Auto Insurance FAQ
Frequently Asked Questions
- Is auto insurance required?
- What does auto insurance cover?
- What’s included in “full coverage” auto insurance?
- When should I buy car insurance?
- How much auto insurance do I need?
- How much auto liability coverage do I need?
- What's the average cost of auto insurance?
- How can I get affordable auto insurance?
- What’s an auto insurance quote and why do I need one?
- Are auto insurance quotes free?
- How do I get an auto insurance quote?
- How do I file an auto insurance claim?
- Can auto insurance providers deny a claim?
- Can auto insurance providers drop me?
Is auto insurance required?
All drivers are required to prove “financial responsibility” for their vehicle and driving habits. In almost every state, that means purchasing at least the minimum required bodily injury liability and property damage liability insurance. (Those are the coverages that make your own insurer pay for another person’s losses if you’re at fault for a collision.) Some states also require drivers to purchase uninsured/underinsured motorist, medpay, or PIP coverage.
What does auto insurance cover?
A good auto insurance policy should cover six fundamental areas:
- Liability insurance in case you damage someone else’s property or injure them
- Uninsured/underinsured motorist coverage in case someone else hits you but doesn’t have enough insurance to cover your injuries or damages
- Collision coverage in case you hit a non-vehicle object (like a tree or lamp post)
- Comprehensive coverage for damage from things like flooding, vandalism, or theft
- MedPay or PIP to help cover your own medical costs after an accident
However, many drivers have unique coverage needs that go beyond these fundamentals. For example, if you drive for a service like Uber or Lyft, you’ll need specialized rideshare insurance. If you own a custom or vintage car, you’ll need extended coverage.
These are just a few popular coverages that can be added on to your auto insurance for better protection:
- “Gap coverage” (loan or lease payoff)
- Accident forgiveness
- Roadside assistance and towing
- Rental reimbursement
- Umbrella liability insurance
- Rideshare insurance
- Custom parts and equipment coverage
- Pet injury coverage
Every insurance company has a different coverage selection. Compare a few of the best auto insurance companies to make sure you’re choosing a provider that fits your unique needs. If you’re not sure what those needs are, we recommend working with an independent agent who can help build your policy and compare insurers on your behalf.
What’s included in “full coverage” auto insurance?
Many insurers claim their policies offer “full coverage” without detailing what that means. In fact, it doesn’t really mean anything. “Some agents use ‘full coverage’ as a shorthand way to describe auto policies that only meet state minimum limits for coverage,” says Jonathan O’Steen, personal injury attorney and partner at O’Steen & Harrison LLC. “True full coverage would provide unlimited protection for all losses arising from an automobile accident.”
Don’t be fooled by insurance jargon that might leave you underinsured. Talk through all your standard and supplemental coverage options with your agent rather than opting for a catch-all plan that sounds sufficient. The truth is, such a plan doesn’t exist.
When should I buy car insurance?
You’ll need car insurance on or before the first day you use your vehicle. The good news is: You get to select the start date for your coverage, so you can start shopping for insurance as early as you want without having to pay for coverage when you’re not on the road.
Even if you’re not insuring a new car, we recommend checking rates regularly to make sure you’re still getting a fair rate from your current insurer. It’s especially important to compare quotes after a major life event that can impact insurance rates, including:
- Adding a new driver to your policy
- Getting married
- Buying a home
- Moving to a new state or city
- Passing the three-year mark after an accident
- Passing a big birthday (25, 30, 40, etc.)
How much auto insurance do I need?
All drivers have to purchase at least the minimum amount of auto insurance required in their state. For full financial protection, most experts recommend choosing higher limits than the state minimum for liability, as well as supplemental coverage. To give just one example, Jonathan O’Steen, personal injury attorney and partner at O’Steen & Harrison LLC suggests buying at least:
- Bodily injury liability: $100,000 per person, $300,000 per collision
- Property damage liability: $50,000 per collision
- Medical payments: $50,000 per collision
- Uninsured motorist: $100,000 per person, $300,000 per collision
- Underinsured motorist: $100,000 per person, $300,000 per collision
Better coverage will cost a little more, but raising limits is often more affordable than people think. See for yourself: Most online quote tools let you check rates for different coverage tiers so you can see how much insurance fits comfortably within your budget.
How much auto liability coverage do I need?
State minimum liability coverage generally isn’t enough to fully protect drivers. “Chances are that you will need more liability insurance than the state requires because accidents cost more than the minimum limits,” according to the Insurance Information Institute. “If you’re found legally responsible for bills that are more than your insurance covers, you will have to pay the difference out of your own pocket.”
