Car Insurance Laws By State (April 2025)

Types of Car Insurance Coverage

What is auto insurance? It is a contract between you and an insurer to pay for losses arising from a car accident. Your car insurance policy can include several types of coverage. To understand the differences in car insurance laws by state, you must first understand the purpose of each of the following coverage types:

First-Party Property Damage Coverage

First-party coverage pays you when your property gets damaged by a covered event. In auto insurance policies, first-party property damage coverage falls into two categories.

Collision coverage pays you when your car gets damaged in any type of road accident, including multi-vehicle collisions, single-vehicle car accidents, and rollover accidents. Comprehensive coverage covers your losses when your car gets damaged in any other event, including vandalism, theft, fire, or natural disaster.

No state requires you to buy collision or comprehensive coverage.

Liability Coverage

Liability coverage pays for other people’s losses that result from negligent driving by a covered driver, such as the policyholder, their spouse, or their child. Liability coverage also falls into two categories.

Bodily injury liability (BIL) coverage pays anyone injured in an accident caused by the covered driver’s negligence. Claimants could include motorists, pedestrians, or cyclists.

Property damage liability (PDL) coverage pays for property damaged or destroyed in a car accident caused by the covered driver’s negligence.

Every state requires BIL and PDL, with two exceptions. Florida and New Hampshire are the only states where you don’t need car insurance with BIL coverage. However, both states require you to have the resources to pay claims if you choose not to carry liability coverage. New Hampshire is the only state where you do not need PDL coverage.

Uninsured and Underinsured Motorist Coverage

An accident without insurance exposes both the at-fault driver and crash victims to significant financial risks. Uninsured and underinsured motorist (UM) coverage pays you if someone who either does not have liability coverage or whose policy limits are not high enough to cover your losses hits you.

Whether the other driver was uninsured or underinsured, you must prove they were driving negligently at the time of the accident when you file a UM claim.

For example, Louisiana only requires $15,000 in BIL. If you get hit by a negligent driver and have more than $15,000 in medical bills and income losses, you can file a claim under your UM coverage to make up the difference.

Most states do not require UM coverage. However, according to an insurance industry summary, the following 19 states plus the District of Columbia mandate it:

• Connecticut
• Illinois
• Kentucky
• Maine
• Maryland
• Minnesota
• Missouri
• Nebraska
• New Jersey
• New York
• North Carolina
• North Dakota
• Oregon
• South Carolina
• South Dakota
• Vermont
• Virginia
• West Virginia
• Wisconsin

Many additional states require insurers to offer UM coverage but allow policyholders to opt out of it.

What States Require Car Insurance With No-Fault Coverage?

Most states require fault-based insurance. Injured road users file claims with the insurers for drivers who cause auto accidents. They can recover compensation by proving that the driver was negligent. The drawback is that there might not be enough coverage if the accident injures multiple people.

A few states use no-fault insurance. Under this system, vehicle owners must buy personal injury protection (PIP) coverage. After a minor crash, each injured road user files a claim with their insurer under their PIP coverage. Their insurer pays regardless of fault. In other words, negligence is irrelevant in a PIP claim.

The following states use no-fault insurance:

• Florida
• Hawaii
• Kansas
• Kentucky
• Massachusetts
• Michigan
• Minnesota
• New Jersey
• New York
• North Dakota
• Pennsylvania
• Utah

The drawback of this system is that PIP benefits are limited. For example, the PIP coverage required by Florida law only pays 80% of the claimant’s medical expenses and 60% of their lost earnings.

Moreover, claimants can only pursue claims against the other driver when they meet a predefined threshold. Thus, someone with New York PIP coverage can only file a claim against the at-fault driver for a serious injury.

The benefit of this system is that claims for minor injuries can be resolved more quickly because the insurer does not need to determine fault for the crash. Moreover, the average car insurance cost per month is usually lower for no-fault policies because insurers have a lower risk of lawsuits.

Variations in Minimum Policy Limits

The final variation in car insurance laws by state is the state minimum car insurance requirement. Policy limits determine the maximum amount the insurer pays for claims.

BIL coverage has two limits. The first is the maximum paid to one accident victim for their injury-related losses. The second is the maximum paid to all victims of a crash.

Thus, a policy with limits of $20,000/$40,000 will pay any one victim up to $20,000. If there are multiple victims, they will share up to $40,000, with no single victim receiving more than $20,000.

Contact Us to Learn More About Car Insurance Rights

Car insurance is often the only option for recovering compensation for crash-related injuries. ConsumerShield educates people about their rights and helps them find legal representation. Contact us for a free case review and lawyer referral.