Auto Insurance: Picking You Up When You Need It

Auto insurance is a necessity for car owners, and with so many options available, it's important to choose the right one. The best auto insurance company for you will depend on various factors such as your age, location, vehicle, and driving history. It is recommended to shop around for the best policy and not just settle for the first option. When choosing an auto insurance company, it is essential to consider not only the price but also the company's customer service, responsiveness, financial stability, and the range of coverage options available. Understanding the different types of coverage, such as liability, collision, and comprehensive insurance, is also crucial in making an informed decision. Additionally, taking advantage of car insurance discounts, such as those offered for safety features or good student grades, can help reduce your premium. By comparing quotes from multiple companies, you can find the policy that best suits your needs and budget.

What types of insurance coverage are available?

There are several types of car insurance available, and they can be split into two broad categories: required coverage and optional coverage.

Required Coverage

Nearly every state requires drivers to carry liability coverage, which includes bodily injury liability and property damage liability. In addition, some states mandate drivers to have first-party medical coverage, such as personal injury protection or medical payments coverage, and/or uninsured/underinsured motorist coverage.

Bodily Injury Liability (BI)

This type of insurance covers the expenses of someone else if you injure them in an accident where you are at fault. It can also apply to anyone listed as a driver on your policy.

Property Damage Liability (PD)

Property damage liability insurance covers repairs to another person's vehicle or property if you are at fault in an accident. "Other property" can include equipment, mailboxes, and someone else's home.

Medical Payments or Personal Injury Protection (PIP)

Medical payments coverage pays for any medical bills resulting from injuries to you or your passengers in an accident. Personal injury protection can also cover lost wages and funeral expenses if someone in your vehicle dies due to an accident.

Uninsured/Underinsured Motorist Coverage

Underinsured motorist coverage protects you if the at-fault driver doesn't have sufficient insurance, while uninsured motorist coverage is for drivers with no insurance at all. This type of coverage can pay for medical bills or repairs to your vehicle.

Optional Coverage

Optional car insurance coverage focuses on the policyholder's vehicle and is usually required by lenders for financed or leased vehicles.

Collision Coverage

Collision coverage pays for the damage to your vehicle regardless of who is at fault in an accident. It also covers rollover accidents and pothole damage.

Comprehensive Coverage

Comprehensive coverage, sometimes known as ""other than collision (OTC)" coverage," pays for damage to your car from incidents other than collisions. This includes damage from natural events (e.g., hail, wind, floods), fire, theft, vandalism, falling objects, and collisions with animals.

Medical Payments Coverage (MPC or MedPay)

Medical payments coverage pays for medical bills for you and your passengers, regardless of who is at fault in the accident.

Gap Insurance

Gap insurance is for new vehicles and can pay the difference between the actual cash value of your financed vehicle and what you owe on your loan if your car is totalled or stolen.

New Car Replacement Coverage

New car replacement coverage pays for a brand-new car if your vehicle is totalled and is only a few years old or under a certain mileage.

Roadside Assistance Coverage

Roadside assistance coverage provides services like towing, flat tire repairs, battery jump starts, and locksmith services.

Rental Car Coverage

Rental car coverage pays for a rental car while your vehicle is being repaired due to a covered loss.

How do I choose the right amount of coverage?

Choosing the right amount of car insurance coverage can be tricky. While you are obligated to get the minimum amount of car insurance required to drive legally in your state, how much you purchase beyond that depends on your own financial situation.

Know the Different Types of Coverage

Firstly, it's important to understand the different types of car insurance coverage available. The main types of coverage include liability coverage, collision coverage, and comprehensive coverage. Liability coverage pays for injuries and property damage caused to others in an accident, while collision and comprehensive coverage pays for damage to your own vehicle. Other types of coverage include personal injury protection (PIP), medical payments coverage (MedPay), and uninsured/underinsured motorist coverage.

Check State Requirements and Lender Requirements

Make sure you are aware of the minimum coverage requirements in your state. Most states require liability coverage, and some also mandate additional types of coverage such as PIP, MedPay, or uninsured motorist coverage. If you are leasing or financing your vehicle, your lender may also have specific coverage requirements, such as collision and comprehensive coverage.

Assess Your Financial Situation

Consider your financial situation, including your assets, income, and savings. If you have a high net worth, you may want to purchase higher liability coverage limits to protect your assets in the event of an accident. Calculate your net worth by adding up the value of your assets (home, vehicles, savings, investments) and subtracting any debts.

Evaluate Your Risk Factors

Think about your driving habits, the value of your vehicle, and the likelihood of getting into an accident. If you drive frequently in high-traffic areas or have a history of accidents, you may want to opt for higher coverage limits. Additionally, consider the value of your vehicle and whether you can afford to repair or replace it if it's damaged or totaled.

Compare Quotes from Multiple Insurers

Shop around and compare quotes from multiple insurance companies. This will help you find the best coverage options at the most competitive rates. Be sure to ask about discounts that may be available, such as good driver discounts, car safety discounts, or multi-policy discounts.

