Type of cars insurance

Types of Car Insurance

The most common type of insurance that is legally required is liability insurance, which covers damages to the other party when you are at fault. However, there are numerous other types of coverage that can offer additional protection from the costs of injuries and property damage to you and your passengers. These include:

• Comprehensive coverage – Pays for property damage after an incident that is not accident-related.
• Collision coverage – Covers damage to your vehicle from a traffic collision.
• Uninsured/underinsured motorist bodily injury coverage – Helps pay your expenses when you've been hit by someone with no or insufficient insurance.
• Uninsured/underinsured motorist property damage coverage – Helps cover damages to your property if you've been hit by an uninsured or underinsured driver.
• Medical expense payments coverage – Helps you pay for your and your passengers' medical expenses, regardless of who was found at fault.

For more information on the various types of coverage available on the market, visit ourCoverages section.

How Insurance Companies Manage Risk

Like all insurance, car insurance rates are assessed based on risk. This means that the insurance provider:

• Calculates your likelihood of making a claim.
• Bases your premium on that level of risk.

Car insurance carriers have found that certain factors statistically affect your chances of getting into an accident, so they use those factors to determine your premiums. They include (but are not limited to):

• Your driving record.
  • Tickets, DUIs, accidents, etc. will make you riskier to insure.
• Your vehicle's make, model, and year.
• Your age, gender, and marital status.
• Your occupation.
• Your credit history.
  • NOTE: Not all states allow use of your credit history to determine your rates.
• Your claims history.
• How many miles you drive per month/year.

If you are a low-risk driver, you'll have an easier time finding cheap rates. If you are high-risk, you'll find that you you'll pay higher premiums, and you may even have a harder time finding an insurance provider to offer you coverage.*

It's important to remember that not all companies calculate risk the same way. Some companies may place more weight on certain factors and less on others, and it may be reversed in another company. Your best bet is to speak to multiple car insurance companies and/or compare car insurance rates online.

Discounts may also factor into your rates. Make sure when you shop around for car insurance to ask about discounts that may apply to you.

* Drivers who've been denied coverage can find it through their state's automobile insurance plan, albeit at a higher premium.