Insurance Curator Choosing the right auto insurance plan is one of the most important financial decisions for U.S. drivers. This guide walks you through full coverage vs. liability, real cost comparisons, how state rules and location affect premiums, and practical steps to pick the best policy for your car and budget.
Quick summary
- Liability-only: Pays others’ medical bills and property damage when you're at fault. Cheapest option and meets minimum legal requirements in many states.
- Full coverage: Combines liability with collision and comprehensive to cover your vehicle’s repairs or replacement. Higher cost but essential for financed, leased, or newer cars.
Sources: Insurance Information Institute (types of auto insurance), NerdWallet (state cost data), Insurify (company pricing averages).
(See Sources at the end for links.)
Understanding the difference: Full Coverage vs Liability
What liability insurance covers
- Bodily injury liability: Medical and legal costs for others if you cause an accident.
- Property damage liability: Repairs for another person’s vehicle or property.
- Meets state minimums (varies by state). If you only want the legal minimum, liability is the option.
What full coverage includes
- Liability (same as above)
- Collision: Pays to repair or replace your car after an accident, regardless of who’s at fault (minus deductible).
- Comprehensive: Covers non-collision losses—theft, fire, vandalism, natural disasters.
- Often required by lenders and leasing companies.
Cost comparison (national averages and company examples)
Average national costs vary widely based on age, driving history, car model, and ZIP code. Use these figures as a baseline for U.S. drivers.
| Policy type | Typical annual cost (national avg.) | Who should consider it | Typical deductible |
|---|---|---|---|
| Liability-only | $400–$700 per year (varies by state) [1][2] | Drivers with older vehicles, cash buyers who accept risk | N/A |
| Full coverage | $1,300–$2,000 per year (varies by state & driver) [1][2] | New cars, financed/leased vehicles, high-risk areas | $500–$1,000 common |
Company average annual premiums (national estimates) — full coverage:
- USAA (military members/eligibles): ~$1,100/year (often lowest) [3]
- GEICO: ~$1,450/year [3]
- State Farm: ~$1,500/year [3]
- Progressive: ~$1,600/year [3]
These company figures are national averages; actual quotes will differ by state and driver profile.
Sources: NerdWallet, Insurify, ValuePenguin. See links in Sources section.
How location (state and city) affects your choice
Insurance rates change by state and even by ZIP code. Factors include:
- Local accident and theft rates
- Weather and natural disaster risk
- State-required coverage minimums and rules
- Population density and congestion
Example considerations for specific states/cities:
- California (Los Angeles) — California requires minimum liability limits of 15/30/5 (check state page for updates). High theft and traffic congestion often make full coverage more attractive if you drive a newer car. See more: Best Insurance For Cars in California: How to Meet State Minimums and Save.
- Florida (Miami) — Higher rates due to severe weather and fraud: consider comprehensive and wind/hurricane coverage options.
- Texas (Houston) — Flood and hail risk plus dense metro areas push full coverage costs up.
- New York (NYC) — High frequency of claims and expensive vehicle repairs; full coverage is common for urban drivers.
For state-by-state cost comparisons and to see how you stack up, consult national databases (NerdWallet, ValuePenguin) and get local quotes.
Who should choose liability-only vs full coverage?
Choose liability-only if:
- Your car is old and current cash value is low (rule of thumb: if annual full-coverage cost > 10% of car value, consider dropping it).
- You own your vehicle outright and can afford repairs or replacement out-of-pocket.
- You want the cheapest legal protection to meet state minimums.
Choose full coverage if:
- Your car is financed or leased (lenders require it).
- Your vehicle is newer or would be expensive to replace.
- You live in an area with high accident, theft, or weather-related risk.
- You need peace of mind and want to avoid large out-of-pocket repair bills after an incident.
How to decide — practical checklist
- Check your vehicle’s current market value (Kelley Blue Book, Edmunds).
- Compare the monthly/annual premium difference between liability and full coverage.
- Determine your emergency savings: can you cover a total loss?
- Factor in loan/lease requirements.
- Consider your commute, parking (garage vs. street), and local claims frequency.
- Get at least three quotes and compare coverages, deductibles, and discounts.
Tips to lower premiums without sacrificing protection
- Raise your deductible (commonly $500–$1,000) if you can afford larger out-of-pocket costs.
- Bundle auto with homeowners/renters insurance for multi-policy discounts.
- Maintain safe-driving discounts and consider telematics/usage-based programs (Progressive’s Snapshot, State Farm Drive Safe & Save).
- Ask about discounts: good driver, anti-theft devices, low mileage, military (USAA), student discounts.
- Shop annually — rates and promotions change frequently.
Best companies by strength (where they typically excel)
- USAA — Best overall value for military members; consistently low premiums and excellent customer service (eligibility required). Average full-coverage ~$1,100/year [3].
- GEICO — Competitive pricing for low- to mid-risk drivers; strong digital tools (~$1,450/year average) [3].
- State Farm — Wide agent network and good customer satisfaction for multi-vehicle households (~$1,500/year avg) [3].
- Progressive — Strong price-comparison tools and options for high-risk drivers (~$1,600/year avg) [3].
For a deeper provider comparison, visit: Best Insurance For Cars by Provider: Comparing GEICO, State Farm, Progressive and USAA.
If you insure new, young, or higher-risk drivers, see: Best Insurance For Cars for Teen Drivers: Low Rates and Maximum Protection for New Drivers.
Final recommendation — an actionable approach
- Determine whether your lender requires full coverage. If yes, buy full coverage.
- If not required, calculate the difference in annual premium vs. potential out-of-pocket loss. If full coverage costs less than 10% of your car’s value annually, lean toward full coverage.
- Always compare at least 3 quotes from major insurers and one local agent.
- Use discounts and raise deductibles sensibly to lower costs.
- Re-evaluate annually or after major life changes (new car, moving, accidents).
Sources
- Insurance Information Institute — Types of auto insurance: https://www.iii.org/article/types-of-auto-insurance
- NerdWallet — Average cost of car insurance by state: https://www.nerdwallet.com/article/insurance/car-insurance-cost-by-state
- Insurify — Average car insurance costs and company comparisons: https://insurify.com/insights/average-cost-of-car-insurance/