Virtually all states have requirements for minimum car insurance.
How much a driver pays per month (the premium) depends on a number of factors:
- Age of driver (teenage boys being the most expensive);
- Type of car (sports cars with large engines more expensive than a minivan);
- Where the car is located (e.g., do you have a garage, do you live in a harsh climate);
- Driver’s driving history (drivers who have had accidents are more expensive);
- Amount of deductible — the higher the amount you pay on a claim, the less expensive the premium.
Remember that your policy will have a maximum amount limit, beyond which you are responsible.
The basic requirement in most States is for Liability Insurance. If you have a car accident that is your fault, Liability Insurance covers property damage (to another car or, say a telephone pole) and medical expenses of the other driver. It is expressed in a series of numbers (e.g. $25,000/$50,000/$25,000) which are the maximum coverage for bodily injury per person/bodily injury per accident/property damage. So using the numbers above, Liability Insurance would pay out a maximum of $25,000 in medical expenses per person involved in accident and a total maximum amount per accident of $50,000 and a maximum amount of $25,000 for property damage.
Check your State Department of Motor Vehicles for current requirements. Also, websites like www.esurance.com will have State by State information.
Tip: Don’t assume you will get the best deal online. Checking with an independent insurance agent for quotes may save you money.
This is almost always required if you have a car loan (lienholder). It pays repairs to your car. If the car it totaled, it may well pay for a replacement. But the coverage varies between insurers and you should check the specific details of your policy.
This covers damage to your car that is not the result of an accident. For example, Comprehensive will cover weather damage. It will also cover you if your car is stolen. Most policies will cover “Acts of God” (hurricanes, floods, tornadoes).
This will cover the medical bills of you and your passengers.
These are not damage related, but should be considered:
Rental coverage – reimbursement of part/all rental car expense;
Roadside assistance – will cover towing and the assistance of a mechanic (e.g., if your car won’t start);
Note: Loss of personal property (handbag, laptop, cell phone) is not usually covered by car insurance.