Seek Professional Advice

Consider consulting with an independent insurance broker or agent who can help you assess your specific needs and find the right coverage options within your budget. They can guide you through the process and ensure you have the appropriate level of protection without overpaying.

How do I pick a car insurance company?

Picking the right car insurance company can be a daunting task. Not only do state requirements vary, but the different types of coverage offered by insurance companies also add to the confusion. Here are some steps to help you choose the right car insurance company for your needs:

Determine your unique needs:

First, evaluate your circumstances, including your driving habits, the age of your car, and your financial situation. For example, if you have a brand-new car, you will likely want collision coverage, which covers damage to your own vehicle in an accident. If you live in an area with adverse weather conditions, you may want comprehensive coverage, which covers non-accident damage such as theft or weather damage. If you have teen drivers in your household, look for insurance providers with discounts or programs geared towards young drivers.

Find insurance providers that match your priorities:

Once you know your needs, you can start researching insurance companies that align with your circumstances. Consider both large and small insurance companies, as they each have their own advantages. Large companies may offer more policy options and 24/7 customer service, while small companies may provide more personalized and localized service.

Check trusted third-party ratings:

Use third-party ratings to assess customer satisfaction and financial strength. J.D. Power, for example, provides independent ratings on the experience with popular car insurance providers. AM Best analyzes an insurance carrier's historical financial health and strength.

Consider digital tools and customer resources:

Think about how you would like to interact with the insurance company. If you prefer using a mobile app or online portal, choose a company that offers robust digital tools. If you value in-person interactions, look for a company with local agents.

Compare insurance quotes based on coverage:

Get quotes from multiple insurance companies, using the same coverage choices, limits, and deductibles across all carriers for an accurate comparison. Keep in mind that some companies may not offer certain endorsements, so you may not be able to get identical quotes. If you are unsure about how much coverage you need, consider working with an insurance agent, who can help you understand your circumstances and recommend appropriate coverage types and levels.

Remember, the best car insurance company for you will depend on your unique situation, so take the time to research and compare options before making a decision.

How do I choose what to pay for car insurance?

When it comes to choosing car insurance, it's important to do your research and find a policy that suits your needs and financial situation. Here are some factors to consider when deciding how much to pay for car insurance:

• Types of coverage: Familiarize yourself with the different types of insurance coverage available and focus on the core coverages that are essential for most drivers. These typically include medical or personal injury protection, uninsured/underinsured motorist coverage, collision coverage, and comprehensive coverage.
• Liability and UM coverage: If you live in a state without no-fault laws, you will need to purchase mandatory third-party liability coverage to protect yourself in case you cause an accident and injure someone else or damage their property. Uninsured and underinsured motorist coverages are also important to have in case you are hit by a driver with insufficient insurance.
• Other available coverages: Depending on your needs, you may want to consider additional coverages such as guaranteed auto protection (GAP), mechanical breakdown coverage, original equipment manufacturer (OEM) endorsement, rental reimbursement, and roadside assistance.
• Financial situation: Consider your financial situation when deciding on coverage limits and deductibles. If you have a lot of assets, you may want higher liability limits to protect yourself from lawsuits. Choose a deductible that you can comfortably afford to pay in case of an accident.
• Discounts: Before purchasing a policy, look for applicable discounts that can lower your premiums, such as occupational or professional discounts, good driver discounts, or bundling discounts if you combine multiple types of insurance with the same company.
• Shop around: Don't settle for the first insurance company you find. Request quotes from multiple insurance providers and compare their coverage options and prices to find the best value for your needs.
• State requirements: Make sure you are familiar with the minimum insurance requirements in your state to ensure that you are complying with the law.
• Your driving record: Your driving history will impact your insurance rates. If you have a clean record, you may be eligible for lower premiums. On the other hand, accidents, traffic violations, or a DUI on your record can significantly increase your insurance costs.
• Your vehicle: The type of vehicle you drive will also affect your insurance rates. Sports cars, luxury cars, and electric vehicles tend to have higher insurance costs due to the increased risk of accidents and the expense of repairs.
• Personal factors: Insurance rates can also be influenced by your age, gender, credit score, marital status, occupation, and education level.

How do I choose a deductible?

Choosing a car insurance deductible depends on your financial situation and driving history. The deductible is the amount you pay out of pocket towards repairing or replacing your car after an accident before your insurance company covers the remaining cost.

Car insurance deductibles typically range from $100 to $2,500, with $500 being the most common deductible amount. The higher the deductible, the lower the insurance rate, and vice versa.

• Value of your car: If your car is worth more, a higher deductible may make more sense as you will be able to afford a higher out-of-pocket cost.
• Your savings: Evaluate how much you can afford to pay for repairs after an accident. If paying a high amount would be a financial burden, opt for a lower deductible.
• Cost difference: Compare quotes from different insurance companies and see how different deductible amounts affect the total cost.
• Risk tolerance: If you are a safe driver with a low risk of accidents, you may opt for a higher deductible.

Ultimately, the decision comes down to your preference and budget. You should choose a deductible amount that you are comfortable with and can afford to pay in the event of a claim.

Frequently asked questions