The ultimate guide to auto insurance coverage

Auto insurance might feel like a different language – one that, unfortunately, they don’t teach in schools. They just kind of expect you to figure things out, from the coverages to getting quotes to making a final choice as to what car insurance to get. We get that it can be overwhelming, so we’ve put together this guide to auto insurance coverage to explain what you need to know.

The ultimate guide to auto insurance.

Here’s an overview of topics we’ll cover in this guide:

  • Auto insurance coverage terms to know
  • Pro tips for getting car insurance
  • Coverages you can consider
  • What affects my car insurance rates?
  • How to save money on car insurance
  • Car insurance discounts

1. Auto insurance coverage terms you need to know.

When you’re on the hunt for car insurance – or just trying to make it make sense in your brain – it helps to speak the lingo. Here are 7 car insurance terms that are useful to have in your repertoire.

Covered loss – A covered loss is a loss that your insurance policy will pay for. Basically, your policy outlines what it will and will not pay for.

Declarations page – A declarations page is kind of a summary of your insurance policy. It includes things like the types of insurance you choose, the limits for each auto insurance coverage, how much each coverage costs, and what vehicles are on the policy.

Deductible – Your deductible is the amount you’ve agreed to pay if you have a claim. You have your piece and the insurance company takes care of the rest.

Limit of coverage – The limit of coverage is the maximum amount that insurance will pay for various coverages that you have.

MVR – An Motor Vehicle Record details your driving history, meaning that it includes things like license status, traffic violations, license suspensions, and accidents. It’s a record held by the state, and it can impact your insurance rates.

Premium – This is basically the amount of money you pay for your car insurance.

Primary use – Primary use (for example, business, pleasure, commuting, farm use) is what you use the car for most of the time.

2. Pro tips for getting car insurance.

If you’re on the hunt for car insurance, you might feel a little overwhelmed. What should you be looking for? How do you know if you’re getting the right auto insurance coverage? What’s the best way to get car insurance? We’ll go over some quick tips to help you out.

Think about what coverages you want to get.

There are a lot of different coverages you can get for your insurance. And before you get bombarded with the jargon and gobbledygook, it’s a good idea to familiarize yourself with different coverages and what they do. (Don’t worry – we’ll give you an overview of coverages in a second.)

Make sure you get enough auto insurance coverage.

It’s important that you get high enough limits of insurance to truly protect yourself if you’re in a serious accident. While all states have some sort of minimum legal requirements for liability coverage, you may want to get more than the minimum. The minimum may not be enough to fully cover your legal obligation to the other driver if you cause a serious accident.

Choose the deductible that works for you.

When you set your deductible, you should consider your finances and how much you can comfortably afford to pay in the event of an accident or a loss. The trick, though, is to remember that choosing a higher deductible can help you get a lower premium (because you’re less likely to file a claim.) But don’t set it so high you’d go broke if you had to pay it.

Research the carrier.

Take some time to research the insurance carrier you’re considering. It’s important to make sure that the carrier is financially stable, they have a good customer service record, and they have a strong reputation for handling claims.

Don’t forget to ask about discounts.

What? Discounts? Yep. You can qualify for different discounts that can help you save money on your car insurance. Don’t forget to check what discounts your carrier offers and ask the agent who’s helping you get quotes for auto insurance coverage.

Consider bundling.

You can consider getting your home and auto insurance from the same carrier (this is called bundling.) Lots of carriers offer a significant discount if you bundle, so definitely give it some thought.

Get quotes.

It’s also important to get quotes for car insurance so you can explore coverage and pricing options. (Fill out our online form to get started with your quotes.)

3. Coverages you can consider.

Like we mentioned above, you can consider lots of different coverages to protect yourself financially. It’s important to make sure you have the right coverages to safeguard your bank account. These are some of the main insurance coverages you can consider for your car:

Liability: This is the coverage that helps you cover your legal obligation to another driver if you’re at fault in an accident. And it can help you cover your legal expenses if they sue.

  • Bodily injury liability can help you cover the other driver’s medical expenses and pain and suffering.
  • Property damage liability helps cover the repair or replacement of the other driver’s car (or other property you damage with your car.)

Collision: Collision coverage can help you pay to repair or replace your car if it’s damaged in – you got it – a collision (i.e. an accident or taking out a fence.) Liability insurance won’t cover repairs to your car.

