Key Takeaway
- Car insurance is legally required in 49 states and works as a contract where you pay a premium and your insurer covers certain losses, including property damage, liability and medical costs, up to your policy limits.
- What you pay depends on your coverage level, driving record, location and more, with rates varying significantly between insurers, making it worth comparing quotes to find the best price for your situation.
- Having the right coverage matters as much as having any coverage. State minimums are often too low to cover a serious accident, and gaps like uninsured motorist protection can leave you paying out of pocket when someone else is at fault.
Car insurance is a contract between you and an insurance company. You pay a monthly or semiannual premium, and in return, the insurer agrees to cover certain financial losses if you get into an accident, your car is damaged or someone is injured.
Most states require drivers to carry at least liability insurance before they can legally drive. A basic policy typically includes six types of coverage that protect you, your passengers, your car and other people on the road.
Jerry has helped 1,202,749 drivers compare car insurance quotes in the past year, making it easy to find the right coverage. Here is how car insurance works, what it costs and how to make sure you have enough.
Jerry pulls up to 20 quotes from top rated carriers.
What is car insurance?
A car insurance policy is made up of several coverage types, each protecting you in a different way. Some are required by law, others by your lender and some are optional add-ons.
According to the Insurance Information Institute, auto insurance provides three main types of protection: property coverage for damage to or theft of your car, liability coverage for your legal responsibility to others and medical coverage for treating injuries after an accident.
Most policies are issued for six months to one year. When your policy period ends, your insurer will send you a renewal notice so you can continue coverage or shop for a new policy.
Key takeaway: Car insurance is a contract where you pay a premium and your insurer covers certain losses. It includes property, liability and medical protections.
Do you need car insurance?
Every state except New Hampshire requires some form of car insurance before you can legally drive. According to the NAIC, if you drive without insurance, you could face fines, license suspension or even have your car impounded.
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You live in one of the 49 states that require liability insurance (New Hampshire doesn’t require it.)
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You own or lease a car and drive it on public roads.
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You have a car loan or lease, since your lender requires it.
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You have assets like a home or savings that could be at risk in a lawsuit.
Key takeaway: Car insurance is legally required in every state except New Hampshire. Even where it is not, driving without it could leave you personally responsible for costly damages.
What does car insurance cost?
The cost of car insurance varies widely based on your coverage levels, driving history, location, age, credit score and the type of car you drive. Rates can differ by hundreds of dollars between insurers for the exact same coverage.
Here is a general look at what drivers pay based on coverage level:
Your actual rate depends on where you live, your driving record and what you drive. That is why comparing quotes from multiple insurers is one of the most effective ways to find a competitive rate.
Key takeaway: Car insurance costs depend on your coverage, location, driving history and more. Comparing quotes from multiple insurers can save you hundreds.
How to get car insurance with Jerry
Getting car insurance does not have to mean calling ten different companies or spending hours filling out forms. Jerry makes it easy to compare quotes from over 100 insurers in one place and buy your policy entirely online.
Jerry also keeps track of market rates and lets you know when it is time to reshop, so you are always getting a competitive price.
Plus, Jerry’s licensed agents are available seven days a week if you need help choosing between types of car insurance or figuring out how much car insurance you need.
How car insurance coverage works
A car insurance policy is made up of several types of coverage, each of which protects you in a different way. Some are required by law, others are required by your lender and some are optional. Here is what each one does.
Liability insurance
Liability insurance pays for damage you cause to others in an accident. It has two parts: bodily injury liability, which covers other people’s medical bills and lost wages, and property damage liability, which covers repairs to other people’s cars or property.
Nearly every state requires liability car insurance. Limits are written in a format like 25/50/25, which means $25,000 per person for injuries, $50,000 per accident for injuries and $25,000 for property damage. Jerry recommends drivers consider limits of at least 100/300/100, since state minimums often fall short of covering a serious accident.
Why it matters: If your liability limits are not high enough, you are personally responsible for any costs above those limits.
Collision and comprehensive coverage
Collision insurance pays to repair your car after hitting another vehicle or object, regardless of who is at fault. Comprehensive insurance pays for damage from events other than collisions, like theft, vandalism, weather, animal strikes and falling objects.
Together, these make up what is commonly called full coverage car insurance. Both come with a deductible, which is the amount you pay out of pocket before your insurance kicks in. Common deductibles are $250, $500 or $1,000. The higher your deductible, the lower your premium.
Key takeaway: Full coverage combines liability with collision and comprehensive. It is required for financed cars and recommended for any car worth over $5,000.
Uninsured motorist coverage
Uninsured motorist coverage pays for your injuries and property damage if you are hit by a driver who has no insurance or not enough insurance to cover the damage they caused.
According to the Insurance Research Council, more than one in seven drivers nationwide were uninsured in 2023. That means every time you get behind the wheel, there is a real chance the other driver on the road will not have insurance to pay for your damages if they cause a crash.
Why it matters: Even if your state does not require uninsured motorist coverage, it’s worth adding to your policy so you’re covered if you’re hit by a driver without insurance. Consider matching it to your liability limits.
How the claims process works
If you are in an accident, here’s what you should do:
🚗 Stay safe. Move your car out of traffic if possible. Call 911 if anyone is hurt.
📸 Document everything. Take photos of the damage, get the other driver’s insurance info and note the time, date and location.
📋 File a claim. Contact your insurance company as soon as possible to report the accident. Your insurer will assign an adjuster to review the damage.
🔍 Get an estimate. The adjuster will assess the cost to repair or replace your car. You will pay your deductible, and your insurer covers the rest up to your policy limits.
🔧 Get repaired. Once the claim is approved, you can take your car to a repair shop. Some insurers let you choose your own shop, while others have a preferred network.
The NAIC advises keeping your policy and your insurer’s contact information easily accessible, so you can file a claim quickly when you need to.
Key takeaway: After an accident, document everything and file a claim with your insurer right away. The adjuster handles the rest.
What affects your car insurance rate
Insurance companies look at a range of factors when calculating your car insurance rate. Some of these you can control, and some you cannot. Here are the biggest ones:
You may also qualify for car insurance discounts for things like bundling home and car insurance, having a clean driving record, being a good student or paying your premium in full.
Key takeaway: Your rate is shaped by your driving record, age, location, credit, car and coverage choices. Comparing quotes is the easiest way to find savings.
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FAQ
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Is car insurance required by law?
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What is the difference between liability and full coverage?
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What happens if someone without insurance hits me?
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How often should I shop for car insurance?
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What is a deductible and how does it work?
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Can I get car insurance the same day?
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Does my credit score affect my car insurance rate?
Methodology
Data included in this analysis comes from policies that Jerry has quoted within the last 6 months for drivers with a clean record and that have full coverage, unless stated otherwise. Data related to violations, accidents or credit scores pull from quote data from the last 18 months. Jerry services 48 states and offers a range of insurance companies to choose from. Read Jerry’s car insurance data methodology to learn more about how we collect, verify and share real-world insurance data.
Ben Moore is a writer and editor at Jerry and an auto insurance expert. He previously worked as a writer, editor and content strategist on NerdWallet’s auto insurance team for five years. His work has been published in The Associated Press, Washington Post, Chicago Sun-Times, MarketWatch, Nasdaq and Yahoo News. He also served as a NerdWallet spokesperson, with appearances on local broadcast television and quotes in Martha Stewart and Real Simple magazine.
Ben has an extensive background in digital marketing, working on affiliate and programmatic advertising campaigns for brands like Cabela’s, H&R Block and Sears. He holds a bachelors degree in marketing from Olivet Nazarene University.
