What is the suggested auto insurance coverage for most cars?

If you're financing your vehicle, lenders will require you to maintain full coverage until the loan is paid off. The average cost of full coverage auto insurance is $79.58/mo.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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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 ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 25, 2021

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Things to Remember...

  • Understanding how auto insurance coverage is priced and calculated can save money and provide the best coverage possible for the price
  • The amount that you owe or don’t owe on your vehicle will determine how much coverage you need to get on your vehicle
  • Make sure that you get quotes from at least 3 different insurance companies when searching for the best coverage
  • Check your state’s regulations so that you are getting the appropriate level of coverage

When looking at car insurance, people typically seek the lowest price possible for the best auto insurance. There are many factors that go into an insurance premium price. The level of coverage provided varies by the way the policy is designed.

Depending on several factors, the recommended coverage level for a vehicle varies significantly. Enter your ZIP code into our FREE auto insurance comparison tool to get rates calculated for you right now.

Knowing the factors that affect these rates and the coverage that goes with them will let you get great auto insurance rates.

Understanding how auto insurance coverage is priced and calculated can save money and provide the best coverage possible for the price.

Vehicle Age

The age of a vehicle works into the calculations for the coverage required. An older vehicle may only require collision, protecting a driver from hitting another car. A newer car may require full coverage, or carry a higher deductible.

A classic car or antique will have a special coverage plan designed to protect the car from loss or theft. The age of the vehicle also indicates safety technology available in the car.

Newer vehicles carry features that reduce the costs of coverage, such as brighter headlights, safety bars, multiple airbags, computer detection systems, improve antilock braking systems and more responsive steering.

These advances in engineering help reduce the likelihood of an accident, helping to reduce the risks associated with vehicle insurance.

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Paid in Full vs. Financed Vehicles

When buying a vehicle, how it is purchased matters. For a vehicle that requires a loan, the bank mandates finding full coverage auto insurance.

Full coverage covers the vehicles for both drivers from damage. These policies cost more for the driver of the financed vehicle.

Banks require this coverage as the loan is based on the value of the asset. In this case, the asset is the car, and the value of the car must be protected.

For a vehicle that is paid in full, the coverage changes. A vehicle may be paid in full at the time of purchase, or once the loan has been paid off completely. At this time, states require a specific level of insurance. Usually, this insurance is just collision.

Collision insurance alone costs less than full coverage, as the only vehicle covered is the other driver’s vehicle. With collision insurance alone, the driver of the vehicle is responsible for their own repair bills to their car.


State Regulations

Each state has its own requirements for the insurance one must carry for their vehicle. The states have minimum requirements for new vehicles, used vehicles, and antique vehicles.

The state requirements for a minimum coverage amount are decided by the legislature.

Any company wishing to insure a vehicle within state borders must comply with the regulations put in place. Failure to do so results in the loss of the companies license in the state.

For a driver, the state minimums can alter the prices. While most drivers cannot move to a cheaper state just for car insurance, drivers can find ways to save money on auto insurance.

By choosing vehicles and coverage packages that are the lowest price, a drive can reduce their insurance bills while being in compliance with state minimums.

Comparison Shopping

Each company offers rates that are the best offering available. The larger a company, the lower the price offered, though the more claims that the company will process.

The state where one lives makes a difference, beyond state-level minimums. Weather, drivers on the road, the number of accidents in a state, the average cost of a vehicle all play a part in determining how an insurer sees the risk in a policy.

For a state with weather hazards, such as snow, ice, or hail, the insurance risks increase. Coverage in these states may be higher than more temperate states, based simply on the weather in the area.

Drivers are more likely to have an accident when the weather is not sunny and clear year-round. States that experience heavy winters, particularly heavily populated states, are at the highest risk for accidents.

The number of vehicles on the road also plays a role in the coverage requirement. The more vehicles on the road, the more likely the chances of an accident.

States with large populations, or even cities within sparsely populated states, are more likely to be higher than the low-cost auto insurance coverage you want.

The odds of a driver losing control of their car, or looking away for a moment, increases with more people on the road. Insurance companies understand this and build a rate around the area where one lives, works, and drives.

A national company will offer lower rates than a smaller, local company. A small insurance company is not necessarily a cheap auto insurance company to find.

The reason behind this is the amount of money flowing in and out of the company. A small insurance company will only collect insurance premiums from clients and will be required to pay out in accordance with the policy.

If the company is small, there are not as many policyholders paying into the company, meaning money must come from another source. For a larger company, money can come from the policyholders in many states.

Operating in states where payouts is rare helps offset the costs of riskier states. This reduction of risk is passed along to the drivers through reduced rates.

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Auto Insurance Coverage Suggestions

When it comes to making a recommendation for the level of insurance one should carry, it can be quite difficult. When driving a financed vehicle, the bank decides what is needed.

When driving a paid off vehicle, the state decides what is needed. Drivers are able to choose any policy above the minimums and requirements they deem appropriate.

For a family on a budget, the suggested coverage would be the lowest price possible that meets state requirements.

For someone with a car they want to protect, full coverage may be an option if they can afford the premiums. A business owner may choose a combination of the two, separate from their business insurance policies.

The right insurance is what fits a budget, the law, and one’s needs. Only the person making the policy purchase can truly decide how much risk they are willing to assume when it involves their auto insurance.

Use our FREE quote comparison tool to find auto insurance rates today!


  1. https://www.iii.org/article/what-determines-price-my-auto-insurance-policy
  2. https://www.goodfinancialcents.com/best-auto-insurance-companies/

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