Tennessee is one of the least expensive states in the country for car insurance. Drivers pay average premiums in Tennessee of $1,146 per year, ranking Tennessee as the 5th most affordable state for insurance. Only Wisconsin, Maine, South Carolina and Vermont have cheaper average premiums than Tennessee.

All of the most affordable states have a few things in common that play a key role in determining auto insurance costs. They are relatively rural areas, with a lower concentration of drivers on the streets and highways at any time than in more congested areas. Low population density makes auto collisions less likely as there is less exposure to other drivers.

Of course, your car insurance rates may be higher or lower than the state average depending upon your situation. If you move to Tennessee from another state, your premiums may or may not change; you can get an idea of whether your rates will be affected by a move by contacting your insurance company for a quote in the new city.

What Determines Auto Insurance Rates?

Car insurance companies base their rates upon the likelihood of needing to file a claim. The more likely it is that a company will need to pay for a claim, the more the insurance rates will cost to offset the possible expense. Therefore, vehicles with a high probability of being involved in an accident will cost more to insure than vehicles with a low chance of being damaged.

Some factors determining auto insurance costs are specific to the driver and vehicle being insured. A person’s age, driving history and credit score play an important role in determining insurance costs. The age, make and model of the vehicle being insured is also a factor in insurance cost.

Other factors are based on where the vehicle is being insured. Areas that are prone to volatile weather events such as hail or floods will have higher insurance costs than places with more temperate climates. Insurance rates are also affected by the crime rates of an area, specifically property crimes like theft and vandalism. Tennessee has a relatively low rate of auto thefts due to its size and location; areas near the Mexico border have the highest incidence of stolen vehicles.

The length of a driver’s commute and access to public transportation also plays a role in setting insurance costs. If commuters are able to avoid driving by utilizing other forms of transport, they will be spend less time driving and thus have a lower risk of being involved in a car accident.

Many of the states with low car insurance costs have a comparably low rate of uninsured motorists, but this is not the case in Tennessee. Approximately 20 percent of drivers in Tennessee do not have insurance. This is probably due to the way that insurance laws are handled in Tennessee: Insurance is not necessary to register a vehicle, only to obtain it on state or city-maintained roads. Coupled with the rural community in many parts of the state, it’s highly probable that a number of those uninsured vehicles are not being driven on established roads.

Car Insurance Requirements in Tennessee

As previously mentioned, you do not need car insurance in order to get a driver’s license or register a car in Tennessee. Liability insurance is required in order to operate the vehicle on Tennessee roads, however, and failing to provide proof of insurance can lead to a $100 fine and a suspended license.

Liability insurance in Tennessee is required to have limits of $15,000 for property damage and $25,000 for injuries per person, up to $50,000 for injuries per accident. If you are responsible for an auto accident, your insurance will pay up to the liability limit for damage and injuries that you cause. Any further expenses over this limit would be your responsibility to pay out of pocket. This can damage your credit and even lead to lawsuits or suspended licenses, so it’s a good idea to carry as much liability insurance as you can afford.

You can also purchase full coverage auto insurance in Tennessee by adding collision and comprehensive coverage to the policy. This type of coverage pays for damage to the insured vehicle regardless of who was responsible for the damage. Full coverage insurance is optional, but it’s a good idea to carry collision and comprehensive coverage if the vehicle is new or valuable. Lien holders will also require that full coverage be maintained on any vehicle until it’s paid off.

Some car insurance companies offer additional coverage such as rental reimbursement, personal injury protection, roadside assistance and other types of insurance. Depending on your budget and needs, the additional coverage may be a good idea. Be sure to ask how much it would cost to add additional coverage to the full coverage insurance policy so that you can budget accordingly.