Comprehensive coverage: Comprehensive coverage helps you repair or replace your car if it’s damaged by something other than an accident. It generally covers fire, theft, vandalism, animal strikes, and falling objects (i.e. tree branches.) Again, liability won’t cover this sort of loss.

(Side note: if you have a car payment, your lienholder or lender may require you to have collision and comprehensive coverage.)

Rental reimbursement: If you’re in an accident, your car might need to spend some time in the shop. Rental reimbursement can help you cover the costs of getting a rental car.

UM/UIM (Uninsured/Underinsured motorist): UM/UIM insurance can help you if you’re hit by a driver who does not have insurance (uninsured motorist) or who doesn’t have enough insurance to cover the entire costs of the accident (underinsured motorist).

It's important to understand the basics of auto insurance coverage.

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4. What affects my car insurance rates?

You might be wondering what affects your car insurance rates and how insurance companies set premiums. Do they just randomly pick a number out of thin air? Not exactly. There are a lot of factors that affect your car insurance premium, including:

  • Your age: Younger drivers often see higher rates because they don’t have lots of experience and they can be more prone to taking risks.
  • Your driving record: Your driving record (for example, tickets and accidents) impact your rates. The safer a driver you are, chances are you’ll have lower rates.
  • Where you live: Your location can affect your rates. Urban areas tend to have more traffic and higher crime rates, which can translate to higher premiums.
  • The car you drive: The year, make, and model of your car plays a part in your rates, and so do the safety features your vehicle has.
  • Your credit score: If you have a better credit score, you could see lower rates because you’re seen as being a lower risk to insure.
  • How much you drive: How much you drive and what your car is used for can impact your premium. The more you drive, the more likely you are to get in an accident.
  • The coverages/deductible you choose: Your premium can be influenced by what coverages you choose and your deductible.
  • If you’re married: You may see lower car insurance rates if you’re married.

5. How to save money on car insurance.

You might be wondering if there’s a way to save money on your auto insurance coverage. That’s a pretty big price tag on your policy, and your bank account is politely asking if you could please pay less for car insurance. Here are some strategies you can employ to save money on auto insurance.

Raise your deductible.

As we explained earlier, you might see lower rates if you choose a higher deductible. But again, don’t set it so high that it would be a big burden for you to pay if you have a claim.

Be a safe driver.

Your driving record affects your rates. If you have speeding tickets and accidents on your record, the insurance company sees you as having a higher risk of getting into an accident (and thus filing a claim.) So, by driving safe and keeping a clean driving record you can score lower car insurance rates.

Drive a safe car.

Insurance companies sometimes offer lower rates on vehicles that have safety features. The car you drive does make a difference to your rates.

Boost your credit score.

It’s possible that your credit score can hurt your car insurance rates. People with better credit scores are seen as being “better” risks and less likely to file a claim. So, be sure to pay your bills on time, limit credit card use and applications, and take care of your credit score.

Take advantage of car insurance discounts.

To get a better rate on your insurance, be sure to take advantage of the discounts that your carrier offers. You can easily save money on your rates just by qualifying for a discount (we’ll explain about a few common discounts in a bit.)

Get quotes.

You can also save money simply by getting multiple quotes and looking into different coverage options. You don’t have to go with the first insurance company you find when you’re getting auto insurance coverage.

6. Car insurance discounts.

Many insurance carriers offer different car insurance discounts. Some common auto insurance discounts to consider are:

Multi-car: You can save money simply by insuring more than one car with the same carrier.

Bundling: Many insurers offer a discount for bundling, or getting home and auto insurance (or renter’s insurance and auto insurance) from them.

Safe driver: You might get a discount if you go a certain amount of time without having a claim.

Automatic payments/Paperless: Insurers may offer discounts if you sign up for automatic payments (which means you won’t accidentally forget to pay your bill.) You also might get a discount for going paperless and having electronic bills and payments. So going green could save you money!

Pay-in-full: You might get a discount if you pay your premium all at once for the year instead of paying monthly.

Low mileage: If you don’t drive very much, you’re at a lower risk of getting into an accident. And that means you could get a discount.

Good Student Discount: Teenagers and young adults could qualify for a Good Student discount if they make good marks in high school or college. (Studies show that students who make good grades are less likely to get into accidents.)

Check out our pro tips for auto insurance coverage.

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Well, those are some of the main things you should know about auto insurance coverage. If you’re looking for great car insurance at a great rate, get started with quotes by filling out our online form, calling us, or messaging us on LiveChat.