Car Insurance 101: How to Pick an Auto Insurance Policy

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Car insurance is a requirement if you’re getting behind the wheel. This not only protects you but other drives on the road, property, and pedestrians in public spaces. Auto insurance policies and requirements vary by state; this article will give you an excellent overview of car insurance and what you’ll need.

What is Car Insurance? Why Is It Needed?

Car insurance is an agreement between driver and insurance companies to pay if you, your vehicle, or other properties/people are damaged or injured. Policies may include a variety of insurance coverages, including payouts if your car is damaged beyond repairs.


Insurance companies use a variety of factors when determining your insurance coverage – including:

  • Age
  • Driving history
  • Location
  • Years of driving
  • Gender
  • Insurance history
  • Annual mileage
  • Credit score

…and the like.

It’s hard to pinpoint the exact reason why your insurance coverage is what it is. Companies do their best to match the best policies for their driver’s needs. Yet, it’s always worth noting you should shop around for auto insurance and compare quotes since policies and coverage change.

You’re more than welcome to drive without insurance… if you’re willing to get fined and face jail time!

Most states have strict requirements for auto insurance. Driving without it often finds drivers paying high fees, possible jail time, and a suspended or revoked license.

Car insurance protects everyone on the road.

It’s a safety net in the event of accidents. And, since we can’t predict these accidents, it’s better for everyone covered than taking on financial responsibility individually. You may not like paying the price, but that’s just how insurance is – in case something terrible happens.

How to Choose the Best Car Insurance

Choosing auto insurance depends on a few personal factors:

  • Recommendations from fellow drivers or family
  • Your driving abilities and responsibility
  • Budget, timing, and location

Ask your friends, family, and fellow drivers what they recommend for auto insurance. And ask what kind of coverage they have and if they’ve ever needed to file a claim. Look beyond the price (for now) to learn about the car insurance company’s service.

It would help if you also considered your driving abilities and responsibility. Or those who are driving the vehicle, such as letting your teen driver behind the wheel. Are you or the teen are heavy-footed and speed a lot? If so, you can expect to pay more if you have a history of traffic violations.

Higher coverage may be in order when you’re realistic about how you are behind the wheel.

Finally, consider your finances and lifestyle:

  • How much can you afford?
  • When do you need it?
  • Does my location affect coverage?
  • What’s the quality of my vehicle?

Weigh what your friends and family had to say against expert opinions. Be sure to call and shop around to find the best car insurance policy meeting your needs. And go online to use cross-comparison reviews and round-ups to verify your decision.

Car Insurance Policies and Requirements

When shopping for auto insurance, you’ll find these recurring items appearing:

  • Liability Coverage – Covers you if you’re at fault
  • Bodily Injury Liability (BIL) – Covers medical expenses for those involved in the accident
  • Property Damage Liability – Covers you if you damage other vehicles or property
  • Personal Injury Protection (PIP) – Covers your passengers
  • Uninsured/Underinsured Motorist Coverage – Covers bills if others don’t have insurance
  • Collision – Covers car repairs after an accident
  • Comprehensive – Covers costs if your car is stolen or damaged (not in an accident)

You’ll often see coverage quoted as “15/30/5” and the like. This typically sets the amount your insurance will pay for accidents and personal damages. The minimum varies by state, but you’ll want to factor in your individual needs and location when shopping for car insurance.

How Much Car Insurance Do You Need?

Most recommend having great coverage with at least two items:

  • Bodily injury liability
  • Property damage liability

Though, it would help if you referred to your state to meet the requirements. Failing to meet these requirements could lead to penalties like fines, jail time, and license suspension/revocation.

The basic rule? Choose the coverage with the highest deductible.

This will lower your premium while covering most (if not all) items. This means you’ll pay more up-front but ultimately pay less throughout the year(s). You’ll save in the long run because you never know if you may never need to file a claim – that could become thousands over your lifetime of driving!

Many recommend buying: 100/300/100 if you want to cover everything and then some.

Ultimately, the decision is on you, who you’re riding with, and the risks you’re willing to take on the road.

PIP, MedPay, and Uninsured/Underinsured Policies

You can often skip or do the minimum for personal injury protection (PIP) since most health insurance policies cover the medical expenses if involved in an accident. However, do consider your passengers, and if for a few dollars more each month, it’s worth knowing they’re protected.

And, get it if you’re living in one of the “no-fault” states requiring it. This includes states like Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah, and Puerto Rico.

Some states require medical payments coverage (MedPay) which acts like PIP. Except, this coverage doesn’t account for lost wages.

You may want to include the uninsured/underinsured policies if you’re in a state known for having fewer drivers without car insurance. Talk with your auto insurance expert or do your research when factoring this into your decision – you don’t want to be caught off-guard!

The Top-Rated Auto Insurance Brands

Which company should you choose for your car insurance? There are quite a few:

  • Geico
  • AAA
  • Progressive
  • State Farm
  • USAA

…and a lot more on a local and state level.

Use your research to find the best coverage and always shop around. Likewise, do your best to practice safe driving to avoid traffic incidents that may raise your rates.

When you’re ready, use the online comparison tools to get the best car insurance you can afford.