What is car insurance and how does it work? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Finding The Best Car Insurance Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
Artur Debat/Getty Images September 12, 2022 Carol Pope is an insurance writer for Bankrate and prior to joining the team, she spent 12 years as an auto insurance agent. During this time, she sold, serviced and underwrote auto insurance for people across the country. She also has experience selling supplement coverage such as umbrella insurance. Angelica Leicht is an insurance editor on the Bankrate team. She is truly passionate about helping readers make well-informed decisions for their wallets, whether the goal is to find the right comprehensive auto policy or the best life insurance policy for their needs. Bankrate logo The Bankrate promise
At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation of how we make money. Our content is backed by LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible. All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate logo Insurance Disclosure
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Almost every state mandates drivers carry a minimum amount of liability insurance, and you must meet those requirements in order to drive legally. Additionally, if you bought your car with a car loan or are leasing a vehicle, your lender will almost certainly have specific coverage requirements you must follow. Compare rates and save on auto insurance today! Get quotes Close X RatesRates keep going up in 2022. Compare rates and save on auto insurance today! Get quotes Close X This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Compare auto insurance rates
Answer a few questions to see personalized rates from top carriers. Save on auto insurance with quotes from trusted providers like: Drivers switch & save an average of $750+/year Arrow Right Are you overpaying for auto insurance? Arrow Right Safe drivers choose Allstate Arrow Right Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. See more providers in Choose from insurers in Show More RATE INCREASE ALERT Rates increased up to 12% this year
Shop for a better rate before you renew your current policy. This advertisement is powered by Coverage.com, LLC, a licensed insurance producer (NPN: 19966249) and a corporate affiliate of Bankrate. The offers and links that appear on this advertisement are from companies that compensate Coverage.com in different ways. The compensation received and other factors, such as your location, may impact what offers and links appear, and how, where and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available. Our goal is to keep information accurate and timely, but some information may not be current. Your actual offer from an advertiser may be different from the offer on this advertisement. All offers are subject to additional terms and conditions. Compare auto insurance rates
Answer a few questions to see personalized rates from top carriers. Save on auto insurance with quotes from trusted providers like: Drivers switch & save an average of $750+/year Arrow Right Are you overpaying for auto insurance? Arrow Right Safe drivers choose Allstate Arrow Right Powered by Coverage.com (NPN: 19966249) Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. See more providers in Choose from insurers in Show More You are required to carry car insurance for a number of different reasons, but you might also wonder what it is you’re paying for. Knowing the basics of car insurance may help you make an informed decision when choosing the best policy that fits within your budget and meets your coverage needs. From coverage selections to filing claims, Bankrate breaks down car insurance and provides you with some tips on how you might be able to lower your rate. What is car insurance
Car insurance is a way to protect yourself financially if you are involved in a car accident or suffer a loss through fire, theft, vandalism or an act of nature. Some only apply if you are at fault in the accident, while others pay when you are not at fault. Furthermore, some coverages help with medical bills, and others pertain to property and vehicle damage. In 2020, averaged $20,235 for bodily injury and $4,711 for property damage. Regardless of the type of coverage, one of the key things to know is that the coverage limit you choose is as much as your policy will pay out. Any amount outside of that is considered your responsibility. For this reason, it is essential to balance policy affordability with levels of coverage. Types of car insurance
When selecting your coverage on a car insurance policy, there are many options to choose from. Liability coverage, for instance, typically has that you must carry to and drive it legally. Other coverage types, like comprehensive and collision, are usually optional unless you lease or finance your car. (BIL): Bodily injury liability coverage provides medical payments for passengers in the other vehicle if you are at fault in the accident. (PDL): Property damage liability coverage provides payments for damages you may cause to property if you are at fault in the accident. This property can include other vehicles along with stationary objects like light poles and structures. (COLL): Collision provides coverage for your vehicle if you are at fault in the accident or are struck by a hit-and-run driver. The payout is determined by your vehicle’s (ACV) minus your deductible. Collision is one half of what most people refer to as full coverage. Your