What's the difference between minimum and full coverage?

A minimum car insurance policy is one where the coverage limits are only enough to meet the state requirements for a car to be legally driven on public roads. This usually refers to bodily injury and property damage liability, but some coverage limits vary based on state law. For example, Florida car insurance law only required property damage and personal injury protection (PIP). While there isn't an industry standard definition for full coverage, a full coverage policy typically includes both collision and comprehensive coverage. The main difference between the two is that minimum coverage does not include coverage to help pay for damage to your vehicle, while full coverage does.

What limits should my car insurance policy have?

You want to have liability limits that are both affordable and provide as much financial protection as possible. The exact account will be different for everyone. Drivers with flashy cars are a target for insurance fraudsters. Whether you are a high-net-worth individual or drive a luxury car, higher liability limits of 100/300/50 can offer better financial protection than state minimums. People who own property, stocks or businesses may want to inquire about additional coverage with an umbrella policy. Keep in mind that it isn't always about how much money you have now, but what you can earn in the future. While young drivers in college might be renters with part-time jobs, they may have enormous earning potential that can be lost due to an at-fault accident with insufficient liability coverage if their wages are garnished. Work with your insurance agent to understand the best limits for your situation.

Does your car insurance go down after your car is paid off?

Although paying off your car is an exciting milestone, the act itself does not affect your car insurance premiums. However, owning your vehicle outright gives you the added flexibility of choosing your coverage and coverage limits. Lending institutions generally require drivers who finance their vehicles to carry comprehensive and collision insurance. You may also have a limit on how high of a deductible you can select. When you own your car, whether you add these coverage types becomes solely up to you.It may be tempting to remove comprehensive and collision coverage and opt for a more affordable liability-only policy, but most insurance professionals recommend keeping full coverage in place if you can afford to do so. Collision and comprehensive coverage may save you from extensive out-of-pocket costs if your vehicle is damaged in an accident or other covered event.

Does car insurance decrease every year?

Car insurance rates usually fluctuate each renewal based on changes in several factors, most of which are out of your control. Insurance is a shared risk, meaning you share in the risk of the other drivers on the road. Even if your driving has stayed the same, factors such as the cost of vehicle repairs and medical expenses tend to increase every year. When this happens or your insurance company has had substantial losses from a catastrophic event, your rates may increase. However, there are some years when insurance companies pay less in claims than anticipated due to better weather or improved driving within a certain area. That is when you may see your rates decrease. All this to say, no, you usually cannot expect your rate to go down every year, but it might not go up every year either. There are times when the rate can decrease a few years in a row. Typically this happens to drivers who are 16 or 17 years old. As they gain driving experience, their insurance rates usually decrease a little each year until they move from the high-risk youthful driver risk pool into the standard risk pool. Also, drivers with surcharges on their policies usually see their rates decrease slightly over three years until the surcharge falls off the policy.

Which car insurance company is the cheapest?

According to our research, Auto-Owners, USAA, Geico, Amica and Erie rank as some of the top cheap car insurance companies on average. However, car insurance isn't one size fits all. Factors like driving record, location, annual mileage, driving experience and coverage needs mean that different drivers may receive different quotes for the same coverage from the same carrier. Additionally, the cheapest carrier for a driver that wants to purchase many endorsements may be different from the cheapest company for a driver seeking liability-only coverage. Obtaining car insurance estimates from several providers and comparing coverage types and benefits is usually the best way to find the provider that meets your desired coverage and budget requirements.

How can I get cheaper car insurance?

Saving money on car insurance may begin before you even purchase a vehicle. Comparing quotes from different carriers for the makes and models of cars you are interested in might give you an idea of what vehicle type may help you save on your premium. You may find cheaper insurance for vehicles you already own by taking advantage of discounts and telematics programs. Another option is to review your policy and ensure you still need every coverage type you have. If you have more than one car or access to another vehicle, you may not need to pay for rental reimbursement coverage. Additionally, depending on your state, maintaining a clean driving record and improving your credit score may also bring down your premium over time.

What's the difference between minimum and full coverage?

Every state has minimum coverage requirements for car insurance. This usually refers to bodily injury and property damage liability, but some may also require personal injury protection (PIP) or uninsured motorist coverage. While buying minimum coverage may result in a cheaper premium, it also means drivers may have minimal financial protection in an accident. For this reason, insurance professionals generally recommend considering full coverage car insurance. While there isn’t an industry standard for full coverage, it usually means higher liability limits with collision and comprehensive coverage to insure your vehicle, which may be required by your lender if your vehicle is leased or financed. You may also be able to add medical payments coverage for you and any passengers in your vehicle, as well as towing and rental reimbursement on each vehicle. These additional coverage may come with an added cost, but it does offer more financial protection in various claims scenarios.

