When should I drop collision and comprehensive?

Drop them when their annual cost is more than 10 percent of the car's current value, because the insurer will never pay more than the value minus the deductible. At the national average the two coverages cost about $1,707 a year, so a car worth less than about $17,000 deserves the arithmetic, and a car worth less than $5,000 should almost always drop them.

Do I need full coverage if my car is paid off?

No, not by law, but you need it if you cannot afford to replace the car yourself. Full coverage is required only with a loan or a lease. If the car is paid off and worth more than about $17,000, full coverage is still the honest baseline, because the collision and comprehensive cost about $1,707 a year and the car is worth more than ten times that.

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The premium ledger · Table No. 49

How Much Car Insurance Do I Need?

Most drivers should carry 100/300/50 liability limits with collision and comprehensive. The state minimum is the floor, not the recommendation. This article states what each coverage does, when the minimum is enough, and the 10% rule for dropping cover.

Filed November 6, 2026 · figures checked against 2026 sources

The short answer

Most drivers should carry 100/300/50 liability limits with collision and comprehensive, which is $100,000 per injured person, $300,000 per accident, and $100,000 for property damage, plus cover for your own car. That is the honest baseline, and it is what most insurance professionals recommend, and it is what NerdWallet’s November 2026 analysis uses as its standard profile, and it costs $2,357 a year on average nationally, which is $196.42 a month. The state minimum is the floor, not the recommendation: it costs $650 a year on average, which is $54.17 a month, and it buys liability only, and it buys it at the lowest limits your state allows, and the lowest limits are low, because the state sets them for the driver who cannot afford more, not for the driver who wants enough. The minimum in some states is 25/50/25, which is $25,000 per person and $50,000 per accident, and one hospital bill is more than $25,000, and one bad crash is more than $50,000, and the driver who carries the minimum and causes the crash pays the rest out of pocket, and the rest is the savings, the house, and the wages, because the insurer pays to the limit and the driver pays beyond it.

The question is therefore not what the state requires but what the crash costs, and the crash costs more than the minimum. A single injured person in a serious crash can cost $100,000 in medical bills, and a multi-car crash can cost $300,000, and a new SUV is $50,000, and the 100/300/50 limits cover those numbers, and the minimum limits do not, and the difference between the minimum and the 100/300/50 is the difference between the insurer paying and you paying, and the difference in premium is the difference between $650 a year and the liability-only part of the full policy, which is about $800 to $900 a year, because the full policy’s $2,357 includes collision and comprehensive, and the liability part of it is the smaller share. The driver who buys the minimum to save $150 a year is buying a $50,000 exposure to save $12.50 a month, and the arithmetic is the answer, because the saving is small and the exposure is large, and the exposure is the reason the baseline exists.

What each coverage does, in plain language

Liability pays for the damage you do to other people and their property, and it is the only coverage every state requires, and it is the coverage that protects your assets, because it pays the other driver’s medical bills and the other driver’s car, and it pays your legal defense when the other driver sues, and the limits are the most the insurer will pay, and the rest is yours. Collision pays for damage to your own car when you hit something, which is another car, a tree, a guardrail, or a pole, and it pays up to the car’s value minus the deductible, and it is required when the car has a loan or a lease, because the lender owns the car until you pay it off, and the lender wants its collateral protected. Comprehensive pays for damage to your own car when nothing collides with it, which is theft, fire, flood, hail, vandalism, falling trees, and the deer, and it is also required with a loan or a lease, and it is the coverage that pays when the car is stolen from the driveway, and the driveway is where most thefts happen.

Uninsured and underinsured motorist cover pays when the other driver has no insurance or not enough, and it pays your medical bills and your car, and it is required in some states and optional in others, and it matters most in the states with the most uninsured drivers, because the uninsured driver is the one who hits you and cannot pay, and the cover is the only way you get paid, and the states with the cheapest minimums are often the states with the most uninsured drivers, because the minimum is cheap where the uninsured are many, and the uninsured are the reason the cover exists. Personal injury protection and medical payments cover your own medical bills regardless of fault, and they are required in no-fault states and optional elsewhere, and they pay quickly, because they do not wait for the fault to be decided, and the fault can take months, and the hospital bill cannot. Gap cover pays the difference between what the car is worth and what you still owe on the loan, when the car is totaled, and it matters when the loan is larger than the value, which is the first two years of most loans, and the gap is the reason the totaled car can still cost you money after the insurer pays.

When the minimum is enough, and when it is not

The minimum is enough when the car is old, the driver has no loan, and the driver has few assets to protect, because the minimum buys the legal right to drive, and the legal right is all the driver needs, and the car is worth less than the collision and comprehensive cost, and the driver can afford to replace it, and the driver’s wages cannot be garnished for much, because there is not much to garnish. The rule for dropping collision and comprehensive is the ten percent rule: drop them when the annual cost of the two coverages is more than ten percent of the car’s current value, because the insurer will never pay more than the value minus the deductible, and the value falls every year, and the premium does not fall as fast, and the day the cover costs more than a tenth of the car is the day the cover is a bad buy, and the driver should bank the premium instead. At the national average the collision and comprehensive cost about $1,707 a year, which is the difference between full coverage at $2,357 and minimum at $650, and ten times that is $17,070, so the driver whose car is worth less than about $17,000 should do the arithmetic, and the driver whose car is worth less than $5,000 should almost always drop them, because the most the insurer will ever pay is the value minus the $1,000 deductible, which is $4,000, and the premium is $1,707 a year, and the insurer pays at most 2.3 years of premium for a total loss, and the driver pays the premium every year whether the car is totaled or not.

