You're a first-time car owner, so you have a lot of questions about auto insurance. This guide will help you understand the different types of auto insurance coverage and what factors affect rates. It will also walk you through choosing an auto insurance policy and maintaining your coverage over time.
Auto insurance coverage, although specific to vehicles, is a broader term that includes many types of auto insurance, including the following:
There are many factors differing from state to state that can influence the insurance premiums you are paying. Below are some of the most common ones:
Most people purchase auto insurance because it helps protect them against financial loss if they get in an accident with another driver that causes damage or injury. This can include:
But besides the financial loss, you must consider many other factors when buying an auto insurance policy.
There can be different coverage options, and which ones you need may differ based on state rules and other factors.
For example, comprehensive and collision coverage are optional in some states but mandatory in others. If you don't purchase these options when buying your policy, then the state law will require you to include them at the time of renewal.
Another factor to consider is how each type of coverage works:
When considering an auto insurance policy, it's a good idea to consider the vehicle you'll be insuring. The following factors can help you determine which type of policy is best for your situation:
If you live in an urban area with high crime rates or you modify your vehicle with aftermarket parts outside manufacturer specifications, your risk profile can increase when shopping for auto insurance policies.
You must also see if you need small motor vehicles or truck insurance. If you own a truck, it is best to go with truck insurance. Truck insurance is specific for trucks and can offer more benefits than general auto insurance.
When looking for an insurance provider, check which states the company has a license in. This will help you determine whether your state's insurance provider is legitimate. Most insurance providers will include such information on their websites.
Western Truck Insurance is a truck insurance provider offering various insurances, including truck liability insurance, trucking crime insurance, physical damage insurance, trucking bonds, and pollution insurance. The company has all the states they are licensed to operate in on its website. According to the list, they are licensed in 27 states. You can go through such information to decide.
The deductible is the amount you must pay before your insurance company starts paying for your car repairs.
For example, if you have a $500 deductible and get in an accident that costs $1,000 in damage to your car, you'll pay $500 out-of-pocket and submit a claim for reimbursement from your insurer. They would pay the rest ($500) as part of their coverage agreement with you.
Auto insurance premiums are based on several factors, including:
Every state will have different premium amounts based on various factors, such as crime, traffic, accident, etc. According to Statista, Michigan holds the highest premium for auto insurance at $4,386 for very minimum coverage in 2022.
The bottom line is that when you're starting, an auto insurance policy is a must. You don't want to expose yourself or your car in case of an accident or other unforeseen incident. However, many different types of coverage are available, and each has pros and cons. Thus, you must understand what each type covers before choosing one.