If you want to buy the right car insurance for your situation, you need to understand what each type of coverage handles.
- Liability insurance protects you when your car is involved in an accident and you are legally responsible for causing it.
- Collision and comprehensive insurance will cover the repair or replacement cost of your car if you are at-fault in an accident. It also covers theft, fire or other perils, minus your deductible.
- Gap insurance will protect you in the event of a total loss. If your car is totaled and it's worth less than what you owe, gap coverage pays off the difference.
- Uninsured motorist covers your medical expenses if you are involved in an accident with a driver who is uninsured.
- Personal injury protection and medical payments are optional coverage that you can purchase to help cover the cost of treating injuries of you, authorized driver and passengers' in an accident.
Liability insurance
Liability insurance stands between you and a lawsuit when you're at fault in an accident.
No house and little or no savings?
We recommend you purchase at least $25,000 per person/$50,000 per accident bodily injury coverage and at least $25,000 for property damage (usually expressed as 25/50/25). Some states require less. However, less coverage will rarely cover all the bills.
California, for example, requires just $5,000 for property damage liability, and most cars are worth more than that. You’re responsible for anything left over. But if you really can't afford anything but bare-bones coverage, your state minimum liability requirements will at least allow you to drive legally.
Own a house and have some savings? Leased your car? The more liability insurance you buy, the cheaper it gets. You’ll find that moving up to 50/100/50 for bodily injury and property damage coverage costs only a few dollars more a month. If you lease a car, you’ll be required to carry even higher levels, usually 100/300/50. And to be confident you are sufficiently covered, Insurance.com Senior Consumer Analyst Penny Gusner recommends you get 100/300/100.
Consider the following, based on Insurance.com’s analysis of rates from up to six major insurers for nearly all ZIP codes:
- The nationwide average cost for state minimum liability coverage is $526
- Increasing that coverage to $50,000/$100,000/$50,000 averages only $561. So, you only pay another $35 a year by increasing your coverage.
- If you increase that to $100,000/$300,000/$100,000 with comprehensive and collision and a $500 deductible, that average goes up to $1,350, which is $824 more per year or $69 per month.
If a teen driver is on your policy or if you have large investments, such as multiple homes, buy the highest limits available from your carrier, usually 250/500/100. Consider an umbrella liability policy on top of that if your net worth exceeds the highest available liability limits.
To give you an idea of how much common coverage levels cost, see our average yearly rate table below:
| State | State minimum | Liability 50/100/50 | 100/300/100 |
|---|---|---|---|
| Alaska | $318 | $323 | $1,109 |
| Alabama | $419 | $432 | $1,299 |
| Arkansas | $397 | $416 | $1,370 |
| Arizona | $496 | $573 | $1,356 |
| California | $491 | $592 | $1,518 |
| Colorado | $506 | $544 | $1,404 |
| Connecticut | $761 | $868 | $1,771 |
| DC | $745 | $809 | $1,723 |
| Delaware | $805 | $904 | $1,646 |
| Florida | $884 | $930 | $1,823 |
| Georgia | $532 | $577 | $1,340 |
| Hawaii | $555 | $609 | $1,458 |
| Iowa | $294 | $323 | $1,015 |
| Idaho | $319 | $343 | $941 |
| Illinois | $383 | $403 | $1,004 |
| Indiana | $400 | $424 | $964 |
| Kansas | $397 | $427 | $1,242 |
| Kentucky | $745 | $793 | $1,752 |
| Louisiana | $705 | $831 | $2,190 |
| Massachusetts | $539 | $609 | $1,191 |
| Maryland | $710 | $748 | $1,390 |
| Maine | $359 | $364 | $925 |
| Michigan | $2,012 | $1,649 | $2,484 |
| Minnesota | $579 | $575 | $1,187 |
| Missouri | $409 | $457 | $1,154 |
| Mississippi | $398 | $425 | $1,323 |
| Montana | $323 | $356 | $1,224 |
| North Carolina | $347 | $383 | $960 |
| North Dakota | $363 | $372 | $1,315 |
| Nebraska | $329 | $344 | $1,113 |
| New Hampshire | $485 | $508 | $1,101 |
| New Jersey | $677 | $779 | $1,346 |
| New Mexico | $424 | $445 | $1,253 |
| Nevada | $623 | $768 | $1,746 |
| New York | $812 | $879 | $1,759 |
| Ohio | $383 | $381 | $952 |
| Oklahoma | $444 | $461 | $1,643 |
| Oregon | $690 | $702 | $1,264 |
| Pennsylvania | $480 | $526 | $1,522 |
| Rhode Island | $751 | $876 | $1,688 |
| South Carolina | $484 | $525 | $1,260 |
| South Dakota | $267 | $290 | $1,059 |
| Tennessee | $404 | $430 | $1,214 |
| Texas | $465 | $488 | $1,300 |
| Utah | $531 | $545 | $1,199 |
| Virginia | $372 | $409 | $972 |
| Vermont | $337 | $350 | $963 |
| Washington | $466 | $503 | $1,191 |
| Wisconsin | $373 | $415 | $1,351 |
| West Virginia | $493 | $545 | $1,375 |
| Wyoming | $339 | $360 | $1,494 |
Methodology:
Insurance.com commissioned Quadrant Information Systems to field rates from up to six major insurers in nearly every ZIP code of the country for three coverage levels. We’ve averaged rates here for state minimum liability limits and for $50,000 per person injured in an accident; up to $100,000 per accident, with $50,000 in property damage and for $100/$300/$100 with a $500 deductible, by state, for the driver profile of a 40-year-old male, 2016 Honda Accord, with good credit and no accidents.
