What You Need to Know About Car Insurance Rates and Quotes

Car Insurance: What you need to know

Most people don't know much about car insurance beyond the fact that you pretty much have to have it. Insurance isn't exactly a thrill-a-minute subject. But, when you get into a car wreck (and that's when, not if), even if it's a little fender bender, you'll be glad auto insurance is there to help -- provided you've got the right coverage. This car insurance guide will give you a rundown of everything you need to know about car insurance.
If you're already a car insurance expert and just want to compare rates and companies, you're in the right place too. With our quote tool, you can get multiple car insurance rate quotes and find the best policy for you.

Why You Need It

Cars aren't cheap, and car accidents really aren't cheap. In addition to car damage, there are also medical bills to consider. When thinking about the cost of a collision, you need to keep in mind that a car accident may involve more than one car -- that can easily double the cost of the damage. And, if each car has multiple passengers and they all get injured, you see how collision costs add up.
Insurance helps you cover those costs. Basically, you pay for an insurance policy, which is cheaper than the costs you'd likely incur because of an accident. Then, if you have an accident, the policy covers some of the costs associated with it. What your insurance policy covers depends on the type of coverage you buy.

Types of Coverage

The type of coverage you get depends on the laws in your state (most states have some required minimum auto insurance laws), the value of your car, and how much of your own money you're willing to spend if you get into an accident.
Collision coverage is pretty basic: it pays for damages to your car if you hit something.
Liability coverage is required by most states. It covers property damage and injuries to others caused by your car. So, if you drive through your neighbor's fence, collision coverage covers the damage to your car and liability coverage covers the damage to the fence. Liability coverage is what you need if you're in an accident and it's your fault.
Medical coverage covers medical expenses that are the result of an accident. If you broke your wrist while driving through your neighbor's fence, this coverage would take care of it.
Comprehensive coverage covers damage to your car that's not the result of a collision. This is the kind of coverage you'd want if a tree fell on your car, or if it were damaged in a flood.
Personal Injury Protection is very similar to medical coverage. The difference is that medical coverage covers everyone injured in an accident, while Personal Injury Protection only covers you. It's required coverage in many states; medical coverage tends to be optional.
Uninsured motorist coverage comes in two types. One takes care of damage to your car if it is hit by a driver who doesn't have liability insurance. The other takes care of bodily damages (like hospital bills) to you or your passengers if you're in an accident with a driver who doesn't have insurance. It's a good idea to carry both kinds; check with an insurance agent in your state to see how much you need.
Underinsured motorist coverage also has two types. The first will pay for damages to your car if it's hit by someone who doesn't have enough insurance to pay for the damage. For example, if your car gets hit by someone with only $2,000 worth of liability coverage and there's $3,000 worth of damage to your car, underinsured motorist coverage pays the difference. You also need underinsured motorist coverage to cover injuries that you or your passengers may have if the other driver doesn't have enough insurance to cover the damages.
Rental reimbursement will pay for you to rent a car while yours is in the shop due to an accident.

What Do You Need?

The type of coverage you get depends the laws in your state (most states have some required minimum auto insurance laws), the value of your car, and how much of your own money you're willing to spend if you get into an accident.

You should always get enough insurance to cover the value of your car -- especially if you still owe money on it. Otherwise, the car could be totaled and you'd still be making payments on it. That means that if you have an expensive car, you should get a lot of coverage. If it's a cheap car, you can buy less. You also should take into account how much money you have in savings. If you have enough money to handle unexpected medical expenses, lost work days and renting a car, you can probably get less coverage.
Also look at other insurance you have. Your medical insurance may cover injuries received in a car accident. If that's the case, you can decrease the medical coverage on your car insurance. Likewise, your homeowners or renters insurance may cover damage to your car.

Place Your Bets

In the end, car insurance is a bet. You pay a monthly fee to an insurance company. They're betting that you won't get into an accident. You're hoping that you won't, but betting that you will. If you "win," the insurance company will pay your accident costs. If you're not in an accident, the insurance company wins because they get to keep your money. Losing this bet isn't bad, though. You won't have to deal with being in an accident, and the longer you lose the bet by not getting into a wreck, the less you'll have to pay the insurance company. But, the day you're in an accident, you'll be glad you're covered

Car Insurance Costs

By Phillip Moeller 

Car insurance is priced based on you and your driving record, your car and where you live and drive, plus on any state-specific rules that might affect insurance rates. Because insurance is regulated by individual states, rates can vary sharply among states. So, if you paid $1,000 for car insurance in Iowa, for example, and then moved to Silicon Valley, you could pay two or three times more for the same coverage.
California insurers don't necessarily take those extra premium dollars to the bank. There is a lot more traffic, accidents, auto thefts and related risks of loss in California, and these real expenses help explain the higher premiums paid by California drivers.

Minimum Insurance Requirements

Different states have different minimum insurance requirements . Please keep in mind that these are minimum requirements. Getting a policy with these levels of protection will satisfy the law in your state but probably will not provide you solid protection should you be in an accident. Remember what insurance is for - to protect you and your property. Property can mean everything you own besides your car, so, don't put your assets at risk by buying a policy with bare-bones liability coverage.

Liability Insurance and Saving Money with Umbrella Policies

Because liability is so potentially large in an auto accident, determining who's at fault in an accident can mean big money. Even in what are called "choice" or "no fault" states, being found liable for an accident can be a life-changer. You may lose your coverage and your license, face much more expensive insurance costs for several years and also be on the wrong end of liability lawsuits should the accident involve any serious injuries. Twelve states and Puerto Rico have some form of no-fault car insurance. Look for details on your state's insurance web site.

One common and cost-effective way to boost your liability protection is to get what's called an "umbrella" liability policy that tacks on substantial liability protection for your vehicle(s) and your home. This can often save you money on both your homeowners/renters insurance and your car insurance, since the insurance company will offer discounts to get more or your business (similar to a cable company that wants to bundle your TV, phone and Internet service).

Your Car Matters

Finally, keep in mind that car insurance can vary by the type of car you drive. The Insurance Institute for Highway Safety conducts safety tests and provides vehicle ratings used by the insurance industry in calculating your insurance rates. A car with solid IIHS safety ratings will typically cost less to insure.

If You Have a Bad Driving Record

Drivers with accidents and traffic tickets on their records may have trouble qualifying for an auto policy. But because coverage is legally required, the insurers doing business in a state have set up what's normally called an assigned risk pool, where they agree to provide coverage to drivers with poor records.
If you're rejected for normal car insurance coverage, the insurer that rejects you is supposed to tell you about the assigned risk option. Your state insurance department web site should have this information as well. When you apply to the assigned risk pool, your coverage will be randomly assigned to one of the auto insurers in your state that participates in the pool.

So, you may not have much choice about who insures your car. And, you'll pay more for coverage - often a lot more. Assigned risk designations often last until your record has improved - that can take three years in many cases but check with your state to find out.
There also are insurers who specialize in covering what are known as "substandard" drivers. They are willing to accept riskier drivers in exchange for collecting higher premiums from these drivers. If you qualify for one of these policies, you should find out how the proposed rates compare with those charged in your state's assigned-risk program. Sometimes, not often, you can find better rates in the assigned-risk program

Source http://www.usnews.com/