CarInsurance.com Insights
- Full coverage averages $2,578 a year nationally. State minimum liability averages $738.
- Limits written as 100/300/100 pay up to $100,000 per injured person, $300,000 per accident and $100,000 for property damage.
- New Hampshire is the only state that does not require liability insurance.
- New Jersey raised its minimums to 35/70/25 on Jan. 1, 2026. California, North Carolina, Utah and Virginia increased their minimums in 2025.
- Every licensed driver in your household should be listed on your policy. Leaving one off can get a claim denied.
A car insurance policy is a single contract that includes several separate coverages. Liability pays other people when you cause a crash. Collision and comprehensive pay for your own car. What you pay depends on which coverage you buy and how high you set your liability limits.
The national average for full coverage with liability limits of 100/300/100 is $2,578 a year, according to Quadrant Information Services. State minimum liability averages $738. This guide walks through what each coverage does, what the numbers on your declarations page mean and where the extra money actually buys you something.
What is a car insurance policy?
Your policy is a contract between you and your insurer, and the declarations page is worth reading. One page lists every driver, every vehicle, every coverage you bought, the limit on each coverage and the deductible you pay before your insurer pays anything.
Behind the declarations page sit the coverage sections, which spell out what triggers a payout, and the exclusions, which spell out what never does. Racing, intentional damage and using your car for commercial delivery are common exclusions. Most personal auto policies run for six or 12 months, and your rate can change at each renewal, even if nothing about your driving changes.
A standard policy usually bundles four things: liability, collision, comprehensive and uninsured motorist coverage. Depending on your state, you may also carry personal injury protection or medical payments coverage. Twenty-four jurisdictions require uninsured and underinsured motorist coverage, so it may already be on your declarations page, whether you chose it or not.
Renewal is the moment to check that list. Limits you picked when you were 22 and driving a used sedan are rarely the right limits once you own a home.
What liability coverage pays for
Liability coverage pays other people when you cause a crash. It splits into two parts. Bodily injury liability covers their medical bills, lost wages and legal costs if they sue. Property damage liability covers their vehicle plus anything else you hit, including a fence, a mailbox or a storefront.
Liability pays nothing toward your own car and nothing toward your own injuries. That is the single most misunderstood line on a policy. If you carry liability only and you total your own car in an at-fault crash, you pay for that car yourself.
Every state except New Hampshire requires liability coverage. New Hampshire drivers stay personally liable for everything they cause, which is why most of them buy a policy anyway.
How to read 25/50/25
Liability limits are written as three numbers in thousands. A 25/50/25 policy pays up to $25,000 for one person’s injuries, up to $50,000 for all injuries in one crash and up to $25,000 for property damage in that crash.
The middle number is a ceiling for the whole accident, not a second helping for each person. Four people injured in one crash share that $50,000.
| Number in 25/50/25 | What it pays |
|---|---|
| First number (25) | $25,000 maximum for any one injured person |
| Second number (50) | $50,000 maximum for all injuries in a single crash, combined |
| Third number (25) | $25,000 maximum for all property damage in a single crash |
What does full coverage include?
No insurer sells a product called full coverage. It is shorthand for a policy that covers liability, collision and comprehensive, and no policy covers every situation, regardless of what it is called.
Collision pays to repair or replace your car when it hits something, or something hits it, including another vehicle, a guardrail or a pothole deep enough to do real damage. Comprehensive pays for everything that is not a collision: theft, hail, fire, flood, falling branches, vandalism and animal strikes.
Both come with a deductible, usually $250, $500 or $1,000. That is what you pay before your insurer pays. Raising your deductible lowers your premium, but only take the trade if you could write the check tomorrow.
If you finance or lease your car, your lender requires both coverages until the loan is paid. Most drivers carry them either way. According to the Insurance Information Institute, 77% of insured drivers add collision coverage and 80% add comprehensive.
Once your car is old enough that the payout will be small, dropping collision coverage starts to make sense. Comprehensive is usually cheap enough to keep.
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Coverage limits worth carrying
CarInsurance.com recommends 100/300/100 as a baseline if you have savings, a home or wages worth protecting. State minimums keep you legal, not financially solvent.
The math is not close. The most common state minimum is 25/50/25. However, the average bodily injury claim is $28,278, according to the Insurance Research Council, which clears a $25,000 per-person limit before anyone counts the property damage. Anything above your limit is yours to pay, and the injured driver can sue you for the balance and go after your savings, your property or your wages.
Minimums are also moving. New Jersey raised its limits to 35/70/25 on Jan. 1, 2026. California, North Carolina, Utah and Virginia all raised theirs in 2025. North Carolina now requires 50/100/50, which is double the property damage minimum in most of the country.
The cost of moving up is smaller than most drivers expect. Bodily injury limits are priced against the frequency of large claims, not the size of the limit, so tripling your protection does not triple your premium. Price 100/300/100 liability limits before you assume you cannot afford it.
Sophie’s Tip
Ask for a quote at your state minimum and for 100/300/100 in the same call, then compare the annual difference. Most drivers find it lands somewhere between a gas tank and a car payment. The first uncovered dollar after a severe accident costs more than the whole year of higher limits.
How much does a car insurance policy cost?
