Do You Need It?: Yes. It’s legally required in all states except one. And even there, the financial responsibility is on you if you cause an accident. Without it, you could be fined, your license could be canceled, or you could end up in jail. All insurers will ensure that they sell you the insurance that is required by law in your state.
How Is It Priced?: Insurance companies will consider a lot of factors in their formula, but they’re just trying to figure out how likely you are to get into an accident, and how much it will cost. If you have no accident history, you’re less likely to have one in the future. It’s the same with tickets. If you drive a car that’s cheap and not popular with thieves, then your insurance will also be cheaper. Your insurance rate also decreases as you get older because you have more experience. But rates go up once you cross 70.
What Does It Cover?: At the very least, it will cover damages and injuries you cause. It’s called liability insurance, and in most states, that’s all that’s required. The cover pays for damage to other cars, objects, other people, and lawsuits against you regarding the accident. Comprehensive insurance covers random events beyond your control that damage your vehicle. This includes fire, riots, vandalism, theft, explosions, falling trees or branches, windshield and glass damage, rocks or objects kicked up by other cars, floods, wind, storms, lighting, hail, earthquakes, and animal collisions. Then there’s collision insurance that covers accidents with other cars irrespective of who caused the accident. It also covers you if you overturn your car. Uninsured and underinsured insurance covers you against accidents caused by drivers with little or no insurance. This kind of insurance exists for property damage and bodily damage. MedPay or Personal Injury Protection (PIP) pays your and your passenger’s medical bills for injuries in a car accident even if they’re in someone else’s car. PIP also covers lost wages, rehab, and funeral expenses.
What Do You Pay?: Apart from your premium, comprehensive, and some other types of insurance have deductibles. This is the amount you pay out-of-pocket in the event of a claim. You can save money on your premium with a higher deductible.
