Thankfully, neither my wife (Alice Goldstein) nor I have needed to use our car insurance for YEARS, and we’re grateful for that. I will admit that paying that car insurance policy renewal every year when haven’t needed it for so long always feels a little wasteful, but the risk we’d be taking without it would be careless and unnecessary. Plus, neither one of us wants to end up in jail, and driving without insurance is illegal 🚔
Car Insurance Basics…
Unlike an Extended Car Warranty which covers the repair of mechanical issues that normally occur as a result of wear and tear, Car insurance is a type of insurance policy that covers the cost of repairing specific damage to your vehicle from an accident. Some auto insurance policies also cover the cost of repairing damage to other cars due to a collision that was your fault. And, you can even buy a policy that covers your medical bills for treatment for injuries from a collision.
The specific coverage levels, the cost of the monthly or annual premiums, and the exact terms vary massively depending on which car insurance company you purchase cover from and which particular type of policy you buy. Factors such as age, gender, and location can also influence how much you’ll need to pay.
Is Car Insurance Required by Law?
Yes, having valid car insurance is a legal requirement throughout the United States – and it’s a law that is taken and enforced very seriously. You need to have an insurance policy in place whenever you drive a vehicle (not just your own car), even if it’s just for a short drive.
However, it’s important to remember that you’re only legally required to have the most basic level of protection in place, though it is prudent to buy a more comprehensive plan to protect yourself against having to foot the bill of costly repairs all by yourself.
What Are the Different Types of Car Insurance?
As mentioned, there are many different types of car insurance out there, such as:
Liability Insurance
Liability insurance is legally required in all 50 States, and it covers the cost of repairing your vehicle and any other vehicles involved in a crash, which has been deemed to be your fault. Liability insurance may also cover the medical bills of other drivers and passengers injured in a collision you for which you were responsible.
Comprehensive Coverage
Auto insurance policies which provide comprehensive coverage cover things unrelated to damage as a result of a crash. For example, they cover car theft and weather damage.
In some cases, purchasing comprehensive coverage can be worth the extra money as it gives you peace of mind and can save you a small fortune. However, it may be an unnecessary expense, especially if your car is relatively inexpensive or if it is usually parked away in a secure area, such as a garage.
Collision Insurance
As you can probably tell from its name, collision insurance provides coverage against the cost of repairs if your vehicle is involved in a crash. Such policies will pay out irrespective of who was at fault in the collision, so they are a sure-fire way to avoid having to pay hefty repair costs after a crash.
Many collision insurance policies will pay you the full value of your car if it is a total write off following a collision.
Uninsured Motorist Protection
Uninsured motorist protection insurance is a very cost-effective way to protect yourself against the cost of repairing your vehicle in the event you are involved in a crash with an uninsured driver. The chances of this happening may seem fairly slim, but with over 15 percent of US drivers driving without insurance, it’s not out of the question.
This auto insurance type will also cover the cost of repairs if your vehicle is damaged in a hit and run.
Rental Car Coverage
This type of car insurance is needed if you are driving a rented vehicle. You must have such coverage in place whenever you drive a rental, even if it’s just for a few hours.
Personal Injury Protection
Insurance policies that have personal injury protection will cover your medical bills if you (and any passengers in your vehicle) are injured in a car crash. Some of these policies will also pay for wages you’ve missed out on due to your injuries.
How Much Does Car Insurance Cost?
With so many different factors taken into consideration by insurance companies when giving you a quote, it isn’t easy to provide a representative figure you can expect to pay. The value of your car, whether or not you’ve claimed a car insurance payout before, and even your age and gender, will determine how much you’re charged.
The type of policy you buy will also significantly impact how much you’ll be charged, with policies covering various different types of damage being more expensive than basic and more barebones policies.
You should expect to pay anywhere from $500 to a few thousand dollars per year for your auto insurance as a ballpark range. If you have an expensive car or have claimed car insurance payouts several times in recent years, you should be prepared to pay several times this.
Why Do Baby Boomers Pay More For Car Insurance Than Younger Drivers?
You probably already know that young, inexperienced drivers are charged considerably more for their car insurance than the average American, but you may be surprised to hear that older drivers also have to spend more on their car insurance.
This is because, statistically speaking, it’s more likely for a Baby Boomer to be involved in a crash, which is their fault than a 30-year-old, for example. So, insurance companies make up for this added risk by charging a higher premium for comparable policies.
However, it’s still possible to get a good deal, especially if you have a good auto insurance record (in other words, you’re a safe driver and have filed very few claims in the past). It’s also worth looking for special insurance packages that are tailored to Boomers and seniors.
How Can I File A Car Insurance Claim?
Whenever you purchase any type of insurance, it’s essential to be crystal clear on what exactly is covered and how you can file a claim. Each individual issuer will have differing requirements, but they will all require you to submit certain pieces of evidence to confirm that you were indeed involved in a crash and to calculate how much they need to payout.
It’s usually as simple as reaching out to your insurance company and filling in a claim form. You may be requested to submit further information and evidence if the insurer’s agents are not certain you’re eligible for a payout.
It sometimes takes days for an insurer to make decisions and issue payments, whereas it may take several weeks to a few months for more complex and more extensive claims.
Finding the Best Auto Insurance Policy For You
With so many different types of auto insurance policies to choose from and countless insurance companies out there, it’s easy to feel overwhelmed when trying to find the best deal for you.
Following our 4 step process will make everything much more manageable and help you find the best car insurance policy for you in no time.
Decide How Much Coverage You Want
Before even thinking about picking an insurance company to go with, you should first decide what type of policy you want and would be most cost-effective for you.
If you have quite an expensive vehicle, it might be worth purchasing comprehensive coverage, but this may be an unnecessary expense if your car is pretty inexpensive.
As long as you have your state-required coverage, there’s no right or wrong answer when it comes to deciding how much coverage you should buy.
It comes down to how much you feel comfortable paying, and if you think the extra peace of mind that comes with more expensive policies is worth the money.
Request a Few Quotes
You should then apply for a few quotes with different insurance companies to get a sense of how much you’re likely to have to pay. It’s important to shop around to find the best deal for you, as you can save a chunk of change by spending a bit more time comparing different policies.
Consider Your Options
Now that you’ve decided what type of coverage you want and have a few quotes to consider, you should think about which one is best for you while also being open to getting more quotes or even looking at getting a policy that offers more or less coverage.
Read the Fine Print
Once you’ve shortlisted two or three auto insurance policies, you should read the fine print to understand exactly what’s covered and how the policies differ from each other. You can then narrow down your selection by the process of elimination until you’re left with one clear winner.
However, if you end up deciding they’re all not particularly suitable for you, don’t hesitate to go back to step two and get some more quotes.
Final Thoughts
Although one in six drivers in the US is uninsured, you should absolutely never consider driving unless you have valid auto insurance in place, as the legal and financial consequences can be very severe.
What level of coverage you should purchase ultimately depends on your preferences and how much you value the extra peace of mind that comes with certain types of more expensive policies, such as comprehensive coverage.
Regardless of what type of car insurance you decide to buy, be sure to shop around to find the best deal for you.
And, before committing to a policy, make sure the insurance company has spelled out what you need to do to ensure your policy remains valid, what the policy actually covers, and how you can file a claim.
If you are clear on your coverage, should you be involved in a crash, it’ll be much easier for you to determine if the insurance company is likely to payout. You’ll know exactly what you need to do to successfully file a claim for the cost of repairing your car and/or to get your medical bills covered.