Auto Insurance Guide

Car insurance protects you financially if you cause an accident, if your car is damaged or stolen, or if you are hit by a driver who has little or no insurance. Almost every U.S. state requires drivers to carry at least some liability coverage, and New Hampshire is the main exception. This guide explains the coverages, how premiums are set and how to buy the right policy.

The main types of car insurance coverage

• Bodily injury liability: pays for injuries you cause to other people, including medical bills and legal costs.
• Property damage liability: pays for damage you cause to other vehicles or property.
• Collision: pays to repair or replace your car after a crash, regardless of fault, minus your deductible.
• Comprehensive: covers theft, vandalism, fire, hail, flooding, falling objects and animal collisions.
• Uninsured and underinsured motorist (UM/UIM): protects you when the at-fault driver has no insurance or not enough.
• Personal injury protection (PIP) or medical payments: pays medical costs for you and your passengers. PIP is required in no-fault states.
• Optional extras: roadside assistance, rental reimbursement and gap insurance for financed or leased cars.

Understanding liability limits

Liability limits are often written as three numbers, such as 50/100/50. The first number is the maximum paid per injured person (in thousands of dollars), the second is the maximum per accident for all injuries, and the third is the maximum for property damage. State minimums are often low compared with the cost of a serious accident, so many experts suggest choosing higher limits if you have savings or a home to protect.

What affects your car insurance premium

• Your driving record, claims history and years of driving experience
• Your age and, in many states, your credit-based insurance score
• Where you live and park, and how many miles you drive each year
• The make, model, age and safety features of your vehicle
• The coverages, limits and deductibles you choose

How to buy car insurance in 5 steps

1. Check your state’s minimum requirements and decide how much protection you actually need.
2. Gather your driver’s license, vehicle identification number (VIN) and current policy details.
3. Get quotes from at least three insurers for exactly the same coverages and deductibles.
4. Ask about discounts: bundling, safe driver, good student, anti-theft devices, paperless and paid-in-full.
5. Check the insurer’s financial strength and complaint record before you sign.

Learn more in our guides: 12 ways to lower your car insurance premium and how much car insurance you need.

This guide is for general information only and is not insurance, legal, tax or financial advice. Coverage, rules and prices vary by state, insurer and policy. Always read your policy documents and speak with a licensed insurance agent or your state insurance department before making a decision.