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: Jun 4, 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.

Here's what you need to know...

  • There are three main types of auto insurance available to motorists
  • Every state has required insurance limits, but the limits may vary
  • Compare insurance rates online before purchasing a policy

Do I really need car insurance? We all know that car insurance is important for all drivers on the road. In fact, in most locations, the law requires that drivers have at least a certain amount of liability insurance. Which states don’t require auto insurance? Virginia and New Hampshire don’t require car insurance. Why is car insurance mandatory? The primary reason is because of liability.

Many motorists are left wondering how much insurance they actually need to get. To answer this question, let’s look at the three major types of car insurance which are:

Enter your zip code to compare online car insurance quotes now!

What is liability coverage and how much do I need?

Liability coverage will pay either for material damages to another person’s vehicle, other public or private property as well as injuries caused to other people should you be involved in an accident that you were at fault.

The actual minimums will vary depending on which state you live in.

In certain states, the minimum amounts are quite low, sometimes as low as a few thousand dollars. However, it is recommended that you get an insurance policy that gives you at least one million dollars in liability coverage.

While it would be highly unusual to cause that much property damage in an auto accident, a person who was injured by your vehicle could sue you for damages.

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Do I need collision or comprehensive coverage?

 

If you can not afford to lose the total value of your vehicle, you need collision or comprehensive coverage. Also, if you take out a loan your lender will require that you carry both collision and comprehensive coverage.

You should also be aware that collision coverage will only pay for damage caused to your vehicle if it is involved in a collision.

Comprehensive coverage will protect your vehicle from incidents such as:

  • Vandalism
  • Theft
  • Fire
  • Natural disasters

Remember that there are thousands of cars that are stolen and never recovered each year. Auto theft is not something that only happens in high-crime areas. Cars have been stolen from any location.

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What deductible amount should I use?

A deductible is an amount that the vehicle owner pays out of before the insurance covers the remaining costs for an insurable event.

For example, if you back your car into a wall and cause $4000 of damage and your deductible is $1000, you would pay the first $1000 by yourself and your insurance company will cover the remaining $3000.

The deductible that you select will have a direct impact on your insurance rates.

The lower your deductible, the less you will have to pay should something happen; however, your monthly premiums will also be higher.

Make sure that you choose an affordable deductible amount should something happen to your car.

How can I make sure I am getting the best price?

The auto insurance industry is a highly competitive one and there are a lot of insurance companies which are competing for your business.

The internet has made it easy to instantly get auto insurance quotes. You can compare prices between different insurers and then pick one that provides the type of coverage that you need at prices that you can afford.

To start comparing car insurance quotes, simply use the free tool found on this site now!

References:

  1. http://www.iii.org/issue-update/compulsory-auto-uninsured-motorists
  2. https://www.allstate.com/tools-and-resources/car-insurance/liability-car-insurance-cover.aspx
  3. http://www.naic.org/state_web_map.htm
  4. https://www.progressive.com/glossary/comprehensive-and-collision/
  5. https://www.consumeraffairs.com/news/should-you-raise-your-auto-insurance-deductible-011117.html