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UPDATED: Mar 13, 2020
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Are you shopping for car insurance and unsure of the type of policy you need? Before you buy an insurance policy via an online insurance comparison tool, you should understand the basics of each type of policy.
In general, you should choose an insurance policy, according to your specific monthly budget and whether you own your vehicle or still make payments.
Once you understand the basics, you can make an informed decision on your new car insurance policy.
State minimum insurance policies offer the least amount of insurance coverage, according to your state’s insurance rules and regulations.
These policies are generally the least expensive of all of the various types of insurance policies on the market. However, they may leave you financially liable if the limits of the policy are less than the cost of the car accident.
For example, let’s say you have a state minimum insurance policy in the state of Florida, which requires $10,000 of personal injury protection and property damage protection.
Your car accident results in expenses of $15,000 for personal injury and $15,000 in property damage; you may be financially liable for the additional $10,000 incurred by the other driver as a result of the accident.
Here are some questions to ask before purchasing the state minimum:
- How much do I drive?
- Do I own, lease or pay on a car note?
- Can my budget afford better car insurance?
Liability car insurance offers better coverage than state minimum because you can choose your coverage amounts for personal property damage and personal injury, or you can ask the insurance agent for recommendations on coverage amounts. A typical liability coverage might have limitations of $50,000 for personal injury and $40,000 for property damage.
Liability coverage protects the other driver, but does not cover your injuries or damage to your car if you caused the accident.
Liability insurance is slightly more expensive per month than state minimum but less expensive than collision insurance or full coverage insurance policies.
Here are some questions to ask before purchasing liability:
- What should I set for car insurance limits?
- Do I own my vehicle?
- Did I use an auto insurance comparison tool to quickly find liability policies?
Comprehensive car insurance covers damage to your vehicle while it was parked, or you were not driving it at the time the damage was incurred. Typical comprehensive coverage items include fire, theft, falling objects, and vandalism.
The specifics of your comprehensive insurance coverage will be listed in your insurance policy. Here are some questions to ask before purchasing comprehensive:
- What would I do if my car were damaged while parked?
- What is the risk of my car getting stolen?
- What is the risk of my car getting vandalized?
Collision insurance is designed to pay for your car accident damage and medical expenses after you caused an accident. This type of coverage usually comes with a deductible — the amount you pay before your car insurance company will cover repairs.
Typical deductible amounts range from $0 to $1,000. It is up to you to choose a deductible amount that you can always afford while keeping your insurance premiums at a rate you can afford.
Here are some questions to ask before purchasing collision:
- How much deductible can I afford?
- Can I afford to fully pay for my car repairs if I am in a car accident?
- Do I own or lease my vehicle?
Full Coverage Car Insurance
Full coverage car insurance is not an official term. However, this verbiage refers to policies that include liability, comprehensive and collision insurance provisions.
It is often referred to as full coverage because it repairs and replaces your vehicle and pays for your medical expenses if you caused the accident or got into an accident in a no-fault state.
It even pays for single car auto accidents where you hit an object like a guard rail, tree, or boulder or drove off the road into a ditch. This type of insurance policy works well for individuals who are still making loan payments and for individuals that cannot afford to entirely pay for the repairs to their vehicles after an accident.
Here are some questions to ask before purchasing full coverage:
- Do I fully understand my full coverage car insurance?
- Do I need to purchase full coverage auto insurance to satisfy my lease or car loan stipulations?
- Do I understand my deductibles, and are they affordable for me?
Car Insurance Add-Ons
When you purchase a car insurance policy, you can opt to include other types of coverage, like roadside assistance, gap insurance, and rental car reimbursement.
When you use a comparison tool to find car insurance policies, simply indicate that you would like the additional coverages. This will allow you to view policies that include everything you need to feel secure while you drive.
- Roadside Assistance – Roadside assistance provides you with a tow truck in the event that your car breaks down, overheats, runs out of gas or gets a flat tire while you are driving.
- Gap Insurance – Gap insurance is recommended for individuals that lease their vehicles or who make car loan payments. This type of coverage covers the gap between the actual value of the car at the time of the accident and the amount listed on your car lease or loan.
- Rental Car Reimbursement – If you need a rental car after your car accident, this scar insurance add-on pays a certain amount for your rented car until your car is fully repaired by the auto mechanic shop.
Here are some questions to ask before purchasing insurance add-ons:
- Have I fully explored all my add-on options?
- Have I chosen the best add-ons for my current and future needs?
- Have I viewed all the available policies with a car insurance quote tool?
Once you have determined the type of policy you need, you can look at available policies and prices by using a car insurance comparison tool.
These online tools can be used in the comfort of your own home or office to choose the best policy for your personal needs and budgetary requirements. Enter your zip code into our FREE comparison tool to get the right coverage for your vehicle!