Every driver has to carry car insurance in the U.S., but some of the coverages are optional. We worked with North Carolina lawyer Carl Nagle to provide recommendations, as he is a former insurance adjuster and former insurance company lawyer. According to Nagle, drivers who fail to carry sufficient insurance and later cause an accident with severe injuries can lose their home and their assets. Proper coverage is the cheapest and easiest way to protect your wealth and ensure that all crash victims are properly cared for.
Most drivers buy the minimum coverage their state requires, pay their premium every six months, and never think about it again. Nagle says that’s a mistake that can turn a bad afternoon into a financial catastrophe.
“State minimums exist to keep uninsured drivers off the road, not to protect the person buying the policy,” Nagle told us. “If you cause a serious accident and your coverage runs out, the injured people can come after everything you own. Your house. Your savings. Your future wages. The additional coverage that would have prevented all of that usually costs less per month than a couple of tanks of gas.”
Nagle spent years handling claims for a major national auto insurance carrier before switching sides. He spent the last three decades representing crash victims. That combination of perspectives led to strong views about what drivers should actually buy.
Start With Liability, and Buy More Than the Minimum
Liability coverage pays other people when you cause an accident. There are two types: bodily injury liability, which pays for the injuries you cause, and property damage liability, which pays for the vehicles and other property you damage.
Every state requires liability coverage. Most states set the minimum somewhere between $25,000 and $50,000 per person for bodily injury, with slightly higher aggregate limits per accident. North Carolina recently raised its minimums to $50,000 per person and $100,000 per accident, one of the highest in the country. California, by contrast, only requires $30,000 per person for injuries. A two day hospital stay would wipe out this coverage.
Nagle’s recommendation for most drivers is to carry at least $100,000 per person and $300,000 per accident in bodily injury liability, and at least $100,000 in property damage. Higher earners and homeowners with substantial equity should carry more.
“Modern medical costs are the reason,” he said. “One trip to the hospital after a serious crash can cost more than $30,000. Add a surgery, add rehab, add lost wages, and you can burn through a minimum-limits policy before the injured person has even started their recovery. When the liability coverage runs out, the at-fault driver ends up personally responsible for.”
“I have seen drivers lose their homes over the difference between a $30,000 policy and a $250,000 policy,” Nagle said. “That difference in premium is often less than $30 a month. It is the cheapest financial protection most people can buy, and most people don’t buy enough of it.”
Uninsured and Underinsured Motorist Coverage Protects The Innocent Driver
UM and UIM coverage protects the policyholder when the at-fault driver has no insurance or not enough insurance to cover the injuries.
Uninsured motorist coverage (UM) applies when the at-fault driver had no insurance at all, or was a hit-and-run driver who was never identified. Underinsured motorist coverage (UIM) applies when the at-fault driver had liability insurance, but not enough to fully pay the full value of the personal injury case.
Both coverages are optional in many states, though some states (including North Carolina) require these coverages on all policies.
Nagle’s recommendation: always carry UM/UIM, and buy UM and UIM coverage in amounts that match your liability limits. If you carry $250,000 in bodily injury liability, carry $250,000 in UM/UIM. If you carry more, match it.
“UM and UIM is the coverage that protects you and your family from other people’s failures,” Nagle said. “A large share of drivers on the road carry state minimum coverage, and some carry no coverage at all. When one of them hits you, your own UM/UIM policy is often the difference between full recovery and financial devastation. It’s protection you buy for yourself, and it’s usually inexpensive compared to liability coverage.”
He noted that UM/UIM coverage travels with the insured person, not just the vehicle. If the policyholder is injured as a pedestrian, a bicyclist, or a passenger in someone else’s car, their own UM/UIM coverage typically applies. This makes it especially valuable for families with multiple drivers.
Medical Payments Coverage Fills Gaps
Medical payments coverage, often called MedPay, pays medical expenses arising from a crash regardless of fault, up to the coverage limit. It typically ranges from $1,000 to $10,000 or more.
MedPay is optional in most states. Some drivers skip it because they have health insurance and figure their health plan will cover any injuries.
Nagle recommends carrying MedPay anyway.
“MedPay pays first, without requiring you to fight your health insurer over what’s covered, what needs pre-authorization, or what the deductible is,” he said. “It also covers costs that health insurance often does not, like ambulance transport or emergency room copays. And in some states, MedPay coverage stacks across multiple vehicles on the same policy, which means a family with three cars could have three times the MedPay coverage available.”
He noted that MedPay is generally inexpensive, often adding only a few dollars per month to the premium. For the price, it’s meaningful protection against out-of-pocket medical costs after a crash.
Some states have “Personal Injury Protection” or PIP coverage, which acts just like Medpay. However, some PIP policies provide additional benefits for lost wages.