Consider the value of assets you could potentially stand to lose in a court case. This will give you a good idea of how much liability coverage is appropriate. “For instance,” says Justin Lovely of the Lovely Law Firm, “if you own a $300k home, a $50k boat, and two cars at $50k, you need to have liability insurance for $400k, the value of your potential assets to lose.”
What’s the average cost of auto insurance?
The average U.S. driver pays just over $1,000 per year (or about $90 per month) for auto insurance, according to the most recent data from the National Association of Insurance Commissioners (NAIC). But rates can vary hugely depending on who you are, where you live, and the vehicle you drive, not to mention the insurer you choose. Among other things, auto insurance rates depend on:
- Marital status
- Home address
- Homeownership or renting
- Credit score
- Driving record
- Insurance claims record
- Vehicle and age of vehicle
- Yearly mileage
How can I get affordable auto insurance?
The best way to find the coverage you need at a low cost is by comparing quotes from multiple insurers. However, there are a few steps you can take on your own to secure a lower premium from any auto insurance company.
- Drive safely
- Ask your insurer about discounts
- Bundle with homeowners or renters insurance
- Choose a higher deductible
- Raise your credit score one tier
- Skip collision and comprehensive on low-value cars
- Complete a defensive driving course
- Choose a vehicle with up-to-date safety features
- Pay your premiums annually or biannually instead of monthly
- Choose online billing instead of paper billing
- Consider usage-based insurance if you don’t drive much
What’s an auto insurance quote and why do I need one?
A “quote” is an estimate of how much you’d pay for auto insurance, based on information about you and your vehicle. Every company evaluates this information differently, which means your quotes will vary by insurer. That’s why it’s so important to look at quotes from multiple auto insurance companies to find the best rate on the coverage you need.
Are auto insurance quotes free?
Getting an auto insurance quote is 100% free, and easier than you might think. Most insurers have quote tools online that let you check and compare rates in just a few minutes. Select insurers do require customers to call in for a quote, but these are still free of charge. You’re under no obligation to buy just because you spoke with an agent or checked prices online.
How do I get an auto insurance quote?
Every insurance company has its own version of the quote form. For example, some will ask for identification, like your social security number or driver’s license number, while others are content with a name and address. Since you’ll be checking quotes from more than one company, keep all the documentation you might need on hand to make the process go as smoothly as possible:
- Make, model, and year
- Vehicle information number (VIN)
- Garaged address
- Name of registered owner
- Prior insurance carrier and expiration date
- Date of purchase
- Info on safety features (airbags, ABS, anti-theft, etc.)
- Date of birth
- Driver’s license number and state of issue
- Social security number
- Ticket and accident history
- Insurance claim history
- License suspension information
- Same information for other drivers on the policy
How do I file an auto insurance claim?
If you’ve been involved in a collision, the first thing you should do (after making sure no one is hurt) is call the police and file an official accident report. Next, carefully document all information about the accident: details and license plates for every vehicle involved, details about the location, time, and nature of the accident, and names and contact information for all drivers and witnesses present. Take photographs as well as written notes.
Then, call your insurance company. They’ll walk you through the steps and documents required to get your claim moving, and assign a claims professional to help you assess damages, navigate the process, and arrange for necessary repairs to your vehicle.
Can auto insurance providers deny a claim?
Auto insurance companies do deny claims on occasion. Here are a few of the more common reasons an auto insurance claim might be not be settled:
- Incident or type of damage is not covered under your policy
- Total damage or injury amount exceeds your policy limits
- Accident was not reported to the insurer promptly, ideally within 24 hours
- Medical attention (if needed) wasn’t sought directly after the accident
- Person driving the car wasn’t insured under the policy
- Driver was breaking the law at the time of the accident
- Driver was impaired or under the influence at the time of the accident
Drivers who believe their claim was wrongly denied or unfairly settled can contact their state insurance department to file an official complaint and learn the proper steps to resolve the issue with their insurer.
Can my auto insurance provider drop me?
Insurance companies will generally only “drop” a customer for one of two reasons: Either because they haven’t paid their premiums in full, or because the insurer finds out the customer lied or withheld information on their application.
“The biggest piece of advice I could give a first time car insurance buyer is to be honest,” says Matt Straley of the Insurance Consultants of Pittsburgh. “A lot of new insurance buyers leave out info or massage the truth to get a lower rate, and the problem comes when underwriting finds out and cancels the policy. This makes it more difficult to obtain new coverage and increases the cost.”
Instead of “dropping” you, it is far more common for an insurer to refuse a customer’s renewal or raise rates when they renew. This can happen if a driver was involved in an accident or got a ticket for a traffic violation during their policy. These types of incidents stay on your insurance record and will affect your standing with insurance companies for three years.