- Most states have laws that require all drivers to carry liability coverage, which pays for property damage and injuries you cause to others if you are at fault in a motor vehicle accident. The minimum limits of liability coverage you must carry vary widely by state. If you do not carry the required liability coverage, you may be subject to fines or license suspension.
- The minimum liability limits required by your state may not be high enough to protect you financially if you cause an accident. For example, Ohio law only requires drivers to carry $12,500 per person and $25,000 per accident for bodily injury liability and $7,500 per accident for property damage liability. Injuries and property damage resulting from an accident can easily exceed these coverage amounts.
- Although most states require liability coverage, some drivers choose not to comply with state laws. Uninsured motorist coverage can help protect you against financial disaster by paying for your medical expenses and property damage if you are involved in a motor vehicle accident caused by an uninsured motorist.
- Auto insurers commonly offer medical payments coverage, which can help pay for your emergency room or hospital expenses if you are injured in an accident, regardless of who is at fault. However, this coverage is not meant to replace health insurance; instead, it is designed to help cover deductibles, co-payments and other accident-related medical expenses not covered under your health insurance policy.
- If you loan or lease your vehicle, your lender may require you to carry physical damage coverage. This coverage pays to repair or replace your car after an accident, regardless of who caused the accident. It also pays for damage caused by weather, fire, theft, vandalism and collision with an animal. If you do not carry this coverage, your lender may purchase "force-placed" physical damage from a carrier it selects and charge you. Force-placed coverage is typically more expensive than physical damage coverage you obtain on your own.
- Although the insurance industry is regulated on the state level, most states permit auto insurance companies to determine their own coverage rates. This means that two companies providing identical coverage may charge different rates. Shop around or talk to an independent agent or broker to find the coverage you need at the lowest price.
- You can save money on your car insurance premiums by taking advantage of discounts. Insurance companies may reduce your premiums if you own a home, avoid filing claims or voluntarily attend a defensive driving course. Ask your agent or broker about available discounts to help control your auto insurance costs.
- Some insurance companies may obtain your credit file as part of the underwriting process. If you have a poor credit history or have not established credit, you may pay higher rates than a driver with a long credit history and no negative credit entries.
- Your driving habits can directly affect how much you pay for car insurance. If you have speeding tickets or other moving violations on your driving record, your auto insurance company may assess a premium surcharge. Accidents you cause can also raise your rates; however, accidents for which you are not at fault typically do not affect your premiums.
- Auto insurance companies typically offer deductibles on physical damage coverage. A deductible is the amount you pay out-of-pocket for vehicle repairs or replacement before your physical damage coverage kicks in. The higher the deductible, the less you will pay for physical damage coverage. However, you should evaluate your ability to pay part of the repair or replacement costs before choosing a high deductible to lower your rates.
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