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Like other insurance types, car insurance is a must-have. It protects your most second biggest asset behind your house – your vehicle. In fact, you’re legally obligated to have car insurance in all but two states. If you drive without insurance, you could face fines, or even worse: lose your license. Since car insurance can be a bit confusing at times, we compiled some of the most frequently asked questions for you.

The Different Types of Car Insurance Available

From collision coverage to umbrella policies, there are many different types of car insurance policies available. Some of these are required, and others are extras that can protect you from experiencing financial hardship. These first set of questions will look at why you need car insurance and what types of car insurance.

I Need Car Insurance

Why do you need car insurance?

You need car insurance to protect you from any liability you may cause while on the road. This protects both you and other drivers. Without car insurance, you would have to pay for the costs of any property damaged or injury caused because of an accident. Since most people do not have these funds readily available, that’s where car insurance comes into play.

What level of auto insurance do I need?

Most people recommend that you have at least $500,000 worth of coverage that includes both liability coverage and bodily injury liability. You will notice that state minimums are way below this – often ranging from $25,000 to $50,000. The amount of coverage you pick should depend on your overall comfort level, the value of your vehicle, and the requirements in your state.

What are the states where you don't need car insurance?

Only two states in the United States do not require car insurance – Virginia and New Hampshire. Even if you don’t have insurance in these two states, you will still be liable for any damages caused in an accident. In fact, if you live in Virginia, you must pay $500 each year as a “penalty” for being uninsured.

Do you need gap insurance when buying a used car?

No, you do not need gap insurance when buying a used car. This type of coverage is optional and pays for the difference between the remaining amount on the car’s loan and the value of the car if it were to be stolen or totaled in an accident. If the difference between the loan and car value is significant, then gap insurance might be a good idea.

If I own my car what insurance do I need?

If you own your own car, you need the required coverage in your state and the minimum amounts. If you own your car and you are not financing it, you have a little but more flexibility when it comes to car insurance. You can choose an umbrella policy and get extra coverage, or just get a basic bodily injury and property liability policy.

When do you need commercial auto insurance?

You need commercial auto insurance when you use your vehicle to transport goods or people in exchange for a fee. Simply put, you need commercial auto insurance when you use your vehicle to conduct business. The main difference between commercial auto insurance and personal auto insurance is that commercial auto insurance has higher coverage limits.

When you buy a car from a dealer do you need insurance?

Yes, you do need car insurance when you buy a car from a dealer – new or used. Some car dealerships will offer to sell you immediate car insurance when you buy your vehicle, but it’s always a good idea to look at outside companies and compare quotes on your own so you can get the best rate.

What car insurance options do a I need?

You need the minimum required by your state, financing company, or lessor. The car insurance options required by your financing company or lessor should meet the minimum requirements mandated by the state, if you abide by their requirements, you should have adequate coverage. Now, if you own a very expensive vehicle, it may be worthwhile to get higher volumes of coverage.

What is car insurance legal cover, do I need it?

Car insurance legal cover is an add-on that you can pair with your car insurance policy. This addition will pay for legal expenses that arise from car accidents. For example, if you get sued because you caused bodily injury to someone, car insurance legal cover could pay for the attorney fees.

What you need to know to save on car insurance?

To save on car insurance, you need to know what factors affect the price of car insurance premiums. Some of the most influencing factors include the type of car you drive, where you live, and your driving history. Knowing these factors can help you make decisions that will in turn lower your car insurance premiums in the future.

What do you need to have full coverage auto insurance?

Full coverage auto insurance might be required if you’re financing or leasing a car. While it isn’t required by states, it does give you extra protection. Full coverage auto insurance includes bodily injury liability, property damage liability, personal injury protection, uninsured/underinsured motorist, and medical payments coverage.

I Need Car Insurance

The Minimum Car Insurance Requirements

Every state (expect for two) requires you to have a minimum amount of car insurance. It’s crucial that you meet these requirements, not only to keep yourself protected, but also avoid fines. Almost every major insurance carrier can help you meet the minimum requirements, however, it’s a good idea to know them before you buy an insurance policy.

How much car insurance do I need?

The amount of car insurance you need depends on which state you live in, and most states only require you to have liability insurance. For example, the state of Iowa mandates minimum coverage of $20,000 for bodily injury of one person, $40,000 for bodily injury of two persons, and $15,000 due to injury or destruction of property caused in an accident.

What kind of car insurance do I need?

The most common types of car insurance include liability, comprehensive, personal injury, and underinsured and uninsured coverage. Your exact coverage needs are determined by state law. Some of these coverage types can be optional in one state but mandatory in another. You can find out exactly what type of coverage you need with your state’s Insurance Division.

How much property damage car insurance do I need?

Practically every state requires you to have property damage car insurance (often referred to as “property damage liability coverage”). Like other forms of car insurance, the amount of coverage depends on where you live. For example, Nevada requires drivers to have $50,000 worth of coverage while Minnesota only requires $10,000. Keep in mind, these are just the minimums – you can always opt for more coverage if you want to be extra-protected.

How much liability insurance do I need for my car?

Each state sets its own minimum liability insurance coverage level. Keep in mind, there are three main types of liability coverage: bodily injury liability coverage per person, bodily injury liability coverage per accident, and property damage liability coverage. Typically states require minimum coverage amounts of $25,000, $50,000, and $25,000, respectively.

If my car is paid off what kind of insurance do I need?

Even if your car is paid off, you will still need to meet the car insurance requirements mandated by your state. This includes, but is not limited to, coverage per person for bodily injury, per accident for bodily injury, and per accident per for property damage. There is one caveat, however, if your car is paid off, you may not need collision insurance.

