Car insurance in the US: what the law requires and what to buy

There is no national car insurance minimum in the United States. Each state writes its own, and the numbers genuinely differ: California requires $30,000 of bodily injury cover for one person, Wisconsin requires $25,000, and New Jersey's standard policy starts as low as $35,000 for one person while the state also requires a cheaper, much thinner policy to be offered alongside it. The second thing to understand on day one: the compulsory part is called liability, and it pays the person you harm, not you.

Five states, five different numbers#

"How much does the law require" has no single answer, because the law doing the requiring is state law. Here is what five official pages currently say:

• California. $30,000 for injury or death of one person, $60,000 where more than one person is involved, and $15,000 for property damage. The California DMV cites California Insurance Code section 11580.1b for those figures.
• Georgia. $25,000 per person and $50,000 per incident for bodily injury, plus $25,000 per incident for property damage, per the state Office of Commissioner of Insurance.
• Wisconsin. $25,000 for one person, $50,000 for two or more, $10,000 for property damage. Wisconsin also requires uninsured motorist cover at $25,000 and $50,000, for bodily injury only.
• Illinois. $25,000 per person, $50,000 per accident, $20,000 for property damage, plus uninsured motorist cover at $25,000 and $50,000.
• New Jersey. The normal policy here is the Standard Policy, and the state's own chart puts its limits as low as $35,000 per person and $70,000 per accident for bodily injury, plus $25,000 per accident for property damage. New Jersey's floor is therefore higher than California's, not lower. Separately, the state requires insurers to make a cheaper Basic Policy available: $5,000 of property damage liability, $15,000 per person of Personal Injury Protection, uninsured and underinsured motorist coverage printed on the chart as None, the Limited Right to Sue option, and bodily injury liability that is not in the policy unless you add it, at $10,000 for all persons per accident. That is one optional product, not the law's minimum, and the state's own page says it "offers less protection" and "should be considered by those with few family responsibilities and few real assets."

Look at the property damage column alone: $15,000 in California, $25,000 in Georgia, $10,000 in Wisconsin, $20,000 in Illinois, $25,000 in New Jersey. Five states, four different answers, and the lowest of them is Wisconsin, not the state with the cheapest optional policy on the list. Anyone who quotes you a single "American" figure is guessing.

How to read 25/50/10#

Agents write these limits as three numbers. Taking Wisconsin as the example, 25/50/10 means:

1. $25,000 is the most the insurer will pay for any one injured person.
2. $50,000 is the most it will pay for the whole accident, however many people are hurt.
3. $10,000 is the most it will pay for property damage: the other car, a fence, a light pole.

California and Illinois use the same order, with different numbers. The first two figures are for people, the last is for things.

A minimum is a number chosen so you will not be fined, not a number chosen to keep you safe. The Illinois Department of Insurance says in its own shopping guide that state minimums may not be sufficient and recommends buying higher limits.

Liability pays the other party, not you#

This is the point most new drivers get backwards, and getting it backwards is expensive. The California DMV puts it in one line: "Liability insurance compensates a person other than the policy holder for personal injury or property damage."

So if you buy only the compulsory cover and you cause a crash, the insurer pays the other driver. Your own bent car and your own broken leg are not covered. Cover for you has to be bought separately, and each piece of it has its own name.

The other coverage types and what they actually do#

The Wisconsin insurance office defines each one as follows. These are the names you will see on a quote in any state:

• Collision. Pays for damage to your own vehicle when it collides with an object, including another vehicle, or when it overturns. Wisconsin states the ceiling as well: it pays up to actual cash value.
• Comprehensive. Pays for damage to your vehicle from fire, vandalism, water, hail, glass breakage, wind or falling objects. Hitting a deer counts as comprehensive rather than collision, a small distinction that decides which part of your policy you claim under.
• Uninsured motorist (UM). Applies when you are hit by a driver with no insurance, or by a hit-and-run driver. Wisconsin is explicit that this covers bodily injury only: it does not cover your property damage and it does not protect the other driver.
• Underinsured motorist (UIM). Applies when the driver at fault does carry insurance but their limits are lower than yours. In Wisconsin this one is not mandatory, but if you request it the state sets minimum limits of $50,000 per person and $100,000 per accident.
• Medical payments. Covers medical or funeral expenses for you or others injured or killed in an accident while riding or driving in your vehicle. It is not cover for the people in the car you hit; that is what liability does.
• Personal Injury Protection (PIP). In states that use it, PIP pays for injuries to you and to other people covered by your policy. New Jersey describes it in exactly those terms and sets it at $15,000 per person in the Basic Policy, rising to $250,000 for certain serious injuries.

Driving uninsured: the money is the smaller problem#

This is why this guide sits alongside how to get a driver's license. The consequences do not stop at a fine. They reach the license itself and the right to keep the car on the road at all.

California states the chain of events clearly, so take it as the worked example:

• If the DMV receives no proof of insurance for a vehicle, the registration is suspended, and that vehicle may not be driven or even parked on public roads until proof is filed.
• If you are in a reportable accident, meaning injury, death, or over $1,000 in property damage, while uninsured, the DMV suspends your driving privilege. Under CVC section 16070, the suspension runs for a minimum of one year.
• Serving the suspension is not the end of it. Under CVC section 16430, proof of insurance must then be filed and maintained with the DMV for three years.
• You can contest the suspension at a hearing, but you have to request it within 10 days.

That is California law. Other states run their own procedures with their own numbers. The shape is what carries over: one uninsured drive can turn into years of dealings with the licensing agency, rather than a ticket you pay and forget.

How to buy a policy without overpaying#

The Illinois shopping guide gives two concrete pieces of advice, and both are easy to act on:

1. Get written quotes from several companies at identical coverage levels. Comparing quotes written at different limits is not comparing anything. Write down the limits you want and hand the same list to every company.
2. Ask for a "non-bound" application before switching. It gets you a price without committing to anything and without canceling the policy you already have, so you never end up with a day of no cover.

Never cancel the old policy before the new one has actually started. Wisconsin lists prior insurance coverage among the things insurers use to set a price. A gap today can cost you money for years afterwards.

Find your own state's official agency through USA.gov, pick your state, and go from there. No government site charges you to read your own state's rules. A .com page charging a "filing assistance" fee is the familiar pattern described in how to spot a scam.

How to pay less#

Start by knowing what the price is built from. The Wisconsin office lists age and gender, marital status, where the vehicle is garaged, driving record, make and model, prior insurance coverage, and annual mileage. Illinois adds the driving records of other people in the household, and credit history.

Between them, the two states list these discounts, all of which you generally have to ask for:

• An accident-free record over a period
• Buying home and auto cover from the same company
• More than one vehicle on the policy
• A good student in the household
• Non-smokers
• Anti-theft devices fitted to the car
• Completing a defensive driving course

The other real lever is your deductible. Wisconsin suggests considering higher deductibles on comprehensive and collision. A higher deductible lowers the premium and raises what you pay yourself when something happens, so set it at a figure you could actually produce in cash tomorrow.

Last of all, a clean driving record is the cheapest thing on this page. Wisconsin and Illinois both put it among the strongest influences on what you are charged, and on whether a company will take you at all.

What to do next#

• Open your own state's insurance department page and write down that state's three minimum figures, rather than using any number from this guide
• Pull out your current policy declaration page, find the liability line, and see what your three numbers actually are
• Get written quotes from at least three companies at identical limits before comparing anything
• Ask each company outright which discounts you qualify for, because they rarely volunteer them
• If you do not have a license yet, start with how to get a driver's license, since the car you bring to the road test has to be insured