Car Insurance

I didn’t realize that you can’t drive a vehicle in America unless you have a minimum amount of insurance. In 49 states and in DC anyway. The only state that doesn’t require car insurance is New Hampshire, where drivers must prove they have enough money to cover any costs if they cause an accident.

In every other state in the US, you will need proof of insurance to get your license plates and car registration.

In some cases, you will need to prove you have insurance lined up if you want to buy a car: many lenders won’t even allow you to complete the car loan process unless you have insurance when you sign. In order to buy the vehicle, you have to have insurance on it in order to drive it off the lot.

So, what you would have to do is first decide what kind of car you want, negotiate a price with the dealership or private owner, call insurance companies or shop online and get a quote, decide on an insurance company, give them the VIN number and pay for the insurance, then buy the car.

I live in Pennsylvania and here PennDOT, the state Department of Transportation says that before a registration plate is transferred, proof of insurance must be given to PennDOT. This could be an insurance identification card issued by an insurance carrier, which has your name and address, vehicle identification number (VIN), make and body style of the car, the name of the insurance company, policy number, as well as the effective and expiration dates.

Ok so it’s clear you NEED it, but what’s the smartest way to buy car insurance? We’ve all seen the ads with the gecko and the emu and the jingles – it can get confusing.

First, get all YOUR OWN INFORMATION together:

The names and driver’s license details of everyone who will be on the policy and their driving history, especially details of every ticket, accident, driving violation.

All about the car – make, model, year, VIN, special safety features, odometer reading and approximate annual mileage driven.

Your current insurance company, if you have one, and the current coverage limits.

Now start comparing quotes from different insurance companies. It is fastest and easiest doing this online. Various sites offer ways to compare quotes/estimates from insurance companies side by side so you can get the best rate or premium. Some are third-party sites such as Nerd Wallet or Zebra. Others are websites of the insurance companies themselves, such as Progressive and Geico.

The problem with using some of these sites is that once you fill in the information, including your contact details, you start getting a bunch of calls, texts and emails.  

You could also contact an independent insurance agent, who might be able to get you a good rate from a company you might not even have heard of before.

You might be wondering, what impacts how much I pay? Various things can impact your car insurance rate: having a good driving record for at least two years (preferably longer), having good credit, living in a safe area, being over 21, being married, education level, a person’s gender, how high your deductible is (higher the deductible, the lower your payment), and if you have multiple things under one policy (not just auto but also home/renters insurance and possibly life insurance).

It’s not always fair but yes, women generally pay less for car insurance because insurance companies set premiums based on statistics. Women can pay less because they generally have fewer and less serious accidents. But Pennsylvania, California, Hawaii, Massachusetts, Michigan and North Carolina do not allow insurance companies to use gender as a rating factor in auto insurance rates. 

So now that you know how to get auto insurance, what TYPE should you get? The aim of all these types of car insurance coverage is to help financially protect you, your passengers, and your car if you get into an accident.

Depending on which state you live in, some of these coverages are mandatory, while some are optional and offer added protection.

Broadly speaking, there are 6 common kinds of coverage:

• Liability Coverage: this is mandatory in most states, with drivers legally required to purchase at least the minimum amount of liability coverage set by state law. Liability coverage has two types of coverage. Bodily injury liability, which may help pay for costs related to another person’s injuries if you cause an accident. The other is property damage liability, which can help pay for damage you cause to another person’s property while driving.
• Uninsured and Underinsured Motorist Coverage: This is required in some states and optional in other states. If you’re hit by a driver who doesn’t have insurance, uninsured motorist coverage may help pay for your medical bills or repairs to your vehicle. If you’re hit by an underinsured driver, that means they have car insurance, but their liability limits aren’t enough to cover your resulting medical bills. That’s where underinsured motorist coverage may help, depending on the laws of your state.
• Comprehensive Coverage: this may help cover damage to your car from things like theft, fire, hail or vandalism. If your car gets damaged by a covered risk, comprehensive coverage may help pay to repair or replace your car (up to the vehicle’s actual cash value). Comprehensive is typically optional coverage, but if you are leasing or paying off your car, your lender may insist on it. This coverage has a deductible, which is the amount you’ll pay out of pocket before your insurer pays you back for a covered claim.
• Collision Coverage: If you get into an accident with another vehicle, or if you hit an object like a wall or pole, collision coverage may help pay to repair or replace your car (up to its actual cash value and minus your deductible). This type of coverage is typically optional, but if you are leasing or paying off your car, your lender might insist on it.
• Medical Payments Coverage: this coverage may help pay for costs related to injuries if you, your passengers, or family members who are driving the insured car are injured in an accident. Covered costs may include hospital visits, surgery, X-rays and more. Medical payments coverage is required in some states and optional in others.
• Personal Injury Protection/PIP: this type of coverage is only available in some states. It may help pay for your medical expenses after an accident. It can also help cover other expenses incurred because of your injuries, including lost income or childcare expenses. PIP is required in some states and optional in other states where it’s available.

There are also some other types of coverage you can get, like if you work for Uber or Lyft, Ride Sharing Coverage offers protection for you and your car. It can cover the gap between your personal auto insurance and the coverage provided by the ride-share company. Another useful insurance is Rental Reimbursement Coverage/Transportation Expense Coverage, which may pay for a rental car while your damaged vehicle is getting repaired or replaced. Towing and labor cost coverage can pay for towing, battery replacement, lockout service, gas service, etc., in case you’re stranded on the side of the road.

I hope what you have just read here helps give some clarity about different types of auto insurance and their various uses.