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.

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).