Comparing car insurance policies is about more than just shopping around to find the best price. It’s important to select a policy that not only fits your budget but also provides adequate coverage to protect your finances if you need to file a claim.
There are many different types of car insurance coverage to choose from, including:
Most states require drivers to carry insurance to drive legally. The types and minimum requirements vary by state and may include liability, uninsured/underinsured motorist, and PIP/Medpay.
New Hampshire doesn’t have a law requiring drivers to maintain insurance, but the state has a financial responsibility law. Drivers need to be able to show they can pay for injuries and property damage they cause if they’re at fault in an accident.
In Virginia, you can legally drive without insurance if you purchase a surety bond, receive a self-insurance certificate from the DMV, or pay a $500 uninsured motorist fee.
There is no one-size-fits-all solution for car insurance because needs vary from person to person. It’s important to evaluate your coverage needs to determine the level of protection that’s right for you before purchasing a policy.
In general, the type and amount of coverage you need are based on multiple factors, including your state’s minimum requirements, budget, risk tolerance, assets, and the value of your car. Where you live and the risk you face from severe weather, theft, and vandalism may also affect the types of coverage you decide to purchase.
In general, you should have enough coverage to protect your assets if someone sues you after an accident.
Determining the value of your car can help you decide whether it makes sense to include certain types of coverage, such as collision and comprehensive. With these types of coverage, the insurance company agrees to pay up to the actual cash value of your vehicle (minus your deductible) if it’s damaged in a covered incident.
The potential payout from a collision or comprehensive claim decreases over time as the value of your vehicle decreases. But if your car’s worth more than what you’d pay for your premium plus your deductible, these coverages are worth considering.
The value of your car is one of the biggest factors insurers use to determine the cost of collision and comprehensive coverage.
At a minimum, you need to maintain the types and amounts of coverage required by law in your state. But remember, the minimum requirements are rarely enough to protect you if you’re in a serious accident. Some types of coverage that provide valuable protection, such as comprehensive and collision, are optional in all states.
If you only stick with your state’s minimum requirements, you could be putting yourself at risk.
Prices for similar coverage can vary significantly between carriers, so it’s a good idea to get quotes from multiple insurance companies before purchasing a policy. When evaluating quotes from different carriers, make sure you’re comparing apples to apples. Each policy should include the same term, types of coverage, policy limits, and deductible amounts.
Some companies charge a fee if you pay in installments instead of paying the total premium upfront, so be sure to check.
Some types of coverage come with a deductible, which is the amount you have to pay before the insurance company picks up the tab. Opting for a higher deductible lowers your premium, while selecting a lower deductible increases your premium.
Because the insurance company will only pay up to the vehicle’s actual cash value (minus your deductible), higher deductibles are generally better for more expensive cars, and lower deductibles are better for less expensive cars.
No matter what amount you choose, make sure you can afford to pay your deductible if you need to file a claim. Otherwise, you may not be able to complete the necessary repairs.
Everyone needs something different when shopping for insurance, so it’s important to find an insurer that can meet your needs. Before you buy a policy, make sure to ask about:
Insurers offer a variety of discounts that can help lower your premium. However, available discounts can vary from company to company, so you need to ask about the types each insurer offers. Common discounts include:
Since most states require insurance, you should get a policy before you purchase a new car so you can legally drive it off the lot. Here are a few more situations where you may need to buy a new policy:
