Car Insurance 101: Everything You Need to Know to Purchase the Right Policy
- Understanding the basics of car insurance
- Car insurance policy terms
- Car insurance coverage terms
- Choosing the right auto insurance policy
- Staying on your parents’ policy
- Available tools for car insurance
- The bottom line
Understanding the basics of car insurance
- Be sued by a victim in the crash
- Be fined
- Lose your license
- Drives up your future auto insurance rate
Car insurance policy terms
Car insurance coverage terms
- Storms and natural disasters
- Theft and vandalism
- Damage from fire
- Damage from animals
- Damage from falling objects
Bodily injury liability
Property damage liability
Personal injury protection (PIP)
Uninsured and underinsured motorists
Other common coverage options
- Roadside assistance. Assists you if you ever find yourself broken down or needing assistance with your car. Provides services such as towing, battery jumping, gas refill, or lockout.
- Car rental reimbursement. This optional coverage provides you with money for a rental car if you’re involved in an accident.
- Personal umbrella coverage. This is extra liability insurance that would cover additional amounts above and beyond your current liability coverage.
- Gap insurance. Popular among new car owners, if you owe more on your car than your car is worth to the insurance company, then this gap coverage would pay the difference if you’re involved in an accident and total your car.
- Rideshare coverage. Gig drivers, such as with Uber or Lyft, can relax knowing you have additional coverage while you’re on the job. This is usually additional liability coverage if your car is damaged or you damage someone else’s vehicle. Some companies offer this option if you are a driver for meal delivery too (UberEats, DoorDash), so if you have a side hustle with your vehicle you might want to consider adding this to your policy.
Choosing the right auto insurance policy
- Driving history (at-fault accidents and tickets will increase your premium)
- Marital status
- Credit score
- Coverage choices, including optional items like car rental reimbursement and roadside assistance
- Qualifying car insurance discounts such as safe driving or bundling of life insurance and homeowners insurance
- If you own your car or there is a lender
- Get quotes. You would be shocked at how much the price varies from one carrier to another. It’s also good practice to get quotes once every year or two
- Review discounts with a fine-toothed comb. Every carrier has standard discounts. Most of them offer discounts for policies with more than one vehicle, more than one policy (if you add renters or homeowners insurance), and for a good driving record. But some lesser-known discounts might include an extra 5% for getting a car insurance quote online, or not driving your car while you’re at college, or taking a driver’s education class.
- Review the company’s financial strength. You can review every insurance company’s financial strength by going to the A.M. Best credit rating website.
Staying on your parents’ policy
- They own your car and you live with them
- They own your car and you’re away at school
- You live with them, they own your car, and you’re married
- You own your own car — even if you live with your parents
- Your parents own your car, but you no longer live with them
Available tools for car insurance
Insurance Information Institute (iii)
A.M. Best financial ratings
The bottom line
Reclaim Up to $610/Year in Car Insurance
Here’s the thing: your current car insurance company is probably overcharging you. But, who has the time to look around for around a new company?
A website called CarInsurance.net makes it super easy to see if you’re getting the lowest price. All you have to do is enter your ZIP code and your age, and it’ll show you your options.
Using CarInsurance.net, people have saved up to $610 a year.
It takes just a few minutes to see how much CarInsurance.net could put back in your pocket. And the best part? Because we’re driving less, some insurers are slashing prices this month.