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How coverage level impacts your car insurance rate

Written by Elizabeth Rivelli
Written by Elizabeth Rivelli
<h5>Edited by <a href="https://rateretriever.com/about/alyssa-dicrasto/"><span style="text-decoration: underline;">Alyssa DiCrasto</span></a></h5>
Edited by Alyssa DiCrasto
Edited by Alyssa DiCrasto
Published on 2024-01-24

Read time: 3 min

Car insurance is a legal requirement in almost every state. Drivers must carry a minimum amount of coverage to register their vehicles and legally drive. However, most drivers can benefit from higher levels of coverage than the required amount. The type of coverage and amount of coverage you purchase has a direct impact on the cost of your car insurance policy.

In this guide, we’ll explain how the level of coverage you choose will impact your car insurance premium. Additionally, we’ll look at the difference between minimum coverage and full coverage, and help you decide which one is the better option for your needs.

How does your level of coverage affect car insurance?

When you purchase a car insurance policy, you have the option to choose the amount of coverage you get. In most states, drivers are required to carry a minimum amount of coverage, which usually includes personal liability insurance. A minimum coverage policy is the cheapest car insurance you can get, but it also provides the least amount of protection.

For the most protection in the event of an accident, car insurance agents recommend that drivers purchase a full coverage policy. Drivers who lease or finance their vehicles are often required to carry full coverage. A full coverage policy provides better coverage than liability-only insurance, but you’ll pay a higher premium for that extra protection.

For a policy with 100/300/100 and a $500 deductible, the average annual premium is $1,824. When the limits are lowered to 50/100/50 with a $500 deductible, drivers only save around $10 a year on average. This suggests that lowering your coverage does not always save you money. 

How much is full coverage insurance?

The average cost of full coverage insurance is $1,824 per year for a policy with 100/300/100 in liability insurance and a $500 deductible. We use these limits for our “premium coverage,” but insurance companies may write you a policy with even higher limits.

If you choose a full coverage policy with lower coverage limits, the average premium doesn’t change much. For a “standard coverage” policy with liability coverage limits of 50/100/50 and a $500 deductible, the average premium is $1,814 per year, which is only slightly cheaper than the policy with higher limits.  

What is full coverage car insurance?

A full coverage car insurance policy is a bundle of several different types of coverage. Here are the coverages that are typically included with a full coverage insurance policy:

  • Liability insurance: Liability insurance helps pay a settlement when you cause an accident that results in someone else’s injuries or property damage. It also helps cover your legal fees if the other person sues you.
  • Collision insurance: Collision insurance helps cover your vehicle repairs after an accident, regardless of which driver was responsible. It also helps cover repairs to your vehicle in an incident such as a collision with an animal or guardrail.
  • Comprehensive insurance: Comprehensive insurance covers car repairs following non-collision incidents, such as hail damage, falling objects, vandalism, and theft.
  • Medical payments insurance: Medical payments insurance, also called MedPay, will cover medical expenses if you or a passenger gets injured in an accident, no matter who was at-fault.
  • Uninsured/underinsured motorist insurance: Uninsured and/or underinsured motorist insurance is sometimes included with full coverage (but not always). This policy protects you if you get into an accident with an uninsured driver or a driver who doesn’t have enough insurance to cover your losses in full.

Full coverage car insurance rates

Full coverage car insurance rates are more expensive than minimum coverage rates. However, the cost will depend on a variety of different factors. Your state, age, credit score, driving record, vehicle type, and deductible are just a few of the things that can impact your premium.

Because full coverage insurance rates can vary, it’s a good idea to compare quotes from several insurers before you purchase a policy. To get started, you can take our short quiz to see how much you can expect to pay for car insurance.

Fetch the best rates for the right coverage, no sign up required!

How much is minimum car insurance?

Minimum coverage car insurance is the most affordable policy you can purchase. Based on our rate data, the average minimum coverage policy costs $735 per year, which is about $61 per month. However, different insurance companies charge different rates for minimum coverage, so it’s still important to compare quotes.

What is minimum car insurance?

A minimum coverage car insurance policy only provides personal liability insurance, which is required to legally drive in almost every state. Liability insurance covers your legal and financial responsibilities if you cause an accident that results in someone else’s injuries or property damage. In some states, uninsured/underinsured motorist insurance is also required as part of a minimum coverage policy.

If you live in a state with no-fault laws, you may be required to carry personal injury protection (PIP) as part of minimum coverage. This type of car insurance will help cover your medical expenses after an accident, regardless of which driver caused the crash. It will also help pay for lost wages if you have to miss work because of an injury you got in an accident.

Minimum car insurance rates

Minimum coverage car insurance is the cheapest type of coverage available. If you’re wondering, “How much is minimum coverage,” the U.S. national average rate is $735 per year. However, because each state has different minimum requirements, the price you’ll pay for minimum car insurance could be different. You could pay higher or lower rates based on your individual situation, which is why it’s important to compare personalized rate quotes.

How much car insurance do I need?

Every driver has different car insurance needs, but a minimum amount of coverage is required in most states. A minimum coverage policy is the cheapest option, so it can be sufficient for drivers who have a very limited budget for car insurance.

However, minimum coverage may not provide enough protection in the event of a crash. Most drivers can benefit from choosing a full coverage policy, which will cover your vehicle’s repairs after an accident.

If you get into an accident and you have a full coverage policy, your insurance company will pay for a substantial portion of the repair bill. If you have a minimum coverage policy, you have to pay out-of-pocket to get your car fixed after an at-fault accident or collision or non-collision event.

If you can’t afford to pay for your car repairs out-of-pocket, or if you have a new vehicle with a high value, getting a full coverage policy can be a good investment. On the other hand, if your car has a low value, a full coverage policy might not be as beneficial, as the insurance payout would be very small if your car was totaled.

Frequently asked

What is the cheapest car insurance?

Minimum coverage is the cheapest car insurance you can get. However, it also provides the least protection. If you want coverage for car repairs and medical bills, you should upgrade to a full coverage insurance policy.

What is the cheapest company for full coverage car insurance?

There isn’t a single cheapest company for full coverage insurance. The cost of full coverage car insurance is different for every driver based on personal rating factors. Additionally, insurance companies can charge different car insurance rates for full coverage. To find the cheapest company for you, get full coverage quotes from several reputable providers and compare them.

Do I need full coverage car insurance?

Full coverage car insurance is not legally required. However, if you lease or finance your vehicle, many lenders require full coverage as part of your loan or lease agreement.