Car insurance provides financial protection for drivers in case of an accident, vehicle damage, personal injury or theft. Without car insurance, drivers would be at risk of financial ruin every time they get behind the wheel, as severe collisions can cost hundreds of thousands of dollars in property damage and bodily injuries.
The various types of car insurance coverage all work a bit differently, depending on which driver is found to be at fault, what type of damage is caused, and what state the accident occurs in.
How Different Types of Car Insurance Work
Bodily injury liability insurance
Bodily injury liability insurance covers any medical bills that other people might have after a collision where you’re at fault. It is required in most states.
Property damage liability insurance
Property liability insurance covers damage that you cause to other people’s property with your car. It is required in most states.
Medical payments (MedPay) coverage
Medical payments coverage helps pay for your medical bills after an accident. It is required in some states.
Personal injury protection (PIP) insurance
Personal injury protection insurance helps with your medical bills and certain other costs after an accident, regardless of who is at fault. It is required in some states.
Collision insurance can help repair your vehicle after an accident with another car. Collision coverage combined with comprehensive insurance is often called “full coverage.” It is optional.
Comprehensive insurance covers non-accident related damage such as vandalism and fallen tree branches landing on your vehicle. It is optional.
Gap insurance helps drivers pay off the rest of their car loan if their vehicle is totaled or stolen. It is optional.
Roadside assistance coverage reimburses you for services like towing and flat-tire replacement. It is optional.
Rental reimbursement covers the cost of a rental car while your damaged car is being repaired after a collision. It is optional.
How Car Insurance Works When You Are At Fault
When you at fault in an accident, the other driver will file a claim with your liability insurance to have their medical expenses and vehicle repairs paid for. If you also need your medical costs and property damage covered, you’ll have to file a claim with your own collision insurance, personal injury protection, or MedPay.
Before you can have your collision insurance cover your vehicle repairs, you’ll likely need to pay a deductible. Deductibles are the amount of money you have to pay before your insurer will cover the rest of a claim. Personal injury protection, uninsured motorist, and comprehensive insurance all usually have a deductible, as well.
Learn more about how car insurance works when you are at fault.
How Car Insurance Works When You Are Not At Fault
When you are not at fault for an accident in most states, the at-fault driver’s liability insurance pays to cover your medical expenses and vehicle repairs.
No-fault states are the exception, requiring you to use your own car insurance (personal injury protection) to pay for your medical bills after an accident. The at-fault driver’s insurance will still pay for your vehicle repairs, though.
If the at-fault driver does not have any insurance, or if their liability insurance is not enough to cover your costs, you can file a claim with your own uninsured motorist insurance.
Learn more about how car insurance works when you are not at fault.
How Car Insurance Works When Fault Is Unclear
When you file a claim, either with your own insurance company or with someone else’s, the insurance company will send an adjuster to investigate the incident and make an official determination of fault. This process can sometimes take a while, so if you need your vehicle repairs covered before fault can be determined, you can still file the claim with your own collision insurance. If you are later found to not be at fault, your insurance company will try to recover those costs, including your deductible, from the other driver’s insurer through a process called subrogation.
If both drivers share fault in an accident, which insurance company pays for the claims is determined by the state’s negligence laws. In Virginia, for example, drivers who are even slightly found to be at fault cannot receive any compensation for their expenses from the other driver. California, however, allows drivers to collect damages based on their percentage of the shared fault.
Learn more about how fault is determined in a car accident.
How Much Car Insurance Do You Need?
Car insurance is required in 48 of the 50 states, except New Hampshire and Virginia. Anyone who owns and drives a car needs to prove that they have coverage in order to avoid costly penalties. If you’re caught driving without insurance, you can face fines, lose your license, or even go to jail. Many states do allow you to make a cash deposit in place of buying car insurance, but it usually has to be between $25,000 and $160,000.
Most states only require drivers to have liability insurance, while others require additional coverage like personal injury protection and uninsured motorist coverage. You only have to meet the state-minimum requirements, but it’s recommended that you buy as much coverage as you can comfortably afford since the minimum coverage limits typically don’t provide enough protection against severe accidents.
Learn more about how much car insurance you need.
How to Get Car Insurance Quotes
Step One: Gather Your Information
To get car insurance quotes, gather your personal information, such as your driver’s license number, Social Security number, and your car’s VIN. This information helps companies learn about your driving history and any potential risks and benefits associated with your car, like safety ratings. They use your data as a factor in your quote.
Step Two: Determine What Types of Coverage You Want
The more coverage you buy, the more you’ll pay for insurance. But as a general rule, it’s a good idea to buy as much coverage as you can afford – each category represents protection from potentially large bills.
Step Three: Choose Which Companies to Get Quotes From
There are over 80 car insurance companies operating in the US. According to WalletHub’s research, the 5 best car insurance companies are:
Step Four: Compare Quotes
You can use WalletHub’s comparison tool to check for quotes from multiple insurers at once, making the process as quick and painless as possible. We recommend you compare quotes from at least three insurance companies to ensure you’re getting the best deal possible.