Here's a question most people get wrong: what happens if you cause an accident that seriously injures someone, and your insurance only covers $25,000 per person? If that person's medical bills hit $150,000—which isn't hard to imagine when you factor in an ambulance ride, emergency surgery, and months of physical therapy—you're personally on the hook for the remaining $125,000. They can come after your savings, your home, even your future wages.
That's the hidden danger of relying on state minimum coverage. Sure, it's legal. But it's rarely enough. And in 2026, with healthcare costs climbing and vehicles more expensive than ever, choosing the right coverage limits isn't just smart—it's essential financial protection.
Why State Minimums Leave You Vulnerable
Most states require surprisingly little coverage. Until recently, California drivers only needed 15/30/5 coverage—that's $15,000 per person for injuries, $30,000 per accident, and just $5,000 for property damage. Think about that: five thousand dollars wouldn't even cover the bumper on many new trucks and SUVs.
Even after California raised its minimums to 30/60/15 in January 2025—the first increase in 56 years—it's still not enough for most serious accidents. The problem is that these minimum requirements were set decades ago and haven't kept pace with inflation, medical costs, or vehicle values.
From 1979 to 2020, healthcare costs in the U.S. rose nearly 669 percent, and experts predict another 8 percent increase through 2025. A serious accident can easily generate $100,000 in medical bills for a single person. If you're carrying minimum coverage of $25,000 or $30,000 per person, you're exposed to potentially devastating financial liability.
North Carolina recognized this gap and raised their requirements to 50/100/50 starting July 2025, giving them the highest property damage minimum in the country. Virginia also bumped up to 50/100/25. These changes reflect a growing understanding: what was adequate 20 or 30 years ago simply isn't anymore.
The 100/300/100 Standard: A Better Starting Point
Most insurance professionals recommend carrying liability limits of at least 100/300/100. This gives you $100,000 of bodily injury coverage per person, $300,000 per accident, and $100,000 for property damage. These higher limits provide a much better safety net against today's medical costs and expensive vehicles.
Is 100/300/100 perfect? Not necessarily. It's generally enough for most drivers and most accidents, but it may not be sufficient if you're involved in a catastrophic crash with multiple serious injuries. Think of it as a solid baseline rather than the ultimate solution.
The good news? Upgrading from minimum coverage to 100/300/100 often costs less than you'd think. While state minimum policies average around $736 annually for liability-only coverage, bumping up your limits typically adds just a few hundred dollars per year. That's relatively inexpensive protection when you consider what you're guarding against—the potential loss of your home, savings, and financial future.
Some drivers with higher assets or greater risk exposure should consider even higher limits like 250/500/100 or 500/500/100. But for most people, 100/300/100 represents a responsible middle ground that provides meaningful protection without breaking the bank.
When You Need an Umbrella Policy
Here's the simple rule many insurance professionals use: buy enough liability coverage to cover your net worth. If you have $400,000 in home equity, $150,000 in savings and investments, and other assets totaling $100,000, you've got $650,000 to protect. Your auto policy's $300,000 limit leaves a $350,000 gap.
That's where umbrella insurance comes in. It provides extra liability coverage beyond your auto and home insurance limits, kicking in when those policies are exhausted. Umbrella policies typically start at $1 million and can go up to $5 million or even higher for individuals with substantial assets.
The cost is remarkably affordable: typically $150-$250 per year for $1 million in coverage, or an average of about $380 annually. That's less than a dollar a day to protect everything you've worked to build.
Most insurers require you to carry certain minimum limits on your underlying policies before they'll sell you an umbrella policy. GEICO, for example, requires at least $300,000/$300,000 bodily injury and $100,000 property damage on your auto policy, plus $300,000 personal liability on your homeowners or renters insurance. Other carriers have similar requirements, typically around $250,000 auto liability and $300,000 homeowners liability.
Umbrella coverage also protects you in situations your auto policy doesn't cover, including claims for false arrest, libel, slander, and liability on rental properties you own. It's comprehensive asset protection that extends across your entire life, not just your driving.
Don't Skip Uninsured and Underinsured Motorist Coverage
You can carry all the liability coverage in the world, but it won't help you when someone else hits you and they're uninsured. And that happens more often than you'd think. In 2023, 15.4 percent of motorists—more than one in seven drivers—were completely uninsured. Even more concerning, one in three drivers (33.4%) were either uninsured or underinsured.
These rates vary dramatically by state. Mississippi leads with 28.2% of drivers uninsured, while New Mexico (24.1%) and Washington D.C. (23.1%) aren't far behind. Even states with lower rates still have meaningful exposure—Maine's 5.7% rate means one in 18 drivers there lacks insurance.
Uninsured motorist (UM) and underinsured motorist (UIM) coverage protects you when you're hit by someone who can't pay for the damage they caused. UM kicks in when the other driver has no insurance at all. UIM helps when they have insurance, but not enough to cover your medical bills and other losses.
The cost is minimal—a median of just $50 per year for uninsured motorist bodily injury coverage and $38 annually for property damage coverage. For less than $100 a year total, you're protecting yourself against a scenario that affects one in three drivers. That's one of the best values in insurance.
Twenty states and the District of Columbia require UM or UIM coverage. If your state doesn't mandate it, add it anyway. This is essential protection that costs almost nothing.
How to Choose Your Coverage Limits
Start by calculating your net worth. Add up your home equity, retirement accounts, investment accounts, savings, and any other significant assets. Don't forget future earnings—if you're a young professional with decades of career ahead, you have substantial earning potential to protect.
For most people with modest assets (under $300,000 net worth), 100/300/100 auto coverage provides solid protection. If your net worth is higher, consider maxing out your auto liability limits to 250/500/100 or 500/500/100, then add an umbrella policy to cover the rest.
Some situations call for higher coverage regardless of your net worth. If you have a teenage driver, own a pool or trampoline, have a dog, own rental properties, or regularly have guests at your home, you face higher liability risk. An umbrella policy makes sense even if you don't have major assets yet.
Talk to your insurance agent about bundling your auto, home, and umbrella coverage with the same carrier. You'll often get discounts, and having all your policies with one company makes the claims process smoother if you ever need to tap into multiple layers of coverage.
Finally, review your coverage limits every few years. As your assets grow, your income increases, or your life circumstances change, your insurance needs evolve too. What was adequate five years ago might leave you exposed today. Make it a habit to reassess your coverage whenever you experience a major life event—buying a home, getting a significant raise, inheriting money, or welcoming a new driver to your household.
Choosing the right coverage limits isn't about being paranoid—it's about being prepared. For a relatively small annual cost, you can transform your insurance from bare-bones legal compliance into comprehensive financial protection. Get a quote for higher limits today. You'll probably be surprised by how affordable real peace of mind can be.
