No matter if it’s your first car or renewing an older model, finding an appropriate policy can save money. This guide covers basic car insurance requirements, types and rates.

Most states mandate drivers purchase certain minimum amounts of liability insurance; however, your policy can be tailored specifically to meet your needs and budget with optional features like uninsured motorist coverage.

Coverage

Car insurance provides financial protection in case of accidents that damage another’s vehicle or property, and also shields you from lawsuits that might follow such incidents. Most states mandate minimum liability coverage, while many people also opt to add other coverage options (typically six options that can be priced individually a la carte).

Bodily Injury Liability- This form of car insurance provides expenses associated with injuries you or any passengers in your vehicle cause to other people. Bodily Injury Liability coverage is usually mandatory in most states, while Property Damage Liability covers damage caused to other property caused by you or anyone driving your car with permission while operating it, including other cars but also lamp posts, fences or buildings.

Comprehensive Coverage- This coverage, optional but often required by lenders when financing a car purchase. Comprehensive is considered theft- and natural disaster-related, while Uninsured/Underinsured Motorist Coverage pays medical expenses and losses in cases with drivers without coverage if involved in an accident with them; 14 percent of drivers don’t carry such coverage so this option could prove valuable if needed. Emergency Roadside Assistance- Provides towing, locksmith and other roadside assistance should you breakdown unexpectedly.

Premium

The premium is the cost associated with your policy and can be paid either all at once (to receive a discount) or on an ongoing basis, depending on which car insurance provider and type of coverage you select. Premiums vary between car insurers and coverage types available – keep in mind that driving record and credit history play a huge part in determining rates!

Other factors affecting your premium include the type of vehicle, driver(s), age and modifications made to it. A higher-performance car tends to cost more than less expensive models when insuring, and you should strongly consider investing in non-required coverages such as medical payments/benefits or personal injury protection that will cover you and others involved in an accident even if another driver is uninsured or underinsured.

Liability limits should correspond with or surpass the value of your assets, while comprehensive/collision coverage provides emergency repairs or replacement of vehicles in case of accidents. Furthermore, consider adding an umbrella policy as extra coverage against serious incidents or lawsuits that arise out of accidents and lawsuits. Lastly, shopping around and comparing quotes is often one of the best ways to save on premiums – drivers could save thousands simply by switching providers.

Deductibles

The deductible is the amount that must be paid before your insurance company begins covering damages to your car or other items in an accident. For instance, if your deductible is $500 and an accident happens that results in car damage, then this amount must be paid out before any further costs are covered by them. Its purpose is to give drivers financial incentives for driving more safely in order to prevent unnecessary claims being submitted against them.

Most states mandate car insurance in order for drivers to legally operate on public roads. When selecting your coverage options, take into consideration both state requirements and personal preferences; collision and comprehensive policies offer additional protection from uninsured or underinsured drivers who cause costly repairs.

Other variables that could influence your premium include the type of vehicle you own, how frequently and often you drive, your age, driving record quality and location. Some insurers may also take your credit history into consideration; drivers with poor scores typically pay higher premiums compared to drivers with excellent scores due to being riskier customers who may file more claims; you should consider adding personal injury protection or uninsured/underinsured motorist property damage coverage into your policy as additional layers of protection against potential claims filing.

Limits

Car insurance limits define the maximum amount your policy will pay out in an insured event, meaning if damages surpass them you are responsible for covering them yourself. Although increased limits may increase premium costs they are certainly worth considering for added financial security.

A basic auto policy typically contains six separate coverage options, some required by law and some offered as extra protection. Most insurers include Liability coverage as a legal requirement in many states as well as Collision, Medical Payments/Personal Injury Protection (PIP), and PIP/Medical Payments Protection as part of a basic auto policy package.

When you see a number listed with each coverage option on your policy, this represents its limits for that type of protection. For instance, a minimum liability policy typically has limits of $50,000 for bodily injuries per person and $100,000 per incident for property damage coverage.

Most insurers also provide Uninsured Motorist Bodily Injury (UMBI) and Underinsured Motorist Bodily Injury coverage for you or your vehicle when hit by someone without sufficient coverage or low policy limits. UMBI coverage helps cover injuries sustained as a result of being struck by someone without auto insurance, or with policies with inadequate limits.

Most policies require you to list all licensed drivers living with you who are related by blood, marriage, or adoption and who frequently drive your vehicle; however, many companies offer an “permissive use” feature which allows you to grant additional drivers permission without adding them directly onto your policy.