The Beginner's Guide to Auto Insurance


Basic Terms


Policy — The combination of all of the terms of your insurance agreement.

Coverage — The circumstances under which the auto insurance company will pay you money when you file a claim. This includes: 1) coverage types — the scenarios under which insurance protects you; and 2) coverage amounts — the limits set on how much insurance payout you can claim.

Premium — The price you pay each billing period (usually annually, biannually, or even monthly) to keep your auto insurance active.

Deductible — The price you pay out of pocket for a claim. Once you pay the deductible, insurance will cover the remainder of the claim (up to the coverage limit).

Insurance Types (The more stars, the more important the coverage)


State requirements — Every state in the United States has its own laws regarding auto insurance. Some restrict the types of insurance themselves and all — New Hampshire aside — have minimum requirements for coverage.

Minimum coverage is listed in shorthand: 25/30/20. The first number is the amount of coverage per person in an accident. The second is the total amount for injuries covered in one accident. The third number is the maximum coverage for damaged property in the accident.

No-fault insurance — Some states require that drivers be responsible for their own party's injuries and damage.

Most people need more auto insurance coverage than the minimum or no-fault auto insurance.

Personal Injury Protection (PIP) — For your medical considerations with no-fault insurance. *****

Bodily Injury Liability — Covers you if you cause a collision that injures someone. ****

Collision — Pays for repairs or replacement of your vehicle when you cause a collision. ***

Comprehensive — Covers non-collision vehicle damage or theft. Includes most natural disasters. **

Medical — Pays for the medical expenses for you and your passengers, whether you are at fault or not. *****

Uninsured/Underinsured Motorist — Protection for you against people who illegally drive without auto insurance. ***

Saving Money


Discounts — You can get a discount for these things and more:

  • Defensive driving courses
  • Low annual mileage
  • Extra safety and/or anti-theft features
  • Covered parking
  • Good grades (for students)

Deductible — The higher you set your deductible, the lower your premiums will be. Make sure you have the money for the deductible.

Credit — Your credit score is a big part of your premium, so improve your credit and save money.

Auto Insurance Quotes — Use our online auto insurance quotes to compare prices and policies. You'll save tons of money in minutes.