Auto insurance requirements are determined by state laws. Therefore, auto insurance rates will vary by state, city, and by driver. To get cheap auto insurance, we recommend comparing auto insurance quotes from at least three different companies before you buy to get an idea of what average drivers in your area are paying for coverage. The top three auto insurance companies based on market share are State Farm, GEICO, and Progressive.
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UPDATED: Aug 19, 2021
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- Different types of car insurance offer different levels of coverage
- You can save money on your car insurance, but it may come at a cost
- Knowing what to do when filing a car insurance claim can save you a great deal of time and money
Auto insurance provides vital coverage in the event of a serious accident. It helps cover repairs to your vehicle, the cost of a rental car, and even assists with paying medical bills in the aftermath of a car accident.
Do you know how your auto insurance coverage works and what you should expect if you get into an accident? Keep reading to learn what kind of car insurance coverage you need, where to find affordable auto insurance rates, and when you might need to hire a car accident lawyer.
Every state requires drivers to carry some type of auto insurance in order to register and legally drive a vehicle. However, car insurance laws and minimum coverage requirements vary dramatically by state.
To find cheap auto insurance near you, enter your ZIP code above to compare free auto insurance quotes from providers in your area.
What are the best auto insurance companies?
While State Farm, GEICO, and Progressive auto insurance are the top three largest companies, that doesn’t necessarily mean they are the best for you.
Take a look at the list below to see the best auto insurance companies in the country based on customer satisfaction:
- New Jersey Manufacturer’s Insurance Company
- Amica Mutual
- Auto-Owners Insurance Group
- USAA Auto Insurance
- The Hartford
- State Farm
- Erie Insurance
- Farmers Insurance
- GEICO Auto Insurance
- Liberty Mutual
Your choice of provider depends on your driving record, where you live, and the kind of policy you need. Not every car insurance company is available everywhere, and not every driver qualifies for coverage with every company. For example, only AAA members can qualify for AAA auto insurance.
Shop around and compare auto insurance rates from multiple companies in your area before you buy a policy. This will give you an idea of what other drivers are paying in your city and what kinds of policies are available.
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What are the different types of auto insurance policies?
As you shop for auto insurance, a wide range of coverage options are available to you depending on your budget, your vehicle, and your specific needs. But each type of coverage comes with different annual rates.
Research the auto insurance costs of each policy type before you buy. You want to make sure you have adequate auto insurance for all your needs without overpaying for coverage that you don’t need or won’t use.
Keep reading for details on the different types of auto insurance coverage you can buy.
What is liability coverage?
In every state, drivers must carry some type of minimum liability insurance that will protect the other drivers and passengers involved in an accident. In most states, minimum liability coverage varies between around $10,000 to around $25,000 for each vehicle involved or person injured in an accident.
Liability-only auto insurance has some of the cheapest rates, averaging around $73/mo, but this type of coverage does not offer any compensation for your vehicle or injuries if you cause an accident.
You may save money now with a liability-only policy only to spend it later when you pay out-of-pocket for an accident.
Property Damage Liability Coverage
Property damage liability coverage is designed to do exactly what it sounds like: coverage offers financial compensation for damage done to property in an auto accident.
Liability coverage offers compensation for the other person’s vehicle and any expensive items damaged in the accident, but will not pay for damages sustained by your vehicle or property.
Bodily Injury Liability Coverage
Bodily injury liability coverage provides compensation for anyone injured in an accident that you caused. Bodily injury liability insurance is designed to help victims pay their medical bills and cover the cost of wages lost when they cannot work for a long period of time following the accident.
You may have separate limits for each individual injured in an accident and on the total compensation the insurance company will pay out after an accident. Like property damage coverage, bodily injury liability coverage applies only to others injured by your negligence, so you cannot seek compensation through your bodily injury liability coverage if you suffer injuries in an accident.
What is personal injury protection coverage?
Personal injury protection insurance offers immediate compensation for medical expenses related to an accident, regardless of who causes that accident. Even if you cause an accident, you can use your PIP coverage to provide immediate coverage for medical bills and other treatments for your injuries.
PIP coverage will increase your average auto insurance rates by $20-$40 per month depending on where you live and the level of coverage you choose.
PIP insurance is no-fault insurance, though not every state that offers or requires PIP insurance is automatically a no-fault state. Currently, only thirteen states in the United States require personal injury protection coverage in addition to minimum liability coverage:
- New Jersey
- New York
- North Dakota
Seven other states, including Washington D.C., allow drivers to opt into PIP coverage, but it’s not required by law:
- South Dakota
Some state auto insurance laws, like in Texas, require that PIP coverage is automatically offered to drivers as part of liability coverage. They can choose to increase that coverage for an additional cost or opt-out. Depending on where you live, you may need to opt-in or out of coverage when you sign up for your policy.
