What Auto Insurance Coverage Do You Actually Need?

Most states only require minimum liability limits — often as low as $10,000–$25,000 — which is far below what a serious accident can cost. This calculator isn't a premium quote tool; it's a coverage-needs estimator based on widely cited industry guidance, to help you know what to ask for before you shop.

The 100/300/100 Baseline

Insurance agents call this "100/300/100," and Consumer Reports and the Insurance Information Institute both cite it as a reasonable balance between protection and premium cost for most drivers — well above typical state minimums.

The Net Worth Rule

If you have significant assets, the standard advice is to carry liability limits that match — or exceed — your net worth. In an at-fault accident, a judgment exceeding your policy limits can come directly after your savings, home equity, and even future wages.

How to Use This Calculator

Enter your approximate net worth (savings, investments, and home equity, minus debts). Add your car's current value and any remaining loan or lease balance. If you have an actual comprehensive and collision quote, enter it to apply the 10% rule for deciding whether full coverage is still worth it.

When to Consider an Umbrella Policy

Standard auto and home policies typically cap out around $300,000–$500,000 in liability coverage. If your net worth exceeds $500,000, an umbrella policy — which starts at $1 million in coverage for a few hundred dollars a year — fills the gap above your regular policy limits.

The 10% Rule for Dropping Full Coverage

If you own your car outright (no loan or lease), conventional wisdom says to consider dropping comprehensive and collision coverage once your annual premium for that coverage reaches about 10% of your car's current value. At that point, you're effectively betting a meaningful chunk of the car's worth every year on coverage you may never use.

Worked Example

A paid-off car worth $4,000 with a $450/year comprehensive and collision premium is right at the edge — 11.25% of the car's value. Dropping that coverage and instead saving the premium toward a replacement car fund is a reasonable option many advisors suggest at this point.

If You're Still Financing or Leasing

Your lender or leasing company almost always requires comprehensive and collision coverage for the life of the loan or lease, regardless of the 10% rule — they have a financial interest in the vehicle until it's paid off. Consider gap insurance too, since new cars can owe more than they're worth in the first few years of a loan.

Where This Fits Your Bigger Picture

Pair your coverage decisions with your net worth calculator results and your auto loan calculator payoff timeline — once a car is paid off and its value drops, it's worth revisiting whether full coverage still makes financial sense.

Frequently Asked Questions