What You Need to Know About Auto Insurance

Auto insurance is designed to protect drivers involved in car accidents, and it’s required in almost every state. Imagine you cause an accident and the driver you hit takes you to court over the accident and damages. Assuming you have coverage, your insurance provider would provide a legal defense for you and pay for the damages and/or injuries you caused, protecting you from a potentially devastating financial loss.
Regardless of who’s at fault and depending on the type of coverage you have, auto insurance can help cover damages to both vehicles involved. But where do you start when selecting the right amount of coverage? Navigating the world of car insurance can seem daunting, but it doesn’t have to be. Understanding the basics of auto insurance is the first step to making an informed decision about your coverage.
How does auto insurance work?
The general premise of auto insurance is to financially protect you against the cost of damage that results from a car accident. Another way to describe auto insurance is a contract between you and an insurance company: if you continue to pay a premium to keep your policy active and meet other requirements, your insurance company agrees to cover your losses as described in your policy. If you’re in a car accident, you can file a claim with your insurance company. After you pay your deductible, your insurance coverage will come into play and cover the cost of damages up to the limits set in your policy.
There are different coverages you’ll see on your auto insurance policy that are designed to cover various aspects of a car accident. Most auto insurance coverages are in place to protect you from paying out of pocket for damages or injuries, but there are also coverages that protect other drivers and their vehicles if an accident was caused by you.
Why do you need auto insurance?
The short answer: accidents happen. In fact, they happen a lot—at an average of nearly 6 million accidents per year in the United States. Auto insurance can protect you from unexpected and potentially expensive accidents. In addition to helping cover the costs of vehicle and property damage, auto insurance can protect you and your assets from lawsuits brought on by other drivers and passengers.
1. It’s probably required by your state.
Nearly every state requires auto insurance. If you drive without insurance in states where it’s required, you could be fined, have your license suspended, have your vehicle impounded, and possibly other consequences in accordance with your state’s law.
2. It offers financial protection.
If you cause a car accident while driving, you could be legally responsible to pay for the damages. If you don’t have adequate coverage, the cost to repair the damaged vehicle(s) and any medical bills would likely have to come out of your own pocket.
3. It helps protect your passengers.
If you or a passenger is injured in a car accident, medical payments coverage can help cover the medical expenses of you and your passengers.
4. It can help pay for repair costs.
If your vehicle is damaged from hitting an object or animal, gets stolen, has a cracked windshield, or is damaged from something other than a wreck, collision and comprehensive coverage can help pay for repairs.
5. It can help protect the most important item: you.
If you’re in a car accident with a driver who doesn’t have enough coverage to pay for your damages or doesn’t have coverage at all, uninsured/underinsured motorist coverage may be able to help, depending on your state’s laws
What are auto insurance coverage limits?
A coverage limit is the maximum amount your insurance provider will pay for a covered claim, like a car accident. The limits are typically divided into categories for each coverage. Nearly every state requires you to have liability insurance at the least. The two main types of liability coverage you might encounter are bodily injury liability and property damage liability. These coverages provide protection in the case of a lawsuit and can cover property damages, injuries, lost wages, or death caused by you.
Each state has minimum insurance requirements that you must meet to drive legally. However, your state’s minimum coverage limits are just a starting point. You can choose to increase your limits or add optional coverages for further protection. Check your state’s specific minimum requirements or talk to your insurance agent for more detailed information.
What affects the cost of auto insurance premiums?
When you get auto insurance for the first time, your agent will ask some general questions about you and your car. Why? Because many factors can impact the cost of your premium. Legal and medical costs can vary by state, also affecting the cost of your premium. When selecting your coverages, keep in mind that more coverage often means you’ll have a higher premium.
The cost of auto insurance is generally higher for drivers under the age of 25 and over 65. Those two age groups are statistically higher risk behind the wheel. On paper, male drivers are considered more likely to get in accidents compared to women. Additional factors that impact the cost of your auto insurance premium include:
-
The model and value of your car (expensive cars typically have higher premiums)
-
The mileage on your car
-
Your driving record
-
Where you live (certain areas have greater risk of accidents, vandalism, and theft)
-
Your age
-
Your gender
-
Marital status
-
Coverage and deductible amounts
-
Previous insurance claims
-
A lapse in coverage
-
Insurance score
-
What you use your car for (personal or business)
Ways to save
To save on your auto insurance premium, check with your insurance provider to learn about discounts available in your state. Alfa® offers discounts for maintaining a safe driving record, completing driver education courses, having a multi-car policy, working in certain fields, and more.
There’s no better time than now to review your auto insurance coverage. Choosing limits that work for you can help better protect you and your vehicle and give you peace of mind behind the wheel. For a free auto insurance quote, visit AlfaInsurance.com or reach out to your local Alfa agent for questions on coverages.
All coverages are subject to deductibles and policy limits. This is not an insurance policy. It is intended only to provide a general description of Alfa Insurance® and/or its product lines and services. An actual policy contains the specific details of the deductibles, coverages, conditions and exclusions. Your Alfa® agent can explain the policy and benefits and answer any questions you may have before you buy.