What is collision coverage?
Liability insurance offers coverage when you can cause an accident that results in serious damage to another vehicle. Collision insurance, on the other hand, offers vital compensation when you commit an act of negligence that ultimately results in damage to your vehicle.
Collision coverage helps ensure that you can repair your vehicle in the event of a serious accident.
Maybe you didn’t brake fast enough at a red light and rear-ended another driver, or you changed lanes a little too soon and clipped the vehicle next to you. Accidents can happen to even the safest of drivers, and vehicle repairs can prove very expensive.
You can also use your collision coverage if the at-fault driver’s insurance company stalls on providing the coverage you deserve following the accident. Turning to your collision coverage can help streamline the repair process. While you may have to pay your deductible, you can often get back on the road faster, and your insurance company can wrestle with the other company on your behalf.
How much does collision auto insurance cost?
While liability coverage is usually fairly universal, most insurance companies base collision coverage on the replacement value of your vehicle. It can cost much more to repair or replace an expensive vehicle or sports car than it does an older vehicle.
While average collision car insurance rates are around $124/mo, you could end up paying much more based on the kind of car you drive.
Before you buy any kind of auto insurance, compare quotes from at least three different auto insurance companies to make sure you’re paying a fair price based on your coverage needs, your driving record, and the make and model of your car.
What is comprehensive coverage?
Your vehicle is at risk for more than just accidents. While collisions might be what we most commonly think of when filing an insurance claim, damages caused by vandals, natural disasters, even city-wide riots can also be covered by insurance.
If you have comprehensive coverage in place, your auto insurance policy will cover the following:
- A natural disaster, including flooding
- A fire
- A tree limb falling on the vehicle
All of these challenges can cause severe damage to your vehicle, leaving you with expensive replacement costs. Collision and liability insurance won’t cover the replacement cost of your vehicle. Comprehensive insurance, on the other hand, will often offer the help you need to get your vehicle repaired after an incident unrelated to an accident on the road.
What is full coverage auto insurance?
It is recommended that drivers carry more than the minimum liability insurance required in their state. Without enough coverage, you will be caught paying for repairs and medical bills out of pocket.
To be fully covered by auto insurance, drivers should purchase liability, collision, and comprehensive policies, also known as full coverage car insurance.
The average rates for full coverage auto insurance will vary based on where you live and the coverage limits you choose. Shop around with various local providers to lock in the best rates on auto insurance.
What is uninsured/underinsured motorist coverage?
Basic liability insurance requirements have not changed substantially over the past several years, in spite of the fact that the cost of the average vehicle has increased substantially.
For example, while the average cost of a brand new vehicle hovers around $41,000, some state minimum liability coverage stops at $10,000 or $20,000 in coverage. If you’re in an accident with an uninsured or underinsured driver, you will be responsible for paying that hefty repair bill yourself.
However, carrying uninsured/underinsured motorist coverage can help ensure that you have the funds you need to repair your vehicle even if the driver that caused an accident does not carry adequate insurance.
What is roadside assistance?
Some auto insurance policies offer roadside assistance coverage as an add-on. If you have roadside assistance coverage, you can call for aid no matter where your vehicle ends up, including a tow truck, a mechanic, a locksmith, or even to take your bill to your auto insurance company.
The insurance company may also have providers on call that they can send out to deal with your vehicle directly. This coverage may prove essential if you live far from friends and family members who could come rescue you in the event of an accident or car problem.
What is rental car coverage?
If your vehicle is out of commission for whatever reason, you may need to rent a car to get around town while you wait on repairs. Rental car coverage will compensate you for any rental costs up to the limit of your policy.
Many auto insurance policies include rental car coverage as an add-on that costs an extra $2-$15 per month.
However, you may want to check your rental car coverage to learn more about how much coverage your policy will actually offer, including how long you can have a rental car and how much your policy will pay.
How do I determine what type of auto insurance I need?
Before you speak with an insurance agent or buy auto insurance online, go over your specific car insurance needs and what you want to expect from your insurance company in the event of an accident or incident. Consider the type of vehicle you drive, how long you commute to and from work, if you live in a big city or high-traffic area, and how many drivers will be listed on your policy.
For example, if you live in Florida, where a high percentage of drivers do not carry adequate auto insurance, you may want to carefully consider your uninsured motorist coverage, especially if you drive a high-end vehicle or just took out an auto insurance loan.
