- All Drivers Need Insurance
- Types Of Coverage: Need Vs. Want
- Coverage Levels: Cheap Now, Expensive Later
- Three Cost Factors: Tickets, Location, Job
- Insured? No Penalty To Switch
- How Comparison Shopping Saves You Money
All Drivers Need Insurance
Basically, every driver needs an auto insurance policy to cover the financial cost of any damage they cause in case of an accident. Technically, some states let you get around this requirement by proving that you maintain about $100,000 (more or less) in the bank, but almost everyone just gets an auto insurance policy. And don’t even think about driving without insurance — at best, you’ll get a big ticket; at worst, in some cases you can go to jail.
Do you need insurance? Yes. All drivers must have insurance.
Types Of Coverage: Need Vs. Want
By law, you need liability insurance: bodily injury liability protects everyone who gets hurt, and property damage liability protects the other person’s property if you cause the car accident.
(Some states require PIP insurance or Uninsured Motorist Coverage. If you live in one of the following states, click here to learn more: CT, FL, HI, IL, KS, KY, ME, MD, MA, MI, MN, MO, NH, NJ, NY, NC, ND, OR, PA, RI, SC, SD, UT, VA, DC)
Then, there’s some stuff you don’t need, but might want to pay extra for:
- Comprehensive insurance: This is great because it covers you if your car gets stolen, vandalized, destroyed by a storm, or many other random events.
- Roadside Assistance/Towing and Labor/Rental Car Reimbursement: If your car breaks down, you don’t have to worry: someone comes to you to fix it; if it needs towing, that’s free; if you need a car for a couple of days, your rental is free too.
Do you need liability insurance? Yes. You might want comprehensive, and roadside assistance too.
Coverage Levels: Cheap Now, Expensive Later
You can get as little as the minimum required coverage for your state, but in an accident, you could find yourself paying tens of thousands of dollars, even though you have insurance. There’s no reason you should worry that a car accident will make you bankrupt, which is why financial advisors recommend getting coverage of at least 100/300/50: $100,000 bodily injury per person, $300,000 total bodily injury, $50,000 property damage.
How much coverage do you need? At least your state minimum, but ideally 100/300/50.
Three Cost Factors: Tickets, Daily Mileage, Car Type
- Your Driving Record
If you have few tickets and moving violations on your record, auto insurance companies will reward your good record and discount your rate.
- Your Daily Mileage
Pretty simple: the more miles you drive per day, the more likely you are to get in a car accident. Don’t try to underestimate your mileage, because insurers check your odometer every few months to make sure you drive about as much as you estimated.
- Your Car
The cheaper your car is to repair, the cheaper your auto insurance. A fancy foreign car with exotic spare parts flown in from Germany or Italy will cost a lot more to repair than a Toyota Corolla, the most common car in the United States.
What will make your premium more expensive? Tickets, high miles, and exotic cars.
Most companies won’t advertise this fact, but customers can always request a refund of the remainder of their premium and switch to a different policy. Make sure to avoid a lapse in coverage by scheduling the end of your old contract with the start of your new contract.
Even if your old insurer charges you a penalty, oftentimes it can be as low as $10. If your new policy makes sense financially, it is often worth incurring a small penalty, waiting for the refund, and moving on to a new company.
What if you’re already insured? You can get a refund if you want to switch policies.
How Comparison Shopping Saves You Money
Quick Recap of Auto Insurance ABCs That Earn Readers $446 Average Savings Per Year
- Do you need insurance? Yes.
- Do you need liability insurance? Yes. You might want comprehensive, and roadside assistance too.
- How much coverage do you need? At least your state minimum, but ideally 100/300/50.
- What will make your premium more expensive? Tickets, high miles, and exotic cars.
- What if you’re already insured? You can get a refund if you want to switch policies.
- Comparison shopping saves customers money with online comparison tools. Our tool is free for our readers; click here to begin.