Car insurance is a contract between you and an insurer, which covers losses you may incur if you have a car accident. Almost all states require drivers to have some form of car insurance, and policies vary by state. They can also offer other types of coverage that you can choose from, depending on your needs and preferences.
Who Should Get It: Drivers with a vehicle loan or lease should consider getting comprehensive insurance to protect against loss or damage if they cause an accident. This type of cover typically comes with a higher deductible, which can help reduce the cost of premiums.
What It Covers: A broad range of damages resulting from a car accident, including bodily injury and property damage to other drivers and passengers in your car. It can also help pay for lost wages, medical bills and even funeral expenses.
How It Works: Auto insurance companies evaluate your risk when calculating quotes. They use information about your vehicle, where you live and your driving history to predict how likely it is that you’ll make a claim.
Rates are different for everyone, so it’s important to shop around and compare the costs of various policies. In addition, you can often save money by bundling your auto and home insurance with one company.
Who Shouldn’t Get It: Drivers who don’t have a vehicle loan or lease should look into buying liability only coverage instead of comprehensive and collision. Liability coverage is the minimum amount of car insurance that you should have if you are driving legally. It is not recommended to purchase this type of coverage if you have a high deductible or don’t need it.
Why It Is So Expensive: The cost of auto insurance depends on many factors, including the model of car you drive, your credit score and where you live. You can find out more about how much your policy will cost by requesting a free quote or visiting WalletHub’s insurance ratings page.
What Are the Benefits?
In addition to covering your car in case of an accident, liability insurance can help you cover legal fees and other expenses that result from a crash. It can also help you cover the costs of repairing other people’s vehicles and injuries caused to them in a collision.
How It Works: This coverage pays to repair or replace your car if you’re at fault in a car accident. It’s not a substitute for a comprehensive or collision policy, but it can be an affordable alternative that isn’t required in all states.
Why It Is So Expensive: Generally, cars that are considered luxury vehicles and are designed to be driven fast and at high speeds will carry more expensive physical damage premiums than other types of cars. This is because the cost to replace or repair a high-end car can be much more than the value of a low-end vehicle.
You can lower your cost of car insurance by taking advantage of all the discounts you qualify for. Some of the most popular include the Good Student Discount, Safe Driver Bonus and multiple-car discounts. You can also reduce your premium by making sure to keep your credit rating clean, choosing a car that is less than 10 years old and paying your premiums on time.