Introduction
When it comes to insuring your car, there are many important decisions to be made. Do you choose liability-only or full coverage? Do you pay extra for roadside assistance or rental car reimbursement? Should you add on optional coverage? How much can you expect to pay for auto insurance? Understanding the different coverage options available, plus ways to save on your policy, will help you find the best auto insurance for your needs.
Types of Auto Insurance Coverage
Typically, policies contain different types of auto insurance coverage. Most states require auto insurance that includes liability coverage, but there are other options that may be necessary depending on your situation. Here are some of the common types of coverage included in auto insurance policies:
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Liability Insurance: Required in most states, liability coverage pays for damages a covered driver causes to others and their property. This can include medical bills, lost wages, and property damage. Depending on the state, the minimum level of coverage typically ranges between 30/60/25, which means up to $30,000 per person for injuries, up to $60,000 per accident, and up to $25,000 for property damage.
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Personal Injury Protection (PIP): PIP is a form of no-fault insurance that covers medical expenses, lost wages, and other expenses related to injuries sustained in an accident, regardless of who is found to be at fault. PIP is often required in states that have implemented a no-fault system.
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Collision Insurance: Collision coverage helps cover the costs of repairing or replacing your vehicle if it’s damaged in an accident. It may also cover the costs of a rental car.
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Comprehensive Insurance: Comprehensive coverage pays for non-accident-related damage to your car, such as theft, vandalism, fire, weather-related damage, or hitting an animal.
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Uninsured/Underinsured Motorist Coverage: This protection covers expenses related to an accident with a driver who doesn’t have car insurance or enough coverage.
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Emergency Roadside Assistance: This additional coverage provides a preset amount of coverage for services like towing, changing a flat tire, emergency fuel delivery, jump-starting a dead battery, and more.
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Rental Car Reimbursement: Rental car coverage helps cover the costs of a rental car while your car is being repaired after an accident.
Factors That Affect How Much You Pay
If you’re shopping for auto insurance, you may be wondering “How much does car insurance cost?” The answer varies from driver to driver, as insurance premiums are based on a variety of factors, including:
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Age and Gender: Generally, drivers under 25 pay more for car insurance due to their higher risk of being involved in an accident. Studies have also shown that men tend to be riskier drivers than women.
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Driving Record: Those with past moving violations or accidents may pay more for their car insurance, as their history of risky driving habits can increase auto insurance premiums.
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Type of Vehicle: Depending on the type of vehicle you drive, you may pay more or less for car insurance. Luxury vehicles tend to cost more to insure than more affordable models, as they may be more costly to repair or replace.
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Location: Where you live can also affect car insurance rates. Drivers living in areas with more traffic or higher rates of accidents will likely pay higher rates than those who live in rural areas.
Tips to Save Money on Your Car Insurance
By understanding how auto insurance works, plus taking simple steps to save, you can find the best car insurance for you. Here are a few tips for keeping your auto insurance costs low:
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Shop Around: Every car insurance company has their own approach to rates and coverage, so it’s always best to shop around and compare prices.
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Increase Your Deductible: Increasing your deductible is one of the quickest ways to lower your insurance payments. However, before increasing your deductible, make sure you have enough money saved to cover the deductible in case of an accident or other covered incident.
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Maintain a Good Driving Record: A clean driving record can help you qualify for discounts on auto insurance premiums. In addition, try to limit the number of miles you drive each year, as this can lower your insurance premiums.
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Look for Discounts: Many car insurance providers offer discounts for things like having multiple policies with the same company, bundling home and auto insurance, belonging to certain groups, and more.
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Consider Dropping Unnecessary Coverage: If you don’t drive far or have an older vehicle, you may not need full coverage or extra protection. Dropping coverage you don’t need can help save on insurance costs.
Final Thoughts
Car insurance can be confusing and expensive, but understanding your coverage options, plus taking advantage of potential discounts, can help you get the best coverage for your needs at the most affordable price. With a little research and some savvy shopping, you can find the right auto insurance policy to protect yourself, your family, and your vehicle.