Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 23, 2020

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It’s all about you. We want to help you make the right car insurance coverage choices.

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Key takeaways...

  • Review all types of coverage that you can get for your car
  • Think about your own personal risks and habits
  • Compare companies and policies for the best rates
  • Keep your driving record clean
  • Ask about driving discounts if applicable to save money on premiums

If you are just starting out with a new car or need to shop for the best insurance plan, there is a certain process you should go through to make sure you get the best deal.

There are many different companies that are willing to give you a quote and talk to you about their insurance plans.

Often, they will all sound equally adequate to cover your insurance needs, but more scrutiny regarding the important components will help you focus on the aspects that you should put a priority on.

Compare car insurance quotes today by entering your zip code in our free rate tool above.

So what types of coverage are available? Do you need them all? Below, we take a look at several different kinds of coverage you should consider to help you decide.

State Liability Coverage

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First and foremost, you should make sure that you have the minimum state liability coverage that your state requires. By doing your research and understanding what is required for state minimums, you will make sure that you have the necessary coverage.

The state usually requires at least the following types of coverage:

  • Bodily injury liability
  • Property damage coverage

Bodily injury liability is the amount that you need to cover any injuries that you may cause due to negligence or an “at-fault” accident for which you are responsible. The bodily injury liability part of your coverage will be the first number listed in the quote.

For example, 20/40/10 means that you will have $20,000 worth of coverage per injured persons for up to $40,000 for the entire accident. The $10,000 means that you’ll also have $10,000 in property damage.

Property damage liability is another required coverage and is the last number listed in the above proportion: 20/40/10. In this example, you have up to $10,000 of property damage liability coverage.

This amount will be allocated to repairing any damage that you cause to other vehicles in an accident.

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Collision Insurance

Collision insurance is an optional coverage, but it is highly recommended when buying insurance for the first time and any time the property value of your car exceeds $1000 or more. Deductibles are the amount that you must meet to have your car repaired by your insurer.

If you have chosen a $500 deductible, you will pay up to $500, and the insurer will pay the rest.

You should choose your deductible carefully because that determines how much you have to pay “out-of-pocket” before your insurance kicks in.

Choose a deductible that is no less than what you can afford to pay yourself for damage in an accident to your vehicle.

Other Coverages

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Some of the other coverages you should consider when shopping for insurance include:

  • Uninsured Motorist – Uninsured motorist insurance covers your accident if the other driver who caused your accident is uninsured.
  • Underinsured Motorist – Underinsured motorist insurance covers damage or injuries that you or your other passengers sustain when the other motorist is underinsured. This means that they may have some limited insurance but it is not enough to cover damages.
  • Personal Injury Protection – Personal injury protection is legal protection that you can opt to carry on your car to protect you from lawsuits stemming from an accident that is ruled due to your negligence.
  • Comprehensive – Comprehensive insurance does not cover accidents. That is what the main part of your insurance is for. Instead, comprehensive covers anything that is not accident-related such as fire, flood, vandalism, theft, and any other incident that results in damage to your vehicle.

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How to Choose an Insurance Company

In addition to these coverages to consider, you should also ask your insurance agent how long it takes for companies to pay their claims.

The claims process should not be drawn out over an extended period. There are, of course, items of paperwork and formalities that much be done when claims are filed.

But the time of your filing the claim and the settlement should not be more than around 10 days to two weeks.

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Think About Your Needs

In the end, insurance is about weighing your personal risk with the amount of premium that you are paying. There’s an old saying in insurance circles, “Some insurance is better than no insurance.” This is certainly true.

If you have the state minimums and nothing else, at least you will not be penalized or risk losing your license due to failure to carry insurance.

If you have a $1500 deductible, this means that you will have to pay the first $1500 in a collision to fix your vehicle, but the insurance company will pay any amount over this.

In short, take out the most insurance that you can honestly afford to pay without causing yourself any financial difficulties, but keep in mind that some accidents can run into thousands of dollars.

So the amount that you pay out in insurance premiums each month is always going to be substantially less than your costs for one accident with multiple injuries or damage from one accident.

Fault and No-Fault States

One thing to keep in mind when shopping for insurance is whether you are in a fault or no-fault state. Most states are “fault” states. This means that police officers at the scene will make a decision on whose fault the accident is.

If it is ruled your fault, your insurance company will pay. If the accident is the fault of the other motorist, their insurance will pay.

In a “no fault” state, your insurance company pays no matter whose fault the accident was. Find out whether your state is a fault or no-fault state before deciding on your car insurance.

Shop and Compare Costs and Premiums

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After you consider all of the various aspects of your auto insurance, you should compare the cost and offerings of different companies to see who can give you the best deal.

The following can affect your premiums and should be considered when searching for an insurer:

  • Consider the number of miles you put on your vehicle each year
  • Consider your the overall risk each day back and forth to work
  • Consider your risk in vacations, trips, and other situations

Look at the rating of the insurer that you are considering and check their BBB rating as well.

Finally, ask the right questions when you are shopping for insurance to guarantee that you get a policy that will fit the needs of your driving habits, vehicles, and habits so that you minimize the risk while finding an affordable premium.

Insurance is for the purpose of protecting your financial assets. It protects you from civil actions that others might bring against you.

It also protects your investment. So when you are shopping for insurance, rather than only asking the question, “Can I afford this insurance?” you should also ask, “Can I afford not to have this insurance?”

The higher the risk, the more insurance you need and should carry on your vehicles. You are protecting not only yourself but others who travel by you and other drivers on the road.

Most of all, drive safely and heed all speed limit signs at all times. Don’t be careless. You have a responsibility to protect yourself and other drivers and to drive defensively to avoid an accident.

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Safe Driving Tips

Some of the tips for safe driving while on the roadways include:

  • Obey all traffic signs
  • Heed all speed limit signs
  • Always be alert to other driver’s habits and movements
  • Avoid distractible driving
  • Never drink and drive
  • Never text and drive

These tips should keep you safe while on the roads. Remember, you never know when an accident could happen, so always be on the lookout. Keep your insurance current and keep your proof of insurance in your car to avoid fees and increases in your premium.

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