When you buy a car you will also purchase automobile insurance. Many different kinds of car insurance policies are available and should be investigated carefully.

What Kinds of Insurance Might You Need?

All states require anyone who owns a car to have automobile insurance. 

• Liability Insurance

Liable means “responsible.” Liability insurance is proof that you will be financially responsible if you cause damage to property or injure other people. Liability insurance protects you against claims if you are at fault in a collision. It helps you to pay for any injury or property damage caused by your actions. Liability insurance not only protects you, it also protects anyone else who has your permission to drive your car. 

Most drivers have two kinds of liability insurance—bodily injury liability insurance and property damage liability. Bodily injury liability insurance covers you if your driving causes injury to or the death of another person. It covers legal fees, court costs, and lost wages.

Property damage liability covers you if your driving causes damage to the property of other persons. It covers damage to their car, property in their car, and damage to buildings, telephone poles, and traffic lights.

Of course, you are covered only for the amount of insurance you have purchased. If a court determines that you have caused more damage than your insurance will pay, you are held personally liable.

• Uninsured Motorist Insurance

If you are involved with a hit and run driver, uninsured motorist insurance protects you. Uninsured motorist insurance protects you in states where no liability insurance is required. It pays for any bodily injury that you may suffer but not for damage to your car.

• Collision Insurance

Collision insurance pays for damage to your car even if you are to blame in a crash or are involved with an uninsured driver. Collision insurance covers repairs if your car is damaged in a parking lot or in a parking space on the street. Most drivers have a deductible policy where you agree to pay the affixed amount such as $100, $250, $500, $750, or $1,000. The insurance company pays the rest. 

• Comprehensive Insurance

If your car is damaged by anything other than a collision, comprehensive insurance pays the bills. 

• Medical Payment Insurance

Medical payment insurance covers medical, hospital, or funeral costs regardless of who is at fault. It pays a fixed amount if you or passengers in your car are injured or killed in a collision. It also pays if you or a member of your family is injured or killed while riding in someone else’s car.  Medical payment insurance pays if you or a member of your family is struck as a pedestrian or on a bicycle, bus, or taxicab rider. The amount paid is determined by the policy. 

•  No-Fault Insurance

No-fault insurance is where your insurance company pays your medical bills and any other costs resulting from a collision related injury because blame is not considered before the insurance company pays the bills. 

• Towing Insurance

Towing insurance covers the costs of on road repairs and the cost of having your car towed.

Which Factors Determine the Cost of Insurance

You purchase car insurance by paying a premium, or a set amount, to an insurance company, usually every six months. Insurance companies rely on statistics to determine their rates. Insurance companies use the following factors to determine rates. 

•  Your age

Drivers under the age of 25 pay the highest premiums.

• Your driving record

Convictions, collisions, and insurance claims can increase your insurance costs.

• Mileage per year

The farther you drive the more your insurance will cost.

• If you drive to work

Carpooling reduces the cost of insurance.

• Where you live

If you live in a city your insurance costs will be greater than a person who lives in the country.

• Your gender

Women pay lower rates than men.  Statistics show that men drive often and farther and are involved in more collisions.

• Your marital status

Young married men pay less than men of the same age who are single and are involved in fewer collisions than single men. 

• The value of your car

The more expensive the car, the greater the cost of insurance.

• The type of car

A sports car will cost more to insure.