Drop rental reimbursement coverage. If you have another car you can use while your vehicle is being repaired, you don’t need to buy this coverage. You can also skip roadside assistance coverage if you have an auto-club membership that’s a better deal, or if roadside assistance comes as part of your car’s warranty.
Review personal injury protection and medical payments coverage. If you already have good health coverage, you don’t need it through your auto policy. Keep the coverage if you don’t have health insurance, or if your usual passengers might not be well-insured.
Actively pursue discounts. They can include breaks for bundling home, auto, and umbrella policies with the same carrier; taking a safe-driving course; letting your carrier know about your lower annual mileage; and reporting your teen driver’s good academic average, typically a B or better.
Keep your credit and driving record clean. Both have an impact on the price of your insurance premium. For the best rates, you’ll need to have at least three years of clean driving. In most states, the better your credit score, the lower your rates will be.
Choose your car wisely. Premiums vary by model. When comparing models, ask your insurer for premium quotes on the different vehicle models that you’re considering. Luxury and high-performance cars tend to cost more to insure than more mainstream models.
Assign the right driver to the right car. Ask your insurance agent who the principal driver should be for each car in your household. Basing those matchups on individuals’ driving records and car values might save you money. Pairing a lower-value car with the driver who commutes the longest distances, for instance, may cost you less than giving that driver the higher-value car. (Of course, this strategy may require come negotiation among family members.)
Car insurance is a financial product designed to protect your finances from the fallout of auto accidents and injuries.
Many factors affect your car insurance rates, including your age and gender (in most states), the type of vehicle you drive, your driving history and the specific coverage you buy.
Car insurance can help pay unexpected costs associated with covered auto accidents. Depending on the coverage you choose, your car insurance policy might pay for damages and injuries you sustain, as well as damages and injuries that you cause to others. Insurance is a financial product. Car insurance does not protect your car; it protects your finances. This means that choosing the right company, coverage types and coverage levels for your needs is important for your overall financial health.
You might choose to purchase liability-only coverage, which protects your finances if you damage someone else’s vehicle or property or if the other party sustains personal injuries. You could also choose full coverage, which adds financial protection for damage to your car. Insurance operates like a pool. Everyone pitches in a little money — your premium amount — so that if and when an accident happens, everyone loses a little bit, but no one loses everything.
How much car insurance you need will depend on your individual circumstances. You’ll have to purchase at least the required minimum coverage types and limits in your state to drive legally. However, most car insurance experts recommend purchasing higher liability limits, even if you opt for a liability-only policy. You’ll pay more for coverage, but you’ll also likely have lower out-of-pocket expenses if you cause an accident and the damages exceed your insurance coverage limits.
If you have a loan or lease on your car, your financial institution will likely require you to have a full coverage policy. But even if you own your car outright, you might want to consider purchasing full coverage — especially if your vehicle is newer, relatively expensive or you do not have the funds to repair or replace it yourself after an accident.
An auto insurance policy is a package of several coverage types. The kinds and amounts of coverage you choose will depend on your specific situation. Experts recommend speaking with an agent who can help you design a policy that best suits your circumstances.
The core coverage on car insurance policies are the liability coverage types. These are generally required by law and protect your finances from damages you cause to others.
Bodily injury liability: This is designed to cover the cost of injuries that you cause to another party in an accident.
Property damage liability: This pays for the damage you cause to someone else’s property in an at-fault accident, like damage to another vehicle, a building or personal property.
Some parts of a car insurance policy are designed to financially protect you and your passengers from the expense of injuries.
Uninsured motorist coverage and underinsured motorist coverage: These coverage types can pay for your damages and injuries if you are hit by a motorist who does not have any insurance or does not have enough insurance to cover your expenses.
Medical payments coverage: This pays for your and your passengers’ medical bills stemming from an accident, regardless of fault. Depending on where you live, it may be mandatory, optional or not available.
Cyber Crime QuotesPersonal injury protection (PIP): This coverage is similar to medical payments but also covers lost wages and the cost to hire someone to do household tasks if you or a passenger is unable to complete them. It is required in no-fault states, may be optional in other states or, like medical payments, may not be available depending on where you live.
If you choose certain coverage types, your car insurance policy could protect your finances from damage that your vehicle sustains.
Comprehensive: Often called “other-than-collision” coverage, this pays for damages to your car caused by various scenarios, including theft, vandalism, weather damage and hitting an animal. Adding comprehensive and collision to your policy means you are purchasing “full coverage.”
Gap insurance: If you have a loan or lease on your vehicle, this coverage pays the difference between your loan amount and the depreciated value of your new car if it is totaled or stolen and not recovered.
Rental car coverage: If your vehicle is not driveable due to a covered loss, this optional endorsement could help pay for the cost of a rental car.
Roadside assistance: This optional coverage can help cover the costs of service calls, like tows, locksmith services and battery jumps.
Average car insurance rates vary by company, vehicle and driver. So shopping around can help you find a policy that fits your needs for the most affordable price. When requesting car insurance quotes, make sure to ask each provider for the same coverage types and policy limits (or as close as possible). That way, you’ll be comparing apples to apples.
Average car insurance rates vary by company, vehicle and driver. So shopping around can help you find a policy that fits your needs for the most affordable price. When requesting car insurance quotes, make sure to ask each provider for the same coverage types and policy limits (or as close as possible). That way, you’ll be comparing apples to apples.
Your car insurance premium is not just based on which company you choose. There are numerous other factors that can impact how much you pay for auto insurance, including:
Age: Young drivers and those who have just earned their license are more prone to accidents and risky driving behavior compared to other groups. This typically equates to higher-cost car insurance premiums. In all states except California, Hawaii and Massachusetts, your age impacts your car insurance premium, with teens paying the most. As you age into your 20s and 30s, car insurance rates generally begin to drop. However, rates may slightly increase again once you reach 70 years of age.
Gender: Males tend to pay higher rates than females due to an increased likelihood of getting into more accidents and more severe accidents. California, Hawaii, Massachusetts, Montana, North Carolina and Pennsylvania do not allow insurance companies to use gender as a factor to calculate your premium.
Vehicle type: The vehicle you drive is another big factor in how much you will pay. Some vehicles are cheaper to insure than others.
Credit rating: It may be surprising, but your credit score may impact your car insurance premium. Drivers with low credit scores tend to file more claims than drivers with higher scores, so insurance companies charge higher premiums to compensate for the increased risk. Not all states allow credit to be used in determining your rate.
Driving record: If you have accidents, tickets or DUI convictions on your motor vehicle record, you will likely pay more for insurance.
Insurance history: Drivers with continuous insurance tend to pay less than drivers with lapses in coverage or no insurance history.
Coverage type and limits: Your premium will vary depending on the coverage type and limits you select. Generally, the more extensive the policy, the more you’ll pay.
Discounts: If you qualify for one or more car insurance discounts, you may be able to lower your premium. You may also save money on car insurance if you are married. And if you are a member of the military or a veteran, you could find specialized discounts or less expensive coverage options.