WHAT IS CAR INSURANCE?

Auto insurance is essential financial protection for you and your car. It covers the costs if you cause a car accident that injures someone else or damages their property. It can also cover damage to your own car, either from a collision or another type of danger, like hail, fire, falling objects and theft.

Car insurance can help pay for towing if you’re stranded by the side of the road, or for a rental car if yours is in the shop after an accident.

At least a minimum amount of car insurance is legally required in almost every state, but most drivers need more coverage than just their state’s requirements.

HOW MUCH DOES CAR INSURANCE COST?

According to a 2020 report from the National Association of Insurance Commissioners (NAIC), the average car insurance premium was $1,134 a year (about $95 a month).

But car insurance rates can vary widely depending on factors like driving history and type of car. Your insurance company matters too — you can submit the exact same profile to three different companies and get three very different prices.

Car insurance rates are calculated based on factors like your age, claims history, location, even your credit score and marital status can affect your premiums.

WHAT DOES AUTO INSURANCE COVER?

Every car insurance policy is made up of different types of coverage that all provide different types of protection.

When you hear full coverage car insurance, that just means an auto insurance policy that includes a full range of protection for both you and your car.

COVERAGEPROTECTS AGAINST…LIKE IF…
Bodily injury liabilityInjury you cause with your carYou rear-end another driver and the impact gives them whiplash
Property damage liabilityProperty damage you cause with your carYou run a stoplight and cause an accident with another car, smashing their passenger-side door
Personal injury protectionMedical expenses for you and your passengers after an accident (required in some states)You live in a “no-fault state” and are injured in a car accident
Uninsured/underinsured motoristDamage caused by a driver who doesn’t have insurance, or whose insurance doesn’t fully cover repair costsYou’re t-boned by an uninsured driver and your car requires expensive repairs
ComprehensiveDamage not caused by a collisionAn icy tree branch falls onto your car’s roof, smashing it and cracking the windshield
CollisionDamage caused by a collision, no matter who was at faultYou backed into a telephone pole and cracked your rear bumper

Buying car insurance can seem intimidating, but it’s actually an easy process — you can probably do it in one afternoon.

All you have to do is follow these seven steps for simple shopping:

Gather your info:
Before you buy a policy, you’ll need to know the make, model and VIN number for every vehicle you’re insuring, as well as the full names, birthday and driver’s license numbers for every driver on the policy.

Understand auto insurance requirements in your state:
Check the car insurance requirements where you live, but keep in mind most drivers need much more coverage than just the state minimums. Those should be a starting point, not a shopping guide.

Understand liability coverage levels:
Liability coverage pays for any damage or injuries you cause while driving. While paying for hundreds of thousands of dollars of coverage may sound excessive, remember that repair costs, medical bills and legal fees can add up after an accident.

Consider additional coverage: 
Comprehensive and collision coverage pay for damage to your vehicle and make sense for most drivers. Think about what other protection you want to add to your policy, like roadside assistance or new car replacement coverage.

Compare quotes online:
Getting quotes from different car insurance companies is an easy process, but you should compare more than just cost. Independent reviews can also help you figure out if you’re getting quality coverage.

Pick a policy:
Once you settle on a policy, you can buy it and set it to go into effect as soon as you need, whether it’s a month away or a day away.

Cancel your old coverage:
Wait until after you’ve purchased a new policy before you cancel your old one, and make sure they start and end on the same day, so you don’t have a gap in coverage.