Auto Insurance
Auto insurance covers damage to your vehicle and protects you financially if you’re liable for someone else’s injuries or damages. Call Today!
What is car insurance?
Car insurance covers damage to your vehicle and protects you financially if you’re liable for someone else’s injuries or damages. Auto insurance can also pay for medical bills if you or your passengers are injured in an accident or you’re hit by an uninsured or under insured driver. Your policy protects you up to certain limits, agreed upon by you and your insurer.
Do I Need Car Insurance?
You don’t need auto insurance to hold a driver’s license in most states, but the car, truck, RV, or motorcycle you’re driving must be insured. The insurance covers the vehicle and, usually, whoever is authorized to drive the vehicle.
Driving without required car insurance can have severe legal and financial consequences, such as license loss, jail, accident damages, or car impoundment. Your car insurance costs will be higher as a result.
More than six million police-reported car crashes are reported annually in the U.S., including personal injury and property damage. Safe driving can help avoid accidents, but you’re never in full control of on-the-road circumstances. Accidents are sometimes unavoidable, as are damages or injuries.
How Does Car Insurance Work?
First, you’ll get an estimate (or quote) for the insurance price (the premium), with several different options based on the maximum protection amounts (coverage). Coverage is based on your state requirements. For example, in some states, the insurance company is required to offer you uninsured motorist coverage.
You select the protection (coverage) you want and pay the premium of your insurance contract (policy) in monthly, semi-annual, or annual payments.
If you have an accident or want to make a compensation claim, you exchange insurance information with the other driver and contact the police to come to the scene or ask them how to file a report.
With the right coverage, the insurance company takes care of negotiating and paying costs. In some cases, you’ll be responsible for a small amount, known as the deductible—the amount you’ve agreed in advance to pay if you make a claim.
What Does Car Insurance Cover?
Although car insurance is spoken about like a singular product, a typical car insurance policy is actually made up of several different types of car insurance that are wrapped up together into one policy that you know as your auto insurance policy.
The six standard types of auto insurance are:
- Liability auto insurance (BI/PD): covers the cost of damage and injury to third-parties, as well as your legal fees, should someone leverage an auto-related lawsuit against you
- Collision insurance: covers the cost of damage and injury to yourself and your passengers should you be involved in a collision with another car or object
- Comprehensive car insurance: covers damage to your own car that results from theft, vandalism, natural disasters, civil disturbances, and other non-collision events
- Medical payments insurance (MedPay): covers the cost of you and your passengers’ accident-related medical expenses
- Personal injury protection (PIP): covers the cost of you and your passengers’ accident-related medical costs and also reimburses you for lost wages due to an accident-related injury
- Uninsured/underinsured motorist insurance (UM/UIM): covers you if you get into an accident with a driver who doesn’t have insurance and consequently can’t pay for damages to your vehicle or treatment for any injuries you might sustain
Additional Coverage Options
In addition to the six standard coverage options mentioned above, many car insurance companies also offer additional optional coverage, such as
- Gap insurance: covers the difference between the actual value of your car and how much you still owe on it if you significantly damage or total a financed or leased car before your financing term is over
- Rental reimbursement: covers the cost of a rental car if your car becomes undrivable for an extended period of time
- Rideshare insurance: covers motorists driving for ridesharing companies like Lyft, Uber, etc
- Mechanical breakdown insurance: covers the costs of car repairs due to mechanical breakdowns, similar to an extended car warranty
- Roadside assistance: covers the costs of emergency road services when your car malfunctions, such as towing, battery services, or flat tire replacement.
What does car insurance not cover?
Car insurance covers most types of damage that are sudden and accidental, but damage that occurs slowly over time is not covered, nor is standard required maintenance. This includes:
- Maintenance problems, like faulty wipers or a malfunction steering system
- Regular wear and tear like worn-out tires
- Mechanical failure or engine failure
- Electrical breakdown
However, you may be able to get coverage for regular repairs through mechanical breakdown insurance (MBI) if it’s offered by your insurance company. Though it can be expensive, MBI pays for damage to the mechanical parts of your car, like new brakes, engine parts, or a blown transmission.
How Do I Get Car Insurance?
For the most part, you can take out a new car insurance policy by finding a provider, navigating to its website, requesting a quote, and then purchasing a policy if you like the quote you received. You can also call your chosen provider or schedule an in-person meeting with one of its insurance agents.
When you request a quote, you should be ready to supply the following information:
- Personal information such as your name, age, and address
- Details about your driving record such as past tickets
- Vehicle year, make, and model
- Vehicle identification number (VIN)
After you’ve compared some quotes and settled on an insurer, you can usually pay online immediately to begin your coverage. Of course, you can also talk with an agent or representative on the phone or in-person to take out coverage. The agent will walk you through all your different options to help you construct a policy that fits your needs. Once you’ve settled on a policy, they’ll tell you how to purchase it.
How Much Does Car Insurance Cost?
According to our most recent data, the national average cost of auto insurance for 2022 is $1,553, though your rate can be higher or lower. To determine your rate, car insurers factor in things like your age, location, driving record, vehicle type, and your credit score.
- Your car
- Where you live
- Your driving history
- Your age
Your Car
Your car will affect your car insurance premium based largely on two factors: how safe it is and how expensive it is.
The safer your car is, the lower its premium will be, as safer cars are less likely to get into accidents. If an auto accident does occur, the driver and passengers are less likely to be injured. Either way, that means a lower chance for an expensive insurance claim.
The more expensive your car, the more an insurer may need to pay to have it repaired. A totaled Ford Fiesta is cheaper to fix than a wrecked Lamborghini. Expensive cars may also have higher theft rates, which is an added risk for the insurer.
Where You Live
Each state sets its own minimum insurance requirements, so the average cost of minimum insurance varies. Driving conditions vary by state and even by city. Living in a densely-populated city means a higher likelihood of an accident or theft.
Your Driving History
If you have a driving record free of accidents and traffic violations, expect a lower premium. However, if your history includes several crashes and speeding tickets, you’re insurance rates will run high. Even a single-car accident can significantly raise your premium.
Your Age
Drivers under 25 typically get higher premiums. After 25, rates begin to lower, reaching its lowest point when for drivers in their 50s and 60s. After that, rates gradually begin to rise again.
The reason for such high rates for young drivers is two-fold: For one, statistics from the Center for Disease Control and Prevention show that drivers between the ages of 16 and 19 are more likely to get into a car accident than any other age group. Secondly, young drivers have a shorter driving history, which means insurance providers have less to go on when determining how safe of a driver they are.
Rates begin to increase for senior who are more likely to suffer from Alzheimer’s, dementia, vision problems, and a number of other health issues that can make driving more dangerous.
How to Save Money on Your Auto Insurance
Car insurance can be expensive, but there are many ways to save money on your auto insurance.
- Change your deductible and/or policy limits: Raising your deductible will lower your premiums. Also, if you lower the limits your policy will cover, it will lower your premiums.
- Ask for discounts: Many people know they could receive a discount for bundling their car insurance with their homeowners insurance, but there often are many more discounts available. Ask about discounts for automatic payments, taking a defensive driving course, or being claim free in recent years.
- Shop around: Auto insurance companies price car insurance differently, so get quotes from at least three different companies.
- Improve your credit history: Car insurers often provide better rates to drivers with good credit.
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