The minimum is not enough when the driver has a loan or a lease, because the lender requires full coverage, and the requirement is in the contract, and the lender will buy its own policy and bill the driver for it if the driver drops the cover, and the lender’s policy is dearer than the driver’s own, and the driver pays it anyway. The minimum is not enough when the driver has a house, savings, or a good income, because the crash that exceeds the minimum limits reaches those assets, and the assets are the reason to buy the higher limits, because the higher limits cost little and the assets cost much. The minimum is not enough when the driver carries passengers, because the passengers are the driver’s responsibility, and the per-person limit is the most the insurer pays each of them, and $25,000 per person does not cover a hospital stay, and the 100/300/50 limits are the floor for a driver who carries people, not the ceiling. The minimum is not enough when the driver drives in a state with many uninsured drivers, because the uninsured driver is the one who will hit you, and the minimum does not cover your own car, and the uninsured motorist cover does, and the cover is the difference between being paid and being broke.

Coverage	What it pays	Who it protects	Required?
Liability 100/300/50	Others’ injuries and property, up to $100k/$300k/$100k	Your assets	Every state
Liability, state minimum	Others’ injuries and property, at the state’s floor	Your legal right to drive	Every state
Collision	Your car, when you hit something	Your car	Loan or lease
Comprehensive	Your car, when theft, fire, flood, hail, or animals strike	Your car	Loan or lease
Uninsured motorist	Your injuries and car, when the other driver has no cover	You	Some states
Personal injury protection	Your medical bills, regardless of fault	You	No-fault states
Gap cover	The loan balance above the car’s value, when totaled	Your loan	Loan or lease

The table is the whole policy in seven rows. Liability is the only coverage every state requires, and it is the coverage that protects your assets, because it pays the other driver and it pays your defense. Collision and comprehensive protect your car, and they are required with a loan or a lease, and they are the difference between full coverage and minimum coverage, and the difference is $1,707 a year at the national average. Uninsured motorist cover protects you from the driver who has nothing, and it is required in some states and optional in others, and it is the coverage most drivers forget, because the driver who hits you is not the driver you chose, and the driver who hits you may have nothing, and the nothing is the reason the cover exists.

The new insight

The minimum is priced for the state, not for you. The state sets the minimum so the poorest driver can legally drive, and the minimum is the floor that keeps the roads legal, not the cover that keeps the driver whole, and the driver who buys the minimum because it is the cheapest is buying the state’s floor at the state’s price, and the floor is $25,000 per person in some states, and one hospital bill is more than $25,000, and the gap between the floor and the bill is the driver’s savings, and the savings are the reason the baseline is 100/300/50, because the baseline costs about $150 a year more than the minimum in liability alone, and $150 a year is $12.50 a month, and $12.50 a month is the cheapest asset protection in the whole household budget, because the house insurance costs more and the health insurance costs more, and the car insurance is the one that pays when the crash is your fault, and the crash is the day the minimum is not enough.

How much cover, by driver

The young driver needs the highest limits, because the young driver is the most likely to crash and the least likely to have assets, and the crash that exceeds the limits follows the driver for years, because the judgment does not expire when the driver turns 25, and the wages can be garnished, and the garnishment is the reason the young driver should carry 100/300/50 at least, and 250/500/100 if the family can afford it, because the family’s assets are the ones at risk when the driver is on the family’s policy, and the family’s house is the asset, and the house is worth more than the premium. The driver with a loan needs full coverage, because the lender requires it, and the driver should also carry gap cover for the first two years, because the loan is larger than the value, and the totaled car leaves a balance, and the balance is the driver’s, and the gap cover is the only thing that pays it. The driver with an old car and no loan should do the ten percent arithmetic every year, because the car loses value and the premium does not fall as fast, and the year the cover costs more than a tenth of the value is the year to drop it, and the dropping should be deliberate, not accidental, because the accidental dropping is the lapse, and the lapse raises the next premium.

The driver with assets needs the highest limits, because the assets are the target, and the plaintiff’s lawyer will ask what the driver owns before asking what the driver did, and the umbrella policy is the next step, because the umbrella sits above the auto limits and adds a million dollars of cover for a few hundred dollars a year, and the umbrella requires the auto limits to be 250/500/100 first, and the requirement is the reason the high limits matter, because the high limits are the foundation and the umbrella is the roof. The driver who drives rarely needs less, but not the minimum, because the rare driver still crashes, and the crash does not care how often the driver drives, and the low-mileage discount is the way to pay less without buying less, because the insurer charges by the mile, and the driver who drives 5,000 miles a year should ask for the discount, and the discount is the honest price for the honest risk.

Sources

NerdWallet November 2026 car insurance cost analysis (updated October 1, 2026): national full coverage $2,357 a year, minimum $650 a year; standard profile 100/300/50 liability limits, 100/300 uninsured motorist coverage, collision and comprehensive with $1,000 deductibles. Insure.com 2026 car insurance calculator: full coverage at 100/300/100 is what most insurance professionals recommend as a genuine financial baseline, and its 50/100/50 liability-only column prices a 40-year-old at $829 a year, the anchor for the liability-only range in this article. The ten percent rule for dropping collision and comprehensive is the standard guidance published by NerdWallet, Bankrate, and the Insurance Information Institute: drop the cover when its annual cost exceeds ten percent of the car’s current value. All calculator figures were computed by this site’s calculator under the stated model.