Most ordinary people have little deep understanding of the nooks and crannies that make up an auto insurance policy. And when you go shopping for new coverage, that can be a real problem. In order to compare auto insurance quotes from one company to another, you must be familiar with the various types of coverage. This will help you to be able to accurately compare auto insurance quotes, as well as to know if you have the right amount of coverage.
The 3 Most Important Auto Insurance Components
There are three specific types of coverage that are common in auto insurance policies. In fact, there are generally state-specific requirements for these provisions, that we’ll get into a little bit later. But here are the three most important types of coverage:
Essentially, this is coverage that will pay a claim that is the result of damages that were caused by you. Basically, liability is coverage that you maintain to protect others in the event that you are involved in an accident that is deemed to be your fault.
There are actually two parts to this coverage. Bodily injury liability covers injuries to other people, and property damage liability covers damage to the other driver’s car.
This is coverage for damage to your own vehicle, no matter who is determined to be at fault. This is the only coverage that will pay for repairs to your vehicle, which means it will generally be a lender requirement if you have a loan on your car. But even if you don’t have a loan, it’s still worth having if your car is worth at least a few thousand dollars.
While collision covers accident-related damage to your car, comprehensive covers other disasters that are generally non-automotive in nature. For example, it will cover theft, vandalism, and damage that is a result of natural catastrophes, such as floods and falling trees.
The Many Different Types of Auto Insurance Coverage
Though most people are at least vaguely familiar with liability, collision, and comprehensive, there are actually a lot of other types of coverage. Though they are often not required by state law, they are still good to have.
This is especially true of the provisions that deal with uninsured motorists. Unfortunately, if you are involved in an accident that is caused by an uninsured driver, the damage will have to be covered by your own insurance policy.
Here are examples of the additional types of auto insurance coverage, including those for uninsured motorist:
- Uninsured motorist coverage. This provision will pay medical expenses in the event that either you or your passengers are injured as a result of damage caused by an accident involving an uninsured driver.
- Underinsured motorist coverage. This provision provides coverage for medical expenses for you and your passengers if you are involved in an accident that is the fault of a driver who has insufficient auto insurance coverage.
- Uninsured motorist bodily injury coverage. This provision will cover you and your passengers for pain and suffering, and lost wages, in addition to medical expenses, that are incurred as a result of an accident with an uninsured motorist. It will also pay in the event that the injuries are caused as a result of a hit-and-run.
- Uninsured motorist property damage coverage. This covers damage your car received from an accident caused by an uninsured driver.
- Personal injury protection, or PIP. You’ve likely heard this referred to as no-fault car insurance. It covers bodily injury claims in situations where no fault has or can be determined.
- Property protection insurance. This coverage provides protection if you cause damage to properly parked vehicles or fixed properties, like buildings and fences. It is specific coverage in the state of Michigan.
Each of these auto insurance provisions is particularly good to have, even if they are not required by state law. The uninsured motorist provisions are especially important since the number of uninsured drivers is on the rise.
How to Shop for Affordable Auto Insurance
The first thing you need to do is grab a copy of your current car insurance policy and write down your coverage and rates. Next, get car insurance rate quotes from other automobile insurance companies. You can call or visit an independent insurance agent, visit individual websites, and check online comparison sites for multiple auto insurance quotes.
Be sure to check the major companies as well as some of the smaller companies – you never know which company will have the best rates until you get a quote. It’s also a good idea to read customer reviews to make sure you are going with a reputable company – the cheapest car insurance doesn’t do you any good if you can’t file a claim.
Be sure to double check your current insurance policy when making comparisons between auto insurance companies to ensure you are comparing apples to apples because a small difference in the language of the policy can have a big influence on the price.
If you’ve held your auto insurance plan for several years, then it’s quite possible that you’re paying way too much for your life insurance coverage. Every year, there are dozens of new insurance companies that hit the market, and the insurance products are constantly changing. Additionally, your insurance needs could have changed since you’ve purchased the coverage.
Start With Your State’s Minimum Auto Insurance Requirements
With the exception of New Hampshire, all states plus the District of Columbia impose minimum auto insurance requirements. A list of those requirements for 2016 is available at Insure.com. But before checking the requirements in your state, you first need to be familiar with the terminology.
State auto insurance minimums are usually shown in a three number sequence that looks something like this: 12/34/56. What do those numbers mean?
Each relates to a minimum dollar amount (in thousands) of a specific type of coverage within the mandated requirement. The coverage sequence refers to the following three types of policy provisions:
- Bodily injury liability maximum for one person injured in an accident
- Bodily injury liability maximum for all injuries in one accident
- Property damage liability maximum for one accident
As an example, the auto insurance requirement for Illinois is 25/50/20. That means that you must maintain a minimum of $25,000 for bodily injury per person, $50,000 total for bodily injury per accident, and $20,000 for property damage.
But like many states, Illinois’s minimum requirements also mandate additional coverage. You must also maintain uninsured/under-insured motorist bodily injury coverage, in the amounts of $25,000 per person, and $50,000 total per accident. This will cover injuries to you and your passengers if you are involved in an accident with an uninsured or under-insured driver. You also need to know what your insurance covers or doesn’t cover if you lend out your car.
Get Multiple Auto Insurance Quotes
Ideally, you want to compare 3-5 car insurance quotes before deciding to switch companies. The following list is a good place to start. Some of these websites in this list are insurance companies and a few are insurance aggregators that will give you multiple quotes from various auto insurance companies. There may be some overlap if you get quotes from more than one aggregator, but you will need multiple quotes to do a car insurance comparison anyway.
Get new quotes for major life events. Your insurance rates may drop when you turn age 25, get married, move to another city or state, have a shorter commute, change jobs (certain occupations may qualify for discounts), or for other major life events. Your rates can also increase because of certain things, like getting a speeding ticket. It is always a good idea to get a new car insurance quote for any of these events.
Shopping for Auto Insurance & Comparing Auto Insurance Rates
As you can see from this guide, auto insurance can be complicated! In order to get the best auto insurance coverage, you need to be consistent with the coverage requirements that you are getting insurance quotes for. If you leave yourself at the mercy of each insurance company to provide their “best quote”, you can easily end up paying too much.
Start with your state’s minimum coverage levels, and then add any other types of coverage that you believe are worth having. Be sure that you are requesting the same coverage types from each insurance company that you are inquiring with. That will give you the best side-by-side comparison, making your choice much easier when you compare auto insurance.
Follow that up with quotes from several different insurance providers and you can be assured that you have been quoted competitive insurance rates on your policy.