Is full coverage insurance worth it?

While full coverage car insurance doesn’t have a set definition, it typically refers to car insurance that has coverage options beyond the state minimum limits and provides protection for yourself and your vehicle. Most full coverage car insurance will include comprehensive coverage and collision coverage to insure the vehicle. Having this extra coverage does mean that your car insurance may be more expensive than if you were only carrying the minimum liability limits, but the benefit is that it may decrease your out-of-pocket costs in the event of a covered accident.

Does your car insurance go down after your car is paid off?

Whether or not your car is financed is not factored into your car insurance premium. Instead, because your lender may require collision and comprehensive coverage, including these coverage options in your policy will affect your cost. Once you pay off your loan, you may choose to remove full coverage and have a liability-only policy, which would likely reduce your premium. However, consider consulting your insurance agent first. Full coverage can be a good idea even if you own your car outright to offer more robust financial protection.

How much does car insurance cost for a beginner?

Teenage drivers have crash rates that are almost four times higher than more experienced drivers. To compensate for this risk, car insurance companies typically charge more for teen drivers. In fact, teens are one of the most expensive age groups to insure. Average annual full coverage car insurance premium for 16-year-old drivers Average annual full coverage premium Percentage above national average 2021 National average $1,771 0% 16-year-old $3,852 118%

Does car insurance decrease every year?

Car insurance rates, on average, steadily decrease as you age, until about the age of 70, when they slowly begin to increase again. However, your car insurance may not decrease every year, since car insurance rates are based on several factors, including your geographic location, vehicle make and model and driving history. If you’ve been involved in an accident or been charged with a DUI, you may see major premium increases when you renew your policy. Even if your personal characteristics and policy details don’t change, your premium may fluctuate depending on the number of claims in your area. Insurers file new rates with the departments of insurance in the states they serve every year, so your premium may be subject to increases or decreases that reflect these new rates.

Average cost of car insurance in May 2022

How much is car insurance?

According to Bankrate’s extensive research, the average cost of car insurance in the U.S. is $2,314 per year. Minimum coverage, on the other hand, has an average annual cost of $644. However, car insurance is like a fingerprint. Although your circumstances may seem similar, your personalized rating factors will cause your premium to vary from that of friends, family and the national average. Still, knowing the average cost of car insurance might give you the information you need to ensure you’re not overpaying for this necessary financial protection.

Key takeaways:

Full coverage car insurance costs an average of $2,314 per year, while minimum coverage is $644 per year. On a monthly basis, full coverage averages $193, with minimum coverage averaging $54 per month.
Geico, Erie and USAA offer some of the cheapest full coverage car insurance. Auto-Owners, Geico and USAA offer the cheapest minimum coverage car insurance among companies we analyzed, on average.
Men tend to pay more than women for car insurance, on average, since data show they are more likely to engage in riskier driving behaviors.
Some vehicles experience higher average insurance premiums than others because of MSRPs, safety features, repair costs, parts availability and other variable characteristics.

Why you can trust Bankrate

Read our full methodology

Car insurance premiums are rising. If you’ve gotten your renewal, you may have noticed that your rates are more expensive in 2024. We’re here to help. Bankrate has been a trusted source in personal finance for nearly 50 years. We’ve evolved into a consumer-driven leading voice in the financial services space and help millions of readers make smarter financial decisions every year. To find the average cost of car insurance, our insurance editorial team evaluated dozens of carriers based on a variety of factors, including car insurance rates by state, insurance carrier, vehicle manufacturer, driving record and driver’s age and gender. As we forge ahead in this uncertain economy, Bankrate is with you every step of the way.

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How much does car insurance cost by state?

On average, car insurance costs around $2,314 per year for full coverage and $644 per year for minimum coverage. However, when determining “how much does car insurance cost” in a specific area, the answer can vary depending on a variety of factors. The state where you live can influence accidents and claim reporting frequency, and even cost of labor and parts, which impact insurance premiums.

Average car insurance cost by state in 2024

The average cost of car insurance varies between states for many reasons, and the coverage levels you choose play a significant role. Here, we cover the two most common coverage limits for a holistic view of average rates — full coverage and minimum coverage. It is typical for drivers who have leases or loans to have comprehensive and collision coverage, along with higher liability limits of 100/300/50, and for drivers of older cars to have liability-only limits at the state-required amounts.

Keep in mind that there are various degrees of coverage between these two options. Even if you are driving an older vehicle, liability coverage helps protect your financial future if you are found at fault for an accident. And insurance experts agree that carrying more liability coverage offers better financial protection. It’s a good idea to speak with a licensed insurance agent to better understand the limits that will work best for you.

Hawaii

Avg. annual full coverage premium

$1,650