Having car insurance is an integral part of car ownership. It’s legally required everywhere except New Hampshire and Virginia; even those states require you to show proof of financial responsibility before hitting the road.
Car insurance is mandatory because it offers protection for you and other drivers if you get into a collision or other driving mishap. Learn how to buy car insurance that meets your state’s minimum coverage limits and keeps you financially protected.
Figure Out What Coverage You Need
Car insurance is not a one-size-fits-all product. There are different kinds of coverage with varying coverage limits. When deciding what type of coverage you need, consider your state’s mandatory minimum coverages.
Each state typically sets its own minimum requirements, but most require drivers to have liability coverage that pays for bodily injuries and property damage if at-fault for an accident. For example, in Texas, you must have a minimum of $30,000 injury coverage per person (and $60,000 per accident) and $25,000 for property damage. You may see this written as 30/60/25 coverage.
Beyond satisfying your state’s requirements, you can also think about what additional protections you might like. Consider the following types of insurance to see what coverages make sense for you.
Car Insurance to Protect Others
Most states require drivers to have liability coverage because it protects others if you cause an accident. For example, you would be considered at fault if you ran a red light and slammed into another car. Your liability coverage would then pay for:
- Property damage coverage: Any damage to the other driver’s car and their possessions
- Bodily injury coverage: Any medical bills, prescriptions, or lost wages from injuries they sustained from the accident
Each state varies slightly in how much property damage and bodily injury liability coverage it requires. A common minimum is $25,000 of bodily injury coverage (for a total of $50,000 per accident) and $25,000 of property damage coverage (25/50/25). However, some states have lower coverage limits. For example, Florida drivers need $10,000 of bodily injury coverage and $10,000 of property damage coverage.
Without liability coverage, you may be responsible for paying for any damages you cause in an accident out of pocket. You could also face legal consequences. For example, Pennsylvania drivers caught driving without insurance can face a $300 fine and a three-month suspension of their registration and license.
Car Insurance to Protect Yourself
Personal Injury Protection (PIP)
PIP coverage helps to pay the medical expenses of whoever was in the vehicle if you are involved in an accident, regardless of who was at fault. It can cover things like:
- Hospital bills
- Doctor’s visits
- Lost wages
- Child care expenses
- Funeral expenses
Currently, 13 states require you to carry PIP insurance. These states are no-fault states, meaning that regardless of who causes an accident, each driver has their own insurance company to compensate them for their losses. Even if you live in a state that does not mandate PIP coverage, it can be good additional coverage to consider.
While health insurance may cover your medical bills, PIP coverage goes the extra mile by covering additional expenses as you recover.
The average PIP coverage amount varies depending on where you live. For example, in Pennsylvania, you are required to have $5,000 in coverage. But in North Dakota, the minimum is $30,000.
Medical Payments Coverage
Medical payments coverage is very similar to PIP in that it provides coverage for you and your passengers’ medical bills after an accident, regardless of who caused the accident. But it has a few key differences:
- Medical payments coverage covers medical bills. It does not offer additional coverage for lost wages, child care, or other living expenses.
- Medical payments coverage is available in states that are not no-fault states.
- While PIP is mandatory in some states, medical payments coverage is always optional.
Typically, medical payments coverage can start as low as $500 and go as high as $100,000. However, choosing something in the $1,000 to $5,000 range is more common.
Uninsured and Underinsured Motorist Coverage
When you are in an accident where the other driver is at fault, it is typically up to their insurance to pay for your property damage and medical bills. But if they do not have liability coverage, or if their liability coverage is not enough to cover the bills, uninsured and underinsured motorist coverage can kick in.
This covers whatever property damage and bodily injury bills the other person’s insurance does not cover. You can also use it for coverage in a hit-and-run accident.
Some states require either uninsured or underinsured coverage, or both. Typically, these coverage amounts are the same as the state’s bodily injury and property damage minimum coverage limits. A typical policy is usually 25/50/25.
Car Insurance to Protect Your Car
To cover the cost of repairing your car in an accident — regardless of who is at fault — you can choose collision coverage. Collision coverage covers any damages to your vehicle caused by:
- Hitting another vehicle
- Being hit by another vehicle
- Hitting something else, like a signpost or fence
Collision coverage does not cover any damage from natural disasters or acts of nature.
Collision coverage is optional, but it can help you repair your car no matter who is at fault for the damages. Unlike other types of car insurance coverages, there is no recommended coverage amount for collision insurance. Instead, the coverage is the total value of your vehicle.
For example, if you get in a crash and repairs are estimated to cost $20,000, but your car’s estimated value is $15,000, your collision insurance may consider your car totaled and pay you the actual cash value for it instead of paying for the repairs.
Comprehensive coverage is another option that protects you if your vehicle is damaged. Unlike collision coverage, which is specific to collision-related accidents, comprehensive coverage handles damages related to acts of nature. For example, it can cover damage from:
- Hitting an animal
- Rocks or other objects
- Storms, including hail, flooding, wind, etc.
