Category: Auto Insurance

Picking coverage is about balancing two risks: paying too much for insurance you don’t need, and being underinsured when something serious happens. The second risk is usually the more expensive one. Here’s how to set each part of your policy.

Step 1: Understand the numbers

Liability limits are written as three numbers, such as 100/300/100:

• 100 = $100,000 bodily injury liability per person
• 300 = $300,000 bodily injury liability per accident
• 100 = $100,000 property damage liability per accident

If you cause an accident and damages exceed these limits, you can be personally responsible for the rest, potentially through a lawsuit, wage garnishment or claims against your assets.

Step 2: Choose liability limits

Your situation	Consider
Few assets, tight budget	More than the state minimum if at all possible; for example 50/100/50
Typical homeowner or saver	100/300/100 is a common rule of thumb
Significant savings, home equity or high income	250/500/100 or more, plus an umbrella policy

Why minimums fall short: a multi-car crash with injuries can involve hospital bills, lost wages and vehicle replacement for several people. Property damage alone can exceed a low limit if you hit a newer vehicle or damage public property. Raising limits often costs less than people expect. Ask for quotes at several levels.

Step 3: Protect yourself from other drivers

Uninsured/underinsured motorist (UM/UIM) coverage pays for your injuries, and in some states your vehicle damage, when the at-fault driver has no insurance or too little. Many advisors suggest matching your UM/UIM limits to your liability limits. Some states require it; in others you must reject it in writing.

Step 4: Decide on collision and comprehensive

These cover damage to your own car. They’re required if you finance or lease. For an older, paid-off car, compare the premium with the car’s value; see full coverage vs liability.

Step 5: Pick your deductible

The deductible is what you pay before collision or comprehensive kicks in. A higher deductible lowers your premium.

• Choose an amount you could pay from savings immediately.
• Compare the premium savings with the extra risk. If raising from $500 to $1,000 saves a small amount per year, it may take many claim-free years to come out ahead.
• Some lenders cap deductibles on financed cars.

Step 6: Consider add-ons

Add-on	Worth considering if…
Gap insurance	You owe more on your loan or lease than the car is worth
Rental reimbursement	You’d need a rental car while yours is repaired
Roadside assistance	You don’t already have it through a car warranty, credit card or auto club
Medical payments / PIP	Required in no-fault states; otherwise consider your health insurance deductibles
Accident forgiveness	You want protection from a first-accident surcharge. See insurance after an accident
Umbrella policy	Your assets or income exceed your liability limits

Review your coverage when life changes

Buying a home, getting a raise, adding a teen driver, paying off a car or retiring are all good times to revisit limits and deductibles. Then compare quotes for the same coverage set: see how to find the cheapest car insurance.

Frequently asked questions

What does 100/300/100 mean?

$100,000 bodily injury liability per person, $300,000 bodily injury per accident, and $100,000 property damage liability per accident.

Is state minimum car insurance enough?

For most drivers, no. Minimum limits can be used up quickly in a serious accident, leaving you personally responsible for the rest.

Do I need an umbrella policy?

If your assets or future income exceed your auto liability limits, an umbrella policy adds extra liability protection, typically in $1 million increments, often at a relatively modest cost.

“Full coverage” is one of the most common phrases in car insurance, and one of the most misunderstood. It isn’t a specific product, and it doesn’t mean everything is covered. Here’s what it typically includes, how it differs from liability-only, and how to decide which is right for you.

Side-by-side comparison

What’s covered	Liability only	Full coverage (typical)
Injuries you cause to others	✓	✓
Damage you cause to others’ property	✓	✓
Damage to your car in a crash (collision)	✗	✓ (after deductible)
Theft, fire, hail, flood, vandalism, animal strikes (comprehensive)	✗	✓ (after deductible)
Your injuries caused by an uninsured driver	Only if you add UM/UIM	Often included
Required by lenders/leases	No	Yes
Relative cost	Lower	Higher

Even “full coverage” usually excludes items such as rental reimbursement, roadside assistance and gap insurance unless you add them.

