There is often confusion between different types of auto insurance policies. There are some coverages that are required by state laws, while other coverages aren’t required but come with most auto insurance policies. Knowing the distinct difference between a “basic” auto insurance policy and “full coverage” can help you save money and not be surprised when it comes time to file a claim.
State Required Auto Insurance
Car insurance requirements vary depending on what state you’re in. All states require a certain amount of liability car insurance, however. Be sure to check your state’s car insurance requirements and consider whether you need higher limits of liability. All car insurance policies should come with these minimum coverages, no matter the provider.
In Tennessee, all drivers must carry at least:
- $25,000 in bodily injury liability per person
- $50,000 in bodily injury liability per accident
- $15,000 in property damage liability
- $25,000 in uninsured motorist bodily injury per person
- $50,000 in uninsured motorist bodily injury per accident
Bodily injury liability offers compensation for injuries the driver may cause someone else while operating the vehicle while property damage liability covers damage the driver may cause to someone else’s property or belongings. These liability coverages can also cover the driver’s legal fees if a victim decides to sue for injury or damage.
Along with bodily injury and property damage liability, there are a few coverages that most car insurance policies offer. These are also included in full coverage policies.
- Comprehensive Coverage: Comprehensive coverage provides compensation for loss of or damage to the insured vehicle due to fire, lightning, smoke, wind, hail, theft, vandalism and other incidents not involving collision.
- Collision Coverage: Collision coverage provides compensation for loss of or damage to the insured vehicle due to collision with another vehicle or object.
- Medical Payments Coverage: This coverage is only available in some states, while others offer personal injury protection. Both cover medical payments after an accident for the driver and their passengers, but personal injury protection also covers lost wages for the driver and their passengers no matter who is at-fault for the accident.
- Uninsured/Underinsured Motorist: This coverage is required in some states, but not most. It covers damages caused by an accident involving a driver not carrying insurance.
What is Full Coverage Car Insurance?
Contrary to popular belief, “full coverage” is not a set policy. Instead, full coverage auto insurance is simply the highest amount of coverage you can have on your vehicle. This type of policy provides a range of coverages, including those listed above. Full coverage auto insurance policies often also cover roadside assistance, which helps with trip interruptions such as a flat tire, running out of gas, towing, and more.
Full coverage car insurance can be expensive, but it also helps prevent hefty lawsuits and damages hitting your pocket directly.
How Much is Basic Car Insurance?
Basic liability alone is relatively affordable. The average cost of state-required auto insurance is around $606 a year (about $50.5 a month). The average cost for full coverage auto insurance in the U.S. is closer to $1,437 a year (about $119.75 a month). Keep in mind that other factors influence car insurance rates aside from coverage limits. Location, age, gender, driving record, credit score and the value of the vehicle can all have an affect on car insurance premiums. In Tennessee, for example, the average cost for basic liability requirements is around $426 a year (about $35.5 a month) while the average cost of full coverage in the same state is about $1,170 a year (around $97.5 a month).
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