- Trees and limbs
There is no coverage limit to select for comprehensive insurance, as the coverage amount depends on your car’s current value. Your insurer would pay up to your car’s cash value for repairs.
Roadside Assistance and Towing Coverage
Roadside assistance and towing coverage provides help if you break down on the road. For example, roadside assistance can come and change your tire if you get a flat tire on your way to work. Or, if your radiator breaks and your car overheats, a tow truck can take your vehicle to the nearest garage.
Rental Reimbursement Insurance
Rental reimbursement insurance can help pay for your rental car or public transit fares if you cannot use your car because of a covered claim. However, it does not apply if your car is in the shop for routine maintenance or if you are trying to rent a car on vacation.
Typically, rental reimbursement insurance has a daily and overall limit.
Other Types of Car Insurance to Consider
After you buy a car, it can depreciate in value by as much as 20% within 1 year. Gap insurance helps when the amount you still owe on the vehicle is more than the car’s actual market value. For example, suppose you bought a new car worth $25,000, put down $5,000, and have a loan of $20,000. Then, the car is totaled, and the market value dropped to $18,000. Gap insurance would cover the $2,000 difference between what you owe and your insurance payout.
Gap insurance is usually around $20 a year to add to your policy.
Rideshare Insurance, or Business Use Insurance
Consider rideshare or business insurance if you use your car for passenger transportation or deliveries. Personal car insurance policies typically do not apply when using your car for business, such as when driving someone for Uber. This insurance can apply any time you have a ridesharing app open in your car, even if you do not currently have a passenger.
Foreign Country Coverage
Foreign country coverage can assist those who travel overseas frequently. Many standard car insurance policies do not apply internationally, though many policies still cover drivers who travel to Canada. However, most policies do not offer coverage in Mexico and beyond. Foreign country coverage allows drivers to remain covered for any accidents that could happen while driving abroad.
Classic Car Insurance
Classic cars are usually 25 or more years old, but some states and organizations have varying criteria. Classic car insurance is a way to protect an older vehicle that you might not use on the road as much. Typically, it limits your travel to car shows and car meetups, and requires you to store the car in an enclosed environment. Premiums tend to be lower than standard car insurance because classic cars are driven less.
Umbrella insurance can offer extra protection if you are worried about needing more liability coverage. It provides an extension of your bodily injury, personal injury, and property damage policies. It’s especially beneficial if you are in a high-cost accident that exceeds your coverage limits.
Insurers usually prefer you to already have $250,000 of liability coverage to be eligible for umbrella insurance.
Clean Up Your Driving and Credit Profile
Car insurance premiums and rates are typically calculated based on the following factors:
- The make and model of your car
- How often you drive
- Where you live
- Your age and gender
- The specific coverages you choose
- Your driving history
- Your credit history
While there are some things you cannot change, like your age and gender, there are a few things you can work on to improve your rates, such as your driving and credit history.
Your driving history includes a list of your previous accidents, traffic citations, and license suspensions. While you cannot erase the past, you may be able to pay any outstanding tickets or fines so these tickets are not still active.
You can also take an approved defensive driving course to help reduce the number of points on your driver’s license. Some states assign you points for each infraction you commit. After you reach a certain number, your license may be suspended or revoked. Only some states use the point system, so taking defensive driving might not remove past violations where you live. However, it can signal to insurers a commitment to safety.
Improving your credit score can also help lower your premiums. Try to reduce your debt and pay your bills on time. Also, ask your credit card companies to give you a higher credit limit to reduce your debt ratio.
Compare Your Options
Refrain from settling for the first car insurance quote you get. Compare quotes from different insurers to see your options. To get an accurate quote, you may need to provide information such as:
- Vehicle year, make, and model
- Vehicle mileage
- Your address where the car resides
- Driver information
Explore Discount Options
Many insurers offer discounts that can lower your premiums and rates. For example, some may offer lower rates if you bundle your auto, home, or life insurance policies with them. Other things that may help you earn a discount on rates include:
- Installing an anti-theft device
- Having certain kinds of safety equipment
- Paying for 6 or 12 months of your premium upfront
- Being a student or a member of the armed forces
Factor these potential savings into each quote for a better idea of their cost differences.
Complete Your Application
The final step of how to get car insurance is to fill out the application. A car insurance application usually asks for the same things you need to secure a quote. That means it may ask:
- Who is driving the car?
- Where is the car is usually parked?
- How many miles is on the car?
- Have you had any accidents in the past?
- Personal information, like your name, birthdate, and address
Coverage typically begins after you make your first premium payment. Some providers offer a digital insurance card but may also send a paper insurance card in the mail. If you purchased your insurance policy online, you may have access to an online portfolio to manage your policy.
Remember to cancel your old policy if you changed from one insurer to another.