Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 22, 2020

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Things to Remember...

  • Auto insurance coverage provides a level of financial protection in the event of an accident
  • Auto insurance rates rise and coverages can vary from company to company
  • By far, the most affordable type of auto insurance coverage is liability insurance when cost is the only factor involved
  • Collision auto insurance coverage covers any damages to a driver’s car that result from a collision
  • Comprehensive coverage types cover any damage to an insured car that’s not collision or accident related

Auto insurance coverage provides a level of financial protection in the event of an accident. The different types of coverage available provide protection in different ways.

In total, the three main types of auto insurance coverage are liability, collision, and comprehensive insurance.

As everyone’s situation is different in terms of driving record, financial status and personal priorities, affordability can take on different meanings in different situations.

Ultimately, the most affordable plan for each of the types of auto insurance coverage depends on the level of risk a person is willing to take and the types of protections a person needs to adequately insure against financial or personal ruin.

Enter your ZIP code into our FREE auto insurance comparison tool to find affordable plans for you.

Factors Affecting Affordability

Auto insurance rates rise and coverages can vary from company to company. The auto insurance regulations enacted in each state can also have a bearing on available plan rates and coverage options within a state.

Add to this the range of differences between drivers in terms of:

  • Driving records
  • Types of cars driven and
  • Individual financial concerns.

All of these factors combined determine whether a particular type of coverage is affordable or not.

Drivers with poor driving records may only be able to qualify for high-risk auto insurance coverage. Drivers pay significantly higher premium rates for high-risk plans than for standard plans. When this happens, a person may only be able to afford the bare minimum coverages required by law.

People with families may opt for more expensive coverage plans to ensure the safety and health of their children and spouses. In this case, affordability has more to do with the quality of life than budgetary concerns.

Someone driving an older model car may choose to only cover injury or damages caused to other drivers, while someone with a new car prefers to insure their own car and bodily injuries as well as damage and injury caused to others.

Ultimately, affordability comes across in different ways for different people and different situations.

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Liability Coverage

By far, the most affordable type of auto insurance coverage is liability insurance when cost is the only factor involved. Liability plans also fulfill the minimum coverage protections for most state law requirements. In the event of an accident, these plans pay damage and injury costs for other people affected by a driver’s actions.

Liability coverage plans come in two types: bodily injury liability and property damage liability.

Both types of coverage protect the driver from legal liability even in cases when the accident results from another driver’s actions.

When drivers can only qualify for high-risk insurance coverage, liability protection may be the only affordable option available until their driving records improve.

Some state laws, such as those in Florida and Michigan carry a no-fault insurance provision that only requires drivers to cover their own damage and injury costs in the event of an accident. So, minimum coverage requirements may be all that’s needed to cover a person’s insurance needs in a state that have no-fault insurance laws.

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Collision Coverage

Collision auto insurance coverage covers any damages to a driver’s car that result from a collision. This includes collisions with other cars and other people’s property regardless of whether the driver is at fault or not. It also covers any property damage caused by an accident.

Plan coverages include the costs for repairing or replacing a car if it’s completely totaled. Insurance companies usually only pay for the actual value of the car when a car is totaled.

In terms of affordability, someone who drives an older model car may want to forego purchasing collision coverage since plans only pay towards the value of the car.

On the hand, someone driving a brand new car may consider collision coverage an affordable and necessary option in order to maintain the car’s current value.

People who live in areas where fender benders are common may also want to consider collision coverage on a newer model car.

As people typically rely on their cars for essential transportation needs, maintaining collision coverage provides a way to ensure they always have a car at hand.

Without this coverage, not being able to get to work or get to doctors’ appointments can place considerable strain on a family’s finances and daily living needs.

Comprehensive Coverage

Unlike the protections found in liability and collision insurance coverages, comprehensive coverage types cover any damage to an insured car that’s not collision or accident related.

Situations covered under comprehensive insurance include:

  • Floods
  • Vandalism
  • Fire
  • Hail
  • Wind
  • Theft

The only collision exception under comprehensive coverage involves damages that result from hitting an animal, such as a deer. Of the three main coverage types, comprehensive insurance carries the highest cost when added to liability and/ or collision coverage.

And while the higher cost aspect may make comprehensive coverage seem like the least affordable plan, someone who lives in an area that’s prone to storms or flooding may consider this coverage a necessity.

Coverage plan costs also vary depending on the number of protections included. So, a plan that only covers vandalism or theft would be more affordable than a plan that covers everything.

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Other Considerations

Considering all the factors that impact auto insurance rates and coverage options, it’s always best to compare insurance company plans before deciding.

A little bit of online research can provide all the information needed to make an informed decision.

As state law requirements can change from year to year, staying on top of changes in state requirements can help ensure drivers maintain the levels of coverage needed to ensure adequate protections are in place.

The auto insurance marketplace also experiences frequent changes in rates and coverage options.

This means insurance costs can go up or down depending on how competitive a particular insurance market is. By doing company comparisons on a periodic basis, drivers can make sure they have the most affordable plan for the type of coverage they need.

Do a FREE auto insurance comparison today by entering your ZIP code!