Who should carry full coverage

• You have a loan or lease. It’s required, and the lender may limit your deductible.
• Your car is newer or valuable. Replacing it out of pocket would be hard.
• You couldn’t afford a major repair or replacement without borrowing.
• You live where theft, hail or flooding is common. Comprehensive alone can be worth it.

When liability-only can make sense

• The car is paid off and worth relatively little.
• You have savings to repair or replace it.
• The yearly cost of collision and comprehensive is a large share of the car’s value.

A middle path: keep comprehensive, which is often relatively inexpensive, and drop collision.

Don’t skimp on liability

Whatever you decide about your own car, liability is what protects your savings and future income if you injure someone. State minimum limits can be exhausted quickly by a serious crash. Read how much car insurance you need.

Ways to make full coverage cheaper

• Raise your collision and comprehensive deductibles if you have an emergency fund.
• Bundle with home or renters insurance.
• Use safe-driver and telematics discounts.
• Compare quotes each year: see how to find the cheapest car insurance.

Frequently asked questions

What does full coverage car insurance include?

There’s no official definition, but it usually means liability plus collision and comprehensive coverage, often with uninsured motorist coverage.

When should I drop full coverage?

Consider it when your car is paid off and its value is low enough that you could repair or replace it from savings, and the yearly cost of collision and comprehensive is a large share of the car’s value.

Is full coverage required by law?

No state requires collision or comprehensive. Lenders and leasing companies do require them if you finance or lease.

Whether you’re 17 or 47, buying your first car insurance policy can be confusing. This guide explains what the coverages mean, what you’ll need to get quotes, and how to avoid overpaying while you build a track record.

Why new drivers pay more

Insurers use your driving record and your history of continuous coverage to predict claims. A new driver has neither. Teen drivers also face higher crash risk; see car insurance for young drivers. Adults who are newly licensed, such as people who recently moved to the U.S. or never needed a car, also start without history, though they may not pay as much as teens.

The coverages, in plain English

Coverage	What it pays for	Required?
Bodily injury liability	Others’ injuries when you’re at fault	Required in nearly all states
Property damage liability	Damage you cause to others’ cars or property	Required in nearly all states
Uninsured/underinsured motorist	Your injuries (and sometimes damage) when the at-fault driver has too little or no insurance	Required in some states
Personal injury protection / MedPay	Your and your passengers’ medical bills regardless of fault	Required in no-fault states
Collision	Damage to your car from a crash	Optional by law; required by lenders
Comprehensive	Theft, fire, hail, flood, vandalism, hitting an animal	Optional by law; required by lenders

Liability limits are often written like 25/50/25: $25,000 per person for injuries, $50,000 per accident for injuries, and $25,000 for property damage. See how much car insurance you need and full coverage vs liability.

What you’ll need for a quote

• Driver’s license number and date licensed for each driver
• Vehicle year, make, model and VIN
• Address where the car is kept
• Expected annual mileage and how you’ll use the car (commuting, pleasure, business)
• Any prior insurance, even from another country, if you have proof

How to lower your first premium

1. Join a household policy if you live with family who are insured.
2. Choose an affordable-to-insure car. Get quotes on specific models before you buy.
3. Complete a driver education or defensive driving course and ask about the discount.
4. Try usage-based insurance to earn discounts for safe driving.
5. Ask about every discount: good student, paid-in-full, paperless, autopay, safety features.
6. Choose a deductible you can afford; higher deductibles lower premiums.
7. Compare at least three quotes for identical coverage. See how to find the cheapest car insurance.

Buying a car? Insure it first

You’ll generally need proof of insurance to register a car, and dealers often require it before you drive off. Get quotes while you’re shopping, then start the policy on your purchase date. If you finance or lease, your lender will require collision and comprehensive and may set a maximum deductible. Ask about gap insurance for a new car with a small down payment.

Build a good insurance history

• Never let coverage lapse. Even a short gap can raise future rates.
• Drive carefully: tickets and at-fault accidents stay on your insurance record for years.
• Re-shop after your first six to twelve months and each year after, as your history improves.