Comprehensive and collision
Collision and comprehensive pay to repair or replace your car after an at-fault accident, theft, fire or other covered peril, minus your deductible.
If you have a loan or lease your vehicle, your lender or leasing company will require you to buy collision and comprehensive.
If you own the car outright, the decision to drop comprehensive and collision is yours alone.
More than 90% of owners keep comp and collision on cars less than eight years old; that drops to less than 50% at 12 years old. We recommend you drop comp and collision when you would no longer make a major mechanical repair, such as a new engine or transmission, getting rid of the car instead, but there are many different rules of thumb.
Deductibles can range from $0 to $2,500, but most drivers choose $500, an amount we recommend. A higher deductible may save you money, but it should never exceed an amount you can pay easily. Your car won’t be repaired until you’ve kicked in your share.
You typically can't buy collision coverage without also buying comprehensive. You may be able to buy comprehensive coverage by itself -- a good idea if you live in a theft -- or disaster-prone area and drive an older car.
The average cost for collision per year is $526, comprehensive is $192, according to rate analysis by Insurance.com.
Gap insurance
Gap insurance pays off your loan if your car is totaled and you owe more than it is worth.
You can buy gap insurance (or loan-lease payoff coverage) through your lender. It’s also available through stand-alone gap providers and many insurance companies. It's typically cheapest through your insurance company, though not all offer it. The increase in your rate for adding gap coverage is just three percent, or $41, a year, Insurance.com rate data show.
You must buy comprehensive and collision coverage to also buy gap insurance. The car must be a total loss, and you must pay your deductible before gap insurance will pay the difference on the loan.
Once your car is worth more than you owe on it, gap insurance is pointless. We recommend you buy gap insurance if you have a loan longer than 48 months or made a down payment of less than 20%.
Uninsured motorist
Uninsured motorist bodily injury -- it’s usually called simply uninsured motorist -- pays your medical expenses if you are injured by an uninsured driver. Even if you have health insurance that might pay for your hospital bills, uninsured motorist would pay the bills for your passengers who aren’t covered by health insurance. It also can cover lost wages and pain and suffering.
Uninsured motorist property damage pays for repairing damage to your car if you are hit by an uninsured motorist. If you also carry collision, it will pay your deductible. If you don’t have collision, it will pay some predetermined amount toward your repairs -- it can vary by state, from as much as $25,000 to as little as $3,500 – and sometimes has a deductible attached. It does not cover hit-and-run accident damage.
Some states require one or both of these coverages. See states that require it using the link below.
Typically your uninsured motorist bodily injury coverage limits cannot be greater than the amount of liability insurance you have.
We recommend buying uninsured motorist coverage, both bodily injury and property damage. The cost is about 5% of you current insurance premium. We strongly recommend buying bodily injury matching your liability coverage if you're not covered by health insurance. We also recommend buying property damage if you do not carry collision coverage.
Personal injury protection and medical payments
Personal injury protection and medical payments pay for the costs of treating injuries that you, authorized drivers or your passengers suffer in a car accident when you are at fault.
Personal injury protection is required in the 12 “no-fault” states where each driver’s insurance coverage pays for his own injuries no matter who is to blame for the accident. Delaware and Oregon also require it.
Medical payments coverage is mandatory only in Maine and for insured drivers in New Hampshire, where insurance coverage is not compulsory.
If personal injury protection or medical payments is optional in your state and you have health insurance already, we recommend that you buy enough to cover your deductible. If you do not have health insurance, we strongly recommend you buy at least $10,000 in personal injury protection or $5,000 in medical payments coverage.