lender will usually require collision and comprehensive coverage if you are financing or leasing, and they may have rules regarding your deductible amount. (COMP or OTC): Comprehensive covers your vehicle for things that are typically outside of your control. Some examples include hitting an animal, theft, vandalism, fire, acts of nature, flooding and glass damage. Comprehensive is the other half of full coverage. (UM/UIM): Uninsured and underinsured motorist provides coverage if you are hit by someone who is uninsured or does not have enough insurance to cover your damage. Depending on the state, you may be able to choose UM/UIM for bodily injury, property damage, or both. In some states, UM/UIM is mandatory. (MEDPAY or MPC): Medical payments coverage provides medical payments for yourself and the passengers in your vehicle, regardless of who is at fault in the accident. Medical payments is usually an optional coverage. (PIP): Personal injury protection can cover things like medical payments, lost wages and funeral expenses for yourself and the passengers in your vehicle. It does not matter who is at fault in the accident, and this coverage may carry a deductible. Depending on your state’s regulations, personal injury protection may be mandatory, and it is not available in all states. While these are the most basic car insurance policy coverage types, many other options exist. Some of these include , rental reimbursement, emergency roadside assistance, mechanical breakdown insurance and new car replacement. Some of these coverage types are not available at every company or for every vehicle. How does car insurance work
Car insurance works by taking on some of the financial risk involved in driving and owning a car. A car insurance company does this in exchange for a premium. Your insurance agent can help you determine what type and level of coverage best suit your needs, and once you reach that agreement, you purchase your policy by paying the premium. An insurance policy is a contract based on a good faith agreement that if you are involved in a covered claim, your insurance company will pay for damages based on your coverage and up to the limits you carry. Sometimes, a specific coverage type will carry a deductible. This is the amount of money you must pay out-of-pocket to use that coverage. This is often the case with comprehensive and collision. For instance, a $500 deductible on collision means that the first $500 worth of damage to your vehicle is your responsibility if you are at fault in an accident. The rest of the damage is covered by your insurance company (up to the ACV of your vehicle). Sometimes, your insurance company will subtract the deductible from your payout amount. How to file a claim
If you get in an accident, the process for filing claims is similar across car insurance companies. After an accident, you should: Make sure everyone is in a safe location after the accident and call the police. Depending on the accident’s severity, you may need to call 911 for medical assistance. Take pictures of the damage, both yours and that of the other party. Do not admit liability even if you think you may be at fault for the accident. Your insurance company will determine who is at fault after hearing the accident’s details. Gather the documentation needed to file your claim. Your insurance professional can provide you with this information, but it generally includes a “proof of claim” report and a copy of the police report. Monitor your claim progress through the insurance company and be sure to follow up with your claim specialist. Before you , check with your insurance provider to see what specific steps are necessary for your claim so you do not experience any unnecessary delays or issues. What goes into insurance rates
Understanding is key to saving money on your premiums. The is $1,771 per year for full coverage, but the cost can vary significantly, depending on the state in which you live. For example, while drivers in Louisiana pay the most on average for full coverage car insurance at $2,864 per year, Maine offers the cheapest full coverage rate, averaging $876 per year. Other that help determine your auto insurance cost include your age, credit score (in states that allow a credit rating to be considered), location, driving record and vehicle type. To be sure that you get the right coverage at the lowest price, consider starting your search by collecting multiple quotes from the to see which company can offer you the best rate for your situation. With so many rate factors considered, it is impossible to compare your rate to that of your friends or family members. You and your friend may live in the same neighborhood and drive a similar vehicle, but you may have vastly different rates based on other factors. How much car insurance do you need
