Disclosure: The ads and links on this website may promote products. We may receive compensation. Always check with legal professionals before making any financial decision.
Car insurance may seem like a different world to drivers. Usually, you spend more time buying a car and learning how to drive than learning about car insurance. Why spend time learning about car insurance? It can help you understand what you’re paying for every month.
What is Car Insurance?
Although rather complicated, car insurance protects a driver from some financial responsibility if they are in a car accident. Car insurance covers damage to your vehicle, medical bills, lost wages, damage to another vehicle and even some legal fees. The road ahead is unknown but car insurance protects you.
Naturally, no one ever expects to be in a car crash. Insurance is there to help cover the costs when a accident does occur. It keeps you and your family safe.
If you cause damage to another driver’s vehicle, it can cover most or all of the costs. It can give you peace-of-mind to know that nearly all drivers are insured.
It is a contract between the insurance company and you. The contract usually means that they will cover certain costs in you are in an accident.
Why Do I Need Car Insurance?
Car insurance can protect you from some devastating surprises on the road. Being insured can help cover medical bills, repair bills, even legal costs in a car accident. Only driving with active car insurance can save you from some huge headaches.
In most states, car insurance is mandatory for all drivers. Some states do make exceptions but those are usually for corporate fleets and wealthy individuals. States usually require someone without insurance to have enough money to pay for all the expenses, should an accident occur.
Depending on the state, driving without insurance may actually lead to jail time. In other states, it comes with a ticket for the first few offenses. Because car insurance keeps other drivers safe, it is dangerous to drive without it.
If you’re caught driving without insurance, you may be arrested, ticketed and may lose your license to drive. Even if you only receive a ticket, that will change your driving history. This will make your insurance rates go up when you next get insured.
For all the reasons and more, please do not drive without car insurance.
How Does Car Insurance Protect Me?
Depending on your coverage, it can protect you from vehicle thief, accident, acts of God (such as natural disasters), uninsured drivers damaging your vehicle, underinsured drivers damaging your vehicle, personal injury, medical costs, legal fees, lost wages and lost of vehicle.
Having a company cover some or all of these costs can make a huge difference. They can take a lot of the headache out from being involved in an accident. They can stand beside you during the whole process.
Can you imagine what would happen if you accidentally totaled a new BMW or Mercedes? Without insurance, you would be on the hook to replace their vehicle.
What Types Of Car Insurance Are There?
- Liability Coverage
- Collision Insurance
- Comprehensive Insurance
- Uninsured Motorist Insurance
- Underinsured Motorist Insurance
- Medical Payment Coverage
- Personal Injury Protection Insurance
- Gap Insurance
- Towing And Labor Insurance
- Rental Reimbursement Insurance
- Classic Car Insurance
- New Car Replacement Coverage
- Ride-sharing Coverage
- Sound System Coverage
Do I Get All Those Coverages?
In most cases, the answer is no. It varies from company to company but most states only require liability coverage. Some also require medical payment coverage or personal injury protection. In other to know for sure, you’ll need to check your policy.
Most insurers often all or most of these coverages. You can often add them to your policy. Personally, I try to make sure I have a good level of personal injury protection, underinsured and uninsured motorist limits in my policy. That way, I know I will be taken care of in those situations.
What If I Just Want Cheap Car Insurance?
In most cases, you’re looking for the state minimum. This varies from state to state. You’ll want to double check to make sure your have the right coverages. However, this may not end up being the best for you. No one knows the future, but you never know when you will need a certain coverage.
Recently, I spoke with someone who was hit by a driver who just drove away. This man made his living by delivering food. Because he did not have uninsured motorist coverage, he lost his vehicle and means of making a living.
Usually, if you have a car payment, you’ll need to have full coverage car insurance. This is something almost all the financial companies require. This is in case you are at fault in an accident. I would also recommend Gap coverage.
Full Coverage Car Insurance
Full coverage usually means your policy includes liability coverage, collision coverage and comprehensive coverage. It will also include anything else mandated by law, such as medical payments or personal injury protection.
Liability coverage covers damages you may do to another vehicle. Collision coverages cover your vehicle if the other party is not found at fault. It will cover repairs or replacement up to the value of your vehicle. If own more than your vehicle is worth, gap coverage covers the difference. Gap is not usually a part of full coverage.
Comprehensive coverage is for damage to your vehicle outside of an accident. If there is hail damage to your vehicle, that is a comprehensive claim. If a deer rams into your vehicle, comprehensive coverage can pay for your repairs.
Do I Need Towing?
A single tow can run over $100. Having a car lockout can cost close to that. Most insurance companies now include towing coverage in their policies. This can be helpful when you desperately need a tow. However, they can classify this as a claim on your insurance. This can lead to higher rates later down the line.
If you have AAA or another roadside assistance program, I would highly recommend using that instead. It can actually end up being cheaper, depending on how many tows you need. These types of memberships are usually rather inexpensive and come with several benefits.
Where Should I Get Car Insurance Quotes?
There are so many places to get insurance quotes. There are local agents, national phone lines, corporate websites and even comparison shopping sites. Where should I start?
I recommend that everyone start with a comparison shopping site. This can let you get quotes from several companies at once. However, I recommend always checking the corporate websites of at least two of the lowest quotes. So that you will know that you’re getting the best rate possible.
Sometimes, how you shop for rates can change the rate you get. Since the corporate website is usually the cheapest way for them to get business, companies usually keep their cheapest rates there.
Of course, you can call your local agent. However, I would recommend getting at least 10 quotes before picking one. That way, you know you’re getting one of the cheapest rates in town.
How Can I Save Money?
Everyone wants to save money! No one really likes paying for car insurance, despite how the coverages may help you later. You will want to start comparing quotes to find the best one.
Of course, it’s best to know what coverages you need. This will save you from paying for coverages you don’t need. That is the best place to start.
Once you know what coverages you need, then it is time to compare quotes. As I’ve said, make sure you get several quotes before making a decision. Maybe try with a comparison insurance site. Afterwards, always double check with those carriers websites.
Although this will take some time, it can help you save hundreds over the course of a year. A lot of the time, people will keep the same company for years. This investment of a few hours of time may save you lots of money over time.
Now you know what car insurance is, why you need it, how it protects you, the types of coverages available, some of the coverages you may need, how to get cheap insurance by saving money on it. If you have more questions, feel free to look around this site. I have several articles about choosing car insurance policies and saving money.
Personally, I have found that Root Insurance saved me the most money so far. Of course, I will always keep looking for better rates. But, for now, Root has been a great company for me.
If you are looking for a good rate, I would recommend trying Root. In fact, if you click here and use my link, you will actually get a $50 bonus just for getting a quote through them!
All you have to do is download the app, fill out a few questions and then let it track your driving. In my experience, it usually take about 7-10 days to get the quote back.
Adam is a license Property and Casualty Insurance Agent for over two years in 25 States. He has worked with 10 different insurances companies. His interests include marketing, insurance, sales, and personal finance.
1 thought on “Car Insurance: A Complete Guide In 2021”
Comments are closed.