Auto Insurance 101: Knowing The Basics

The basics of car insurance 101 include (1) auto insurance coverage types, (2) levels of coverage, and (3) knowing your state minimums. Car insurance coverage 101 and auto insurance claims 101 are car insurance topics that every driver should be familiar with. The best place to start is to learn is with the auto insurance basics 101.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jul 28, 2020

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Here's what you need to know...

  • There are different types of auto insurance, but the most basic is liability coverage
  • Know that you have options regarding coverage limits as well as who you use as an insurance provider
  • Compare several companies before choosing one as your car insurance company

Auto insurance is mandatory by most state laws and having the right coverage can provide substantial financial protection in the event of an accident. However, there are two important questions to ask.

  1. What type of car insurance do you need?
  2. How much is car insurance per month?

There are hundreds of car insurance companies and policy options which can make choosing car insurance overwhelming at first. You must decide which deductible to use, what discounts to expect, how much coverage to buy, and of course, which company to use.

The best place to start is to learn about the general details of auto insurance.

Think about buying a new car – you surely want to know the fuel mileage and warranty details. Buying auto insurance should be no different, so spend time educating yourself well ahead of having to file a claim.

Many drivers only find they are underinsured or even uninsured after an accident so don’t let this happen to you!

Our auto insurance guide provides a wealth of content around commonly asked questions to help you understand coverage and ultimately save money or at least acquire the appropriate policy for your unique profile.

Be sure to use our FREE comparison tool above by entering your ZIP code.

Types of Car Insurance

 

Car insurance is heavily regulated which provides certain consumer protections such as not having coverage dropped mid-term. Since all car insurance companies are rated based on their financial strength, a sense of security is also available for consumers.

At the end of the day, the most important thing you can do is understand the types of car insurance available in order to better choose an appropriate policy for your needs.

Auto insurance revolves around eight major types of insurance including:

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Knowing Your Coverage Levels

Simply click on the link above to learn more about these types of insurance.

The most common is liability insurance as states have a responsibility to protect drivers so most minimum car insurance requirements are only liability insurance, the form of car insurance that provides protection for damages to other people and their property.

It is important to note that the minimum levels of liability insurance required are often much less than you really need. State laws do not require you to purchase any type of auto insurance to cover damages to you or your vehicle.

Many consumers opt for the cheapest car insurance rates only to find out later they have no coverage for any damage to their vehicle.

It is extremely important to know the difference between liability, collision, and comprehensive coverage as these three types of insurance involve the most claims for damages in common car accidents.

You can also view our commonly asked questions by using our search box for any term related to auto insurance. Some of the most popular questions this month include:

  • Who is better – Allstate or State Farm?
  • What is Personal Injury Protection?
  • What is no-fault car insurance?
  • How much is car insurance per month?
  • What car insurance discounts are available?
  • Who are the top 10 car insurance companies?

Buying auto insurance is certainly a big decision, and while coverage is mandatory, there are no laws concerning who you must buy coverage from.

Take your time, learn about coverage, and compare several car insurance companies before choosing a provider.

Enter your ZIP code into the FREE comparison tool below!

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Average Monthly Car Insurance Rates by State