What Is the Cheapest Auto Insurance Coverage?

The cheapest auto insurance policy option is Liability only coverage, which complies with state minimum requirements and allows people to drive legally. When people don’t need to insure their own automobile and/or financially just are able to spare money for the lowest possible coverage, they can go with this option. If motorists can spare some more money but still want to spend as low as possible for the coverage they like, they need to shop hard to find the most competitive insurer to achieve this goal.

Along with budgetary constraints, the wish to buy the cheapest car insurance policy can stem from believing that is all needed. Motorists should look at all options before settling for something inferior just because of its price. It is likely that they can find a great package with Collision and Comprehensive included at a reasonable price. Otherwise, they may be giving up valuable protection too easily.

The Cheapest Policy Option

Where you live determines the basic requirements and premiums. It is compulsory to comply with these rules in every state, except Delaware and Virginia. Delaware still requires you to prove financial responsibility and Virginia requires you to pay a $500 Uninsured Motorist Vehicle Fee (a figure that could in fact get you a basic plan in there, providing you are not high risk).

Generally, liability consists of three main coverage with a fourth requirement in ‘no fault’ states. The three requirements in all are generally written in the format of 25/50/25, where it equates:

  • $25,000 for a single injury
  • $50,000 for multiple injuries
  • $25,000 for property damage

These provisions are for third parties, either in your vehicle or another or pedestrians but do not include yourself or your own property. In a no fault state, of which there are 12, the fourth requirement is Personal Injury Protection, which is for your own and family members’ medical expenses.

Average premium costs for minimum coverage range from $284.03 per year in the cheapest state of North Dakota to $882.10 in the most expensive of New Jersey, according to the National Association of Insurance Commissioners latest report. However, NAIC is several years behind in publishing their findings and those figures are likely to be higher now. You could take this range as the absolute lowest liability automobile insurance premium. However you would be taking too many chances with this choice.

You May Need More than the Minimum

The first risk is from 12.6% uninsured motorists nationally, with a range between 3.9% in Massachusetts and 25.9% in Oklahoma. A typical driver can expect 3 – 4 auto accidents in a lifetime and there is a high chance at least one of those accidents will involve one of those drivers. In an at fault system, this means you would have to recover the costs of the accident directly from the individual.

If they have no policy in force, it stands to reason they also would not have the money to compensate for these expenses you suffered. Now, you can arrange Uninsured Motorist Coverage so that your own carrier pays for them. The problem is that you can only have it for the limits you provide others. In other words, you cannot increase the limits that protect you without increasing the safety net you provide to third parties.

If you were to cause an accident in an at fault state and had auto insurance with the minimum Liability limits, with the average claims ranging between $15,000 to $40,000, without pain and suffering claims in a lawsuit; the minimum often will not compensate claims against you fully. Any amount over limits will need to be paid out of pocket. Most people don’t have thousands of dollars in readily available savings to meet these costs.

Average Costs for the Cheapest and Full Coverage

Liability only plans are obviously the most economical to buy and cost on average $420 which is $35 per month, if you are lucky enough to live in an affordable premium zip code. However, drivers in places with expensive rates like Michigan pay on average $1,130 per annum for the cheapest vehicle insurance coverage and it is $94 a month.

On the other hand, lucky drivers can get full coverage for around $900 or $75 a month in several jurisdictions with the lowest automobile insurance rates. If it is on the other end of the spectrum you would be facing quotes as high as $2,700 or $225 a month for it.

But that is on the extreme end. A median liability policy cost in the US is about $684 ($57 per month) and the same for full coverage is $1,325 ($110).

The fact is that these figures may not mean much to you because the premium you need to pay can be a lot more or less. There are so many factors that affect costs and quite a few of them unique to you. It is good to know these median figures. But the best option is to do a thorough car insurance comparison shopping online if you want to find out what is the most competitive quote for you.

You should always get quotes for a level of protection you are comfortable with even if you want to get the lowest priced automobile insurance policy because you are concerned about its affordability. We can confirm that the gap can be very narrow between those two options at a few locations in the country. On the other hand, the protections afforded with the latter are pretty distinguishable, as the former doesn’t include any losses of the policyholder.

The premium difference between a Liability-only vehicle insurance and a typically sold plan was just over $2 per day in the most expensive state of New Jersey. If you ensure you get the best discounts available as well as the most competitive quotes you could potentially get a full policy that fits within the budget and saves you from a future financial hardship.

You should always keep personal circumstances in mind to make the best call. An older person living somewhere in the quiet, not going anywhere far and has a clunker of a car may not be worried much about these things. However, you may stand to lose a lot more than him/her if you are going places with a nice car, house and decent income to safeguard.