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How much car insurance coverage do I need?

In nearly every state, drivers are required to carry a minimum amount of car insurance. You must carry at least the minimum amount of coverage to register your vehicle and legally drive. However, the amount of coverage your state requires won’t necessarily be enough to fully protect you in the event of an accident.

Before you purchase an auto insurance policy, it’s important to ask the question, “How much car insurance coverage do I need?” In this guide, we’ll explain how much coverage drivers typically need, and who can benefit from choosing a full coverage policy. We’ll also share the average cost of car insurance for minimum coverage and full coverage.

How much car insurance do I need?

Every state has different car insurance requirements. You must meet the state’s requirements to get behind the wheel legally. If you lease or finance your vehicle, you might be required to carry more car insurance coverage than your state mandates.

Minimum car insurance requirements

Most states require drivers to carry a minimum amount of personal liability insurance. Liability insurance covers your legal and financial responsibilities when you cause an accident and someone else gets injured or their property gets damaged. Some states also require drivers to carry uninsured and/or uninsured motorist insurance or personal injury protection (PIP) as part of a minimum coverage policy.

Select your state from the dropdown menu to see its required coverage types and minimum coverage amounts:

Car insurance by state

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Lender requirements

Drivers who lease or finance their vehicles are often required to carry more coverage than the state requires. Typically, lenders require drivers to have a full coverage policy for the duration of their lease or loan agreement. A full coverage policy provides physical damage coverage for the vehicle. This is important to lenders because they have an insurable interest in the vehicle and legally own the car until your loan is paid off or your lease is returned.

Full coverage car insurance

A full coverage car insurance policy is optional for most drivers (unless it’s required by a lender). Full coverage car insurance policies include a bundle of coverages that provide coverage for you and your vehicle. Here are the coverages that are typically found with a full coverage car insurance policy:

  • Liability insurance: A full coverage policy includes liability insurance, and the coverage limits tend to be higher than what the state requires. This gives you more financial protection if you cause an accident.
  • Collision insurance: Collision insurance covers your vehicle’s repairs after an accident, regardless of which driver was responsible. It typically pays out based on your car’s actual cash value (ACV) and has a deductible.
  • Comprehensive insurance: Comprehensive insurance is often called “other-than-collision insurance.” It covers your vehicle’s repairs if there is damage from incidents like falling objects, fires, floods, hail, or vandalism. Comprehensive insurance also covers theft.
  • Medical payments insurance: If you or any of your passengers get injured in a car accident, medical payments insurance provides a small amount of coverage for your medical bills.

Full coverage vs. minimum coverage car insurance

If you’re wondering, “How much auto insurance coverage do I need,” you can start by comparing a minimum coverage policy and a full coverage policy. A minimum coverage policy is required by law in almost every state, and it’s also the cheapest policy you can get. However, minimum coverage insurance provides the least amount of coverage, and no coverage for your own property in an accident you cause or a non-collision event.

A full coverage policy is optional for most drivers, and it provides significantly more protection than minimum coverage. A full coverage policy will help pay for your vehicle repairs after a collision or non-collision incident, so you don’t have to pay entirely out-of-pocket. Because full coverage is more comprehensive, the premiums are more expensive than minimum coverage.

Most drivers can benefit from choosing a full coverage policy, even if you own your vehicle outright. Although the premiums are higher, having full coverage will save you money if you need to file a physical damage claim. If your vehicle gets damaged and you only have minimum coverage, you must pay for your vehicle repairs out-of-pocket. If your car is totaled, you won’t receive any money to replace it.

How coverage level impacts cost of car insurance

The amount of coverage you have directly impacts your car insurance rate. Minimum coverage insurance is usually much cheaper than full coverage. Based on the rate data we collected, the average minimum coverage premium is $735 per year and the average full coverage premium is $1,824 per year.

In addition to the type of coverage you choose, the amount of coverage you select will also affect your rate. However, lowering your coverage limits doesn’t always have a dramatic impact on the cost of your policy.

For example, we found that a full coverage policy with liability coverage limits of 100/300/100 and a $500 deductible costs $1,824 per year, on average. On the other hand, a full coverage policy with lower liability limits (50/100/50) and a $500 deductible only costs about $10 less per year.

Frequently asked

What is the best coverage for car insurance?

There’s no “best” coverage for car insurance, but insurance agents generally recommend that drivers purchase a full coverage policy. Full coverage provides much better protection than minimum coverage. To find the most affordable full coverage insurance for your situation, it’s a good idea to get quotes from several insurers. You can take our short quiz to see how much you can expect to pay for car insurance.

What is the difference between full coverage and liability car insurance?

Full coverage and liability-only car insurance differ in a few ways. A full coverage insurance policy will cover your vehicle’s repairs after an accident, even if you were responsible. It also pays for some of your medical bills if you get injured in a crash. A liability car insurance policy only covers another person’s losses if you cause an accident. Minimum coverage insurance is also cheaper than full coverage.

Is $100 a month too much for car insurance?

There’s no monthly car insurance payment that is considered “too much.” Car insurance rates are personalized to each driver based on factors like location, age, credit score, claim history, vehicle type, and other things. The type of coverage, amount of coverage, and your insurance company can also impact your rate. For reference, the average minimum coverage policy costs about $61 per month and the average full coverage policy costs $152 per month. However, you might pay more or less for car insurance based on your individual situation.

About Rate Retriever

At Rate Retriever, our mission is to make the way you shop for insurance transparent and fair through user-friendly tools that respect your privacy and deliver reliable, comprehensive results 

So we took everything we hated about comparing insurance quotes online – the spam, the long questionnaires, the limited choices, the inaccuracy of quote prices – and threw it out the window, favoring a short form that more accurately estimates what you’ll pay at each of the top insurance providers near you. 

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