Do I Have Too Much Car Insurance Coverage?

Last Updated on December 11, 2025

Some drivers don’t have enough auto insurance and are dangerously exposed. Others pay for way more coverage than they’re ever likely to use. If you’re wondering, “Do I have too much car insurance coverage?”, the real goal isn’t “more” or “less” — it’s the right-sized amount of protection for your situation.

Below, we’ll walk through how much car insurance most people need, signs you may be over-insured, and how to safely adjust your coverage without putting your finances at risk.

Key Takeaways

• “Too much” car insurance usually means you’re paying for coverage or add-ons that don’t match your car’s value, finances, or risk level.
• Liability limits should generally be high enough to protect your net worth and future income from a serious at-fault accident.
• Car value, health insurance, emergency savings, and whether you live in a high-risk or high-uninsured area all affect how much coverage you really need.
• Review your policy at least once a year, comparing different limits and deductibles, to right-size your coverage instead of simply buying the cheapest or the most expensive option.

How Much Car Insurance Do You Need?

There’s no universal dollar amount that works for everyone. The right level of coverage depends on:

• Your assets and net worth
• Your income and how much you need to protect future earnings
• Your appetite for risk (are you risk-averse or comfortable taking on more yourself?)
• How much you drive and where you drive
• Your budget and ability to handle a surprise bill

At a minimum, you must carry at least the coverage your state requires. You can see those limits in detail here: state-by-state auto insurance requirements.

Many people, however, are better off with liability limits that are higher than the legal minimum. Others also add umbrella coverage to provide extra protection beyond what their regular auto policy can cover.

As a general rule of thumb, you want enough liability insurance so that a serious at-fault accident is unlikely to wipe out your savings, home equity, and other assets.

Signs You Might Have Too Much Car Insurance Coverage

“Too much” car insurance usually means you’re paying for protection that doesn’t match your risk or your finances. Here are common signs you may be over-insured:

• You carry full coverage on a low-value car. If your vehicle is worth only a few thousand dollars, the yearly cost of comprehensive and collision coverage (plus your deductible) may be close to what the car is worth. In that case, you may want to rethink full coverage.
• Your deductible is so low that your premium is much higher. If you could comfortably afford a higher deductible from your savings, but you’re paying extra every month just to keep a very low deductible, you may be buying more insurance than you need.
• You have duplicate medical coverage. If you have strong health insurance and generous disability benefits, you might be able to reduce or drop optional medical coverages on your auto policy (like MedPay in some states), depending on state rules. Learn how the two interact here: health insurance or car insurance – who pays first?
• You pay for extras you never use or value. Things like towing, rental reimbursement, or glass coverage can make sense for some people, but not everyone. If you rarely rent cars, already have roadside assistance (through your carmaker, credit card, or auto club), or don’t mind paying out of pocket for minor issues, you may be able to trim these add-ons.
• Your liability limits are far beyond your assets, and the higher limits strain your budget. Having more liability coverage is almost never bad, but if you’re paying for extremely high limits that you truly can’t afford while you have very few assets to protect, you may be slightly over-insured on liability and under-funded in your emergency savings.

That said, being “over-insured” on liability is generally safer than being underinsured. Cutting liability coverage too aggressively to save a few dollars can create huge financial exposure later.

How Much Car Insurance Does an Average Driver Have?

Industry data suggests that the average driver files a collision claim roughly once every three years and a comprehensive claim roughly once every 10 years. Many of these claims are relatively small. Serious, high-value claims (like a total loss or a major injury case) are rarer, but when they do happen, they can be financially devastating.

Because of this, most drivers choose liability limits that are somewhat higher than their state minimums, but not extremely high. State minimums are often written in a three-number format like 25/50/25 or 30/60/25, which means:

• The first number is bodily injury liability coverage per person
• The second number is bodily injury liability coverage per accident
• The third number is property damage liability coverage per accident

If you only carry the minimum required by your state, your policy might look like 25/50/25 or 30/60/25. Many insurers and financial professionals recommend starting with higher limits (for example, 100/300/50) if your budget allows and you have assets to protect.

Keep in mind that millions of drivers in the United States have no auto insurance at all. Nationwide, roughly 1 in 7 drivers does not have insurance, and in some states – like Florida – the share of uninsured drivers can approach 1 in 5. These high-uninsured states make it even more important to buy adequate uninsured and underinsured motorist coverage.

What Are the Minimum Insurance Requirements in Your State?

Each state decides its own minimum auto insurance requirements. Some require only liability coverage, while others also require personal injury protection (PIP) or uninsured/underinsured motorist coverage.

Historically, two states – New Hampshire and Virginia – treated car insurance differently and didn’t always require drivers to carry a traditional policy. However, laws continue to evolve, and Virginia now generally requires drivers to carry liability insurance rather than simply paying an uninsured motorist fee. New Hampshire still allows some drivers to go without a policy if they can prove financial responsibility, but most drivers there still buy insurance.

All car insurance policies sold in your state will at least meet state minimum limits. Depending on your risk tolerance and finances, you might want to raise your coverage limits beyond the minimums – sometimes double or triple them.

Some states already require relatively high liability limits. Texas, for example, requires drivers to have a minimum 30/60/25 policy with $30,000 of bodily injury liability per person, $60,000 of bodily injury liability per accident, and $25,000 of property damage liability per accident. If your state’s minimum limits are already on the higher side, you may not need to raise them as dramatically as someone in a state with very low minimums.