Frequently asked questions

Why is car insurance expensive for new drivers?

Insurers have little or no driving or insurance history to judge your risk, and newly licensed drivers have higher crash rates on average.

Can I get car insurance with a learner’s permit?

Usually permit holders are covered under a parent’s or household policy; rules vary by insurer and state, so tell your insurer when someone in the household gets a permit.

Do I need insurance before buying a car?

Yes. You generally need proof of insurance to register a car and drive it off the lot. Arrange a policy that starts on the purchase date.

After a crash, your first priorities are safety, your health and getting the car fixed. But it’s natural to wonder what happens to your insurance bill next. Here’s how insurers treat accidents and what you can do to limit the long-term cost.

Right after an accident: a quick checklist

1. Check for injuries and call 911 if anyone is hurt or vehicles block traffic.
2. Move to safety if you can, and turn on hazard lights.
3. Exchange names, contact details, insurance information and license plates with other drivers.
4. Take photos of the scene, vehicles, damage and road conditions; collect witness contacts.
5. File a police report if required in your state or if there are injuries or significant damage.
6. Notify your insurer promptly, as most policies require timely notice.
7. Don’t admit fault at the scene; let the insurers determine responsibility.

How accidents affect your rate

Situation	Typical effect
At-fault accident with a paid claim	Surcharge at renewal, often lasting three to five years
Not-at-fault accident	Often no increase; some states restrict surcharges
Comprehensive claim (hail, theft, animal)	Usually a smaller effect than at-fault collision claims, if any
Accident with a DUI or reckless driving	Large increase; you may need an SR-22 filing
Multiple accidents or claims	Possible non-renewal; you may need a high-risk insurer

Surcharges usually apply at your next renewal, not immediately. Each insurer has its own rules for how long an accident counts and how much it adds.

Should you file a claim for a small accident?

If damage is minor, no one is hurt, and the repair costs only a little more than your deductible, paying out of pocket may cost less than a multi-year surcharge. But be careful:

• Always file if anyone may be injured or another driver’s property is damaged. Injuries can surface later, and liability claims can be expensive.
• Your policy requires you to report accidents. Ask your insurer how reporting without a claim is treated.
• Get a repair estimate before deciding.

Accident forgiveness

Many insurers offer accident forgiveness, either as an add-on or as a reward for years without claims. It typically prevents a surcharge for your first at-fault accident. It must be on your policy before the accident, it isn’t available in every state, and it usually applies once in a set period. Check the details in your policy.

How to lower your rate after an accident

• Shop at renewal. Some insurers penalize accidents much less than others. See how to compare quotes.
• Take a defensive driving course. Some insurers and states offer a discount or allow it to offset points.
• Try usage-based insurance to show safe habits.
• Raise your deductible if you have savings to cover it.
• Bundle auto with home or renters insurance.
• Avoid more incidents. A second claim can lead to much bigger increases or non-renewal.
• Mark the date when the accident should drop off your insurance record and re-shop then.

If you’re labeled high-risk

Several at-fault accidents, a DUI or a license suspension can push you into the high-risk market. You may need non-standard insurers or your state’s assigned-risk plan, and some situations require an SR-22 certificate of financial responsibility. Rates fall as your record improves, so keep shopping as incidents age.

Related: full coverage vs liability · how much car insurance you need

Frequently asked questions

How long does an accident affect car insurance rates?

Commonly three to five years for an at-fault accident, depending on the insurer and state.

Will my rates go up if the accident wasn’t my fault?

Often not, but it depends on the insurer and state. Some states limit surcharges for not-at-fault accidents.

Should I switch insurers after an accident?

Shopping is smart, especially at renewal. Insurers weigh accidents differently, so another company may offer a lower rate even with the accident on your record.

Many drivers are surprised to learn that their credit history can affect what they pay for car insurance, even with a spotless driving record. Here’s how it works, where it’s limited, and what you can do about it.

What is a credit-based insurance score?

