But finding the right policy can feel like a daunting task.
With a little preparation, you could get a good policy at an affordable price.
How to Shop for Car Insurance in 5 Steps
Auto insurance can be expensive.
Looking for more ways to save money on your policy? Here are13 ways to lower your ratewithout changing your lifestyle.
You must pay $500, then your car insurance pays the remaining balance.
Coverage limits:The maximum your auto insurance will pay.
You would file a claim with your car insurance company to have your car repaired.
The fence owner would also file a separate claim with your insurance company to have their fence repaired.
To save time when you compare rates, gather this information before you shop for car insurance.
There are different types of coverage and different requirements for each key in.
Heres a simple breakdown.
Liability coverage is required by law in most states.
However, specific coverage requirements and minimums vary by state.
Liability insurance protects your assets in the event of a crash.
Its the most important part of your auto insurance.
The more assets you have, the more liability insurance you should carry to protect yourself.
Thats why getting the minimum amount of coverage your state requires isnt always a smart money move.
A good rule of thumb is to have coverage that equals the total value of your assets.
Total assets include your home, car, savings and investments.
Liability coverage limits on policies are shown as three different numbers: 50/100/50 up to 250/500/250.
Suppose your policy lists the numbers 50/100/25.
Uninsured and underinsured motorist coverage is required in some states and optional in others.
It does not cover damage to your car, theft or damage to other peoples property.
No-fault insuranceis mandatory in 12 states.
This is sometimes called full coverage car insurance.
No state requires drivers to carry collision or comprehensive insurance coverage.
Adding this coverage can cost twice as much as your basic insurance requirements.
Collision coverage pays for damage to your car when the accident involves an object or another vehicle.
This coverage is optional unless you finance your car.
This coverage includes a deductible.
A lot can change in a year including your car insurance rates.
Most car insurance providers offer discounts for things like good grades or a clean driving record.
Some insurers may even offer you a discount for taking a defensive driving course.
However, you should never reduce your liability coverage to save money.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
