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What are a driver’s auto insurance coverage options?

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Things to Remember...
  • Auto insurance policies have similar components regardless of the insurer
  • Some coverage types are required while others are optional; make sure you know what you need
  • Comparison shopping is the best way to find coverage at affordable premium rates

Drivers know that auto insurance coverage is required to comply with requirements of the law and some lenders.

Major auto insurance companies offer many coverage options that are designed to mitigate the risk of loss for drivers and property owners.

Auto insurance coverage limits should be set to prevent financial hardship following an accident or other significant loss.

Enter your ZIP code into our FREE auto insurance comparison tool to find the right coverage for you.

Policy Components

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Costs associated with repairs and vehicle replacement will dictate the need for each of the following components:

  • Liability – All 50 states require drivers to carry minimum levels of liability insurance to cover injuries and property damage sustained by other people. Older vehicles might not be worth the cost of the optional policy components, but liability insurance must be carried on all vehicles
  • Bodily injury – Passengers and drivers in other vehicles are covered under the bodily injury liability component of the auto insurance policy. Health care costs can add up quickly, so dollar limits should be set appropriately
  • Property damage – Other vehicles and stationary objects damaged by impact from the insured vehicle will be repaired or replaced using funds from this coverage component
  • Comprehensive – Damage to the insured vehicle that is not related to an actual collision, such as falling objects, theft or vandalism, will be paid for under the comprehensive component. Expensive vehicles should be covered by comprehensive insurance to prevent financial hardship
  • Collision – Vehicle damage caused by a collision with another vehicle or a stationary object will be covered under the collision component. While this coverage is optional, any vehicle that is worth more than the policy deductible should be covered by collision insurance
  • Uninsured/underinsured motorist – Major insurance providers add the uninsured/underinsured motorist component to standard auto insurance policies. Make sure you do not buy from one of the substandard auto insurance companies
  • Personal injury protection – Injuries sustained by the primary policyholder, or the driver of the insured vehicle, are covered under this component. Whenever health insurance coverage is not available through another avenue, this component is recommended

Optional Coverage Choices

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Major auto insurance companies offer some variations on the adequate auto insurance coverage that meet the needs of certain drivers.

Questions must be asked to determine if the preferred insurer offers these options:

  • Roadside assistance – Towing and other convenient help services can be secured by adding this option to the standard car insurance policy. Major insurers assign different prices to this offering, so specific questions must be asked at the time the policy is being underwritten
  • Seasonal insurance – Snowbirds, also known as people with a summer home and a winter home, might have vehicles that are driven for a portion of the year. Some insurance companies provide insurance for vehicles that are driven during certain seasons, such as ice cream trucks or snowplows
  • Limited use – Cars that are driven less than 2,500 to 5,000 miles per year might qualify for this less expensive coverage type. Each insurance company has a different maximum mileage limit that must be observed to prevent cancellation of the coverage

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Coverage Limits

Setting coverage limits at the minimum is not a wise way to lower the cost of automobile insurance.

Enough auto insurance coverage must be maintained to prevent financial hardship following an event.

Even if the policyholder has sufficient means to pay expenses out of pocket, there are external entities that will impose coverage requirements on all drivers.

  • State requirement – Each state requires all drivers to carry the legal minimum limits of liability insurance coverage. Insurance companies are required to comply with these minimum levels whenever they underwrite auto insurance policies in each state
  • Lender requirement – Drivers with outstanding car loans on the insured vehicle might encounter a minimal insurance requirement from the lender. Insurance companies might not be aware of this requirement, so the driver must do appropriate research with the car loan lender prior to contacting the insurance company
  • Umbrella liability – Drivers that own homes might acquire an umbrella liability insurance coverage to raise the dollar amount of liability coverage at lower premium rates. Adjustments to liability coverage must be made with sufficient information to prevent hardship

Specialty Coverage

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Standard auto insurance policies are grouped into classes for different vehicles to allow each insurance provider to calculate the probability that claims will be made within that group.

Certain types of vehicles will not be accepted into those standard classes. Specialty insurance companies underwrite policies to cover certain types of vehicles.

It is still possible to find cheap auto insurance for these vehicles:

  • Collector or Classic – Vehicles that were manufactured before a certain model year will fall into the collector class. Classic cars fall into a loose definition which states, “any car that has a market value among collectors.” Both of these unique classes are underwritten by specialty insurance companies
  • Custom – Standard vehicles with highly specialized equipment and features will fall into this specialty class of vehicles. Cars that are customized entirely also fall into this class. Specialty insurance companies offer insurance coverage for this group
  • Recreational – Many different types of vehicles make up the recreational class of vehicles, including boats, motor homes, golf carts, trailers, and ATVs. A major insurance company might offer coverage for these vehicles, but the underwriting class will be separate from the standard vehicle classes

Final Word

Auto insurance options continue to evolve as market demands present new ideas and needs to the insurance companies. Drivers will find the best insurance coverage by following a carefully-devised approach to the comparison process.

Drivers will find the best insurance coverage by following a carefully-devised approach to the comparison process.

Quotes must contain similar coverage amounts and components to provide a clear picture of the costs associated with sufficient car insurance.

After appropriate coverage limits are selected, the policyholder will save money on annual premiums by asking for every possible discount from the insurance company of choice.

Use our FREE auto insurance comparison tool now by entering your ZIP code.

FREE Auto Insurance Comparison

Compare quotes from the top auto insurance companies and save!

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