What Is Car Insurance?

Car insurance helps in providing financial protection if you’re in a car accident, your vehicle is damaged in a non-collision event (e.g, a falling tree, hail, etc.), or your car is stolen. In exchange for a premium – the amount of money you pay for your policy – the insurer will pay for covered expenses. Depending on the type of policy you choose, this can include property damage or bodily injuries you or another driver or passenger sustained.

Every policy is based on limits, or the maximum amount the insurance company will pay on a claim. Some types of coverage also carry deductibles, or the amount you have to pay before the insurer will cover remaining costs.

There are several types of car insurance available, and you can customize a policy to get the insurance coverage you need.

Kinds of Car Insurance Coverage
Liability Insurance
Liability coverage pays for costs associated with an accident for which you’re found legally at fault. Generally there are two types of liability coverage which includes:

Bodily injury: This covers the expenses related to injuries or death for others (e.g., another driver, their passengers, or a pedestrian) when you are at fault.
Property damage: This covers the expenses for repair or replacement of others’ property (e.g., fencing, a home, etc.) you damage when operating your vehicle.
Most states require drivers to carry a minimum amount of liability coverage before they can register and operate a vehicle in that state. You can find out how much liability coverage you need by visiting your state’s Department of Motor Vehicles (DMV) or by visiting our Auto Insurance by State guide.

How Much Car Insurance Do I Need?

To determine how much car insurance you need, start by looking at your state’s requirements. Most states require drivers to carry liability insurance, but some require additional types of coverage, like uninsured motorist coverage or PIP. Similarly, If you finance or lease your vehicle, it’s also best to check with the lender or lesser to determine what type and amount of coverage is required as part of your loan or lease agreement.

Keep in mind these are starting points and insurance coverage needs vary. If you don’t feel you’d be able to afford liability, medical, or legal expenses after an accident, it’s a good idea to consider purchasing a policy that will protect your assets.

How Much Does Car Insurance Cost?

According to our most recent data, the national average cost of auto insurance for 2022 is $1,553, though your rate can be higher or lower. To determine your rate, car insurers factor in things like your age, location, driving record, vehicle type, and your credit score. .

An accurate car insurance estimate also takes into account how much coverage you purchase and the deductible and limits you choose. The key to finding the cheapest car insurance company is to shop around with at least three different auto insurance companies.

The Cheapest Car Insurance Companies in 2022

Average Annual Rates:
USA: $1,000
Geico: $1,148
State Farm: $1,267
Nationwide: $1,327
Travelers: $1,371
American Family: $1,371
Progressive: $1,533
Farmer: $1,917
Allstate: $2,047
Are you overpaying for auto insurance? Find the cheapest insurance for you in our ranking of the Cheapest Car Insurance Companies of 2022.

How to Save Money on Your Auto Insurance

Car insurance can be expensive, but there are many ways to save money on your auto insurance.

Change your deductible and/or policy limits: Raising your deductible will lower your premiums. Also, if you lower the limits your policy will cover, it will lower your premiums.
Ask for discounts: Many people know they could receive a discount for bundling their car insurance with their homeowners insurance, but there often are many more discounts available. Ask about discounts for automatic payments, taking a defensive driving course, or being claim free in recent years.
Shop around: Auto insurance companies price car insurance differently, so get quotes from at least three different companies.
Improve your credit history: Car insurers often provide better rates to drivers with good credit.

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