Best Minimum Coverage Auto Insurance for 2023

American drivers pay about $2,646 annually for auto insurance, but most people don't need to pay that much to drive legally. State minimum car insurance only costs about $764 per year, on average, and in some places, it's possible to score an even better rate. Here's a look at some of the companies that offer the best minimum coverage car insurance.

Minimum car insurance varies by state, but in most states, it includes the following:

• Bodily injury liability coverage: This pays for the other driver's medical bills if the policyholder injures them in an accident.
• Property damage liability coverage: This pays to repair the other driver's vehicle or personal items if the policyholder is at fault in an accident.
• Personal injury protection (PIP): In no-fault auto insurance states where each driver bills their own insurance for medical costs, PIP helps policyholders pay for their medical bills.

In some states, minimum car insurance coverage also includes:

• Uninsured motorist coverage: This kicks in if the policyholder is hit by a driver who doesn't have insurance.
• Underinsured motorist coverage: If a policyholder is hit by a driver who doesn't have enough car insurance to cover the full cost of the accident, this coverage pays the rest.

Every state sets its own laws about how much car insurance you need. A pretty common requirement is $25,000 of bodily injury liability coverage per person, $50,000 of bodily injury liability coverage per accident, and $25,000 of property damage liability coverage. This is sometimes written as 25/50/25 coverage.

But there are states that require more or less than this. California, for example, only requires drivers to have 15/30/5 coverage, while Alaska requires 50/100/25 coverage.

Drivers typically pay more for minimum car insurance in states that require higher coverage limits and in states that require uninsured and underinsured coverage in addition to the liability coverage discussed above.

Minimum car insurance coverage is synonymous with cheap auto insurance. Rather than paying thousands of dollars a year for car insurance, most drivers can drive legally for just a few hundred dollars annually.

That makes minimum coverage especially popular with those on a budget or with an accident history who have seen their rates increase.

While state minimum car insurance coverage may save drivers money on their premiums, it can cost them big time if they cause an accident.

Car accident costs can rapidly exceed state minimum coverage, especially if someone is seriously hurt. Drivers who have state minimum coverage may not have enough insurance to pay the full cost of the damages. They could find themselves in court being sued for the remainder.

State minimum car insurance also doesn't include any protection for the driver's own vehicle. So if that's damaged as well, the driver must pay out of their own pocket. These extra protections raise insurance premiums, but by how much depends on the type of vehicle. Drivers who own cars with the lowest insurance costs may not notice too much of a difference.