Before selecting your auto insurance coverage, ask yourself these key questions:
What is your car worth?
If you drive a very inexpensive vehicle, replacing it may cost less than your average insurance rates. In this case, liability-only insurance will provide adequate coverage.
On the other hand, if you drive an expensive vehicle, particularly one whose value exceeds the minimum liability coverage limits, you may need to carefully evaluate your underinsured motorist coverage and uninsured motorist coverage to ensure that you have the protection you need if another driver causes an accident with your vehicle.
Do you have an auto insurance loan?
If you’re insuring a new vehicle for the first time, you may actually have to take out comprehensive and collision coverage on your vehicle, according to the terms of your loan.
When you take out a loan to cover the costs of a vehicle, the vehicle stands as collateral for that loan. The lender may keep your title until you pay off the loan. If you stop making payments on your loan, the lender can then take possession of your vehicle. If you have a serious accident, on the other hand, you may no longer have the vehicle for the lender to take possession of.
To help prevent losses in the event of a serious accident caused by the driver of a vehicle, most lenders will require you to carry more than minimum liability insurance. Your loan may also require that you carry GAP insurance to cover the remaining amount on your loan after a vehicle is totaled in an accident.
What is your auto insurance budget?
There are two key questions you need to consider when you look at your budget for insurance coverage purposes:
- First, you need to know how much you can afford to pay for your insurance coverage. If you plan to take out a loan for a new vehicle, make sure you factor those increased insurance payments into your budget, and;
- Second, you need to consider whether you have the money in your budget or to cover you if something happens to your vehicle.
If you cannot afford to pay for repairs or replacement costs to your vehicle, you may need to consider increasing your insurance coverage or decreasing your deductibles so that you will not be without a vehicle in the aftermath of an accident.
Are there any exceptions in your auto insurance policy?
Most insurance policies have exceptions that could interfere with your ability to receive compensation after an incident. For example, some policies may not cover flood damages, especially if you live in a flood-prone area.
However, when there are exceptions in an auto insurance contract, then there are usually additional riders you can take out to cover these types of situations. Riders can increase your car insurance rates, but the up-front cost could save you thousands in a denied claim.
What should I do after a car accident?
Now that you know the type of coverage you need to be adequately covered in a car accident, what should you do after a car accident?
If there are serious injuries, immediately call 911 and the police. If this is a minor accident, move the vehicles off the road if possible and call the police if there is significant damage to your or any vehicles involved.
Do you have to file a police report for a car accident? No, you aren’t under any legal obligation to call the cops after an accident unless there are serious injuries. However, the police will file a report that can help quickly establish fault and make it easier to process your insurance claim.
Provide the police with an assessment of what you observed leading up to the accident, including any factors that may have contributed to the accident. Do not brush off the other driver’s liability or accept liability at this time. That is for the insurance companies to figure out later.
For example, if you stopped fast at a red light and the other driver rear-ended you, you did not cause the accident: the other driver followed too close and did not stop fast enough, and likely bears liability for the accident.
Once you speak with the police, get in touch with your insurance company as soon as possible. Most insurance companies now have 24/7 hotlines available, so you can call in and report the accident immediately and ask for further clarification about what you should do next. With some companies, you can file your auto insurance claim with the mobile app.
How do I file an auto insurance claim?
Not sure how to file a car insurance claim? It’s easier than you think. If you carry collision insurance on your vehicle, you have two options for filing a claim after the accident:
- You can choose to go through the other driver’s insurance company and wait for compensation, which may lead to delays, or;
- You may choose to go through your own collision insurance, pay your deductible, and let your insurance company deal with the other company and reimburse you later.
If you plan to file a claim through the other driver’s insurance company, you will need to get in touch with that insurance company. The company will be able to open a claim, but cannot proceed with that claim until talking to the other driver.
Your insurance company can advise you about the best course of action following the accident. However, getting the ball rolling soon after the accident will help streamline repairs to your vehicle.
It can take time to get your vehicle repaired after a car accident. You may need to wait for the other driver to get in contact with their insurance company, wait to have the damage to your vehicle appraised, and wait to have the repairs approved through the insurance company. This process, due to its time-consuming nature, can leave you extremely frustrated.
If the insurance company drags its feet or refuses to provide the compensation you deserve, you may need to get in touch with an auto insurance attorney to learn more about your rights. Use our free search tool below to find free legal advice, local auto insurance agents, and free auto insurance quotes near you.
Do you have adequate car insurance for your needs? Do you need help finding a car insurance provider who will offer the coverage you need in the event of an accident, natural disaster, or theft? Enter your ZIP code below to get the auto insurance advice you need.
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