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Although several Affordable Car Insurance companies offer more nuanced and add-ons options, the three main types of auto insurance are reduced to:

  • Liability Coverage
  • Collision coverage
  • comprehensive coverage

Liability Coverage

Liability coverage required by law in most states covers other personal injury and property damage to the driver in an accident in which you are involved. And more importantly, it does not cover your own injuries or property damage. Buying liability insurance will always be affordable but not necessarily the smartest option. Sometimes it makes sense to have only liability coverage, and other times it doesn’t. More on that in a minute.

You probably want to see your insurance liability coverage as written on your auto insurance policy: $50,000 / $100,000 / $50,000 (50/100/50). This means you have $50,000 in bodily injury coverage for each person, $100,000 in total bodily injury coverage, and $50,000 in property damage coverage. Each state requires its own minimum amount of liability insurance for legal stay.

The buy-in is tempting because it will keep rates as low as possible. Unfortunately, this is a bad idea: a bad incident can mean your costs can easily exceed the low minimum status, and then you have to pay. If you don’t have the money, your other assets are vulnerable.

Collision Coverage

There is also collision coverage, which covers damage to your slammed vehicle. Most commonly, it covers crashes when you’re in trouble. Still, you can also pay in certain circumstances when another driver is at fault or in scenarios not covered by other policies.

The cost of your collision coverage will depend mainly on the car’s value, but they do not control the deductible – the amount you pay out of pocket before your insurance company picks up the rest of the tab.

Full Coverage

True to its name, full coverage covers just about any car-related calamity, and you can think of less damage as a result of an accident. Instead, comprehensive insurance pays for things like auto theft policies, damage from severe weather, or repairs needed after a date night with clueless deer. The cost of collision coverage will depend on your car, but you can control your deductible.

What Types of Affordable Car Insurance Do I Really Need?

Comprehensive and collision coverage seems like a smart option, but it only comes with much higher liability insurance. If you bought a loan to pay for the car, you probably don’t have a choice: your lender will require collision evidence and comprehensive coverage. And dropping collision or comprehensive coverage isn’t a good idea for anyone who doesn’t have the savings to pay for repairs out of pocket.

But there are situations where opting for liability only makes sense. For example, if you’re driving an old car that’s paid off and can be easily repaired or replaced, keeping only liability coverage can mean significant savings. Collision and comprehensive coverage can also be excessive on any car you drive in moderation.

Bottom Line: If you want dirt cheap car insurance, liability coverage is the most affordable auto insurance option and will legally cover you. But dropping collision and comprehensive coverage can be risky if repairing or replacing your car after an accident would mean substantial financial difficulty.

Other Types of Affordable Car Insurance Coverage

There are several other types of coverage and supplements, some of which may be required in some states. One is Personal injury protection, which pays for medical expenses after an accident.

There’s also uninsured or uninsured motorist coverage, which means you can’t be left hanging after an accident where the other driver is at fault but doesn’t have enough (or no) insurance and can’t afford it. Other add-ons pay for rental cars while the car is stationary and roadside assistance.

If you’re trying to cover your personal injury bill, it’s probably not a smart buy as long as you have a good health insurance plan; there would be too much overlap between the two policies.

However, uninsured and uninsured motorist coverage is a decent bet, especially in areas with a high percentage of uninsured drivers. It’s also pretty cheap: by adding two options for my appointment, GEICO increased my monthly bill by just a few dollars.

As for other small accessories, consider leaving them out. Suppose you can cover the rental cost (or borrow a friend’s car while you’re in a bind). In that case, rental car drivers are unnecessary, and AAA membership is often a better deal on roadside assistance coverage if you have an older vehicle.

Is Affordable Auto Insurance Mandatory in my state?

Each state has different requirements when it comes to affordable auto insurance. Many simply require liability insurance (bodily injury and property damage). Others go a step or two further and require supplements like personal injury protection and uninsured/underinsured motorist coverage.

According to the Automobile Insurance Information Institute, New Hampshire is the only state that does not require liability insurance. However, the state still requires you to show that you have sufficient funds to meet state requirements if an accident is at fault.


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