SHOPPING FOR AUTO INSURANCE
Where can I buy car insurance?
There are many national and local insurance companies that offer car insurance. Many of these insurers sell other insurance products as well, and may offer discounted rates to policyholders who buy multiple policies from them (see below for more information on car insurance discounts).
Drivers can buy car insurance from individual insurance agents or companies, or from a broker that offers insurance from many different companies. Drivers can save money by comparing auto insurance quotes and making sure that they get the best deal possible on the coverage they need.
How much does car insurance cost?
Car insurance rates depend on a number of factors. These include:
- Personal details like age, sex, and marital status
- Where you live
- Average annual distance driven
- Your vehicle
- Your credit
- Your coverage amount and type
According to the Insurance Information Institute, the average annual car insurance cost was around $866 dollars in 2014.
Is car insurance mandatory?
In most states, some level of car insurance is required. The minimum amount of coverage may just be liability insurance, or it may include uninsured/underinsured motorist or additional medical coverage.
New Hampshire and Virginia do not require that drivers buy auto insurance, but do have minimums in place for drivers who do choose to buy insurance. You can find out how much auto insurance is required in your state here.
When should I buy car insurance?
You should buy auto insurance before you begin driving, as it’s required in most states (see below). Driving without insurance is often illegal and leaves you financially vulnerable.
Does my vehicle affect my car insurance rates?
Yes. The market value of your car and the history of other drivers with the same make and model play a factor in your auto insurance rates. Certain safety features may not automatically qualify you for cheaper car insurance, but they can prevent you from getting into accidents, saving you money indirectly.
What car insurance discounts are available?
Available discounts depend on your insurer. However, common car insurance discounts include various affiliation discounts, reduced rates for students, good driver/no-accident discounts, and hybrid vehicle discounts.
Additionally, insurers will often offer lower rates to policyholders who bundle different insurance products together, such as homeowners insurance and auto insurance.
CAR INSURANCE COVERAGE
What does car insurance cover?
Your car insurance coverage depends on the type of policy you purchase. Different types of car insurance include:
- Bodily injury (BI) and property damage (PD) liability coverage for damaged caused to other people or property.
- Personal injury protection (PIP) to cover medical expenses and other damages.
- Collision and comprehensive coverage for damage done to your vehicle in collisions, and in non-collisions (i.e., fire, vandalism, or theft).
- Uninsured and underinsured motorist (UM/UIM) coverage protects in the event of an accident where the at-fault driver doesn’t have insurance.
How much car insurance do I need?
The first thing you should consider is how much coverage is required by your state. This can be found through your state’s DMV. That’s how much car insurance you have to buy, and should be the floor of your car insurance budget. Beyond that, you should buy as much car insurance coverage as you feel comfortable with and can afford.
You may decide to max out your car insurance budget with available options. UM/UIM is often overlooked but can be crucial in accidents with uninsured drivers and is a relatively inexpensive add-on; comprehensive coverage is usually more costly, but if you live in an area that has a high level of car theft, it might be a more valuable addition to you.
What does car insurance not cover?
Car insurance is great for covering repair costs after an accident, but it won’t cover the costs of general wear and tear. That means when you take your car in to get the oil changed or the tires rotated, you’re footing that bill yourself.
However, you may find that your tires or batteries are covered by a warranty for a limited time, which can help cover your costs.
Does my car insurance cover other drivers?
It depends on the specific policy. Your policy may have an “omnibus clause” that covers any driver who has permission to use your vehicle (known as permissive drivers). If an insured driver drives your vehicle, yours will be the primary insurance and theirs will offer secondary coverage.
The best way to make sure that your car insurance covers another person is to have them listed as a named driver on the policy. Speak to someone at your insurance company before you let someone borrow your car if you’re unsure whether or not your specific policy will cover them.
What is gap insurance?
Gap insurance fills the gap between what your insurance company pays and for accident or theft, and what you owe on an existing car loan.
Car insurance pays out depending on your car’s current value. Because many cars lose value quickly, you may find yourself in a situation where you owe more on a loan than what the car is actually worth — for instance, you buy a $30,000 car and in one year it is valued at $22,000, but you still have $25,000 left on your own. Gap insurance covers that $3,000 difference.
Gap insurance typically adds on around 5% of your total car insurance bill.
What is an SR-22?
An SR-22 is often considered insurance, but it technically isn’t. It’s simply a certificate from your insurer showing that you have insurance coverage. An SR-22 may be ordered by a judge if you have a less-than-perfect driving record, like getting dinged for multiple moving violations or a DUI.
An SR-22 usually has a filing fee of around $25, and stays with you for around three years.
TYPES OF CAR INSURANCE
Does car insurance cover rental cars?
Comprehensive and collision coverage extends to rental cars, while liability insurance does not. You should check your policy to see if coverage applies to rental vehicles and, if so, what stipulations or limitations there may be.
If your policy does not offer rental car coverage, you may have some limited coverage from your credit card; you can purchase insurance from the rental car company; or you can shop for a standalone rental car policy (that is typically cheaper than what the rental company will offer).
Do I need rideshare insurance?
Obviously, if you don’t drive for Uber, Lyft, or another rideshare company, you don’t need rideshare insurance. But if you drive as your full-time job or just to make ends meet, supplemental rideshare insurance may be valuable.
Rideshare trips are divided into “periods.” Period 1 is when the driver has the rideshare app open but hasn’t matched with a passenger; Period 2 is when the driver and passenger are matched but the passenger hasn’t been picked up; and Period 3 is when the passenger is in the car. Rideshare companies provide coverage throughout, but especially during Period 1 this coverage can be limited.
Rideshare insurance is offered as an add-on to a driver’s existing personal policy and bridges the gap in coverage during Period 1 (and, sometimes, offers more comprehensive coverage in Periods 2 and 3). Many popular auto insurance companies, like Geico, USAA, and State Farm, now offer rideshare insurance.
Do I need car insurance if I don’t have a driver’s license?
You likely need auto insurance before you drive, but if you don’t have a license, you may find yourself in a situation where you need insurance.
If you employ drivers, have a teenage driver, are currently trying to get your license, or even own vintage automobiles that need some level of protection you may need car insurance.
However, you may need a license to buy insurance. You can get around this by including a principal or primary driver on your policy until you get your own driver’s license.
Can I get car insurance if I don’t own a car?
Yes. Most car insurance companies offer what’s known as non-owner car insurance policies. These policies usually don’t cover collision or comprehensive coverage, but offer standard liability coverage and may let you add medical and underinsured/uninsured motorist protection.
If you don’t own your own car but still drive often, either by borrowing cars, renting cars, or using services like Zipcar, non-owner car insurance can be an affordable option.
Do I need different insurance for other types of vehicles? While your standard auto insurance policy will cover your car, you may need different types of insurance if you have different types of vehicles. Commercial trucks, motorcycles, ATVs, and RVs all require their own insurance, which can be purchased from most popular insurance companies.
Last updated on Oct 2nd 2017