Dave Ramsey Says You Need at Least This Much Liability Insurance

Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.


  • Buying liability insurance is important for asset protection.
  • Drivers need to make sure they have a sufficient amount of insurance coverage.
  • Finance expert Dave Ramsey recommends motorists get at least $500,000 in liability protection.

Having the right auto insurance coverage is crucial to avoiding catastrophic financial loss.

In most states, drivers are required by law to purchase a certain minimum amount of auto insurance in order to be able to drive legally. Typically, this includes liability insurance. Liability insurance is a type of car insurance that protects a driver's assets in case the motorist causes a crash. It ensures victims of an accident receive money for property damages and injuries, as the insurance pays out when a covered policyholder causes a collision that harms others.

Liability insurance doesn't pay for the at-fault drivers own car repairs, but covering the liability costs can be even more important since sometimes accident victims incur substantial damages. It's important for every motorist to make an informed choice about how much liability insurance to have -- but it's not always easy to figure out.

For those confused about how much coverage is enough, finance expert Dave Ramsey has a suggestion on what the minimum amount of protection should be.

How much liability insurance Ramsey believes motorists need

Many motorists choose to purchase the minimum liability insurance that is required by state law. In many cases, this means they get around $25,000 per person and $50,000 per accident in coverage for bodily injury and around $10,000 per accident in property damage protection -- depending on their state's rules.

This would mean if they caused a collision with two other drivers, their insurance would pay out a maximum of $50,000 in total for injuries, with up to $25,000 going to each driver. And the insurer would pay out only $10,000 to repair property. In some states, these limits are even lower while in others they are higher.

Ramsey believes most drivers need much more coverage than that. In fact, on his blog, he recommends buying at least $500,000 in liability protection at a minimum. The reason for this is simple. As his blog states, "We’ve heard too many stories from people who know firsthand that the state minimum liability isn’t enough."

Why buying more liability insurance coverage is advisable

Even a relatively minor injury or small amount of damage to a vehicle could cost much more than the minimum amount of liability coverage -- especially if several people get hurt or have their cars damaged.

In most states, a driver who causes a collision can be held liable for all damages that result from that crash. That can include loss of wages if an injury prevents a victim from working, as well as compensation for pain and suffering. If the driver has too little insurance to pay for all losses injured victims experience, the insurer will only pay out up to policy limits regardless of the actual amount the motorist is responsible for paying for.

The result is that victims can try to collect additional compensation from the driver personally. That means the motorist's assets could be at risk. No one wants to face a court order to pay hundreds of thousands of dollars in compensation out of their own pocket -- but that's exactly what could happen with too little insurance.

Drivers who want to make certain their assets are safe should seriously consider following Ramsey's advice and buying much more liability protection than their state mandates. Purchasing $500,000 of coverage is a good starting point, but those with significant assets to protect may want to aim even higher and pay a little extra for $1 million or more in protection.

Our best car insurance companies for 2022

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we've researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

Our Research Expert

Related Articles

View All Articles Learn More Link Arrow