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How to pick the right type of car insurance


Mar 25, 2023 #car, #insurance, #pick, #type

Car insurance is legally required in all states except New Hampshire and Virginia. In the other 48 states, drivers are required to carry a minimum amount of auto insurance if they own a vehicle. You must meet the coverage requirements in your state to register your vehicle and legally drive.

The cost of car insurance depends on a variety of factors, including your location, your age, and your driving record. However, auto insurance rates have been increasing over the last several years, due to things like inflation and the rising price of vehicles. To get the lowest rate possible, it’s important to shop around and compare multiple insurance quotes.

In this guide, we’ll explain the different types of car insurance, how to shop around, and what you can do to save money on this costly but necessary coverage.

Types of car insurance

As you’re shopping for car insurance, you will probably come across many different types of coverage. There are a variety of car insurance policies, some of which are required and others that are optional. Here are the most common types of car insurance. (Remember, car insurance is required in all states except New Hampshire and Virginia.)

Required in most states

Personal liability insurance

Personal liability insurance is a legal requirement in most states. It includes coverage for bodily injuries and property damage when you cause an accident. Specifically, it pays for the other driver’s medical expenses if they get hurt, as well as their vehicle repairs. Personal liability insurance also covers your legal fees and court costs if you get sued.

Uninsured/underinsured motorist insurance

Uninsured/underinsured motorist insurance is legally required in certain states. This policy pays for your losses after an accident when you get hit by a driver who is uninsured or does not have enough insurance coverage to pay for the damages in full. It generally covers bodily injuries and property damage. 

Optional coverage

Collision insurance

Collision insurance is an optional coverage that is often purchased as part of a full coverage policy. It pays for your vehicle repairs after an accident that you cause. It also covers rollovers and single-car crashes. Most collision insurance policies cover your vehicle based on its actual cash value (ACV), which is the fair market value of your car, minus depreciation. 

Comprehensive insurance

Comprehensive insurance can also be purchased with a full coverage insurance policy. It pays for repairs if your car sustains damage from a non-collision incident, such as a fire, flood, hailstorm or vandalism. Comprehensive insurance also covers vehicle theft. If something happens to your car, most comprehensive policies reimburse you based on the car’s ACV. 

Medical payments insurance

Medical payments insurance is another optional policy that typically comes with full coverage insurance. It provides a small amount of coverage for your injuries and your passenger’s injuries after an accident, no matter who caused the crash. It may cover things like an ambulance ride, hospitalization, surgery, rehabilitation costs and X-rays. 

Required or optional, depending on state

Personal injury protection

Personal injury protection (PIP) is a required coverage in most no-fault states and is sold as an optional endorsement in other states. PIP pays for your medical expenses after an accident, even if you were not responsible. Minimum PIP coverage limits vary by state. 

No-fault states as of March 2023 are:

  • Florida
  • Hawaii
  • Kansas
  • Kentucky
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New York
  • North Dakota
  • Pennsylvania
  • Utah

What car insurance covers and doesn’t cover

Car insurance provides robust coverage for many of the situations you might face as a driver. It covers your financial responsibility when you cause an accident, and depending on the type of policy you have, it also covers car repairs.

However, car insurance policies don’t cover everything. While every car insurance policy is slightly different, most policies don’t provide coverage for the following:

  • General car wear and tear
  • Routine vehicle maintenance 
  • Personal items that get stolen from the vehicle
  • Intentional damage
  • Damage above the limits of your policy
  • Ridesharing 
  • Aftermarket parts 

To fill these gaps in coverage, some car insurance companies sell optional add-ons. Here are some common ones that can provide additional protection in certain scenarios:

  • Roadside assistance: Roadside assistance covers the cost of some roadside vehicle repairs, like fixing a flat tire or jumpstarting a battery.
  • Accident forgiveness: This policy waives your first at-fault accident, so it doesn’t impact your premium. 
  • Gap insurance: If you owe more on your car than what it’s worth, gap insurance will pay off the loan if your car gets totaled.
  • New car replacement coverage: This policy covers your vehicle at its replacement cost value (RCV), which does not include depreciation. 
  • Custom parts and equipment coverage: Custom parts and equipment insurance covers aftermarket parts that you’ve installed in your car, like rims or a new sound system.

How to get a car insurance quote

The process of getting a car insurance quote is simple and straightforward. To get the most affordable policy for your situation, it’s a good idea to get quotes from several insurers and compare them. Here are the general steps you should follow to get car insurance quotes:

  1. Gather some information: Before you start getting quotes, it’s helpful to have some information ready. You will probably need to provide your vehicle’s VIN, make, model, year, mileage, trim level, and your driver’s license number or Social Security number. 
  2. Choose your coverages: During the quote process, you will need to choose your coverages and coverage limits. You will be able to add optional coverages. Some car insurance companies will recommend coverage types based on the car you have, how you use your car, and your annual mileage. 
  3. Pick your deductibles: You will also need to choose deductibles during the quote process. Not all insurance coverages require a deductible, but collision and comprehensive insurance are two that typically have a deductible. If you choose higher deductibles, your premium will be lower.  
  4. Review your quotes: Go through the quote process a few times to get rates from several insurance providers. (When creating the quote, car insurance companies will usually check your credit, but this is considered a “soft pull” that won’t affect your credit score.) Once you have your quotes, compare them to see which insurer can offer you the lowest rate for the coverages and deductibles you want.

Tips for getting the best car insurance rates

When shopping for auto insurance, most drivers are looking for the cheapest policy possible. Here are some ways to save money on car insurance:

  • Pay attention to discounts: Most car insurance providers offer discounts. These vary based on the insurer, but you can usually find savings for smart students, claim-free drivers, safe drivers, taking a defensive driving course, insuring multiple vehicles on your policy, and insuring a car with safety features, like anti-lock brakes.
  • Bundle your policies: You can often save money on car insurance if you purchase auto insurance and home, renters or condo insurance from the same insurer.
  • Pay your premium in full: Paying your annual car insurance premium upfront and in full is a great way to get a lower premium. Most insurance companies offer a small discount if you choose this payment option.
  • Improve your credit score: In most states, insurance companies will check your credit when you apply for a policy. Drivers with good credit generally pay less for insurance than drivers with bad credit. Improving your credit can help you get a better rate.

Bottom Line

Car insurance provides comprehensive protection for many of the potential risks you can face as a driver and vehicle owner. Not to mention, it’s legally required in most places. As car insurance rates increase, it’s important to shop around to find the lowest premium. Comparing quotes can help you get the most affordable rate for your coverage needs and personal profile.

Once you lock in a low insurance premium, you should take the necessary steps to keep it there. Avoiding tickets and accidents, maintaining good credit, and taking advantage of discounts are all ways to maintain a cheap rate. You should also get new quotes if you move, add or remove a driver from your policy, purchase a new car or have a claim. 

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at [email protected].



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