What is auto insurance?
Auto insurance protects you against financial loss in the event of an accident. The insurance company pays your losses as outlined in your policy. Policyholders pay annual premiums, and the company pays all or most of the costs related to auto accidents. Premiums differ depending on age, gender, driving record, and other factors, and coverage minimums vary by state.
Why do you need auto insurance?
Having auto insurance is required for drivers in almost every state. Beyond the legal requirement, auto insurance helps pay for covered losses, medical expenses, and legal fees resulting from accidents.
Protection
Covers you, your passengers, other drivers, and your vehicle. May pay for damage to another driver's vehicle and medical expenses if injured.
Saves time
Handles repairs, replacements, and towing. No negotiating with other drivers when you're involved in an accident.
Supplements health insurance
May pay for medical bills, like dental work from an accident, that health insurance typically won't cover.
Takeaway: Auto insurance covers your liability and property damages from car accidents.
What are the types of coverage for auto insurance?
Below are the most standard types of coverage. Options may vary by state and company. Always check your policy to review coverage limits.
Liability Required
Two types: bodily injury liability and property damage liability. When you are at fault, it covers the cost of property damage and medical expenses. Most states require minimum liability coverage. If you can afford it, carry coverage above your state's minimum — it reduces the risk of paying out-of-pocket if you exceed your policy limit.
Collision Optional
Pays for repairs to your car when it's damaged in an accident involving a collision with another car, tree, fence, pothole, or other object. Not required by state law, but drivers with paid-off cars should consider it to protect their finances.
Comprehensive Optional
Pays for damage not caused by an accident — weather, theft, vandalism, animal damage, and glass damage. Optional but valuable. Anti-theft or tracking devices on your car can make it more affordable.
Property Damage Required
If your property is damaged by another driver — such as being hit while parked, or a vehicle sliding off the road into your house — you can file a claim under property damage coverage.
Personal Injury Protection (PIP) Varies by state
Often called "no-fault" insurance, required in states with no-fault laws. Covers your medical expenses and your passengers' regardless of fault. Includes medical expenses, funeral expenses, child care, lost income, and household services. Does not cover vehicle or property damage.
Uninsured / Underinsured Motorist (UM/UIM) Recommended
Protects you from accidents caused by a driver without insurance or without enough coverage. Covers you when the at-fault driver can't pay your expenses, or you are the victim of a hit and run.
How to purchase an auto insurance policy
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1
Know yourself and your car
You'll need your name, date of birth, driver's license number, vehicle identification number (VIN), driving record, vehicle details, anti-theft devices, and information about other drivers on your policy.
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2
Determine what coverage you need
Know how much of each type you need — liability, collision, comprehensive, etc. Look up your state's minimum requirements, but consider carrying more. Additional options include roadside assistance, new car replacement, and rental reimbursement.
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3
Get quotes and compare
Get multiple quotes and compare. Use an online comparison tool to see rates from several carriers at once. Higher coverage limits are generally worth the marginal cost increase. Review each quote carefully — it may include coverage you don't need.
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4
Look for discounts
Common discounts include multi-policy, multi-car, good driver, good student, anti-theft, defensive driver, pay-in-full, paperless, and usage-based programs. Always confirm available discounts when shopping.
Note: Read your policy carefully about coverage limits. If your expensive items exceed the limit, talk to your agent or call customer service to endorse those items.
What affects your auto insurance premium?
Not all insurers use the same risk models, but here are the most common factors that determine your rate.
Age, gender & marital status
Under 25 costs more. Women typically pay less. Married drivers get lower rates.
Driving record
Clean record = lower premium. Violations and accidents raise rates for 3–5 years.
Location (ZIP code)
Urban areas with higher accident and theft rates cost more than rural areas.
Insurance credit score
Based on credit history. Statistically, lower scores correlate with more claims.
Vehicle type & use
Higher-value cars cost more. Safety features and low mileage can earn discounts.
Coverage amount & deductible
Higher limits and lower deductibles cost more. Raising your deductible lowers your premium.
How much is auto insurance?
The national average for auto insurance is around $1,600 per year. Your premium is determined by your car, driving history, age, coverage, and in some states, your credit report. Click any state to see detailed pricing.
| State | Average Annual Premium |
|---|---|
| Alabama | $856 |
| Alaska | $930 |
| Arizona | $994 |
| Arkansas | $848 |
| California | $957 |
| Colorado | $1,050 |
| Connecticut | $1,168 |
| Delaware | $1,221 |
| District of Columbia | $1,334 |
| Florida | $1,356 |
| Georgia | $1,127 |
| Hawaii | $803 |
| Idaho | $678 |
| Illinois | $897 |
| Indiana | $744 |
| Iowa | $674 |
| Kansas | $766 |
| Kentucky | $896 |
| Louisiana | $1,443 |
| Maine | $667 |
| Maryland | $1,149 |
| Massachusetts | $1,136 |
| Michigan | $1,358 |
| Minnesota | $840 |
| Mississippi | $930 |
| Missouri | $869 |
| Montana | $784 |
| Nebraska | $766 |
| Nevada | $1,141 |
| New Hampshire | $824 |
| New Jersey | $1,350 |
| New Mexico | $870 |
| New York | $1,349 |
| North Carolina | $705 |
| North Dakota | $659 |
| Ohio | $777 |
| Oklahoma | $895 |
| Oregon | $961 |
| Pennsylvania | $961 |
| Rhode Island | $1,300 |
| South Carolina | $1,020 |
| South Dakota | $693 |
| Tennessee | $820 |
| Texas | $1,096 |
| Utah | $889 |
| Vermont | $762 |
| Virginia | $819 |
| Washington | $994 |
| West Virginia | $913 |
| Wisconsin | $731 |
| Wyoming | $742 |
What companies offer car insurance?
Most well-known insurance companies offer more than just auto insurance — GEICO, Farmers, and Liberty Mutual, for example. Newer companies like Root and Clearcover focus primarily on auto. Here's how the two options compare:
Standalone auto insurers
Root, Clearcover, etc.
- + More brands and price options
- + May partner with your dealer
Bundle with other policies
Liberty Mutual, GEICO, Farmers, etc.
- + Multi-policy discount
- + Manage all policies in one place
You can start a free quote here to compare multiple auto insurance companies side by side.
What is not covered by auto insurance?
Acts of God
Hurricanes, earthquakes, and floods may not be covered unless you have comprehensive coverage.
Personal belongings in the vehicle
Laptops, phones, and valuables stolen from your car are not covered. Use renters or homeowners insurance instead.
Driving a different vehicle
Most auto insurance follows the car, not the driver. You may not be covered when driving someone else's vehicle. Check your policy for details.
Maintenance and wear & tear
Routine maintenance, mechanical breakdowns, and normal wear are never covered by auto insurance.
Excluded drivers
Some insurers require you to exclude drivers with DUI or extensive accident history. If an excluded driver uses your car and crashes, the claim will be denied.
References
Our articles are intended for informational purposes and should not be considered legal or financial advice. Our articles are not written or reviewed by insurance agents. Consult your policies with your agent or a professional for details regarding terms, conditions, coverage, exclusions, products, services, and programs.
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