Let’s face it, the cost of owning and maintaining a car is no joke. The average annual cost of car ownership in the U.S. can reach as high as $10,000 or more. If you don’t have that kind of money lying around, you may be tempted to drive without insurance, after all, what could go wrong? A lot! In fact, driving uninsured is a risk no driver should take.
If you are caught driving without insurance, you will likely face serious penalties like fines and points on your license. Moreover, if you are involved in an accident while uninsured, your lack of coverage can result in much greater financial consequences such as overwhelming medical bills from the other driver’s health insurance company or repair costs from your own auto insurance provider. In short, driving without insurance is never worth the risk!
Main Types Of Insurance Coverage
When you hear the word “insurance,” what comes to mind? People with expensive cars, houses and jewelry perhaps? While this is true for some of us, there are definitely other types of people who also need insurance.
In fact, according to the Insurance Information Institute (III), more than 60 percent of adults in the U.S. have some form of auto insurance, home insurance or renters insurance. And that is a good thing because there are various reasons as to why one might want to get insured. Whether it is your house burning down or getting robbed, having adequate insurance coverage can be a life-saver in many different ways. This article will explore the main types of insurance coverage and why you should get them all!
The following are the main types of car insurance coverage:
– Required Insurance Coverage:
– LIABILTY auto insurance, to pay for damage to the cars and property of others, and bodily injury to others, that you cause.
– UNINSURED MOTORIST coverage, pays for medical bills for you and your passengers if you’re harmed by someone without auto insurance.
– (PIP) personal injury protection, in states that have “no-fault” insurance laws, pays your medical bills no matter who caused the accident.
Optional – but important – Insurance Coverage:
– COLLISION insurance coverage, pays for repairs of damages to your insured car, regardless of fault – even if you back up into a pole.
– COMPREHENSIVE insurance coverage, protects you from theft and vandalism, and non-collision types of damage – such as flooding and falling objects.
Special Types Of Insurance Coverage
– Accident forgiveness coverage: If you cause a car accident, your insurance company will “forgive” the accident and your insurance premiums won’t increase. This is typically limited to one forgiven accident per policy for a certain amount of time.
– Gap insurance: If your car is totaled, gap insurance covers the difference between what you owe on a car loan and what your car is worth.
– Rental reimbursement insurance: Pays for a rental car or substitute transportation while your car is being repaired under an insurance claim.
Best National Car Insurance Companies
1) Amica Insurance: Ranked second highest for overall auto claims satisfaction in 2020. “Advantage Points” program for good driving, renewing a policy and referring other drivers. These points can be used to keep your current rate even after an accident. Amica also offers free glass repair, free lock replacement and free airbag repair after deployment.
2) Allstate: This insurance giant ranked eighth overall for claims satisfaction. They offer a variety of discount programs, plus a strong personal service attribute provided by their large network of local agents and claims offices.
3) Chubb Insurance: Specializes in insuring high-end cars and high income individuals. Collision coverage will pay for repairing your car with original manufacturer-made parts and you can even get extra high liability limits, up to $10 million.
4) Farmers Insurance: Personal service provided by a network of local agents. Discounts available for students with good grades and members of certain professional groups. Discount also available for bundling other insurance (such as home owner’s) with them.
5) Geico: Ranked first in overall customer satisfaction in many regions of the U.S. Many discount programs offered, especially for government employees, active military and veterans. They also offer mechanical breakdown coverage for newer cars.
Best Regional Car Insurance Companies
The best auto insurance company for you may not be one of the large, national insurers. There are some smaller, regional based companies that also offer good coverage, service and rates. The following are the best of these regional companies:
– Auto-Owners Insurance provides coverage in 26 states in the middle of the country.
– Erie Insurance Company does business in the Northeast, Midwest and Appalachian regions.
– NJM Insurance Group is only available in Connecticut, New Jersey and Pennsylvania.
Cost of Car Insurance
The price of auto insurance varies from company to company. Of course, you should not select a company by price alone, but also strongly consider the company’s ratings and reputation. Having a cheap premium won’t be so great if the insurance company won’t pay a claim or cancels your policy right away after any claim.
The companies with the lowest average cost:
USAA; Erie; Auto-Owners; State Farm; Geico and Progressive
The companies with the highest average cost:
Farmers; The Hartford and Allstate
Also, remember that with any company you can reduce your cost by not buying any unnecessary “fluff” coverage and by choosing higher deductibles.
Special Considerations and Tips
– Newer or younger drivers should shop around carefully, as many insurance companies will charge much more for these types of drivers.
– Keeping your car in a garage, or at least parked off the street, can often reduce your insurance costs.
– Most car insurance coverage will not protect your personal belongings left in the car.
– Some car insurance includes roadside assistance / towing coverage. However, if you belong to an auto club, you should not spend extra for this.