Car insurance guide
Car insurance, explained simply
The types of coverage, what drives your price, easy ways to save, and how to compare quotes so you're not paying more than you need to.
The main types of car insurance coverage
A car insurance policy is a bundle of separate coverages. Some are required by your state or lender; others are optional.
Liability
Pays for injuries and property damage you cause to others in an accident. Almost every state requires a minimum amount.
Collision
Repairs or replaces your car after a crash with another vehicle or object, no matter who was at fault.
Comprehensive
Covers damage not caused by a collision, such as theft, vandalism, hail, flooding, fire or hitting an animal.
Uninsured / underinsured motorist
Protects you if you're hit by a driver who has no insurance, or not enough to cover your costs.
Medical payments or PIP
Helps pay medical bills for you and your passengers after an accident. Personal injury protection (PIP) is required in some states.
Optional extras
Roadside assistance, rental car reimbursement and gap coverage for financed or leased cars can usually be added for a small cost.
How much coverage do you need?
The right amount depends on your car, your loan and what you'd stand to lose after a serious accident.
State minimum
Only the liability coverage your state requires. It's the cheapest option, but minimum limits can be low, and it doesn't pay to fix your own car.
Liability + collision + comprehensive
Often called "full coverage". It protects your own car as well as others, and is usually required for financed or leased cars.
Higher liability limits
If you have savings or a home, limits above the state minimum can protect your assets if you cause a serious accident.
Ride-share and delivery driving
Personal policies often exclude driving for ride-share or delivery apps unless you add a specific endorsement.
What affects your price
Two drivers with the same car can get very different quotes. These are the main factors insurers weigh.
- Driving recordAccidents, speeding tickets and DUIs usually raise rates for several years.
- Where you liveYour ZIP code affects rates through local traffic, theft and claim costs.
- Your vehicleRepair costs, safety ratings and how often a model is stolen all matter.
- Age and experienceNewer and younger drivers typically pay more.
- How much you driveLower annual mileage can mean a lower premium.
- Coverage and deductiblesHigher limits cost more; higher deductibles usually cost less.
- Insurance historyA gap in coverage can raise your rate when you buy a new policy.
- Insurance scoreIn many states, insurers use a credit-based insurance score. Some states limit or ban this.
Ways to lower your premium
Before you cut coverage you might need, try these first.
Shop around every 6–12 months
Prices for the same coverage can vary widely between insurers. Comparing at renewal is the easiest way to check you're not overpaying.
Bundle and insure multiple cars
Insuring two or more cars on one policy, or bundling with home or renters insurance, often earns a discount.
Raise your deductibles
A higher collision and comprehensive deductible lowers your premium. Choose an amount you could pay comfortably.
Review coverage on older cars
If your car is worth little, paying for collision and comprehensive may not make sense anymore.
Ask about discounts
Common ones include safe driver, good student, defensive driving course, safety features, paperless and paid-in-full.
Try usage-based programs
Some insurers offer discounts if an app or device shows you drive safely and not too much.
How to compare quotes
The cheapest quote isn't a good deal if it covers less. Line quotes up on these points.
- Match the liability limitsUse the same limits in every quote. Limits are often shown like 100/300/100: $100k per person and $300k per accident for injuries, and $100k for property damage.
- Use the same deductiblesCompare quotes with identical collision and comprehensive deductibles.
- Check what's includedLook for rental reimbursement, roadside assistance and uninsured motorist coverage, and whether they're included or extra.
- Look at how claims workCheck whether you can choose your own repair shop and how new or used parts are handled.
- Check the insurerLook up its financial strength rating and its complaint record with your state's department of insurance.
Frequently asked questions
Is car insurance required by law?
Almost every state requires drivers to carry at least a minimum amount of liability insurance. New Hampshire is the main exception, but drivers there must still be able to pay for damage they cause.
What does "full coverage" mean?
It isn't an official policy type. People usually mean liability plus collision and comprehensive. Lenders typically require this if your car is financed or leased.
Will a ticket or accident raise my rate?
Usually, yes. At-fault accidents and moving violations commonly raise premiums, often for three to five years, depending on your insurer and state.
Is it cheaper to insure two cars together?
Often. Many insurers offer a multi-car discount when vehicles are on the same policy.
What is gap insurance?
If your car is totaled, gap coverage pays the difference between what the car is worth and what you still owe on your loan or lease.
How often should I compare quotes?
At least once a year, and whenever you move, buy a car, add a driver or see a big jump in your renewal price.
This guide is general information, not insurance, legal or financial advice. Coverage requirements, options and discounts vary by insurer and state. Always read your policy documents.