Auto Insurance 101: What You Need to Know to Stay Protected on the Road

Read Time:6 Minute, 25 Second

Auto insurance is a topic that’s often misunderstood. You may think you understand auto insurance, but the truth is that you probably don’t. A lot of people think they’re covered when they’re not, and many others get the bare minimum—which isn’t adequate at all. If you want to stay protected on the road (and in your wallet), then make sure to educate yourself about this important subject!

Table of Contents

What is auto insurance?

Auto insurance is a type of insurance that covers you in the event of an accident. Auto insurance policies are issued by companies, which are responsible for paying the costs associated with your injuries and damage to vehicles involved in accidents.

Auto insurance policies vary depending on several factors, including:

The type of vehicle being insured (some coverage is mandatory while other types are optional)
The age and gender of the driver(s) named on the policy
Where you live (state laws vary widely)

Liability coverage, collision coverage, and comprehensive coverage

Liability coverage: If you cause an accident that injures another person, liability insurance will cover the other driver’s medical expenses and any property damage.

Collision coverage: This is what pays for repairs to your car after an accident. It also covers theft or damage from natural disasters like floods and earthquakes.

Comprehensive coverage: This protects against damage caused by things other than collisions, like fire or weather events (like hail storms).

How much auto insurance do I need?

The amount of coverage you need depends on what kind of car you drive, how old and/or experienced a driver you are and where you live. If you’re a new driver with little experience behind the wheel and an older model vehicle, for example, it’s likely that your insurance company will recommend a higher level of protection than someone who has been driving for years in an expensive sports car (and has had no accidents or tickets). You can get an idea of how much auto insurance coverage would cost by getting quotes from several different providers.

Are there different types of auto insurance?

There are three main types of auto insurance policies: liability coverage, collision coverage, and comprehensive coverage.

Liability insurance covers injuries to other people and property damage caused by you or your car. It’s mandatory in most states; if you get into an accident without it, the other driver can sue you for damages (and win).
Collision coverage pays for damage to your car when it’s hit by someone else or something else (like a deer). Some people choose not to buy collision coverage–especially if their car is old enough or expensive enough that they have high deductibles–but it’s usually cheaper than paying out-of-pocket for repairs after an accident.
Comprehensive coverage covers any other damage done to your vehicle–including theft and vandalism–that isn’t covered under collision or liability policies

What’s the difference between collision and comprehensive coverage?

When you purchase car insurance, it’s important to understand the difference between collision and comprehensive coverage. Collision coverage pays for damages to your vehicle if you’re involved in an accident with another vehicle or object. Comprehensive coverage covers damage from other things like storms, vandalism and theft that aren’t related to an accident. While both types of policies are optional in most states (including California), some require drivers to have at least some type of collision coverage on their cars before they can register them with their local DMV offices.

Regardless of whether you opt for one or both types of auto insurance policy, it’s important to remember that there are limits on what each one will cover–and those limits may vary depending upon the company issuing your policy. For example:

With respect to collision policies: Some insurers offer deductibles ranging anywhere from $250-$1000; while others offer no deductible at all! In addition, some companies will provide rental car reimbursement while others don’t offer this benefit at all (but might still provide free roadside assistance).

Should I get full coverage insurance or liability-only?

Full coverage insurance means you’re fully protected in the event of an accident. This includes damage to your car, injuries and property damage. The other type of auto insurance is liability only, which covers you for injuries and property damage but not for damage to your car or other vehicles involved in an accident. If you have full coverage then it will pay for all damages caused by an accident regardless if it was your fault or not (and this can be very helpful).

Do I need auto insurance in the EU?

Yes, you need auto insurance in the EU. As with most things in Europe, there are a few different rules and regulations depending on where you’re from and where you’re driving. In general:

Some countries require you to have a minimum amount of coverage. This varies by country but is generally around $30,000 USD (or about 26,000 euros). The exact amount required by law depends on your vehicle’s age and value; if it’s high enough that it might be worth more than that without any problems–for example, if it’s one of those new Teslas–then they might require more coverage than normal just so they don’t get stuck paying out too much money if something happens while they were driving abroad. You can get coverage from your own country or another EU country. You can buy coverage online or at an agency.

What happens if I don’t have enough coverage and cause an accident?

If you cause an accident and don’t have enough coverage, the consequences can be severe. If you’re at fault in a crash and don’t have enough insurance to pay for your damages, you will be responsible for them. This means that if someone else’s car is damaged or destroyed in the accident and they sue you for compensation, then even if they win their case against you (which is likely), they won’t get anything from your insurance company unless their claim exceeds what was covered under your policy.

You could also lose driving privileges: if one state finds out about another state’s suspension of driving privileges due to lack of insurance coverage, then it may ban anyone from driving within its borders who has been suspended from doing so elsewhere–even if there was no criminal conviction involved! This means that even though no crime has been committed here either by person A or by person B,.

Make sure you have a policy that covers your needs.

Before you get behind the wheel, make sure that you have the right coverage. While it’s important not to skimp on insurance and get as much protection as possible, it’s also important not to overdo it either.

Make sure that your policy has enough liability coverage in case of an accident where someone else is hurt or property is damaged. If they sue you for more than what’s stated in your policy, then they can take whatever money is left after those expenses are paid off from their settlement with their own attorneys’ fees deducted first–and then go after any other assets including any other policies (such as homeowners or life) that might be available through family members who live with them; this could include parents’ homes if they’re still living there at age 65+.

Conclusion

While auto insurance is a necessity for drivers, it can be confusing to figure out what type of coverage is right for you. If you’re not sure what kind of policy would work best or whether or not it’s necessary in your state, talk with an agent who can help guide you through the process.