Auto Insurance: Everything You Need to Know
What is Auto Insurance?
Auto insurance is designed to protect what is, most likely, one of the most expensive belongings you have — your car! Whether you lease or own, auto insurance is designed to protect you in the case of an accident or theft. In the US, nearly every state requires you to have an auto insurance policy to drive a car. The only outliers are New Hampshire and Virginia. However, even if you plan to live in one of these states, beware: you will still be financially liable if you cause an accident and harm another car, person, or property. This could mean hundreds of thousands of dollars out of your pocket. It’s a much better idea to insure yourself.
What Does Auto Insurance Cover?
Auto insurance can cover a variety of events depending on the type of policy. Here are the most common types of coverage for auto insurance policies:
- Liability coverage is considered ‘minimum’ coverage and is the type required by nearly every state in the US. Liability insurance will cover damages done to another vehicle, person, or property when it has been determined that you caused an accident. It will also cover you in the event of lawsuits arising from an accident.
- Collision coverage will protect your own car in the case of a collision with another car, a tree, a parking garage wall, etc.
- Comprehensive coverage will cover damage done to your car through no fault of your own — it’s stolen, a rock cracks your windshield, kids from the neighborhood spray paint it, etc.
- Personal Injury Protection will pay for your own medical expenses that arise from a collision regardless of whether you caused it.
- Uninsured/Underinsured Motorist Bodily Injury (UIM) and Property Damage (UMPD). These types of insurance will protect you and your car if an uninsured driver hits you. However, if you already have collision and comprehensive coverage, there is no need for this type of coverage unless required by state law.
Many companies will bundle these policies together for you, so decide which types you would like before you begin shopping around.
How Does Auto Insurance Work?
If a qualifying event happens during your coverage period, you may make a claim to your insurance company to be compensated for the event. It’s important to note that nearly all policies have a “deductible” — the amount you must pay in order to access your policy benefits. For example, if you run into a tree and the repairs will cost $800, and your deductible is $500, your insurance will only send you $300.
After you have started a claim, the insurance will determine how much compensation you are entitled to, depending on your policy. If the claim surrounds a collision with another driver, the company will open an investigation into the accident to determine who was at fault. This process can take some time, especially if there is a dispute over who caused an accident, you or the other driver.
What Determines the Cost of My Policy?
The cost of your policy will be partially determined by the type and amount of coverage as well as your deductible — the lower the deductible, the higher your premium. The rest is determined by calculating how much of a risk the insurer thinks you may pose, including
- Age - very young and very old drivers will be more expensive to insure
- Driving record - if you have accidents or speeding tickets, the cost will be higher. However, as you are new to the country, you likely won’t have any driving record at all, which can also cause your rate to be higher. To begin building your driving record, start the process of getting a US driver’s license as soon as possible.
- Usage - the more you drive, the higher the risk is you will eventually be involved in an accident
- Location - high traffic and high crime areas will hike up your premium
- Type of vehicle - sporty bright-red performance cars will be more expensive to insure than a station wagon.
Each company will differ in how they weigh each of these factors, though, so it’s important to shop around before deciding on a policy!
How To Get Auto Insurance
It’s important that you find the right policy for you. Think about the types of coverage you want as well as the deductible and premium you can afford. Then, be sure to compare several companies before you select a policy. While there are many to choose from, the most popular auto insurance providers in the US are Geico, Allstate, and Progressive.
The easiest way to get auto insurance quotes is online. Many companies have a tool on their website that will get you a quote in minutes. Of course, you can work with an insurance broker who can help compare the policies for you, but they will charge you a commission. After you and your provider agree on the details of coverage, deductible, and premium, you’ll need to submit an application. To do so, you will usually need:
- A driver’s license (US or International Driver’s Permit + license from your home country)
- Your Social Security Number
- Information about your car: make, model, and year, the vehicle identification number (VIN), what safety and anti-theft features it has, and an estimate of how many miles you plan to drive it each year
- Information about any additional drivers you would like to be covered by your policy (children, spouse, etc.)
- Bank information to set up automatic payments
After your application is approved, you will need to sign, pay, and wait for your documentation to arrive. Once you are insured, you are free to get on the road!