A credit-based insurance score is different from the credit score lenders use. It’s built from information in your credit report, such as payment history, outstanding debt, length of credit history, recent applications and credit mix, and used to predict the likelihood of insurance claims. Insurers that use it say it’s a strong predictor of claim costs. Critics argue it penalizes people for financial hardship unrelated to driving.

Insurers check it with a soft inquiry, which does not affect your credit score, so you can compare as many quotes as you like.

States that ban or restrict credit in auto insurance

State	Rule (summary)
California	Credit isn’t used to underwrite or rate auto policies
Hawaii	Auto insurers can’t use credit in underwriting standards or rating plans
Massachusetts	Credit information can’t be used to set auto rates, underwrite or renew
Michigan	Credit can’t be used to set auto rates or to deny, cancel or non-renew; may be considered for installment payment options
Maryland	May help set the rate on a new policy, but can’t be used to deny, cancel, non-renew or raise rates at renewal
Oregon	Can’t be used to cancel or refuse renewal; limited use when first offering a policy
Utah	Limited use at initial underwriting and only to grant discounts, not to raise premiums

How to lower your premium with bad credit

1. Shop more insurers than usual

Each insurer weights credit differently, and some weigh it more lightly. With poor credit, the spread between the highest and lowest quote can be especially large. Include regional insurers and ask an independent agent to quote several companies.

2. Lean on driving-based discounts

Usage-based (telematics) programs price you partly on how you actually drive, which can offset a credit penalty for safe drivers. Also ask about safe driver, defensive driving course and multi-policy discounts.

3. Pay in full if you can

Monthly installment plans may carry fees. Paying the six- or twelve-month premium upfront can lower your total cost.

4. Adjust deductibles and coverage wisely

A higher deductible lowers your premium, and dropping collision on an old, low-value car can save money. Don’t cut liability below what protects you. See how much coverage you need.

5. Ask about extraordinary life circumstances

Many states have rules allowing consumers to ask insurers for reasonable exceptions when credit was damaged by events such as serious illness, divorce, death of a family member, job loss or identity theft. Ask your insurer or state insurance department.

6. Improve your credit and re-shop

Paying on time, lowering card balances and fixing report errors can improve your insurance score over time. Ask your insurer to re-rate your policy, or shop again at renewal. Check your reports for free at AnnualCreditReport.com.

If you’re denied or charged more because of credit

Under the Fair Credit Reporting Act, if an insurer takes adverse action, such as charging you more, based on your credit report, it must tell you and identify the credit bureau it used. You’re entitled to a free copy of that report and can dispute errors.

For the full quote-comparison process, see how to find the cheapest car insurance.

Frequently asked questions

Can you get car insurance with bad credit?

Yes. Bad credit doesn’t prevent you from buying car insurance, but in most states it can raise your premium. Shopping several insurers and using discounts can help.

Which states don’t allow credit to affect car insurance?

California, Hawaii and Massachusetts don’t allow credit to be used for auto rates, and Michigan bars its use in setting auto rates. Maryland, Oregon and Utah restrict how it can be used.

Does getting a car insurance quote hurt my credit?

No. Insurers use a soft inquiry for credit-based insurance scores, which does not affect your credit score.

Retirement changes how you drive: fewer commutes, more flexible schedules, maybe one car instead of two. Your insurance should change too. Many older drivers overpay simply because they haven’t updated their policy or shopped around in years.

How age affects rates

Car insurance rates generally fall through early adulthood, stay relatively low through middle age, and can start rising again for drivers in their 70s and older. Insurers attribute this to higher claim costs in older age groups. How much rates change, and when, varies widely by insurer and state, which is another reason to compare.

Discounts seniors should ask about

Discount	How it works
Mature driver / defensive driving course	Complete an approved course, often available online. Many states require insurers to offer a discount for older drivers who complete one; the discount usually lasts a set number of years.
Low mileage	Report your actual annual mileage; driving less often costs less.
Usage-based or pay-per-mile	Programs that measure driving or miles can reward low-mileage, daytime drivers.
Bundling	Combine auto with homeowners or renters insurance.
Affinity / membership	Some insurers offer rates through retiree or membership organizations.
Paid in full / autopay	Paying the premium upfront or by automatic payment.
Vehicle safety features	Anti-lock brakes, anti-theft devices and some driver-assistance features.

