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 5, 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...

  • Most basic insurance policies will not cover the expenses that are associated with all of the damage caused by accidents
  • Insurance coverage that is considered basic usually only includes liability coverage
  • Overall, it may cost you more money for not having the right amount of insurance than if you had paid more for a different insurance policy

Basic car insurance coverage will cheaply cover what is required in your state but, in most cases, it is not enough.

Car accidents result in damage to the vehicles involved and also the drivers and passengers.

Affordable car insurance rates can be found right here just by entering your ZIP code in the FREE quote box!

Table of Contents

State Requirements

 

How much car insurance do you really need? Do you need full coverage on your car? Car insurance used to be optional for most drivers, however, this is not the case anymore.

To protect drivers from financial ruin, the majority of states now have minimum requirements for how much coverage for car insurance is needed for each driver.

In fact, if you are caught driving without proper insurance you can automatically lose your license.

Visit the National Association of Insurance Commissioners to find out if your state requires drivers to carry auto insurance.

Your state department of insurance will let you know what type of insurance you need and what limits you are required to carry.

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What Basic Insurance Covers

Basic insurance will vary according to which state you reside in. Even though most states have minimum requirements, the specific requirements are different from state to state.

Basic insurance usually refers to liability insurance.

If you are the at-fault party in an accident, it is your responsibility to pay for the damages that result. If you did not have car insurance you would likely be sued by the other party for the expenses.

Liability insurance includes both of the following:

  • Property damage coverage – helps to pay for damage done to the car of the other person driving or any other property that you hit
  • Bodily injury coverage – helps pay for any of the injuries that the other driver or passengers sustained because of the accident

Liability coverage will not cover any damage done to your car or medical expenses that you incurred because of the accident.

Additional Coverage Options

What should be covered in car insurance? To protect your own car against property damage there are two kinds of coverage you can get:

  • Collision coverage – will help pay for damage done to your vehicle that was caused by a collision, which refers to hitting another car or some stationary object
  • Comprehensive coverage – the other kind that will pay for property damage to your car such as damage from hail, wind, fire, vandalism, or theft

You also should consider purchasing coverage called personal injury protection or PIP. PIP covers any injuries incurred by you or any of your passengers.

Personal injury protection is a broad type of coverage. It pays for medical expenses and also covers wages that may have been lost due to the injuries and any other costs associated with them. In the unfortunate case of death, PIP can also cover costs associated with a funeral.

Some states require drivers to purchase PIP coverage.

Medical payments pay for costs associated with medical care. It covers you plus your family members, even if you are in someone else’s vehicle.

You choose the limit of medical payments on your policy, which is the maximum amount that your insurance company will pay out for the damages.

The Insurance Information Institute has more information about all the different types of insurance coverage available for your auto. It is a good resource in order to understand insurance better.

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Dangers of Carrying Basic Insurance

The biggest danger of only carrying basic insurance is that it will often affect you financially. Since basic insurance only includes liability insurance, the other driver’s damage will be covered but none of yours will.

Either you have to drive around with a damaged car or without a car, or you need to use your own money to pay for the damages. If there are any bodily injuries it is even worse, as you usually can’t ignore these injuries and will have to figure out a way to pay for them.

In most states, basic liability insurance does not cover other drivers who are uninsured.

Even though all drivers are required to carry some type of car insurance in most states, almost 14 percent of drivers are still driving without insurance, according to the Insurance Research Council.

Although you can sue them for damages, chances are that they wouldn’t be able to pay which means that you would have to pay for any expenses related to the accident.

Another factor with basic insurance is that the limits for liability may be too low to fully pay for all of the damages.

Some states require very low limits such as $10,000 for each person, with a maximum of $20,000 per accident.

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How to Find Cheap Car Insurance

 

Even if you get more than basic car insurance, it is possible to find affordable policies. A quick way is to do a search on the Internet. Most companies would love your business and offer competitive rates in order to get it.

Keep in mind that you are in control of many of the factors in regards to obtaining cheap insurance rates.

One of the biggest is how safe of a driver you are. If you have been in multiple car accidents or have received a number of traffic violations, the chances of you getting cheap insurance are pretty slim.

If you have had a less than stellar driving history, focus on safe driving and stay out of trouble and eventually you will be able to take advantage of affordable rates again.

Your credit history is another factor in car insurance rates. The lower your credit score, the higher your rates.

Although credit is another thing that takes awhile to build back up, you can with determination and work. The Federal Reserve provides tips to help you improve your credit score.

If you have trouble finding good rates for car insurance and you have a good driving and credit history, don’t give up.

Start your search for cheap car insurance rates right now by filling in your ZIP code in our FREE quote box!