How To Get a Handle on Auto Insurance

In every state except New Hampshire, auto insurance is mandatory. But how much coverage should you get? State-required minimums may not cover the costs of a serious accident. You may want to consider higher levels of coverage so you're not left financially exposed. You can customize your coverage to suit your needs and budget.

The first thing to understand is what your state requires. You can usually find state-specific requirements on your state's Department of Motor Vehicles website, but here's a general guide to what you're likely to need:

• Most states require bodily injury liability for you and other drivers who are listed on the policy. The other common requirement is property damage liability, which reimburses others for damage that you or another driver caused to a vehicle or property such as a fence, a building or a utility pole.
• Some states require personal injury protection. It reimburses medical expenses for injuries to you or your passengers and covers lost wages and other related expenses. Uninsured motorist coverage reimburses you when an accident is caused by an uninsured motorist, as in the case of a hit-and-run. There's also underinsured motorist coverage that covers costs for a driver who lacks adequate coverage.
• Collision insurance covers damage to your car if it collides with another vehicle or object. This coverage will not reimburse you for mechanical failure or normal wear and tear, but it will cover damage resulting from plunging into deep potholes or rolling your car. But as your car ages and its value goes down, collision coverage may no longer be a good value.

Before you make your decision, here are some terms you will need to know:

• Deductible. Your insurance deductible is what you pay out of pocket before your insurance pays anything. Every claim you make is subtracted from your deductible until insurance kicks in. Your rates will be higher if you opt for a lower deductible.
• Comprehensive auto insurance. This covers theft and damage caused by an incident other than a collision: fire, flood, vandalism, hail, falling rocks or trees, meteorites and similar things.
• Glass coverage. Windshield damage is common, and some auto policies include no-deductible glass coverage for side and rear windows and moonroofs.
• Liability insurance. This covers you for accidents that are your fault. If someone else needs medical attention, this insurance covers damages.
• Gap insurance. If you lease or finance your vehicle, you'll be required to buy collision and comprehensive insurance sufficient to cover the market value of your car, not what you paid for it. If your car is totaled or stolen, there may be a gap between what you owe on the car and your insurance coverage. That's where gap insurance comes in — it pays the difference. For leased vehicles, it's usually rolled into your lease payments.

An auto policy covers you and other family members, whether you're driving your car or someone else's car. It also provides coverage for someone who is driving your car with your consent but is not on your policy.

Your personal auto policy covers personal driving — when you're commuting, running errands or vacationing — but not for using your car for commercial purposes like delivering pizzas or providing ride-sharing services. So if you do use your car for Uber or Lyft, be sure to talk to your insurance company about coverage for commercial use.
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Finally, keep in mind that numerous factors influence your potential rates. These include the type of vehicle you drive, the miles you put on your car each year, how clean your driving record is, where you live, your age, your sex, the length of your credit history and your insurance history. Marital status factors in; married people often pay a lower premium amount. The coverages and deductibles you choose are the largest factors in cost. Also, rules will vary from state to state. Get a few quotes for comparison to figure out which coverage is right for your wallet. And be sure to ask what is — and is not — in the coverage you have.