How much does car insurance cost?
Car insurance rates depend on a number of factors. These include:
- Personal details like age, sex, and marital status
- Where you live
- Average annual distance driven
- Your vehicle
- Your credit
- Your coverage amount and type
Is car insurance mandatory?
In most states, some level of car insurance is required. The minimum amount of coverage may just be liability insurance, or it may include uninsured/underinsured motorist or additional medical coverage.
When should I buy car insurance?
You should buy auto insurance before you begin driving, as it’s required in most states (see below). Driving without insurance is often illegal and leaves you financially vulnerable.
Does my vehicle affect my car insurance rates?
Yes. The market value of your car and the history of other drivers with the same make and model play a factor in your auto insurance rates. Certain safety features may not automatically qualify you for cheaper car insurance, but they can prevent you from getting into accidents, saving you money indirectly.
What car insurance discounts are available?
Available discounts depend on your insurer. However, common car insurance discounts include various affiliation discounts, reduced rates for students, good driver/no-accident discounts, and hybrid vehicle discounts.
Additionally, insurers will often offer lower rates to policyholders who bundle different insurance products together, such as homeowners insurance and auto insurance.
What does car insurance cover?
Your car insurance coverage depends on the type of policy you purchase. Different types of car insurance include:
- Bodily injury (BI) and property damage (PD) liability coverage for damaged caused to other people or property.
- Personal injury protection (PIP) to cover medical expenses and other damages.
- Collision and comprehensive coverage for damage done to your vehicle in collisions, and in non-collisions (i.e., fire, vandalism, or theft).
- Uninsured and underinsured motorist (UM/UIM) coverage protects in the event of an accident where the at-fault driver doesn’t have insurance.
How much car insurance do I need?
- The first thing you should consider is how much coverage is required by your state. This can be found through your state’s DMV. That’s how much car insurance you have to buy, and should be the floor of your car insurance budget. Beyond that, you should buy as much car insurance coverage as you feel comfortable with and can afford.
- You may decide to max out your car insurance budget with available options. UM/UIM is often overlooked but can be crucial in accidents with uninsured drivers and is a relatively inexpensive add-on; comprehensive coverage is usually more costly, but if you live in an area that has a high level of car theft, it might be a more valuable addition to you.
What does car insurance not cover?
- Car insurance is great for covering repair costs after an accident, but it won’t cover the costs of general wear and tear. That means when you take your car in to get the oil changed or the tires rotated, you’re footing that bill yourself.
- However, you may find that your tires or batteries are covered by a warranty for a limited time, which can help cover your costs.
Does my car insurance cover other drivers?
- It depends on the specific policy. Your policy may have an “omnibus clause” that covers any driver who has permission to use your vehicle (known as permissive drivers). If an insured driver drives your vehicle, yours will be the primary insurance and theirs will offer secondary coverage.
- The best way to make sure that your car insurance covers another person is to have them listed as a named driver on the policy. Speak to someone at your insurance company before you let someone borrow your car if you’re unsure whether or not your specific policy will cover them.
What is gap insurance?
- Gap insurance fills the gap between what your insurance company pays and for accident or theft, and what you owe on an existing car loan.
- Car insurance pays out depending on your car’s current value. Because many cars lose value quickly, you may find yourself in a situation where you owe more on a loan than what the car is actually worth — for instance, you buy a $30,000 car and in one year it is valued at $22,000, but you still have $25,000 left on your own. Gap insurance covers that $3,000 difference.
- Gap insurance typically adds on around 5% of your total car insurance bill.
What is an SR-22?
- An SR-22 is often considered insurance, but it technically isn’t. It’s simply a certificate from your insurer showing that you have insurance coverage. An SR-22 may be ordered by a judge if you have a less-than-perfect driving record, like getting dinged for multiple moving violations or a DUI.
- An SR-22 usually has a filing fee of around $25, and stays with you for around three years.
Does car insurance cover rental cars?
- Comprehensive and collision coverage extends to rental cars, while liability insurance does not. You should check your policy to see if coverage applies to rental vehicles and, if so, what stipulations or limitations there may be.
- If your policy does not offer rental car coverage, you may have some limited coverage from your credit card; you can purchase insurance from the rental car company; or you can shop for a standalone rental car policy (that is typically cheaper than what the rental company will offer).