Auto 
insurance is more than a requirement for getting behind the wheel. It is a financial safety net that can help protect you, your vehicle, your passengers, and your assets when an accident or other unexpected event occurs.
The challenge is that auto insurance can be confusing. Policies contain different types of coverage, deductibles, limits, exclusions, and optional protections, while premiums can vary considerably from one driver to another. The cheapest policy is not necessarily the best policy if it leaves you exposed to a major financial loss.
QuoteQuick.net makes it easier to understand the basics of auto insurance so you can make more informed decisions and compare available options. Whether you’re buying insurance for the first time, replacing an existing policy, adding another vehicle, or simply wondering whether you’re paying too much, understanding how coverage works is the best place to start.
What Is Auto Insurance?
Auto insurance is a contract between you and an insurance company. You pay a premium, and the insurer agrees to provide specified financial protection for covered losses according to the terms of your policy.
Auto insurance generally provides three broad types of protection: liability coverage for damage or injuries you cause to others, coverage that can protect your own vehicle, and coverage that can help with medical expenses depending on the policy and state where you live.
Most states require drivers to carry some form of liability insurance or otherwise demonstrate financial responsibility before operating a vehicle legally. The required coverage and minimum limits vary by state. New Hampshire, for example, does not have the same compulsory liability insurance requirement found in most other states, although drivers remain subject to financial-responsibility requirements.
This is important because the minimum amount required by law isn’t necessarily the amount of coverage that makes sense for you. A serious accident can produce medical bills, vehicle damage, legal expenses, and other costs that exceed state minimum limits.
Types of Auto Insurance Coverage
Understanding the different parts of an auto policy is one of the most important steps when comparing insurance.
Bodily injury liability helps pay for injuries or death suffered by other people when you are legally responsible for an accident. Depending on the circumstances and policy, covered expenses can include medical costs, lost wages and other damages. Liability coverage can also provide legal protection when a claim or lawsuit results from a covered accident.
Property damage liability helps pay for damage you cause to someone else’s property. That could mean another vehicle, but it can also include a fence, building, utility pole or other property damaged in an accident.
Collision coverage helps pay for damage to your own vehicle resulting from a collision with another vehicle or object. It can also cover certain rollover and pothole-related damage. Collision coverage is generally optional under state law, but a lender or leasing company may require it when a vehicle is financed or leased.
Comprehensive coverage protects against many types of damage that aren’t caused by a collision. Depending on the policy, covered events can include theft, vandalism, fire, hail, flooding, falling objects and damage caused by hitting an animal. Like collision coverage, comprehensive coverage is generally optional under state law but may be required by a lender or lessor.
Uninsured and underinsured motorist coverage can provide protection when you’re involved in an accident with a driver who has no insurance or doesn’t have enough insurance to cover the resulting loss. Coverage requirements and available options vary by state.
Medical payments coverage and personal injury protection (PIP) can help pay medical expenses associated with an auto accident. PIP can provide broader benefits in some states, potentially including lost wages and other expenses. These coverages are particularly dependent on state law and the policy selected.
Other optional coverage can include rental reimbursement, roadside assistance, towing, glass coverage and other protections. The availability and terms of these options vary among insurers and states.
How Much Auto Insurance Coverage Do You Need?
There isn’t one coverage level that is right for every driver.
Your state’s required minimum is a starting point, but it shouldn’t automatically be treated as a recommendation. State minimums are designed to establish a legal baseline, not necessarily to protect everything you own if you’re involved in a serious accident.
Consider your vehicle, income, savings, property and other assets when deciding how much liability protection you need. Someone with substantial assets may have considerably more to lose from an underinsured liability claim than someone with fewer financial resources.
It’s also important to consider the vehicle itself. If your car is financed or leased, your lender may require comprehensive and collision coverage. Even after a loan is paid off, those coverages may still make financial sense if replacing the vehicle would be difficult for you.
A useful way to think about coverage is this:
State minimums answer: What do I need to legally drive?
Adequate coverage answers: What level of financial protection makes sense for my situation?
Those aren’t necessarily the same thing.
What Determines the Cost of Auto Insurance?
Auto insurance premiums are not based on a single factor. Insurers evaluate risk and use rating factors to determine the price they charge for coverage. The factors considered can vary by insurer and state.
Your driving history can have a significant impact. Accidents, traffic violations and other driving-related history may affect how an insurer evaluates your risk.
Your location also matters. Insurance costs can vary based on factors such as traffic patterns, claims history, theft, weather and other characteristics of the area where you live and drive.
Your vehicle is another important consideration. The make and model, repair costs, safety characteristics and other vehicle-related factors can influence premiums.
Your age and driving experience can also affect pricing, as can annual mileage and how the vehicle is used.
Your coverage limits and deductibles affect what you pay as well. In general, selecting higher deductibles can reduce premiums, but it also means you will have to pay more out of pocket when a covered claim occurs.
Some insurers also offer discounts or usage-based insurance programs. Usage-based insurance can use telematics information such as miles driven, time of day or driving behavior to help determine pricing, although availability varies.
Because insurers can evaluate risk differently, comparing multiple quotes can be worthwhile even when your personal circumstances haven’t changed.