Full coverage averages $2,578 per year nationally, roughly three and a half times the $738 average for a state minimum policy. Liability at 50/100/50 averages $829. If you do not own a car and need coverage to drive someone else’s, a non-owner policy averages $486.
Those are national averages, and your number will land somewhere else. Where you park at night, your age, your claims history, your credit in most states, the car itself and the deductibles you pick all move the figure.
The useful way to read the table below is as a menu of trade-offs rather than a price list. The jump from state minimum to 50/100/50 buys you meaningfully higher liability protection for about $91 a year. The jump from there to full coverage buys protection for your own car, which is where most of the cost sits. See how the rates change.
| Coverage level | Average annual premium | What it protects |
|---|---|---|
| Non-owner policy | $486 | Others, when you drive a car that you do not own |
| State minimum liability | $738 | Others only, at the lowest legal limits |
| Liability 50/100/50 | $829 | Others, at limits above most state minimums |
| Full coverage, 100/300/100 with $500 deductibles | $2,578 | Others, plus your own vehicle |
Who must be listed on your policy?
Every licensed driver who lives in your home belongs on your policy, as does anyone outside the household who regularly drives your car. Insurers price your premium off that list, so leaving someone off is not a savings strategy. It is grounds for a denied claim, a repriced policy or a cancellation.
That includes an adult child home from college, a partner who moved in last month and a roommate who borrows your car on weekends. A licensed teenager in the house gets listed even if they rarely drive.
You have two options when a household driver pushes your rate up and never touches your car. Some insurers let you formally exclude that driver, which means the policy pays nothing if they ever drive it. Others let you list a person without rating them, which is common for an unlicensed 15-year-old who is not driving yet.
Tell your insurer when the household changes. A new roommate, a teen who just got licensed or a former spouse who moved out all belong on that call.
When your state requires an SR-22
An SR-22 is a form your insurer files with the state to prove you carry at least the liability coverage the state requires. It is not a policy, and it is not a type of insurance. It is paperwork attached to a policy you already have.
States typically require it after a DUI, a license suspension, a conviction for driving without insurance or several moving violations in a short window. Most drivers carry the filing for three years, though the period runs from one to five years depending on the state and the offense. The clock may start at the offense date, the conviction date, the suspension date or your reinstatement date.
Eight states do not use the SR-22 at all: Delaware, Kentucky, Minnesota, New Mexico, New York, North Carolina, Oklahoma and Pennsylvania. Florida and Virginia use a stricter form called the FR-44 for alcohol-related convictions, which requires higher liability limits than an SR-22.
Do not let the policy lapse while the filing is active. Your insurer must notify the state, and the usual result is another license suspension and a reset filing clock.
How to pay less for the same coverage
Comparing quotes from at least three insurers is the biggest lever you have, because no two companies price the same driver the same way. Each one uses its own formula, which is why identical drivers end up with quotes that differ by hundreds of dollars at the same coverage level.
Shop at every renewal, and shop again after anything that changes your risk profile: a move, a new car, a marriage, a driver added or dropped, or a violation aging off your record. The carrier that was the cheapest three years ago often is not the cheapest now.
Beyond that, reliable moves are unglamorous. Ask your current insurer to run every discount you might qualify for, including bundling, paying in full, going paperless, defensive driving and a good-student discount. Raise your deductible if you have the cash to cover it. Consider a telematics program if you drive fewer miles or mostly off-peak.
Cutting coverage is the last resort, not the first. Dropping collision coverage on a car worth $2,000 is reasonable. Dropping liability limits to save $90 a year is not.
Frequently Asked Questions: Car insurance policy
Does my car insurance policy cover someone else driving my car?
Usually, yes. Coverage follows the car for most personal auto policies, so a friend who borrows it with your permission is generally covered by your liability and, if you carry it, your collision. Your policy pays first and your claims history takes the hit. Anyone who drives your car regularly should be listed on the policy.
How long does a car insurance policy last?
Most personal auto policies run for six or 12 months. At the end of the term, the policy renews and your insurer can reprice it, even if you had no claims and no violations. Renewal is the natural point to compare quotes, review your limits and confirm the drivers and vehicles listed are still correct.
What happens if a claim is bigger than my policy limits?
You pay the difference. Your insurer pays up to the coverage limit and stops; the remaining balance is your personal responsibility. The other driver can sue you for it, and a court can allow collection from your savings, your property or your wages. Higher limits or an umbrella policy closes that gap.
Can I change my coverage in the middle of my policy term?
Yes. You can add or drop coverage, change limits or adjust your deductible at any point, and your insurer will recalculate the premium for the rest of the term. Lowering coverage may generate a refund. If you have a loan or lease, check with your lender first, because dropping collision or comprehensive usually violates the agreement.
Do I have to list an unlicensed teen on my policy?
It depends on whether they’re licensed or of driving age. Insurers want every household member on record, but a 15-year-old who is not licensed yet generally does not affect your premium. That changes the day they get a learner’s permit or a license. Tell your insurer then, because an unlisted licensed driver is a common reason claims get denied.
Resources & Methodology
Methodology
CarInsurance.com commissioned Quadrant Information Services for average annual premiums by coverage level. Full coverage rates reflect 100/300/100 liability limits with $500 collision and comprehensive deductibles. Rates are national averages and will differ from any individual quotes. Read the detailed methodology for more information.
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