The type and amount of coverage you carry is the biggest decision you make when buying car insurance. Liability-only averages $56/mo while premium full coverage runs $275/mo. Here is what each type includes, costs, and when you need it.
| Coverage Tier | Monthly | Annual |
|---|---|---|
| Liability Only (State Minimum) | $56/mo | $672/yr |
| Basic (Liability + Uninsured Motorist) | $68/mo | $816/yr |
| Standard Full Coverage | $208/mo | $2,496/yr |
| Premium / Comprehensive | $275/mo | $3,300/yr |
Best for: Drivers with older, paid-off vehicles worth less than $4,000 who want the lowest possible premium.
Best for: Budget-conscious drivers who want protection against uninsured drivers (about 1 in 8 drivers nationally is uninsured).
Best for: Most drivers. Required by lenders on financed or leased vehicles. Recommended for any car worth more than $4,000.
Best for: Drivers with newer or high-value vehicles, those who want maximum protection, or anyone who wants peace of mind with low deductibles.
Pays for injuries and property damage you cause to others in an at-fault accident. Every state except New Hampshire requires some form of liability coverage.
Pays to repair or replace your vehicle after a crash, regardless of who is at fault. You pay your deductible first, then the insurer covers the rest up to your car's actual cash value.
Covers damage to your vehicle from events other than collisions: theft, vandalism, weather (hail, floods, hurricanes), fire, falling objects, and animal strikes.
Full coverage is not a single product. It is industry shorthand for liability + collision + comprehensive bundled together. When a lender requires "full coverage," they mean this combination.
Covers the difference between what you owe on your loan and your car's actual cash value if it is totaled. Essential for new cars that depreciate quickly or if you made a small down payment.
Pays for a rental car while your vehicle is being repaired after a covered claim. Typically covers $30-$50/day for up to 30 days.
Covers towing, flat tire changes, jump starts, lockout service, and fuel delivery. Cheaper than AAA for drivers who only need basic roadside help.
Protects you if you are hit by a driver with no insurance or insufficient coverage. About 12% of US drivers are uninsured. Required in some states, optional but recommended in others.
Covers your medical bills and lost wages regardless of fault. Required in no-fault states (FL, MI, NJ, NY, etc.). Limits and requirements vary by state.
Covers medical expenses for you and your passengers after an accident, regardless of fault. More limited than PIP but available in more states.
If your car is financed or leased: You need full coverage (liability + collision + comprehensive). Your lender requires it. Consider adding gap insurance if you owe more than the car is worth.
If your car is paid off and worth over $4,000: Full coverage is still recommended. The cost of collision and comprehensive coverage is modest relative to the protection it provides against a total loss.
If your car is worth less than $4,000: Liability-only may be the most cost-effective choice. Use the 10% rule: if your annual collision premium exceeds 10% of the car's value, consider dropping collision coverage.
Regardless of vehicle value: Always carry enough liability coverage to protect your assets. If your net worth exceeds the state minimum liability limits, increase them. A 100/300/100 policy is a reasonable baseline for most drivers.