Understanding Auto Insurance

If you’re shopping for car insurance, it may seem like a lot of information all at once. Fortunately, understanding the types of auto insurance coverage is not difficult once you know what you’re looking for. It’s important to know you have the proper coverage on your vehicle so you can drive legally in your state.

You can choose a minimum coverage policy that provides simple protection if you cause an accident. You can also purchase higher levels of coverage that help if your vehicle is damaged. What will work best for you will depend on the make and model of your vehicle, how much your car is worth, how often you drive, and other important factors.

As you consider multiple companies for auto insurance, you may wonder which will be the best for you. The best car insurance for you will depend on your personal needs and budget. You can compare how much auto insurance do you need from multiple companies to find the best coverage in your area quickly.

Understanding the Different Types of Auto Insurance

There are five major types of auto insurance you may need for your vehicle:

• Liability insurance
• Collision insurance
• Comprehensive insurance
• Personal injury protection (PIP)
• Uninsured/underinsured motorist coverage

Depending on where you live, you may need more than one of the coverages listed above to drive legally in your state. Still, it’s important to understand all five types of car insurance coverage so you can determine what will be best for your situation.

Understanding Liability Insurance

Almost every state in the U.S. requires drivers to carry liability insurance. With liability coverage, you are protected if you cause an accident and injure someone or damage another person’s property.

Liability auto insurance has two standard elements: property damage and bodily injury. With property damage liability, your insurance company will cover damage you cause to someone’s car or other property up to a certain dollar amount. With bodily injury liability, your insurance company will cover the medical bills associated with injuries to other parties in an accident you cause.

In understanding auto insurance coverage, it’s important to know your state’s laws for liability coverage. Each state decides how much auto insurance you should have as a driver.

For example, in South Carolina, you must have $25,000 in bodily injury coverage per person, $50,000 in bodily injury coverage per accident, and $25,000 in property damage coverage per accident. You’ll often see this written as 25/50/25. In California, drivers need 15/30/5.

If you live in a state requiring higher liability coverage levels, your car insurance rates may be higher than the national average. Knowing your state’s requirements for coverage can also help you better understand auto insurance quotes available in your area.

Understanding Collision Insurance

Collision insurance helps if you cause an accident and damage your vehicle. With collision coverage, your insurance company will pay for repairs to your vehicle once you’ve paid your deductible. In addition, you don’t have to purchase coverage up to a certain amount. Instead, insurance companies automatically cover your vehicle up to its actual cash value (ACV) before totaling it.

Without collision insurance, you will pay for any repairs to your vehicle out of pocket if you’re at fault in the accident. Collision coverage may not be a good idea for older vehicles with a low ACV, but drivers who finance their cars or whose cars are expensive should consider collision coverage (and your lender might even require it).

Understanding Comprehensive Insurance

Similar to collision insurance, comprehensive auto insurance coverage is not mandatory (though it may be required by your lender if you finance). Instead, comprehensive insurance is an option drivers can add to their auto insurance policies.

If you have comprehensive insurance, your insurance company will pay for repairs to your vehicle if the damage was caused by something other than an accident, such as inclement weather, wild animals, theft, or vandalism. Without comprehensive coverage, you would have to pay for any repairs related to these events out of pocket.

If you combine collision and comprehensive insurance with liability coverage, you have a full coverage auto insurance policy. Many people choose full coverage on their vehicles to ensure they are safe and protected behind the wheel.

Read More: What is the difference between comprehensive and collision auto insurance coverage?

Understanding Personal Injury Protection (PIP)

PIP coverage helps if you or anyone in your vehicle is injured during an accident. Personal injury protection insurance pays for visits to the doctor and medical bills, and it may also help with lost wages associated with a covered accident. Some states require PIP insurance, but the coverage is available in all states in the U.S.

Understanding Uninsured/Underinsured Motorist Coverage

Uninsured/underinsured motorist coverage protects you if you’re in an accident someone else caused, but that person does not carry the proper insurance. With uninsured/underinsured motorist insurance, your insurance company will cover the damage to your vehicle up to your car’s ACV.

Some insurance companies offer a vanishing deductible with uninsured or underinsured motorist insurance. Speak with a representative from your insurance company to learn whether this is an option for you.

Read more:

• Top Uninsured Motorist Insurance Coverage: What You Need to Know
• What happens if you don’t have Auto Insurance?

How Auto Insurance Works

Before you can utilize your car insurance coverage, you have to purchase a policy. You may have a car insurance policy you’re happy with, or you may be searching for the right company with better rates.

Insurance companies determine rates by considering several factors to assess your risk of filing a claim. Some of the most significant factors that may impact your car insurance rates include:

• Gender
• Marital status
• Credit score
• Location
• Driving history
• Car make and model
• Coverage type

Insurance companies have different ways of assessing risk. Because of this, you need to compare car insurance quotes from several companies before determining which works best. Comparing quotes will help you ensure you aren’t overpaying for your coverage.

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How to File an Auto Insurance Claim

If you need to file an auto insurance claim, you’ll reach out to your insurance company either over the phone or online to do so. Have your personal and policy information ready to provide, and be as detailed as possible about what happened during and leading up to the accident.

Once you file a claim, an insurance adjuster will assess the damage to your vehicle, and your insurance company may tell you where to take your car for repairs. Your insurance company should cover the cost of repairs once you pay your deductible.

Read more: How quickly can you get Auto Insurance coverage?

How to Get The Right Auto Insurance Policy

How to get auto insurance coverage? The first step to find the right auto insurance coverage is to shop online for coverage. When you shop online, you can compare coverage and quotes from several providers in your area. When you compare information from multiple companies, you learn which will work best based on your unique situation.

As you consider the types of auto insurance coverage you may need, assess your current situation. Do you drive a relatively new car with a high cash value? If so, you should consider a full coverage policy that would help if you ever needed to pay for repairs to your vehicle following an accident or other incident. On the other hand, do you drive an older model that’s not worth much money? If so, a minimum coverage or liability-only policy may work great.

As you assess your vehicle, how much you drive, and the types of coverage you do and don’t need, you’ll be able to determine the type of policy you want to purchase with an insurance company. Learning all about insurance may seem boring, but it could help you find coverage that protects you when you need it, and you could save money in the process.

If you like your current insurance company, finding and comparing quotes from other car insurance companies at least once a year is still a good idea. First, make sure your company is not charging too much for coverage. If it is, let a representative know that other companies are willing to offer the same coverage for less to see if your current insurance company will match the quote.

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Understanding Why You Need Auto Insurance

Car insurance helps drivers in two major ways. First, auto insurance protects drivers who cause an accident. Without liability coverage, you would be financially liable to pay for repairs or medical bills associated with any accident you caused.

Second, car insurance assists you in repairing your vehicle when necessary. Coverages like collision and comprehension ensure you won’t pay for repairs to your car if you cause an accident or if something like bad weather or theft causes damage.

Understanding auto insurance may not seem exciting, but knowing what types of coverage you need is important. You could pay a lot out of pocket after an accident or other incident without proper car insurance. And if you’re ever caught driving without coverage, you could get into a lot of trouble.

Assess your current situation to determine what types of coverage you’ll need other than liability. For example, adding collision and comprehensive coverage may be a great idea, depending on the type of car you drive and whether you have a lease. PIP and uninsured/underinsured motorist coverage may also be helpful to add to your policy if they aren’t already required in your state.

Once you know what coverage you’re looking for, get quotes from several insurance companies to determine which offers the most affordable policy.