How do I know if I chose the right coverages?

Choose the right coverage for your car by learning about the types of auto insurance out there. Also, consider the type of car you drive and your ability to pay for damages if needed. While most states have a minimum requirement for auto insurance, coverage is usually very limited. For the most peace of mind, add coverage and increase limits to be fully covered. You can keep auto insurance rates low by adding discounts to your policy and keeping your driving record clear.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Feb 15, 2022

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Overview

  • There are multiple types of auto insurance coverage available
  • Your state laws plus your personal needs will influence which coverages you need
  • Save money on car insurance by keeping a clean driving record and using discounts

When it comes to auto insurance, it can be difficult to choose the right coverage. You have to take into consideration the minimums you must carry, as well as the coverages that will make your life easier and offer peace of mind.

We will take you through the main types of auto insurance and how to choose the right car insurance coverage. However, it’s important to remember that each company will offer various coverages with different rates.

Shop around before you decide to buy auto insurance. Compare coverages and rates from different companies to find the best deal for you.

To get started on finding the right coverage for you, enter your ZIP code to compare free auto insurance from nearby companies.

What are the types of auto insurance to choose from?

Although the number of coverages to choose from can be intimidating, learning about each one will help you decide if you need it. There are several basic types of auto insurance coverage, and each is designed a little differently.

Common types of auto insurance include:

  • Liability – If you cause an accident, it covers personal injuries and property damage to others
  • Collision – Pays for damages to your vehicle if you cause an accident
  • Comprehensive – Pays for damages not from an accident. Fire, theft, vandalism, and acts of nature are examples of damages that are not caused by an accident
  • Medical Payments and Personal Injury Protection – Protects you and your passengers against medical bills, regardless of who is at fault in an accident
  • Uninsured/underinsured motorist – Protects you and your car in the event that you are hit by a driver who is either uninsured or underinsured
  • GAP – Covers the difference between what you owe and what your car is worth. The amount of time you can keep this coverage is usually limited

There are other coverages available, such as rental car and roadside assistance, that you can add to your policy at any time.

The type of coverage you choose to carry affects your car insurance rates. More coverage means higher rates.

This table shows the average annual rates from top auto insurance companies based on the type of coverage you carry. This will give you a good idea of how coverage affects rates.

Average Annual Auto Insurance Rates Based on Coverage Type
CompanyAverage Annual Rate for Low CoverageAverage Annual Rate for Medium CoverageAverage Annual Rate for High Coverage
Allstate$4,628.03$4,896.81$5,139.02
American Family$3,368.49$3,544.37$3,416.40
Farmers$3,922.47$4,166.22$4,494.13
GEICO$3,001.91$3,213.97$3,429.14
Liberty Mutual$5,805.75$6,058.57$6,356.04
Nationwide$3,394.83$3,449.80$3,505.37
Progressive$3,737.13$4,018.46$4,350.96
State Farm$3,055.40$3,269.80$3,454.80
Travelers$4,223.63$4,462.02$4,619.07
USAA$2,404.11$2,539.87$2,667.92
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Although rates are higher with full or high coverage, so is the amount of coverage. So keep in mind — more coverage means you will have fewer out-of-pocket costs.

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How do you determine which auto insurance coverage is right for you?

You need to consider several things when choosing the right coverage for you. Be sure to look at more than just rates when you are thinking about auto insurance.

First, consider your vehicle. Is it a new, expensive, or custom car? Is it older and already paid for? The more a car costs, the higher the insurance rates. Having limited coverage means you will be stuck paying for expensive repairs yourself. Consider adding higher limits and more coverage if  you can’t afford to pay for repairs or a replacement out of pocket.

If you lease a car or have a loan, you probably can’t choose whether or not to carry full coverage. Most lenders require drivers to carry full coverage to protect the vehicle in case it’s damaged.

Next, consider how to choose the right liability coverage. Look at the auto insurance requirements in your state. Chances are, the limits will be very low. Considering the cost of vehicles and hospital stays, this minimum coverage may not give you what you need.

Consider adding collision and comprehensive coverages to protect your vehicle from accidents, acts of nature, theft, vandalism, and other damages. The minimum insurance required by each state generally won’t pay for damages to your car, and limits are very low if it does include coverage.

Finally, consider medical and uninsured/underinsured coverages. Hospital costs are very expensive, and paying them out of pocket is unlikely.

Many drivers either do not have insurance at all or have only the bare minimum. In fact, the Insurance Information Institute estimates that around 12% of drivers are uninsured. So, no matter what other drivers do, adding a little extra coverage might give you peace of mind.

How can you save on auto insurance?

After you decide how much coverage you need, the next thing to do is see how you can save.

First, choose your coverage and deductibles carefully. Remember, more coverage means higher rates, so you may not need extras like rental car coverage and roadside assistance.

You can also save money by raising your deductibles. Your deductible is the amount of money you have to pay before your insurance starts paying. Most deductibles are $500-$1,000, but choosing a higher deductible means your rates will decrease.

Second, take a look at which personal factors are used to determine your auto insurance rates. Some factors, like your age, are out of your control. However, your driving record is completely in your control and is the most significant factor. Tickets, accidents, and DUIs will cause your rates to skyrocket.

Next, shop around for coverage. Every auto insurance company will look at your personal factors differently and offer different rates. So, while one company may overlook that speeding ticket, another will charge you more.

Finally, take advantage of car insurance discounts. They can make a huge impact on your rates. Many companies allow you to bundle them for the most savings.

Choosing the Right Coverage: The Bottom Line

Choosing the right auto insurance doesn’t have to be difficult. Simply look at your vehicle and how much you can pay each month for coverage, as well as what you would be able to pay in the event of an accident.

One of the best ways to find affordable auto insurance is to comparison shop. Compare multiple companies near you for the best coverage with the lowest rates.

Now that you know how to choose the right auto insurance coverage, enter your ZIP code to compare car insurance quotes from companies in your area.

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