Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 27, 2020

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Things to Remember...


When you are buying car insurance, it can be challenging to understand what you are really evaluating when you compare premium policy prices.

Auto insurance is one of the most important financial purchases you make since it provides you with protection from potential lawsuits if you are involved in an accident.

To find great protection at affordable prices, enter your ZIP code into our FREE car insurance comparison tool!

A good understanding of the basics of auto insurance concepts and knowing how to shop for car insurance can help you accurately compare auto insurance premium prices.

What is auto insurance?

Auto insurance began as an industry in the early 1900s. As the car industry grew, the potential for accidents that resulted in injuries and property damage also increased.

Auto insurance was developed with the intention of providing financial protection with general damage payments from auto insurance companies when an accident happens.

Car insurance pays for repairs to your car and other property if you have an accident. Additionally, it also pays for injuries that are the result of an auto accident.

Minimum levels of auto insurance coverage are required in most states. If you are involved in an accident and are responsible for the accident, it is important that you have enough insurance to pay for the expenses resulting from that accident.

If you do not have insurance or enough insurance coverage, you will probably be sued for damages, putting any assets you own, such as a home or business, at risk.

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Liability Insurance

Liability auto insurance is mandatory insurance in 47 states. It pays for damages and injuries to another person if you cause an accident.

It does not pay for damages to your car or for injuries sustained by you or your passengers.

Minimum legal levels of liability insurance are very low and often do not cover the entire amount of damage costs adequately. It is advised that you purchase additional liability insurance if you can afford it.

Collision Insurance

Collision insurance is not legally mandatory. However, if your car is leased or financed, your lender will require you to purchase collision insurance.

Collision auto insurance pays for damages to your car if it is involved in a crash. Examples of damages covered include collisions with buildings, fences, guard rails and other vehicles.

Collision insurance pays for damages to your car, regardless of who is driving your car.

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Comprehensive Insurance

Comprehensive auto insurance is not legally required. If your car is leased or financed, your lender will require you to carry comprehensive insurance.

Comprehensive coverage pays for damages to your car that are the result of events other than collisions.

For example, if your car is damaged due to a hail storm, tornado or hurricane, it will be covered under comprehensive.

Comprehensive also covers damages due to hitting animals, vandalism and if your car is stolen.

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Personal Injury Protection

Personal injury protection insurance is mandatory in 14 states and is auto insurance coverage in addition to liability insurance.

It is also commonly referred to as “medical expense” insurance, PIP and “no fault” auto coverage.

PIP pays for medical expenses regardless of who is at fault for an accident. It pays for hospital bills, doctor visits, and rehabilitation services. Additionally, it pays for lost wages and legal costs.

Uninsured/Underinsured Motorist

Uninsured and underinsured motorist insurance pays for damages and injuries if the other person involved in the accident either does not have insurance or has inadequate insurance.

Your insurance company will pay for the damages and take legal action to collect their losses from the other driver.

Gap Insurance

Gap insurance pays for the difference between your car loan or lease amount due and the loss amount if your car is declared a total loss.

If your car is declared a total loss, you will only be paid for the depreciated value of the car at the time of the accident.

However, you will be held responsible for the total amount financed by your lender. Gap insurance protects you financially by paying the difference between your car loan/lease and the value of the car.

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Comparing Auto Insurance Prices

When you are buying car insurance, it is important that you compare prices from several different companies before you make a purchasing decision.

When you compare prices, you should compare the same type of coverage, the same level of coverage and the same deductible levels for an accurate measure between companies.

You can request free auto insurance quotes from a number of sources. Insurance comparison websites allow you to receive multiple premium rate quotes from insurance companies and brokers within a short period of time.

Our FREE car insurance tool can give you rate quotes when you enter your ZIP code.

You can also receive car insurance rate quotes from independent insurance brokers, who usually represent multiple insurance companies and can provide you with several quotes for comparison.

You can also request coverage rate quotes from insurance company websites.

When comparing coverage rate quotes, keep in mind that insurance companies often offer discounts, allowing you to lower your rates.

Additionally, member benefits aside from actual coverage may include services such as roadside assistance, towing, car rental assistance and travel concierge services.

Enter your ZIP code into our FREE car insurance comparison tool to find rate quotes to compare now!