As mentioned above, most likely has minimum limits on the different types of coverage that you need to carry to drive legally. There are three types of coverage typically required of drivers, written as liability amounts in the following order: Bodily injury coverage per person / Bodily injury coverage per accident / Property damage coverage per accident You will commonly see these ratios listed as minimums. For instance, it is common to see 50/100/25. Those are simply the minimum amounts of each coverage type required in thousands of dollars. So a 50/100/25 ratio for auto insurance means: if you are at fault, up to $50,000 gets paid out for each person’s injury, $100,000 is the maximum total payout per accident, and $25,000 is the maximum payment for property damage. State law designates the minimum amount of coverage that is required for its drivers. Some states have low minimum liability limit requirements. California, for instance, only requires that you carry 15/30/5. Since most accidents result in property damage higher than $5,000, carrying the minimum limit increases the likelihood that you will have to pay out of pocket for damage if you are at fault in an accident. Most insurance agents recommend that you carry higher than the state minimum for liability coverage to better protect yourself from financial risk. Additionally, carrying state minimum liability does not provide coverage for damage to your vehicle. Omitting comprehensive and collision can cause hardship if you are in an at-fault accident and your car needs extensive repairs. How to save on car insurance
Comparison shopping for an auto insurance policy in your area is crucial for finding cheap insurance because prices vary by insurer and ZIP code. Some of the offer much more affordable options than their competitors. Outside of comparison shopping, there are some actions you can take to help slash your insurance costs, such as understanding how much coverage you really need and purchasing accordingly. It also pays to look for . Some common car insurance discounts include: Good driving discount Defensive driving course discount Low mileage discount discount Good student discount Driver’s training discount Multi-car discount Military or veteran’s discount discount Some people raise their comprehensive and collision deductibles to lower their premium. Although it is true that a higher deductible results in a lower cost for those coverages, this strategy may not be the best choice for everyone. Car insurance is about lowering your financial risk, so it’s generally not a good idea to choose a deductible amount you cannot easily afford. What do I need to buy car insurance
If you are looking for how to get car insurance for the first time or have not set up a new policy in a while, you might be wondering, “What do I need to buy car insurance ” You may need to provide several pieces of information before purchasing a new car insurance policy, all of which provide a better idea of you and your vehicle. These include your: Driver’s license (both for you and for people you expect to be driving your insured vehicles) Vehicle registration Social Security number Banking information Vehicle identification number (VIN) Lienholder or leasing company information and their coverage requirements It also helps to have a copy of the , as this outlines current insurance coverage on any vehicles for which you need a new quote. Once you have your items together, get a few online car insurance quotes to compare how you can save with one insurer versus another. You may qualify for better discounts with a particular auto insurance company, so it is worth the time to shop around for quotes before you buy. You should also keep in mind that most insurance companies require you to list all licensed drivers that live in your household on your policy. Frequently asked questions
What car insurance company has the best coverage types and rates
It depends. Car insurance companies can use about a dozen factors to calculate your premium, including your location, driving history and vehicle type, or even your credit in some cases. For this reason, car insurance is almost like a fingerprint — not one policy will be exactly the same as another. That’s why one of the best ways to find the best company for you is to shop around for and compare the options.
Do I need car insurance before buying a vehicle
While you won’t need insurance before , you will likely need to show proof of insurance to complete your purchase and drive off the lot. Since buying a new car can be an all-day event, some people prefer to set up their policy to go into effect on the day they pick up the car. If you already have an existing policy, your current coverage may temporarily extend to your new vehicle, but this can come with some risk, as it’s limited to only the coverage you carry on your old car. Plus, this coverage extension usually only lasts for 30 days. That’s why many insurance professionals recommend that you either add the new car to your existing policy or finalize your new policy the day of your car purchase.
How do I cancel my car insurance policy
is usually straightforward, but each company has a different process or requirements to complete this request. Some insurers will accept a verbal request to cancel, and others will require you to submit your request in writing. Furthermore, some insurance companies will ask you to provide proof that you have obtained new insurance or have canceled the registration on your vehicle. Since this process varies from company to company, you may want to contact your agent for specifics on canceling your policy. SHARE: Carol Pope is an insurance writer for Bankrate and prior to joining the team, she spent 12 years as an auto insurance agent. During this time, she sold, serviced and underwrote auto insurance for people across the country. She also has experience selling supplement coverage such as umbrella insurance. Angelica Leicht is an insurance editor on the Bankrate team. She is truly passionate about helping readers make well-informed decisions for their wallets, whether the goal is to find the right comprehensive auto policy or the best life insurance policy for their needs.