5 Surprising Stats About Car Insurance Requirements in the U.S.
Most drivers need car insurance to drive legally, but rules vary across the U.S. Here are some of the most surprising facts about state-minimum coverage.
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Car insurance is pretty common, and for most people, it's legally required to get behind the wheel. But how much drivers need and how much protection state-minimum coverage offers varies a lot by state. Here are five of the most surprising statistics about car insurance requirements in the United States.
1. Only two states allow drivers to skip insurance
Currently, 48 states require their drivers to carry at least some car insurance to operate a vehicle legally. The only two that don't are New Hampshire and Virginia. But that doesn't mean drivers in these states can just ride worry-free off into the sunset.
Virginia requires its uninsured drivers to pay a $500 uninsured motor vehicle (UMV) fee, renewable annually. Failure to do this or purchase at least state-minimum coverage, which could be less than $500 per year for some, could result in fines and driver's license and vehicle registration suspension.
New Hampshire enables its drivers to skip coverage, but only if they're able to provide proof of financial responsibility. This shows that they would be able to pay for damages if they cause an accident. It usually means purchasing a bond or making a cash deposit equal to the state's minimum liability coverage. Often, this is a much bigger hassle than just purchasing car insurance in the first place.
2. The average premium for state-minimum coverage is $787
The average American driver paid $787 for state-minimum car insurance in 2023. It's reasonable to expect this rate will be a little higher in 2024 due to inflation.
But costs vary significantly by driver. Those with accident histories or those who have been known to drive without insurance in the past pay higher premiums because of the higher risk they pose to insurers.
Location matters a lot too. Each state sets its own minimum coverage requirements, and states with stricter requirements often have higher premiums for state-minimum coverage. For example, Michigan drivers pay about $1,807 per year on average for minimum coverage while drivers in Wyoming can meet their state's requirements for about $354 per year on average.
3. The most common state requirement is 25/50/25 coverage
Ten states require their drivers to carry what is known as 25/50/25 coverage -- that is, $25,000 of bodily injury liability coverage per person, $50,000 of bodily injury liability coverage per accident, and $25,000 of property damage liability coverage. Many other states use this as a starting point. But some require extra coverage while others enable drivers to get by with lower property damage liability limits.
Insurers aren't legally allowed to sell a driver less than the state minimum coverage. So drivers don't need to worry about tracking these requirements themselves. When getting a quote, the state-required amount will always be the lowest possible option.
4. Maine has the highest state-minimum requirements in the nation
Maine has one of the strictest state-minimum car insurance requirements in the nation. All of its drivers must have at least the following to drive legally:
- $50,000 of bodily injury liability coverage per person
- $100,000 of bodily injury liability coverage per accident
- $25,000 of property damage liability coverage
- $2,000 of medical payments coverage
- $50,000 of uninsured/underinsured motorist coverage per person
- $100,000 of uninsured/underinsured motorist coverage per accident
The high liability coverage limits and additional protections leave these drivers better off in an accident than those with minimum coverage in other states. But even this coverage may not be enough to cover all bills in serious accidents. That's why many drivers prefer to purchase even higher limits if they're able to do so.
5. Florida and New Jersey have some of the lowest state-minimum requirements
On the other end of the spectrum, there's Florida and New Jersey, which both require surprisingly little insurance to meet the state's insurance law.
Florida only requires that drivers have $10,000 of personal injury protection (PIP) and $10,000 of property damage liability coverage. New Jersey lets its drivers get by with just $15,000 of PIP and $5,000 of property damage liability coverage.
But again, just because it's possible to drive legally with these limits doesn't mean it's the best move. Purchasing higher car insurance limits will raise premiums, but it can also save drivers a lot of money if they cause an accident.
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