Auto Insurance
Auto insurance is legally required in 49 states (only New Hampshire exempts, but you must prove financial responsibility). It protects you from financial devastation in accidents. Average full-coverage cost: ~$2,543/year (2024).
Liability Coverage (Required)
Pays for injuries and property damage you cause to others. Every state except NH requires minimum liability coverage. Expressed as three numbers (e.g., 100/300/100): $100K per person bodily injury / $300K per accident bodily injury / $100K property damage. State minimums are dangerously low — a sing
Collision Coverage
Pays to repair or replace your vehicle after an accident, regardless of fault. Required by lenders if you have a car loan or lease. Deductible typically $500-$1,000. Higher deductibles lower premiums by 15-25%. Consider dropping collision on vehicles worth less than $5,000 — the premium may exceed p
Comprehensive Coverage
Covers non-collision damage: theft, vandalism, weather (hail, flood, falling trees), fire, animal strikes, and falling objects. Typically the cheapest of the three main coverages. Same deductible structure as collision. Required by lenders on financed/leased vehicles. Worth keeping even on paid-off
Uninsured/Underinsured Motorist (UM/UIM)
Protects you when the at-fault driver has no insurance or insufficient coverage. About 14% of US drivers are uninsured. UM covers accidents with uninsured drivers. UIM covers the gap when the at-fault driver's limits aren't enough to cover your damages. Required in some states. Even where optional,
Gap Insurance
Pays the difference between your car's actual cash value (what insurance pays when totaled) and what you still owe on your loan/lease. New cars depreciate 20-30% in the first year. If you owe $25,000 but your car is worth $18,000 when totaled, gap insurance covers the $7,000 difference. Typically $2
Usage-Based / Telematics
Programs that adjust your premium based on actual driving behavior. A phone app or plug-in device tracks speed, braking, mileage, and time of day. Progressive Snapshot, Allstate Drivewise, Root, and State Farm Drive Safe & Save are popular options. Good drivers can save 10-30%. But if you brake hard
Cost Factors
Understanding what drives your premium helps you find savings.