Other states have minimum policies that are quite low – sometimes as low as 15/30/5 or 15/30/10. In those states, drivers who can afford to will often increase their liability limits significantly to avoid being underinsured.

Higher Coverage = Less Risk

Your auto insurance limits are really a question of how much financial risk you want to retain personally.

• Lower limits and fewer coverages mean lower premiums, but more risk that you’ll have to pay out of pocket after a serious accident.
• Higher limits and broader coverage mean higher premiums, but less chance that one bad crash will lead to wage garnishment, liens, or even bankruptcy.

If you buy only the bare minimum, you are betting that you’ll never cause a major accident. That might save you money month-to-month, but in the rare event that you cause a serious crash, you could be personally on the hook for tens or hundreds of thousands of dollars beyond what your policy will pay.

That’s why the “cheapest” policy is not always the best. Here’s more on that tradeoff: why the cheapest insurance isn’t always the best insurance.

In short: more insurance coverage equals less risk for you. The key is finding the point where the extra protection you get is worth the extra premium you pay.

What’s Your Net Worth?

Your net worth – what you own minus what you owe – is one of the most important factors in deciding how much liability coverage you need.

Imagine you’re distracted by your phone and rear-end another vehicle in heavy traffic. The other driver suffers serious injuries and extensive vehicle damage. You’re clearly at fault. Between medical bills, vehicle damage, pain and suffering, and other losses, the total claim is $125,000 or more.

• If your liability limits are low, your insurance company will pay only up to your policy limit. Anything above that could lead to a lawsuit.
• If your net worth is relatively small, there may not be much for someone to come after. Lawsuits are still possible, but the incentive is lower.
• If your net worth is high (for example, you own a home with substantial equity, have investments, or a high income), an attorney has a much stronger incentive to sue you personally.

That’s why people with higher net worths typically want higher liability limits and often purchase umbrella coverage. Umbrella policies extend your liability protection beyond what your auto (and homeowners) insurance can cover, often in increments of $1 million.

If your net worth is growing, remember to review your limits every year or two so your coverage keeps up.

Other Things to Consider When Deciding on Car Insurance Coverage

Beyond state minimums and net worth, several other factors can help you decide whether you have too much, too little, or just the right amount of coverage.

Per-Claim Coverage Limits: Every policy has coverage limits. Some only meet your state minimums, while others go much higher. Make sure you understand whether there are any per-claim or sub-limits (for example, different limits for certain medical coverages or add-ons) so you’re getting the level of protection you think you’re paying for.

No-Fault Versus At-Fault States: Twelve states use some form of no-fault system, where your own policy (often through PIP) helps pay your medical expenses regardless of who caused the crash. The remaining states are at-fault (or “tort”) states, where one driver is legally responsible. In at-fault states especially, low liability limits can expose you to more personal risk.

Your Risk Factors: Your risk isn’t just about how good a driver you are. Consider:

• Whether you drive daily in heavy traffic or mostly on quiet roads
• If you drive at night, in bad weather, or on icy roads
• If your neighborhood has a lot of thefts or break-ins
• How often you commute, road-trip, or use your vehicle for work

The more you drive and the riskier your environment, the more you might want to lean toward higher coverage limits and full coverage. Here’s more on when it makes sense to make a claim after an accident.

Full Coverage Versus Basic Coverage: Many people use “full coverage” to describe a policy that includes comprehensive, collision, and liability coverage. Basic coverage usually only includes liability. You can save hundreds of dollars per year by dropping comp and collision on an older car, but you won’t be able to make claims for damage to your own vehicle if you do.

If you’re unsure whether full coverage is worth it, start here: Is full coverage the same as comprehensive coverage?

Health Insurance: If you already have strong health insurance, you may not need as much medical coverage on your auto policy, depending on your state’s requirements and your deductibles. This article explains how the two work together: health insurance or car insurance – who pays first after an accident?

Emergency Fund: Ask yourself: if the worst happens, how much could you comfortably pay out of pocket?

• If you have a solid emergency fund, you can often choose a higher deductible and slightly lower coverage in areas where you’re comfortable taking on more risk.
• If you have little to no savings, it may be smarter to carry higher coverage and a lower deductible to avoid a bill you couldn’t handle.

FAQs on Having Too Much Car Insurance Coverage

Final Word: How to Right-Size Your Car Insurance

Car insurance is really about managing risk. You don’t want to pay for coverage that doesn’t make sense for your vehicle or your finances, but you also don’t want a single crash to destroy your savings or put your future income at risk.

To figure out whether you have too much car insurance coverage:

• Review your limits and deductibles on your declarations page.
• Compare those limits to your net worth, income, and risks.
• Consider whether you’re overpaying for full coverage on a low-value car or duplicative add-ons.
• Use tools like this guide to auto insurance limits to see how your coverage stacks up.
• Adjust your coverage as your car ages, your finances change, or your driving habits evolve.

We recommend setting your coverage limits based on your risk tolerance, budget, and net worth, and reviewing your policy at least once a year. If you’re not sure whether you’re over-insured or underinsured, getting quotes for a few different limit and deductible options can show you how much protection you gain (or lose) for each dollar of premium you spend.