Understand what you’re covered for so you can build your perfect policy.
No one ever plans to be in an accident, but there are around 16 million auto accidents in the United States every year. Understand your coverage options so you can build the policy that’s right for you.
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What’s included with basic coverage?
Minimum coverage auto insurance is required in almost every state except Virginia and New Hampshire. Minimum coverage is determined by the state and varies from state to state. Auto Insurance typically covers medical fees, vehicle repair damages, body damage, legal fees and property damages.
Bodily injury liability
Covers injuries to another person in an at-fault accident, including medical care, legal help and funeral costs.
Property damage liability
Covers damages to someone else’s property in an at-fault accident, including repairs to vehicle, buildings or fences.
Personal injury insurance
Covers healthcare after an accident regardless of fault, including ambulances, nursing care and lost income.
Uninsured or underinsured motorist coverage
Covers damage caused by another driver if they don’t have insurance or if their insurance isn’t enough to cover the costs.
Optional car insurance coverage to consider
Unlike liability, personal injury protection and uninsured motorist coverage — which are required in most states — the following coverage types are optional. These optional coverage features offer extra protection against other mishaps that might happen to you or your car.
If you’re at fault in an accident, your collision insurance kicks in and pays for damage to your car.
Ensures that you’re covered for the expense of replacing or repairing your vehicle, regardless of fault, and damages that aren’t within your control.
This creates a gap between how much money you receive from your insurer and what you still owe to your bank.
Protects you beyond the coverage offered by your basic insurance.
If you break down on the side of the road, you’ll have help when you need it.
New car replacement
You’ll get a newer version of your current car if your new vehicle is stolen or declared a total loss.
Helps you with your medical costs resulting from a car accident — no matter who’s at fault.
If your pet is injured while riding in the car, this can help cover the costs.
What do coverage amounts mean?
Each state has minimum requirements for the amount of basic coverage you’re required to purchase. For example, the minimum liability coverage for New York state is $25,000 for bodily injury to one person, $50,000 for bodily injury to all persons and $10,000 for property damage in any one accident. Make sure you’re meeting your state’s minimum requirements.
How much car insurance do I need?
Answer four quick questions and compare the right car insurance coverage for you.
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|Cheapest rates||Good coverage||Highest coverage|
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What coverage do I need?
When you’re shopping around for the lowest price car insurance, you’ll see several options with big price differences. When comparing whether to add certain kinds of coverage, consider both the minimum state requirement and if the optional coverage is worth it.
The cheapest car insurance isn’t always the right one for your needs, even if saving money is your number one priority. Consider how you’d pay for your car if it was stolen or totaled in an accident. Could you afford a new car without insurance?
Liability claims, for example, could total much more than the bare minimum if you crash into someone’s garage or a car full of passengers. If you’re looking for the cheapest coverage, play around with maximum coverage and monthly payments. An extra $5 a month could cover you for hundreds of thousands in extra coverage. But for an older car that’s worth less than your annual premium, consider cutting comprehensive and umbrella coverage.
How much does each type of coverage cost?
|Coverage||Annual cost||Coverage details||Required||Worth it?|
|Collision||$300||Damage to your car||No||Yes|
|Comprehensive||$135||Non-accident damage like theft & weather||No||Only for newer cars or high risk areas|
|Property damage liability||$1,000 – $2,000||At fault damage to property||Yes||Yes|
|Personal injury protection||$50 – 100||Your post-accident injuries regardless of fault||Yes in 15 states||Yes|
|Bodily injury liability||$1,000 – $2,000||At fault post-accident injuries to others||Yes||Yes|
|Uninsured motorist||5% of annual premium||Damages caused by uninsured driver||Yes in 22 states||Yes|
|Umbrella||$150 – $300||Damages above and beyond other coverage||No||Only for high value assets|
|Medical payments||$50 – 100||Post-accident injuries for you & passengers||No||Only as health insurance supplement|
|Gap insurance||$20 – $30||Damages if car is stolen or totaled||No||Only for loans over car value|
How much extra car insurance coverage can I afford?
You can afford the most coverage by getting exactly what you need — and nothing more. While it can be beneficial to spend a little extra on your annual premiums, you don’t always need the most expensive policy.
- Have high-deductible health insurance? Pay about $50 a year to add on $1,000 of medical payments coverage. Once your car insurance has paid the deductible, your health insurance can cover the rest.
- Have a new car? Add GAP insurance for $20 a year so you don’t end up paying two car loans if yours is totaled in an accident and needs to be replaced. When your car is paid off, take it off your policy.
- Have an old car? Collision insurance may have been a great idea when your baby was new, but it might be time to re-evaluate. If your deductible costs almost as much as your car, you can ditch this add-on.
- Don’t have a hefty savings account? Uninsured motorist coverage could be worth the extra money. Without it, if you’re injured in an accident where you’re not at fault, you’ll have to take the other driver to court to get the money. And you’ll have to pay for any bills yourself until you have a settlement, even if you’re unable to work.
- Drive a lot of dirt roads? If you’re at high risk for a cracked or chipped windshield, full glass coverage can replace it with no deductible. To save even more, look for an insurer that offers deductible-free windshield repairs on its comprehensive policies.
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How to know when you’re covered
Damage to other people’s property
Hitting a car
Hitting a pole
Hit and runs
Hitting an animal
Storm or flood
Emergency accommodation, transport and repairs
Replacement of keys
Contents inside the car
New car replacement
While exclusions may vary between providers, you generally won’t be covered for:
- Damage caused by mechanical failure, depreciation, rust, wear and tear or changes made to the vehicle
- Loss of income from being unable to drive
- Damage incurred due to participation in a race or your vehicle generally not being safe
- Damage that was caused intentionally
- Any damage incurred if the person driving didn’t have a license, was drunk or on drugs
- Drivers not listed on your policy
Agreed and market values determine the value of your car for insurance purposes, but each in a unique way. The determined value will affect whether your car is written off, repaired or replaced under the terms of your insurance policy.
With market value, your car is insured for its current value at any given time based on its make and model, including depreciation.
With agreed value, you and the insurer agree on a specific amount your car is worth for your policy terms. For cars that have been customized or restored, you can include the value of the modifications in the agreed amount.
- Pays the expected value of your car on the open market at the time of the accident
- Not the trade-in value or collector value
- Doesn’t include warranty cost, vehicle transfer costs, stamp duty or dealer profit
- The car value that you and your insurer agree upon when you apply or renew
- Beneficial for classic or modified cars
Is market value or agreed value best for me?
When deciding if market value is right for you, consider whether or not the reduced amount will be enough to replace your lost vehicle. Is the money you save on your premium worth the additional cost you’ll have to pay to purchase a new vehicle? If you drive an older vehicle that’s 10 to 15 years old, replacement cost may not be as great a concern as saving on your premiums.
Effectively comparing car insurance quotes requires understanding the ins and outs of each type of coverage to decide if you need it and what’s covered. Compare car insurance companies and get multiple quotes to find the right policy and coverage for you.