How to Compare Auto Insurance Quotes
Comparing quotes is more useful when you’re comparing equivalent coverage.
A common mistake is to look only at the premium and choose whichever number is lowest. A lower premium may simply reflect lower liability limits, higher deductibles or less coverage.
When comparing quotes, look at:
- Liability limits
- Collision coverage
- Comprehensive coverage
- Uninsured/underinsured motorist coverage
- Medical payments or PIP
- Deductibles
- Rental reimbursement
- Roadside assistance
- Coverage exclusions and limitations
- Discounts
- The insurer’s claims and customer-service reputation
For example, imagine one insurer offers a policy for $125 per month while another offers one for $105. At first glance, the second option appears better. But if the $105 policy has substantially higher deductibles or lower liability limits, the $20 monthly savings could come with considerably greater financial exposure.
Compare the protection, not just the price.
Ways to Potentially Lower Your Auto Insurance Premium
Shopping around is one of the simplest ways to determine whether you’re currently paying a competitive rate. Different insurers can price the same driver differently because they use their own underwriting and rating models.
You can also ask insurers about available discounts. Depending on the company and your circumstances, discounts may be available for things such as multiple policies, safety features, defensive driving courses, good driving records or other qualifying characteristics.
Choosing a higher deductible can also reduce the premium, but only consider doing so if you could comfortably afford that deductible after an accident.
Keeping your driving record clean, reviewing your coverage periodically and making sure your insurer has accurate information about your vehicle and driving habits can also help you avoid paying for coverage or classifications that no longer reflect your situation.
The goal isn’t necessarily to find the cheapest possible policy. It’s to find a reasonable balance between premium, coverage and financial protection.
What About “Full Coverage” Auto Insurance?
You’ll often hear people talk about having “full coverage” insurance. It’s important to understand that full coverage isn’t a single standardized insurance product.
The term is commonly used to describe a policy that combines liability coverage with comprehensive and collision coverage, but the exact protection included in a policy can vary.
A policy described as “full coverage” could still have different liability limits, deductibles, exclusions and optional coverages than another policy described the same way.
That’s why it’s better to look at the actual coverage limits and policy details rather than relying solely on the phrase “full coverage.”
What Happens If You’re Involved in an Accident?
Your first priority after an accident should be safety. If possible and appropriate, move to a safe location, contact emergency services when necessary and follow applicable reporting requirements.
Exchange information with the other driver and document the scene when it is safe to do so. Photos of vehicles, road conditions and relevant surroundings can be useful when a claim is evaluated.
You should also notify your insurance company according to the requirements of your policy. Your insurer can explain the claims process and what documentation is needed.
Don’t assume that every accident will be handled the same way. Liability, collision, comprehensive, uninsured motorist and other coverages can involve different claims processes depending on the circumstances.
Common Auto Insurance Mistakes to Avoid
One of the biggest mistakes is buying the lowest-priced policy without comparing what it actually covers.
Another is carrying only the minimum liability limits required by law without considering whether those limits provide enough protection for your financial circumstances.
Drivers sometimes also forget about uninsured or underinsured motorists coverage, even though an accident involving an inadequately insured driver can create significant financial problems.
It’s also easy to set up a policy and then forget about it for years. Your vehicle, mileage, household, driving habits and financial circumstances can change. Reviewing your policy periodically gives you an opportunity to determine whether your coverage still makes sense.
And if you finance or lease a vehicle, pay attention to your lender’s insurance requirements. Collision and comprehensive coverage may be required as part of the financing or lease agreement.
Compare Auto Insurance Quotes
If you’re shopping for auto insurance, comparing available options can help you understand what coverage is available and how different insurers price your situation.
Request a free auto insurance quote through QuoteQuick to explore available options from participating providers and licensed insurance professionals.
The right policy isn’t necessarily the one with the lowest monthly premium. It’s the one that provides appropriate protection for your vehicle, your circumstances and your financial situation at a price you can reasonably afford.
Frequently Asked Questions
Is auto insurance required?
Most states require drivers to carry some form of liability insurance or meet financial-responsibility requirements. The exact requirements and minimum limits vary by state.
What is the difference between comprehensive and collision insurance?
Collision generally covers damage to your vehicle resulting from a collision, while comprehensive generally covers covered non-collision losses such as theft, vandalism, fire, certain weather events and animal strikes.
Does liability insurance cover my own car?
Generally, liability coverage is designed to pay for injuries or property damage you cause to others. It does not normally pay to repair your own vehicle after an accident you caused. Collision coverage is generally used for covered damage to your own vehicle resulting from a collision.
Do I need comprehensive and collision coverage?
State law generally doesn’t require collision or comprehensive coverage, but a lender or leasing company may require them. Whether you should keep them after a vehicle is paid off depends on the vehicle’s value, your financial situation and how much risk you’re comfortable assuming yourself.
How can I find cheaper auto insurance?
Compare quotes from multiple insurers using equivalent coverage, ask about discounts, review your deductible and periodically reassess your policy. A lower premium isn’t necessarily a better deal if it comes with substantially less protection.
How often should I compare auto insurance quotes?
There is no universal schedule that applies to every driver. It’s reasonable to compare options when your circumstances change and periodically check whether your current premium remains competitive.