Adjusting coverage in retirement

Keep liability strong

If you cause an accident, you can be personally responsible for damages above your liability limits. Retirees often have retirement accounts, a paid-off home and other assets worth protecting. Many advisors suggest limits well above state minimums, and some drivers add an umbrella policy. See how much car insurance you need.

Rethink collision and comprehensive on older cars

If your car is paid off and its value has dropped, the yearly cost of collision coverage may approach what you’d get from a claim. Compare the premium for these coverages with the car’s market value and your savings. See full coverage vs liability.

Review medical coverage

Depending on your state, your policy may include medical payments or personal injury protection. Check how it coordinates with Medicare and any supplemental coverage before reducing it.

Update drivers and vehicles

Remove drivers who no longer live with you or no longer drive, and remove vehicles you’ve sold. If a spouse stops driving, ask how to list them; insurers have specific rules.

Safety and staying independent

Regular vision checks, reviewing how medications affect driving, and choosing a car with good visibility and modern safety features help keep you safe on the road. Some drivers choose to limit night or highway driving as they age. Those choices can also keep your record, and your premiums, in good shape.

Re-shop regularly

Loyalty doesn’t always pay. Compare quotes at least every year or two, and whenever you move, retire, change vehicles or drive significantly less. Our guide to finding the cheapest car insurance walks through the process.

Frequently asked questions

Does car insurance go up for seniors?

Rates are often lowest in middle age and can begin to rise for drivers in their 70s and older, reflecting higher claim costs in older age groups. The change varies a lot by insurer and state.

What is a mature driver discount?

A discount for completing an approved defensive or mature driver course. Many states require insurers to offer it to older drivers; the discount usually lasts for a set period, such as three years.

Should retirees drop collision coverage?

It can make sense for an older, paid-off car if you could afford to repair or replace it yourself. Keep strong liability coverage to protect your savings.

If you’re a teen, a college student or a driver in your early twenties, your first insurance quote can be a shock. The good news: rates typically fall as you gain experience and keep a clean record, and there are concrete ways to reduce the cost now.

Why insurance costs more under 25

Insurers price policies on the likelihood and cost of claims. Inexperience, higher crash rates and more risky driving behaviors among young drivers mean more claims on average. According to the IIHS, the crash risk is especially high in the first months after a teen gets a license. Rates usually decline gradually through the early twenties and often drop noticeably around age 25, assuming no accidents or violations.

Ways to lower the cost

1. Stay on a parent’s or household policy

Adding a young driver to an existing policy is typically much cheaper than buying a standalone policy. The household may also keep multi-car and bundling discounts. Remember that any claims or tickets affect the whole household’s rates.

2. Earn a good student discount

Many insurers offer a discount to full-time students who maintain good grades, commonly a B average or 3.0 GPA, or who make the honor roll. You’ll usually need to send a transcript or report card.

3. Try usage-based insurance (telematics)

Programs that use a phone app or plug-in device to track braking, speed, time of day and phone use can reward safe young drivers. Ask whether the program can raise your rate as well as lower it.

4. Take a driver training course

Many insurers discount policies for completing an approved driver education or defensive driving course.

5. Use the “student away at school” discount

If a student lives more than a set distance from home (often 100 miles) without a car, some insurers reduce the rate because they’ll drive the family car less.

6. Choose the right car

A modest, used vehicle with strong safety ratings is usually far cheaper to insure than a new sports car or high-horsepower model. Before buying, get quotes for the specific vehicles you’re considering.

7. Pick a sensible deductible

A higher collision and comprehensive deductible lowers the premium, but only if you could pay it after an accident.

Should a young driver carry full coverage?

If the car is financed or leased, the lender will require collision and comprehensive. For an older, low-value car, liability-only coverage may make sense, but young drivers are statistically more likely to be in an at-fault crash, so liability limits should be higher than the state minimum. See full coverage vs liability and how much car insurance you need.

