Auto insurance is essential financial protection for you and your car. It covers the costs if you cause a car accident that injures someone else or damages their property. It can also cover damage to your own car, either from a collision or another type of danger, like hail, fire, falling objects and theft. Car insurance can even pay for towing if you’re stranded by the side of the road, or for a rental car if yours is in the shop after an accident.
At least a minimum amount of car insurance is legally required in almost every state, but most drivers need more coverage than just their state’s requirements.
Every car insurance policy is made up of different types of coverage that all provide different types of protection.
When you hear full coverage car insurance, that just means an auto insurance policy that includes a full range of protection for both your and your car.
|Coverage||Protects against…||Like if…|
|Bodily injury liability||Injury you cause with your car||You rear-end another driver and the impact gives them whiplash|
|Property damage liability||Property damage you cause with your car||You run a stoplight and cause an accident with another car, smashing their passenger-side door|
|Personal injury protection||Medical expenses for you and your passengers after an accident (required in some states)||You live in a “no-fault state” and are injured in a car accident|
|Uninsured/underinsured motorist||Damage caused by a driver who doesn’t have insurance, or whose insurance doesn’t fully cover repair costs||You’re t-boned by an uninsured driver and your car requires expensive repairs|
|Comprehensive||Damage not caused by a collision||An icy tree branch falls onto your car’s roof, smashing it and cracking the windshield|
|Collision||Damage caused by a collision, no matter who was at fault||You backed into a telephone pole and cracked your rear bumper|
According to a 2020 report from the National Association of Insurance Commissioners (NAIC), the average car insurance premium was $1,134 a year (about $95 a month). But car insurance rates can vary widely depending on factors like driving history and type of car.
Your insurance company matters too — you can submit the exact same profile to three different companies and get three very different prices.
The make and model of car you drive will affect your insurance rates. Luxury cars with expensive parts cost more to insure than a budget daily driver, and cars with certain safety features get you a lower rate
More types of coverage and higher limits means more protection, but it also means higher premiums.
Drivers with poor credit scores may have more trouble finding affordable coverage than drivers with stellar coverage.
Recent accidents and driving violations will raise a red flag on your profile, while having a squeaky clean record can earn you extra savings.
Accident rates, density and repair costs in your neighborhood will all go into calculating your premiums.
Younger, less experienced drivers (under 25) are more likely to get in accidents and file claims, so they often pay the most for car insurance.
The best car insurance company isn’t always the one that offers you the lowest rates. When you’re choosing car insurance, weigh cost along with factors like claims satisfaction ratings and customer happiness.
Independent third-parties like J.D. Power, which rates insurance companies based on feedback from real customers, and A.M. Best, which scores insurance companies on their financial stability, are good places to look for help choosing the best company for you. Low rates are great, but you want a car insurance company that will be there to help you when you need to file a claim.
Buying car insurance can seem intimidating, but it’s actually an easy process — you can probably do it in one afternoon.
All you have to do is follow these steps for simple shopping:
Before you buy a policy you’ll need to know the make, model and VIN number for every vehicle you’re insuring, as well as the full names, birthday and driver’s license numbers for every driver on the policy.
Know what types of coverage and how much of each you’ll need before you start shopping. Most car insurance policies have the same basic components, but higher limits mean more protection … and higher premiums.
Getting quotes from different car insurance companies is an easy process, but you should compare more than just cost. Independent reviews can also help you figure out if you’re getting quality coverage.
Once you settle on a policy, you can buy it and set it to go into effect as soon as you need, whether it’s a month away or a day away.
Wait until after you’ve purchased a new policy before you cancel your old one, and make sure they start and end on the same day so you don’t have a gap in coverage.