5 things to know about car insurance

Car insurance seems like a simple thing, but there are a lot of variables that can affect your rate and coverage. Sitting down with your insurance agent once a year is a great way to go through what you have, as well as what you might still need or want to adjust.

Here are some of the variables in car insurance, along with some helpful car insurance tips.

1. What insurance do I need?

All states require either insurance or a proof of financial responsibility, and in most, coverage for bodily injury and property damage liability is mandatory. That said, each state has its own car insurance requirements and coverage varies. Research your state’s requirements, think about the various car insurance components that make up your policy and understand how each works.

Bodily injury: The bodily injury portion covers a person’s physical injuries, caused when you or someone on your policy is behind the wheel. That may include medical expenses, wages and legal fees, as well.

Property damage: Property damage liability covers damage by your car to other people’s property, including their car and other physical property like a fence or house you may have hit.

Personal injury protection: Other types of coverage are sometimes optional, depending on the state. Like the bodily injury coverage, personal injury protection pays medical costs and lost wages. However, this applies in states where there’s “no fault” coverage, meaning that your injuries and those of people in your car are covered by your insurance policy, regardless of who caused the accident.

Underinsured and uninsured motorist coverage: This coverage provides insurance protection if you’re hit or injured by someone who doesn’t have adequate insurance and for hit-and-run accidents. This ensures that you are not paying out of your own pocket for costs associated with an accident that’s not your fault.

Collision coverage: One coverage to strongly consider is collision coverage, which applies to damage to your own car when you’re at fault in an accident. Your property damage policy covers the car or cars you hit, but not your own. Collision coverage provides insurance protection for your car damage as well.

Comprehensive coverage: Comprehensive insurance also protects your car, but for non-driving damage to your vehicle, like vandalism and weather events.

Your auto insurance agent can explain these types of coverages, including what’s mandatory in your state, what’s optional, their recommendation and how much each type of coverage costs.

2. What your car insurance policy covers if you’re traveling

When you’re renting a car while traveling, the car rental company always asks if you want to purchase their insurance. Many auto insurance policies, though, provide some level of coverage for you when renting. Before you go on a trip, check your auto policy or call your agent to find out what coverage you have and where it applies.

You might need to get separate auto insurance if renting a car in another country, for example, or if renting an expensive sports car versus a car similar to what you already own.

3. What do usage-based car trackers do?

Some car insurance companies offer tracking devices that monitor your driving, giving you a discount based on how safely you drive. How do these usage-based car trackers affect your premium? You get credit for safer driving techniques, such as driving fewer miles than average, not braking hard, accelerating gently and not driving during the late-night hours. Ask your insurance agent if you can participate in this type of program, which is designed to reward safe drivers with lower premiums. After all, the safer a driver is, the fewer accidents they cause.

4. Insurance discounts

Insurance companies provide multiple ways for you to save money. One savings technique is using one company for several different insurance policies, such as auto, homeowners and life insurance. Companies will give you a discount for “bundling” your policies.

Ask about other car insurance discounts, too. Some offer auto insurance discounts based on having a clean driving record (no at-fault accidents), students earning good grades in school, taking a defensive driving course at certain ages, installing anti-theft devices on your car and even using paperless billing or paying electronically.

5. Insurance tips for additional coverages

Insurance companies offer many other options that can be inexpensive for you but provide a lot of value. That might include a towing or a roadside assistance service. By getting this option, you might be able to cancel the more expensive independent roadside service you already have.

Windshield replacement is another coverage some drivers find valuable, especially if they live in areas where a lot of rocks are kicked up on the road. Rental car reimbursement is another option, which pays for rental cars while your car is being repaired after an accident.

You want to know that you’re fully covered when an accident happens with your car. By understanding how car insurance works and ensuring you have the right coverage for your needs, you’ll be protected financially in case a covered event happens.