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Auto Insurance

Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella...

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Reviewed byDaniel Walker
Licensed Auto Insurance Agent

UPDATED: Jul 31, 2020

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It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn't influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Auto insurance is required in some sort of fashion in almost every state. While state requirements vary, the type of insurance you can get is fairly uniform. In addition to the typical auto insurance coverage most people carry, there are also several optional plans that can cater to different needs.

Sometimes the cost of insurance is somewhat mandated by the state and other times the state allows free rate competition pricing. No matter where you live, there are ways to reduce your premiums and save on your auto insurance. Read on for more information from insuranceproviders com about auto insurance.

Tort States and No Fault States

Every state mandates its own auto insurance requirements, which can vary greatly depending on if a state is a fault state or a no fault state. There are a few states that allow you to choose between the two. In an a fault state, which is also known as a tort state, one of the parties in an accident is generally found to be at fault, dictating that the insurance company of the person at fault is responsible for the payment of damages. In these cases, many times law suits are filed in order to request additional claims for property or medical injury.

Due to the increase in lawsuits, about a dozen states became no fault states, eliminating the majority of potentially frivolous and costly lawsuits. In a no fault state, everyone’s insurance pays for their own insured’s medical damages. In a no fault state, everyone gets reimbursed timely through their Personal Injury Protection (PIP) coverage from their own insurance company and no one sues the other party for additional claims. Lawsuits, however, can be filed if a medical injury or monetary loss is extreme.

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Required Auto Insurance Coverage

Even if your state requires auto insurance, sometimes you do not need to purchase an auto insurance policy. Typically, liability or PIP is what is mandated with different limits set by different states. Depending on the state where you live, you may be able to satisfy minimum liability requirements through the proof of financial responsibility.

Proving financial responsibility through self insurance is usually done by purchasing a bond from an insurance company or a surety company. The cost is usually that of the amount of the minimum liability requirements. Another way to satisfy the financial responsibility requirement is to make a cash deposit with the state treasurer to satisfy the minimum requirement.

Whatever method you choose to meet the state’s auto insurance requirements, it is necessary to carry proper legal proof with you and with the vehicle at all times.

Types of Auto Insurance

There are several types of auto insurance policies that can cover a wide range of areas for your protection and convenience. The most common policy is liability and that is what is usually required by state law. Liability basically covers bodily injury and property damage and is paid out to the victim by the insurance company of the person who is found to be at fault for the accident. It is also important to keep track of the driving laws in your state.

Liability is made up of three amounts, usually referred to with three numbers such as 25/50/10, for the minimum dollar amount requirements. The first number represents the thousands of dollars covered for bodily injury for one victim in the accident.

The second number denotes the total maximum coverage for two or more victims injured. The third number is usually smaller because that addresses property damage, whether it is vehicular, landscaping, fencing, or housing. Liability only pays out to the victim when the insured person was at fault. More on liability insurance can be seen in the video below.

The insured person who is found at fault does not receive compensation from his own liability coverage. Learn more about collision and comprehensive coverage in the section below.

Collision and Comprehensive

In order to receive coverage for damage to your car in an accident for which you are found at fault, you need to carry collision insurance. Collision is an optional policy, but is usually mandatory by banks or leasing companies for newer vehicles that are financed or leased.

Collision will cover damages to your car no matter who is at fault for an accident. Many people drop this insurance when their car becomes older and no longer considered worth insuring against damages.

The same as collision is an optional policy, so is comprehensive. Again, newer vehicles that are not owned outright are usually required to carry comprehensive coverage while the car is being financed or leased. Comprehensive coverage protects your vehicle from a host of potential hazards, including theft, vandalism, fire, and more.

While collision provides insurance from damages caused by another vehicle, comprehensive provides insurance from all other types of incidents.

Uninsured/Underinsured Motorist Coverage

Some states do not require uninsured or underinsured motorist auto insurance, but it is usually recommended. Uninsured and underinsured are usually sold together under one policy, but they can sometimes be purchased separately as well.

Although all states require auto insurance, not everyone is compliant and therefore there is the possibility that you could be struck by an uninsured or an underinsured motorist, leaving you to contend with the cost of all of your bodily injuries if you do not have insurance to cover it.

