Auto Insurance Guide

When you hit the road, you have no idea what’s going to happen.

You can be as safe as possible and still never know what someone else is going to do.

Everyone makes mistakes.

You can look away for one second, and the next thing you know, BAM!

You’re in an accident.

While you don’t want to think about an accident happening, you never know when one will.

You need the best protection possible.

Aside from never leaving your home or wrapping your car in bubble wrap, having quality auto insurance is the best thing you can do to protect yourself and your car.

What is Auto Insurance

Unlike other kinds of insurance, like life insurance, auto insurance isn’t as simple.

There are several different parts of insurance plans and add-ons.

You need to wade through all of the confusing terms and types to get the best coverage.

If you don’t understand the plan you’re buying (or need to buy), you won’t know if you have enough coverage.

Thankfully, once you break down all of the parts of coverage, it’s not as difficult as it might seem at first glance.

Liability Coverage

The first part of the protection we are going to look at (and one of the most important) 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 which is going to pay 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

This is a kind of coverage which isn’t used as often but is extremely important.

Having auto insurance coverage is the law.

Just because it’s the law doesn’t mean everyone obeys it.

Imagine a scenario: you’re driving to work one morning and a distracted driver doesn’t stop at a stop sign, crashing into your car.

Everyone is okay, the cops are called, and you start filing the report.

Then things take a turn as you find out the other driver doesn’t have any car insurance.

A study in 2014 showed that around 12% of drivers didn’t have insurance.

If you’re in an accident, which isn’t your fault, there is a chance the other person won’t have insurance.

Are you out of luck? Are you going to have to pay for the damages?

If they don’t have insurance, a lawyer can hopefully help you get some of the costs covered.

The uninsured motorist coverage will help pay for the repair bills or medical fees if the other person is at fault and not insured.

Some states require drivers to have this uninsured motorist coverage, whereas, in others, it’s an optional add-on.

Property Damage Liability Insurance

The other types of insurance have dealt with drivers, but this kind of liability deals with objects and property.

If you’re involved in a wreck and you damage someone’s tree, home, fence, etc. this portion of your insurance will pay to replace or fix those things.

Collision Coverage

This is the most basic type of coverage.

It’s what pays for any repairs if you’re in a car accident, regardless of which driver is to blame.

Collision coverage also pays if you hit something other than a car.

One thing which isn’t protected with collision coverage (even though most people believe otherwise) 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.

Comprehensive Coverage

Comprehensive coverage is the everything else protection.

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 optional coverage you can add to beef up your protection.

Auto Insurance Deductible

The deductible is one of the most common complaints of auto insurance.

If you’re paying premiums every month, why should you pay to use the policy?

The deductible 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 people, a deductible costs either $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.

What Will Your Auto Insurance Quotes Be?

When you apply for an auto insurance plan, the carrier is going to try to get a full 360 view of your driving habits and your total risk to the company.

Here are some of the factors they are going to review when adding up 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, those drivers get lower rates.
  • 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 (similar to the age factor)
  • 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 equals higher rates.
  • Type of Car/Age of Car. The more expensive your car is (usually the newer it is), the higher your premiums. The more expensive the car is, 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.

There may also be additional factors to consider if you are insuring a motorcycle, boat or RV.

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 got quotes from two companies for the same coverage, you would get two very different numbers.

Just because some companies sell the same kind of policy doesn’t mean they will have the same sized premiums.

Pay-Per-Mile 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 insurance is pay-per-mile car insurance.

These plans are exactly what they sound like; you’re going to pay based on how many miles you drive.

Here’s how they work: You will pay a monthly base rate and then pay an additional fee for every mile.

More and more companies are beginning to offer this type of coverage and it’s changing the way carriers are thinking about auto protection.

As an example, let’s look at Metromile.

They are one of the most popular pay-per-mile insurance carriers.

The base premium is going to be based on several factors, but they have premiums as low as $29.

After the cheap monthly payment, you’ll pay around 6 cents for every mile.

These pay-per-mile companies are targeting drivers who don’t drive much.

Getting The Best Auto Insurance Quotes

You need to do some comparison shopping, but where should you start?

Which company is the best?

You probably don’t have the time (or desire) to call dozens and dozens of companies.

Luckily, you don’t have to.

Just because you’re legally required to have a plan, doesn’t mean you have to break your bank to meet the coverage requirements.

You should get the car insurance you want without having to fork over your life savings every month.

There are plenty of tools you can use to get all of the quotes to come to you.

We have one which will get you rates and coverage options in a matter of seconds.

You need to answer some basic questions about yourself and your insurance needs and allow our tool to run the numbers and tell you the best auto insurance options for you.

Instant Quote
About Jeff Root

is the owner of He's an independent life insurance agent who has helped 1,000's of consumers purchase life insurance online and over the phone.

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