Why You Need More Than the Statutory Minimum When You Buy Auto Insurance

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Updated: 01 October 2023
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Insuranceopedia Staff
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Key Takeaways

  • Every region requires a statutory minimum of auto insurance to minimize everyone’s losses, but in most cases, you likely need to purchase additional coverage.

Whenever you get behind the wheel, you run the risk of getting into an accident. To make sure that drivers can compensate each other for bodily injuries and property damage, all U.S. states, territories, and Canadian provinces have established financial responsibility laws that require drivers to purchase a minimum amount of auto insurance.

Components of Auto Insurance

In the United Sates, the statutory minimum has three components:

  • Coverage for bodily injury for each party involved
  • The total limit for bodily injury resulting from any one accident
  • The limit for property damage.

The three limits are commonly written side by side with a slash to separate the numbers, with each number representing thousands of dollars. So, for example, 10/20/5 would represent $10,000, $20,000, and $5,000 of coverage of the respective type.

Statutory Minimum Auto Insurance Chart

State/Territory Limits Details
Alaska 50/100/25  
Alabama 25/50/25  
American Samoa 10/20/5  
Arkansas 25/50/25  
Arizona 15/30/10  
California 15/30/5 Low-income drivers can obtain insurance through the California Automobile Assigned Risk Plan, which has limits of 10/20/3.
Colorado 25/50/15  
Connecticut 20/40/10  
Delaware 15/30/10  
District of Columbia 25/50/10  
Florida 10/20/10  
Georgia 25/50/25 You can bundle car, home, and life insurance in Georgia to get a discount.
Guam 25/50/20  
Hawaii 20/40/10  
Idaho 20/50/15  
Illinois 20/40/15  
Indiana 25/50/10  
Iowa 20/40/15  
Kansas 25/50/10  
Kentucky 25/50/10  
Louisiana 15/30/25  
Maine 50/100/25 $1,000 in medical payment coverage is required as well.
Maryland 30/60/15  
Massachusetts 20/40/5  
Michigan 20/40/10  
Minnesota 30/60/10  
Mississippi 25/50/25  
Missouri 25/50/10  
Montana 25/50/10  
Nebraska 25/50/25  
Nevada 15/30/10  
New Hampshire 25/50/25 $1,000 in medical payment coverage is required as well.
New Jersey 15/30/5 Basic policy limits are 10/10/5, but do not offer uninsured or underinsured motorist coverage. You can bundle car, home, and life insurance in New Jersey to get a discount.
New Mexico 25/50/10  
New York 25/50/10 Insureds must also have 50/100 for wrongful death. You can bundle car, home, and life insurance in New York to get a discount.
North Carolina 30/60/25  
North Dakota 25/50/25  
Ohio 12.5/25/7.5 You can bundle car, home, and life insurance in Ohio to get a discount.
Oklahoma 25/50/25  
Oregon 25/50/20  
Pennsylvania 15/30/5  
Puerto Rico 4/4/4 Minimums are purchased via a government agency known as the Automobile Accident Compensation Administration. This premium is refunded if you procure auto insurance privately.
Rhode Island 25/50/25  
South Carolina 25/50/25  
South Dakota 25/50/25  
Tennessee 25/50/15  
Texas 30/60/25  
Utah 25/65/15  
Virginia 25/50/20  
Vermont 25/50/10  
Virgin Islands 10/20/10  
Washington 25/50/10  
Wisconsin 50/100/55  
West Virginia 20/40/10  
Wyoming 25/100/15  

Auto insurance policies provide coverage in the United States of America, its territories and possessions, Puerto Rico, and Canada (but are you Driving to Mexico? Here’s What You Need to Know about Auto Insurance).

There is also a provision for those who travel in states or provinces where the statutory minimum is higher than the minimum in the state where the vehicle is garaged. In this case, the limits increase to the statutory minimum of the region in which an accident occurs. For example, a car is garaged in Illinois (20/40/15), the driver is the at-fault party in Wisconsin (50/100/55), and there is $30,000 in property damage. The policy would cover the entire loss because Wisconsin’s statutory minimum is higher.

Are Statutory Minimums Enough?

In most cases, the answer is no. To ensure repayment, auto loan lenders require borrowers to name them as a loss payee on auto insurance policies. Lenders may also insist on limits higher than the statutory minimum as a condition for the loan. In these cases, the consumer has to satisfy it by buying sufficient liability insurance coverage.

Even if the car is fully paid for, the answer is still likely no. Take, for example, a driver with California’s statutory minimum of 15/30/5 and who collides into two parked cars. She does $6,000 in damage to one car, which does not have uninsured/underinsured motorist coverage and $7,000 in damage to the other, which does have uninsured/underinsured motorist coverage of 250/500/50. Because her limits are insufficient to cover the damage, the owner of the first car files a small claims action and the insurer for the second car sues the at-fault driver. She ends up responsible for the $8,000 difference between the policy limit and the amount of property damage she caused.

That brings us to a third reason why statutory minimums may be insufficient. Uninsured/underinsured motorist coverage covers damages beyond the other party’s limits. In the example above, the insurer of the second vehicle adjusted the claim and provided for a rental vehicle while the car was being repaired. Thus, the insurer had the right to seek reimbursement for indemnification from the at-fault party.

How to Save on Car Insurance Rates?

There are a few ways to save money on car insurance rates. Here are a few tips:

  • Maintain a Clean Driving Record: Safe driving habits can significantly impact your insurance premiums. Avoiding accidents and traffic violations demonstrates to insurers that you’re a low-risk driver, which can lead to lower rates.
  • Choose a Higher Deductible: Opting for a higher deductible means you’ll pay more out of pocket in case of a claim, but it can lead to lower premium costs. Just make sure you have the financial means to cover the deductible if an accident occurs.
  • Bundle Car Insurance with Home Insurance: Bundling your car insurance with mobile home insurance can lead to substantial savings. Insurance companies often offer discounts for bundling multiple policies, as it allows them to reduce administrative costs. For example, in Louisiana you can bundle mobile home insurance and car insurance with Progressive to save money in the long run.
  • Maintain a Good Credit Score: Many insurers use credit scores to help determine premium rates. A higher credit score often translates to lower insurance premiums, as it suggests to insurers that you are responsible and less likely to file claims.
  • Shop Around and Compare Quotes: Different insurance companies have varying pricing structures and discounts. Getting quotes from multiple insurers and comparing them can help you find the best deal. Keep in mind that while price is important, also consider the coverage and customer service provided.

How to Find the Best Car Insurance?

If you’re looking for a good car insurance policy, we’ve put together a list of guides to get you started:


Although you are required to carry a minimum amount of auto insurance to satisfy legal requirements of where you reside, the minimum is often insufficient to provide adequate coverage for losses. Moreover, you may be required to maintain higher limits to satisfy a lender’s requirements. The additional cost of the limits is low for the amount of additional protection provided, and should you be an at-fault party for a large loss, you may consider the extra cost a bargain.

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