Auto insurance is a critical component of vehicle ownership, providing financial protection against various risks. Understanding the different types of auto insurance and what they cover can help consumers make informed decisions about their insurance needs. This article compares the main types of auto insurance, explaining their purposes and referencing some key statistics.
The premium averages provided in this article are sourced from the National Association of Insurance Commissioners report and can be found here.
Liability insurance is mandatory in many states and covers costs associated with injuries and damages to others if you're at fault in an accident. It has two main components:
Average Premium (2022): According to the NAIC report, the average premium for liability insurance was $661.89.
Collision insurance covers the cost of repairing or replacing your vehicle if it is damaged in a collision with another vehicle or object, regardless of who is at fault.
Average Premium (2022): The average premium for collision insurance was $400.05.
Comprehensive insurance provides coverage for damages to your vehicle caused by non-collision events, such as theft, vandalism, natural disasters, and falling objects.
Average Premium (2022): The average premium for comprehensive insurance was $196.16.
Uninsured/Underinsured Motorist (UM/UIM) insurance covers your medical expenses and vehicle repairs if you're hit by a driver who doesn't have insurance or doesn't have enough insurance to cover the damages.
Key Statistics: The NAIC report highlights that in 2022, there was a notable rise in vehicle theft rates and other non-collision incidents, underscoring the importance of comprehensive and UM/UIM coverage.
Personal Injury Protection (PIP), also known as no-fault insurance, covers medical expenses, lost wages, and other related costs for you and your passengers, regardless of who is at fault in an accident.
Key Statistics: The report indicates that states with higher medical and legal costs tend to have higher PIP premiums【15†source】.
| State | 2022 Average Premium |
|---|---|
| Florida | $1,152.02 |
| Louisiana | $990.58 |
| New York | $989.32 |
| Michigan | $758.44 |
| Georgia | $895.70 |
| State | 2022 Average Premium |
|---|---|
| District of Columbia | $586.01 |
| Rhode Island | $487.17 |
| Michigan | $479.62 |
| Florida | $371.15 |
| New Jersey | $441.78 |
| State | 2022 Average Premium |
|---|---|
| Wyoming | $395.54 |
| South Dakota | $407.21 |
| Montana | $333.70 |
| Colorado | $371.73 |
| Michigan | $190.59 |
Auto insurance is essential for protecting against various risks associated with driving. Liability insurance covers costs if you're at fault in an accident, collision insurance covers damage to your vehicle from collisions, and comprehensive insurance covers non-collision damages. Understanding these coverages and their costs can help you choose the right insurance for your needs. We recommend speaking to a qualified financial professional to understand what the right options are for your risks to ensure you are covered.
For more detailed information, refer to the latest report from the National Association of Insurance Commissioners (NAIC) here.