Uninsured and underinsured coverage usually covers you and the passengers in your car. You can also purchase insurance for uninsured and underinsured motorist property damage to cover damages to your vehicle. Read on for information on personal injury protection and medical coverage.

Personal Injury Protection and Medical Coverage

Personal Injury Protection (PIP) is required in no fault states to cover your own medical damages in the event of an accident. Even when PIP is not required, it can be purchased optionally for people who seek insurance protection for bodily injury resulting from an auto accident. Drivers or carpool passengers without health insurance are usually good candidates for this type of coverage. A breakdown of Personal Injury Protection can be seen in the video below.

Another option for medical coverage is a Medical Payments policy, which provides protection in the event you are injured in a vehicular accident either while in a car or on foot. In addition to paying for medical and or hospital expenses, coverage usually includes earnings compensation for lost work time. Accidental Death and Dismemberment can optionally be purchased as well.

Additional Auto Insurance Options

Owners of newer vehicles are usually given the option of purchasing Loan or Lease Gap insurance. In order to buy this coverage, you also must carry comprehensive and collision. Automobiles depreciate very quickly, which can be extra troublesome if your new vehicle is damaged in a car accident while it is still being financed or leased.

If the car becomes totaled and you do not have Loan or Lease Gap insurance, you may discover that your insurance policy will not pay out enough to cover the balance you still owe on the car, which means you will be making car payments for a car you no longer have. Loan or Lease Gap insurance is available to reduce your loss in this type of circumstance.

Most auto insurance policies go with you and usually include coverage in a rental car. However, if you are in an accident and your car needs to be repaired, the cost of the rental car is typically out of pocket. For a small increase in premium, you can purchase a policy that covers Rental Car Reimbursement. Additionally, you can buy Towing and Labor coverage which would also provide you with emergency roadside assistance.

Custom Parts and Equipment is a separate policy that can be purchased to cover any of your aftermarket accessories. Some of these include brush guards, running boards, specialized lighting, custom paint jobs, and installed entertainment systems. Coverage would not apply to items that can be easily taken out of the vehicle, such as a laptop or portable DVD player.

There is no easy answer to the questions, “What are the 10 best insurance companies?” or “What are the worst insurance companies?” However, we offer a free list of auto insurance companies‘ quotes comparison! Use our helpful tool below!


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Managing Car Insurance Rates

If you have an auto, you have to have auto insurance. While you may not always have a lot of choices on how much your premium will cost, there are some things you can do to be sure you are paying the lowest premium while still receiving excellent coverage.

The first step to saving money on auto insurance is to understand what options are available and how they pertain to your unique situation. Some policies that are commonly carried by other people may not apply to you while some coverage that most people don’t know about may be essential to your daily living. Review all of your options and determine what you absolutely need and then decide how much additional coverage you can afford.

The basic minimums are only minimums and are usually not large enough to satisfy the claims. If you can increase your coverage it is considered a good idea to do so. You can reduce your premium by raising your deductible to something that is manageable and comfortable for you. The higher your deductible, the more you will pay out of pocket in the event of a claim, but the less you will pay annually on your premiums.

Take advantage of all discounts offered by your insurance company. You can usually qualify for multiple savings, including multi-car discounts, multi-policy discounts, anti theft discounts, automobile safety discounts, good driving discounts, and good student discounts. Check with your agent to make sure you are getting every discount for which you are qualified and follow up on a semi-annual basis in case there are any changes.

Rates between insurance companies can differ greatly depending on your area and the company you decide to go with. For example, check out the chart below for auto insurance rates in Chicago, IL.

CompanyAverage Rate
American Family$5,080.51
State Farm$3,319.18
Liberty Mutual$2,831.86
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So, “who has the cheapest car insurance?” As you can see, State Farm auto insurance rates are much different than Progressive and USAA’s auto insurance. The best auto insurance company for you all depends on your needs.

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Auto insurance is required for your financial protection. Be sure you are adequately covered not just for state requirements, but for your own needs as well. While you are committed to having auto insurance, you are not committed to your insurance agent, so shop around to be sure you are getting cheap auto insurance with the most protection.

So, “which insurance company is best for car insurance?There are many auto insurance companies out there, so is no easy answer to the question, “which insurance company is best for car insurance?” However, you can create your own Top 10 list of auto insurance companies in the USA. You can get free auto insurance quotes for auto insurance rates by entering your zip code now to get started!

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