Whether you’re on the hunt for better rates or shopping for the first time, car insurance can be intimidating. There are so many numbers thrown at you, and every provider claims to offer cheap car insurance or the most benefits.
How can you possibly choose? In this article, we’ll go over everything you need to know about car insurance and how to choose a policy that fits your needs.
Type of Car Insurance Coverage
Before you can select any policy, you need to know about the different types of car insurance coverage. While some coverage is designed to protect you, other insurance pays for damages and injuries you cause to others. The following are just a few of the most common insurance coverage options:
Liability
This type of coverage is for others. Specifically, auto insurance providers design bodily injury liability to cover injuries or deaths that you caused with your car. Property damage liability covers vehicles or other property damaged by an accident you caused. Almost all states require drivers to carry a minimum liability policy.
Collision
If you want to cover your car’s damage when you cause an accident, you need collision insurance. It covers the cost of repairing or replacing your vehicle whether you hit a car, pole, tree, or another object.
Medical Payments and Personal Injury Protection (PIP)
Several states also require that drivers carry insurance for medical payments or personal injury. This plan reimburses you for medical costs associated with an accident. They also cover lost wages for you and your passengers.
Uninsured Motorist
In the event of a hit and run, you will be thankful for this insurance. It provides you with coverage when the driver at fault lacks enough coverage to pay for the damages he or she caused.
Coverage Amounts
Once you know what type of coverage you need, you must choose the amount. As with the coverage types, your state often determines the minimum amount of coverage you must carry. It could be as low as $10,000 a person or $20,000 for a single accident. On the other hand, insurance companies can set maximum limits for liability coverage.
Obviously, you shouldn’t choose more coverage than you can afford, so you need to find the balance between your budget and your needs. Since many cars can cost upwards of $40,000, you should aim for at least that much in property damage coverage. If you own a more expensive vehicle, we recommend upping your coverage in case an underinsured driver hits you. These are just a few of the things you should consider when selecting your coverage amount.
Car Insurance Rates
Your car insurance premium can vary greatly from the next person’s—even with the same coverage and deductibles. We know that sounds crazy, but it’s true! Insurance providers don’t base your car insurance quote on those two factors alone. In fact, there are a lot of different things they take into consideration when calculating your payments, including:
- Location
- Age
- Gender
- Years of Driving Experience
- Marital Status
- Vehicle Type and Use
- Claims History and Previous Coverage
- Miles Driven
- And More!
While your claims history and driving experience make sense, you might wonder, “what do my gender and marital status have to do with my insurance?” They are risk factors determined by claims data. For example, young drivers are statistically proven to be the riskiest drivers to insure. Therefore, your rates are much higher when your 16 than when you turn 25.
It’s important to note that while all of these factors are considered, they don’t carry the same weight. Each insurance company weighs them differently, which is why they charge different rates.
Choose Your Perfect Car Insurance Policy
Now that you know more about the types of coverage and factors that influence your rates, you can be better prepared to handle your search. If you’d like to learn more about car insurance coverage or how to lower your car insurance rates, we encourage you to check out some of our other articles.