Comprehensive and Collision Coverage Protects Your Vehicle
Collision coverage pays for damage to your vehicle from a crash, regardless of fault. Comprehensive coverage pays for damage from non-collision events like theft, vandalism, hail, or flood. Both are optional under state laws, but lenders typically require them on financed vehicles.
Nagle’s guidance here is more nuanced. For newer vehicles, or any vehicle where the driver could not comfortably afford to replace it out of pocket, both coverages make sense. For older vehicles with limited market value, the math changes.
“If you’re driving a 15-year-old car worth $3,000, and the collision coverage costs $600 a year with a $500 deductible, you’re paying a lot of money to protect an asset you could nearly replace with the coverage’s own premium,” he said. “At some point, older vehicles are cheaper to self-insure. But most drivers should run the math based on their specific situation, not just drop the coverage without thinking about it.”
Umbrella Insurance Is Underappreciated
An umbrella policy provides additional liability coverage above the primary auto policy, and this coverage is typically part of the driver’s homeowners insurance policy. Typical umbrella policies carry limits of $1 million to $5 million and cost surprisingly little.
Nagle strongly recommends umbrella coverage for homeowners, higher earners, and any family with significant assets to protect.
“An umbrella policy is one of the best values in insurance,” he said. “For most families, $1 million in umbrella coverage costs somewhere between $200 and $400 a year. In exchange, you get an extra million dollars of protection above whatever your auto policy provides. If you cause a serious accident, that extra layer can be the difference between the insurance company paying the judgment and the injured people coming after your personal assets.”
Rental Reimbursement and Roadside Assistance
Rental reimbursement pays for a rental car while the insured vehicle is being repaired after a covered accident. Roadside assistance covers towing, jump starts, tire changes, and similar services. Both are optional add-ons, and both are typically inexpensive. Carrying these add-on coverages is a matter of personal choice.
The Real Purpose of Auto Insurance
Nagle’s overall recommendations reflect a specific view of what insurance is for.
“Insurance is not a bet that a bad thing will happen. It’s a decision to trade a small, predictable premium payment for protection against a large, unpredictable loss. Most people are willing to make that trade for their house, their health, and their life. Auto insurance should be no different.”
He said that the drivers who end up in the worst financial situations after a serious crash are almost always the ones who carried too little coverage. This can be true for the at-fault driver who carried low coverage, and also for the innocent victim who decided not to carry UM/UIM.
“The financial pain of paying an extra $30 or $50 a month for adequate coverage is relatively minor,” he said. “The financial pain of losing your wealth and savings because you caused an accident with severe injuries and your policy limit was too low is enormous. Every driver should periodically look at their coverage and ask whether it’s actually enough to protect what they’ve built.”
What to Do This Week
Nagle offered specific suggestions for readers who want to check their current coverage:
Pull out your declarations page. This is the summary document that shows your coverage limits. It comes with each policy renewal, and most carriers make it available through the customer portal.
Confirm your liability limits. If they are at the state minimum, consider raising them. Most drivers with any assets should carry at least $100,000/$300,000/$100,000, and homeowners or higher earners should consider more.
Check your UM/UIM coverage. These limits should generally match your liability limits. If they don’t, or if you don’t have UM/UIM coverage at all in a state where it’s available, add it.
Consider an umbrella policy. If you own a home, have significant savings, or have a household income above roughly $100,000, talk to your insurance agent about adding a $1 million umbrella policy.
Verify MedPay coverage. If you don’t have MedPay, add it. It’s usually inexpensive and covers gaps in health insurance after a crash.
Ask your agent about rate differences. Many drivers are surprised to learn that raising coverage limits from state minimums to substantial protection often costs less than they assume, sometimes only $10 to $40 a month. Ask your agent for specific quotes at higher coverage levels before assuming better coverage is out of reach.
Attorney Nagle summed up his advice this way: “The purpose of car insurance is not to satisfy the DMV. It’s to protect the driver’s family and to make sure that people who are seriously injured on the roads can be properly cared for. Buying enough coverage does both of those things, and it usually costs less than people expect.”
What Every State Requires
State minimum coverage requirements vary dramatically. The chart below shows the current minimum required auto insurance coverage in all 50 states and the District of Columbia.
Carl Nagle is a North Carolina personal injury attorney whose firm focuses exclusively on motor vehicle accident cases. He is a former claims adjuster for a major national insurance carrier and a former insurance defense attorney. More information about his firm is available at naglefirm.com.
Matthew Wilde
Matthew Wilde is an automotive journalist with experience contributing to leading publications. He focuses on delivering clear, well-researched analysis of automotive industry news and vehicles. Growing up surrounded by a variety of cars, Matthew developed a strong foundation in automotive technology and design. His work emphasizes accuracy and depth, aimed at informing both enthusiasts and industry professionals with straightforward, precise reporting.
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