Auto insurance shopping

Auto insurance is a financial product that protects you against losses from car accidents, theft, and other vehicle-related incidents. Every state except New Hampshire requires some form of auto insurance.

20 steps across 6 sections

1. Liability Insurance

  • What it covers: Injuries and property damage you cause to others in an accident
  • Two parts: Bodily injury liability (medical bills, lost wages, legal fees) and property damage liability (repairs to others' vehicles/property)
  • Required: By law in nearly all states
  • Typical limits expressed as: 100/300/100 (meaning $100K per person bodily injury / $300K per accident bodily injury / $100K property damage)

2. Collision Coverage

  • What it covers: Damage to your car from contact with another vehicle or object (tree, guardrail, building), regardless of fault
  • Deductible: Typically $250-$1,000 (you pay this amount before insurance kicks in)
  • When to carry: Required if your car is financed or leased; recommended for newer vehicles

3. Comprehensive Coverage

  • What it covers: Damage from non-collision events — theft, vandalism, fire, flooding, hail, falling objects, animal strikes
  • Deductible: Typically $250-$1,000
  • When to carry: Same as collision — required for financed/leased vehicles; recommended for cars with significant value

4. Uninsured/Underinsured Motorist Coverage (UM/UIM)

  • What it covers: Your injuries and damages when the at-fault driver has no insurance or insufficient insurance
  • Also covers: Hit-and-run accidents
  • Required: In about 20 states
  • Recommended: Even where not required, since roughly 12-13% of drivers are uninsured nationally

5. Personal Injury Protection (PIP)

  • What it covers: Medical expenses, lost wages, and sometimes funeral costs for you and your passengers, regardless of fault
  • Required: In no-fault states (Florida, Michigan, New Jersey, New York, and others)
  • Key feature: Pays regardless of who caused the accident

6. Medical Payments Coverage (MedPay)

  • What it covers: Medical and funeral expenses for you and your passengers after an accident
  • Difference from PIP: Narrower scope — typically covers only medical bills, not lost wages
  • Available: In at-fault states as an alternative to PIP

Common Mistakes

  • Buying only state minimums
  • Choosing the cheapest quote without checking the company
  • Not comparing quotes regularly
  • Overlooking uninsured/underinsured motorist coverage
  • Setting deductibles too high to save on premiums

Pro Tips

  • Raise your deductible to $1,000
  • Ask about accident forgiveness
  • Check if your state offers low-cost auto insurance programs
  • Pay your premium in full
  • Telematics programs

Sources

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