How much car insurance do I need?

Owning a car comes with a lot of financial responsibilities —the purchase (or lease) price, maintenance, gas — and plenty of other expenses to keep in mind. But before you hit the open road, there’s one vehicle cost you absolutely need to have buckled up: car insurance.

You probably know you need this crucial coverage, but how much is enough? The cost can vary depending on where you (and your car) call home, what kind of vehicle you drive, and how much you can afford.

In the U.S., each state has its own requirements when it comes to car insurance. As you’ll see in the table provided by NerdWallet , most require a minimum of $50,000 of bodily injury coverage as well as $25,000 in property damage liability. Bear in mind that state requirements are just one factor and some circumstances may require you purchase more than the state minimum.

To find the bare minimum coverage you need, you can start with your state’s requirements. If you have a lease or a loan, your lessor/lender may also have coverage conditions. Finally, another consideration when determining the amount of insurance coverage could be the value of your car. Newer, more expensive cars could present more risk for providers, and may require more coverage.

Not all car insurance is created equal.  Different policy types provide coverage for different situations and could pay for injuries or damage to vehicles accordingly. The major types of car insurance coverage to consider include the following:

This covers damage you may do to someone else and their property. Most states require liability coverage, and it’s generally less expensive than other, more comprehensive types of car insurance.

PIP will help pay for medical expenses for you and your passengers, no matter who is at fault in an accident. Some states have no-fault insurance laws that require PIP insurance. This type of coverage may also pay for expenses such as lost wages, funeral expenses, and replacement for services lost due to injury, such as cleaning or childcare.

MedPay helps covers medical bills and other related expenses for you and your passengers, regardless of who caused the accident. MedPay is required in some states, but in other states, MedPay is optional.

UM and UIM coverage helps pay for your medical expenses when someone else who doesn’t have liability insurance (or doesn’t have enough) causes an accident. In some states, it can also pay for damage to your vehicle. This coverage is required in some states and optional in others.

As the name suggests, collision coverage pays for vehicle repairs if you’re in an accident. It’s not required by most states, so you should consider the value and age of your car when deciding if you need collision insurance.

Vehicle damage isn’t always the result of an accident, and comprehensive insurance may  cover some of those instances (hail, theft, fire, flood, animals). It’s often sold along with collision coverage and your lender or leasing provider will likely require this type of coverage.

Note: In addition to your insurance policy, you could inquire about add-ons to cover specific problems you may encounter as a driver. An example would be emergency roadside assistance. If your car breaks down, emergency roadside assistance can help pay for services like tow trucks, locksmiths, jump starts, fuel delivery, and basic repairs on the side of the road.

A deductible is the amount you could pay out-of-pocket for a car insurance claim before your insurance begins to pay and can range from a few hundred dollars up to $2,500. Liability coverage often has no deductible, but for comprehensive and collision insurance, you will need to choose a deductible level.

A common deductible is $500. Bear in mind, the lower the deductible, the higher your premium will be. What’s right for you can depend on your budget and preferences. Some considerations are whether you want to save on premiums but possibly pay more if you file a claim, or whether you’re more comfortable with higher premiums in exchange for a lower out-of-pocket cost in the event of a claim.

Car insurance is required by law in most states. If you are in a state that requires insurance coverage and you are pulled over while driving without insurance, you could be fined, have your car impounded, or have your license suspended. In some rare instances, you could even face jail time if you cause an accident without insurance, you could be responsible for all of the associated costs. The other driver could also sue you for damages.

As you navigate the ever-changing landscape of car insurance, there’s a lot to consider. Finding the right type and amount of car insurance coverage for you means balancing costs, state requirements and more. It’s a lot. But by taking the time now, you can drive easy knowing you’ll be covered no matter what lies down the road.