Car Insurance Basics

Simply put, car insurance is protection. You pay your insurance company a premium (your bill) usually monthly, twice a year, or annually. That premium pays to protect you if you have an accident or your car is damaged or stolen. Keep in mind that car insurance does not pay for mechanic repairs or maintenance. The coverage is outlined in your insurance policy.

When you buy car insurance from a company, they’ll ask about your car, driving habits and history. Since you’re required by law to carry basic auto coverage, your answers will help determine how much protection you need beyond what your state requires.  This makes up your policy, a document that outlines what your insurance company agrees to protect, based on what you choose. 

If you get into an accident or your car is damaged or stolen, you file a claim with your insurance company. That’s how you ask for payment to help you repair or replace something that’s protected under your policy. If the claim is covered, your insurance company will pay for the damage or loss, after you pay your deductible. Your deductible is the amount of money you pay on your own before your insurance kicks in.

Yes, but requirements vary by state. Most states require you to have:

• Liability coverage – If you injure someone or hit a car or other property while you’re driving, this coverage pays for the damages (property damage liability) or medical bills (bodily injury liability), from that accident. This coverage also helps cover lawsuit expenses. 
• Medical payments coverage or Personal Injury Protection (PIP) – These coverages help pay if you or your passengers are injured in an accident. PIP is required in certain states and covers injuries no matter who caused the accident. 
• Uninsured motorist coverage – This protects you if your car is damaged and/or you are hurt in an accident caused by someone with no car insurance.

Most standard car insurance policies include the three coverages described above, along with protection for you and your car if: 

• You collide with another car or something else, like a mailbox or fence (Collision coverage)
• It’s stolen, vandalized, damaged by hail or if something falls on it, like a tree (Comprehensive coverage)
• Someone with no, or not enough, insurance causes an accident (Uninsured/Underinsured Motorist coverage)

Most standard car insurance does not include coverage for:

• A tow if your car breaks down at the side of the road
• Windshield repair or replacement
• Valuables in your car (like electronics)
• Normal wear and tear or car maintenance
• Rental fees
  

Additional coverage may be available for everything on this list, with the exception of normal wear and tear or car maintenance. Talk to your rep to learn more.

There’s no set price for car insurance. Some factors that affect your price are:

• Your driving history
• How many and what types of claims you’ve had in the past
• How much of the financial risk you take (your deductible)
• The limits you select for liability and medical coverage