Having average car insurance typically means that you have more that what is required by law, and less than premium coverage. If you are searching for car insurance one of the first things you need to do is determine what you have to have in order to drive in your state, and if you don’t own your car you need to figure out what the lender (the person you are making payments to for the car) requires you to have so you are not in default of your loan.

To check your states minimum car insurance requirements, see here.

Full coverage car insurance often combines accident or collision insurance, liability insurance, uninsured motorist, no-fault, and comprehensive coverage into one insurance policy. The limits for each of these and applicable deductibles will separate an average insurance policy from premium coverage.

Full Coverage or Not

If you have full coverage you are covered if the car is stolen, or if anything happens to the car up to the policy limits. Typically a person is required to have full coverage anytime there is a loan on the car. Bank and other lending institutions have specific requirements as to the level and type of full coverage required to have the loan. If you own the car, depending on how much it would take to fix or replace the automobile, you may not need full coverage.

Full coverage on the vehicle means the lender for the car is covered if it is totaled or wrecked. Having collision and comprehensive insures will allow the bank to get money back if something happens to the car. The car owner is covered as well. If your $20,000 car is totaled and can’t be repaired, you don’t have to pay for a car you can’t drive. Before granting a loan, the bank verifies worth of the vehicle, so insurance would pay off the amount of the loan and if you had equity in the car you would get the balance of the money to use towards a replacement vehicle.

Required Liability Insurance

Whether or not you choose to carry collision and comprehensive for the vehicle if you have the choice, you have to have liability insurance in order to license a car in most states. Each state sets the minimum amount required and it will be shown like this: 25/50/15. These numbers represent thousands of dollars in coverage.

If these are the minimums for your state it means that you are required to carry $25,000 of Bodily Injury Liability for one person outside of your vehicle that is injured in an accident due to your fault. The 50 stands for $50,000 maximum to cover all injuries that occur for each accident due to your fault, and $15,000 is the maximum paid for property damage in one accident.

No-Fault Requirements

Some states also require that you have no-fault insurance. This means that your insurance policy has to pay the medical expenses for everyone in your vehicle, no matter who is at fault for the accident. This type of law is intended to help eliminate insurance fraud. It is important to note that even if your state has a no-fault requirement, you will still have to carry liability, even though technically no-fault insurance means that everyone pays for themselves in spite of of who is liable.

It is also important to understand that if you carry the minimum amount of car insurance that your state allows, but have an accident in a state with higher minimums or additionally required insurance, by design your coverage will increase to match the minimum insurance protection needed in the state where the accident occurred.

Bumping Your Coverage from Basic to Average

Car insurance minimums may not be enough coverage. The cost to fix or replace cars, the rising costs of medical care, and the risk of being in a multi-car accident mean that minimum levels will put you at risk. If your insurance doesn’t cover the costs involved in an accident deemed to be your fault, you can be sued for the difference, even in a state that is technically a no-fault state because if you are hit by an out of state driver, they can still sue.

Many agents and insurance governing associations will suggest that drivers have at least 100/300 in order to provide liability levels at $100k per person with $300k total per accident. This coverage would typically be considered average coverage in today’s world.


Average car insurance means that you carry more the minimum required by the laws of your state or your lender, and less than what would be considered premium car insurance coverage. Drivers should understand what insurance they have to carry in order to legally drive on US roads, and then assess their individual needs.