Keep the record clean

One at-fault accident or speeding ticket can raise rates for three to five years. Graduated licensing rules, which limit night driving and teen passengers, exist because they reduce crashes. Following them protects both safety and premiums.

Compare quotes every year

As a young driver’s record and age improve, the cheapest insurer can change. Re-shop each year and after turning 21 and 25. For a full comparison method, read how to find the cheapest car insurance. Brand-new drivers of any age should also see car insurance for new drivers.

Frequently asked questions

Is it cheaper for a young driver to be on a parent’s policy?

Usually yes. Adding a teen or young adult to an existing household policy is typically cheaper than buying a separate policy, and it can unlock multi-car discounts.

At what age does car insurance go down?

Rates usually fall gradually through the early 20s and often drop noticeably around age 25, assuming a clean record.

What grades do you need for a good student discount?

Requirements vary by insurer, but many ask for a B average, a 3.0 GPA, or a spot on the honor roll or dean’s list.

Car insurance pricing is personal. Insurers use their own formulas and data, so a company that’s cheapest for your neighbor may be one of the most expensive for you. The only dependable way to find the lowest price is to compare quotes for the same coverage, then use every discount you qualify for.

What determines your car insurance rate

Factor	How it affects price
State and ZIP code	State laws, local accident and theft rates, repair costs and litigation all matter
Driving record	Accidents, speeding tickets and DUIs raise rates for several years
Age and experience	Young and newly licensed drivers pay the most; see young drivers
Vehicle	Repair costs, safety ratings and theft risk
Coverage and deductibles	Higher limits cost more; higher deductibles cost less
Credit-based insurance score	Used in most states; restricted or banned in some. See car insurance with bad credit
Annual mileage and use	Commuting and high mileage increase risk
Insurance history	A lapse in coverage can raise your rate

How to compare quotes the right way

1. Gather your details: driver’s license numbers, VINs, current declarations page, and any tickets or claims in the past 3–5 years.
2. Pick one coverage set and quote it everywhere: the same liability limits, uninsured motorist coverage, collision and comprehensive deductibles. See how much car insurance you need.
3. Get at least three quotes from a mix of large national insurers, regional companies and an independent agent who can quote several carriers.
4. Ask about every discount (list below).
5. Check the company, not just the price: financial strength and complaint records. Your state insurance department and the NAIC publish complaint data.
6. Time the switch: start the new policy before canceling the old one so you never have a lapse.

Discounts worth asking about

• Bundling auto with home, renters or condo insurance
• Multi-car policies
• Safe driver / claims-free history
• Usage-based (telematics) programs that track driving habits
• Good student discounts for young drivers with good grades
• Defensive driving course completion, especially for older drivers
• Paid-in-full, autopay and paperless billing
• Vehicle safety and anti-theft features
• Affinity discounts through employers, alumni groups or professional associations

Lower your premium without cutting critical coverage

• Raise your deductible if you have savings to cover it. Moving from $500 to $1,000 on collision and comprehensive usually lowers the premium.
• Drop collision on an older car when the premium approaches what the car is worth.
• Improve your credit in states where insurers use it.
• Keep coverage continuous. Even a short lapse can raise your rate.
• Re-shop every year, and after life changes like moving or a ticket falling off your record.

Guides for your situation

• Car insurance for young drivers
• Car insurance for new drivers
• Car insurance for seniors
• Car insurance after an accident
• Car insurance with bad credit
• Full coverage vs liability only

Frequently asked questions

Which company has the cheapest car insurance?

There is no single cheapest company for everyone. Prices depend on your state, ZIP code, vehicle, driving record, age and, in most states, credit-based insurance score. Comparing at least three quotes is the most reliable way to find your lowest rate.

How often should I shop for car insurance?

At least once a year before renewal, and whenever you move, buy a car, add a driver, or your record or credit changes.

Is minimum coverage the cheapest option?

It has the lowest premium, but it may leave you personally responsible for damages above your limits after a serious accident.