Last Updated: November 2020
Auto insurance can help protect your vehicle, medical costs, and liability if you are in an accident.
In the US, auto insurance is required by law, yet it’s something that a lot of people aren’t sure how to shop for.
Below, we will show you the different auto insurance options you have. You’ll learn how the deductibles work, factors that determine your costs for car insurance, and how to find the best quotes from top-rated carriers.
- What is Auto Insurance?
- Different Types of Auto Insurance
- How the Auto Insurance Deductible Works
- How Much Does Auto Insurance Cost?
- How to Find the Best Auto Insurance Quotes
What is Auto Insurance?
Auto insurance is a form of insurance to protect vehicles for the road like cars, motorcycles, and trucks. The owner of the vehicle pays a monthly premium to an insurance company for protection against damages to the vehicle.
- Having auto insurance is required by law in the US.
Auto insurance isn’t as simple as other forms of insurance, like life insurance. There are several different parts of auto insurance plans including optional add-ons.
Different Types of Auto Insurance
There are several types of auto insurance coverage you can choose from.
Type 1: Liability Insurance Coverage
The first part of the protection we are going to look at is liability protection. There are three parts of liability coverage.
Bodily Injury Liability
If you’re in an accident and you’re at fault, this is the part of your plan that pays for any medical bills and lost wages of the other driver or passengers.
Without this coverage, you could be stuck with hospital bills for the other person/people, which could easily equal hundreds of thousands of dollars.
Uninsured Motorist Coverage
Uninsured motorist coverage helps pay for the repair bills or medical fees when you’re in a wreck, the other person is at fault, and they’re not insured.
Property Damage Liability Insurance
If you’re involved in a wreck and you damage someone’s property (tree, home, fence, etc.) this portion of your insurance will pay to replace or fix those things.
Type 2: Collision Insurance Coverage
This is the most basic type of coverage.
Collision coverage pays for any repairs if you’re in a car accident, regardless of which driver is to blame. It also pays if you hit something other than a car.
Note: One thing that isn’t protected with collision coverage is damage to your car which didn’t happen while driving. If a tree falls on your car or it’s stolen, this part won’t do you any good.
Type 3: Comprehensive Coverage
Comprehensive coverage is the “everything else” protection for your vehicle.
Basically, all the things which aren’t protected under the collision coverage are protected with comprehensive.
This coverage can help pay for any repair bills caused by fire, theft, anything falling on your car, animals, weather, and whatever else you can think of.
- If you’re leasing a car, you will be required to have comprehensive coverage.
- If you own your car, then it’s an optional coverage you can add for extra protection.
Type 4: Pay-Per-Mile Auto Insurance Coverage
Recently, some carriers are changing the way they sell auto insurance.
Instead of trying to cram all of their customers into a “one-size-fits-all” box, they are offering more customizable options.
One of those new ways of selling auto insurance is a pay-per-mile insurance model.
- You pay a monthly base rate.
- You also pay an additional fee for every mile that you drive.
More and more companies are beginning to offer this type of coverage and it’s changing the way carriers are thinking about auto protection.
Metromile Car Insurance is one relatively new company that is using this model. They have base premiums as low as $29, then you’ll pay around 6 cents for every mile.
How the Auto Insurance Deductible Works
The deductible for auto insurance is the amount of money you have to pay out-of-pocket before the insurance coverage kicks in.
The deductible amount can change based on the plan, the carrier, and your preferences.
For most auto insurance companies, a deductible is $500 or $1,000.
Policyholders with $1,000 deductibles are going to pay less every month, but they will have to pay more out-of-pocket when they make a claim on their plan.
How Much Does Auto Insurance Cost?
When you apply for coverage, the auto insurance companies are going to try to get a clear idea of your driving habits and your total risk to the company. This will affect the cost of your auto insurance policy.
Here are some of the factors they are going to review when determining your rates:
- Age: Younger drivers are going to pay more for their insurance coverage. Studies have shown younger drivers are at a higher risk for an accident.
- Location: Where you live is going to change how much you pay. Some states are better for drivers, and those drivers get lower rates. Check for an insurance agent near you who has access to regional companies you may have not have heard of.
- How Long You Have Been Driving: The more driving experience you have, the less risk you are to the insurance company. New drivers pay more for coverage.
- Claims History: If you’ve made a lot of claims on your insurance policy, they are going to charge you more.
- Any Tickets or Accidents: Similar to claims history, if you have several tickets or accidents on your record, you’re a riskier driver. More risk means higher rates.
- Type of Car/Age of Car. The more expensive your car is, the higher your premiums will be because the more the company would have to pay on a claim.
- How Much You Drive: If you don’t’ drive much every year, there is a chance you can get a discount on your plan. Obviously, the less you drive, the less chance you have to be in an accident.
All of the factors are not considered equal. The carrier is going to view some of them with more severity than others.
For example, some companies focus on recent accidents more than others. Other carriers are going to put a lot of stock into the age and location.
If you get quotes from two companies for the same coverage, the costs might be very different.
There may also be additional factors to consider if you need motorcycle, boat, or RV insurance.
How to Find the Best Auto Insurance Quotes
To find the best auto insurance for your needs, you should get quotes from the best auto insurance companies and compare them.
There are plenty of tools you can use to get all of the quotes to come to you.
Use our free quote tool on this page to find coverage options in a matter of seconds.
You need to answer some basic questions about yourself and your insurance needs, then allow our tool to run the numbers and tell you the best auto insurance options for you.