How much car insurance coverage do I need?

Since driving conditions and regulations differ across the United States, each state is responsible for setting the minimum amount of car insurance coverage needed. All major car insurance companies should be able to offer you a policy that meets your state’s minimum requirements. After meeting your state’s minimum requirements, you can always add additional coverage if you wish.

What car insurance coverage do I need?

Most states require that you have both bodily injury liability and property damage liability coverage. Some states, such as Illinois, require that you have uninsured/underinsured motorist coverage. A handful of states also require you to have medical payments coverage. You should visit your state’s Department of Insurance website to find out the exact coverage requirements in your state.

What is the minimum car insurance you need?

At minimum you will need bodily injury liability and property damage liability coverage. Most states require coverage amounts of $25,000 of bodily injury liability per person, $50,000 of bodily injury liability per accident, and $25,000 of property damage liability per accident. Some states, such as Pennsylvania, require coverage up to $5,000 in medical benefits.

How much car insurance do I need in Texas?

According to the Texas Department of Insurance , you need 30/60/25 liability coverage: $30,000 for injuries per person, a total of $60,000 per accident, and $25,000 worth of coverage for property damage. Texas law requires that all drivers show proof that they can pay for any accidents that they are liable for.

When you buy a used car do you need insurance?

Yes, you need car insurance when you buy a used car. Even if you buy a $1,000 20-year old sedan, you can still cause damage to other vehicles on the road. The only way you wouldn’t need insurance is if you lived in one of the two states that do not require it – Virginia and New Hampshire. Even in these states, you would still be liable for any damages you cause on the road.

How much car insurance do I need according to Dave Ramsey?

According to Dave Ramsey, you should have at least $500,000 worth of coverage that includes both property damage liability and bodily injury liability. Dave Ramsey also suggests you purchase collision coverage – coverage that covers the costs of damages when you are at fault in an accident with another car on the road or an object.

Car Insurance When You’re Renting a Car

When you’re driving a car that you don’t own, there’s always a lingering fear of getting into an accident. If you have auto insurance and rent a car in the United States, your policy should cover your rental car. There are, however, some exceptions. Some car rental companies try to sell you extra insurance, but that isn’t necessary in most cases.

What rental car insurance do I need?

If you drive a rental car, your personal auto insurance policy should continue to cover you. For this reason, you do not need to purchase any additional insurance that is marketed by car rental companies. There is one exception – if you’re driving internationally, your personal auto insurance may not extend to the rental car (depending on the country). In this case, you may need to purchase auto insurance through the car rental company or another party.

What insurance do I need to rent a car?

To rent a car, you need to show proof that you have personal auto insurance. Car rental companies usually offer to sell you additional insurance, but most standard personal auto insurance companies will extend coverage to a rental car. Travelers out of the country should consider buying insurance from the rental car company, which should meet the minimum standards mandated by the country.

Do I need extra insurance when renting a car?

No – if you rent a vehicle of similar value, you should not need extra insurance. However, you can always contact your insurance company to confirm beforehand. If you rent a vehicle worth more than your personal vehicle – such as a Ferrari – you will need to purchase extra insurance to cover the vehicle.

Do you need liability insurance when renting a car?

Yes, you do need liability insurance when renting a car. The liability coverage will protect you if you get into an accident and cause property damage or bodily injury. If you already own a vehicle and have car insurance, your policy should cover the rental car. If you don’t own a car, you should get insurance through the car rental company.

What type of car insurance do I need for Uber?

Uber provides a low level of supplemental car insurance while the app is on. Once the app is turned off, your personal auto insurance kicks back in. The type of insurance that Uber provides includes $1,000,000 of third-party liability, uninsured/underinsured motorist bodily injury, and contingent comprehensive and collision coverage.

Do you need collision insurance when renting a car?

Yes, you do need collision insurance to cover you from any liabilities that could arise when you rent a car. If you have personal auto insurance, the collision coverage should extend to the rental car. However, you will still be responsible for paying the deductible. Many car rental companies offer a “collision waiver” that will help cover the cost of any damage caused by an accident as well.

How much insurance do I need for a leased car?

When you lease a car, you typically need more coverage than the state minimums. Often a lessor will require you to have collision coverage and comprehensive coverage. Most lessors require that you have $100,000 of bodily injury liability coverage per person and $300,000 per accident along with $50,000 for property damage liability.

Car for hire, what insurance do I need?

If you are the one hiring the car (Uber, Lyft, etc.), you do not need insurance. The driver of the vehicle is required to have insurance. On the other hand, if you are the one being hired and are driving passengers in your car in exchange for pay, you may need commercial auto insurance.

Obtaining Car Insurance for a New Vehicle

Don’t let the excitement of a new vehicle distract you from insuring it. Your insurer only allows for a small gap (a maximum of a week) before your new car is unprotected. If you move to a new state, you will also want to inform your insurance carrier, because you may need a new policy. As a rule-of-thumb, always insure your new vehicle as soon as possible. Some people opt for cheap temporary car insurance to handle a car purchase.

What do I need to get car insurance?

While the exact documents you need vary with the insurance carrier, you will always need a copy of your driver’s license, a copy of the driver license of anyone else who will drive the vehicle, and your vehicle registration. If you already have insurance coverage with another company and want to switch carriers, then you should bring a current declaration page.

How soon after buying a car do you need insurance?

If you’re buying a new car and trading in your old one, you can simply transfer your existing car insurance policy. Most insurance companies give policyholders a grace period of seven to thirty days before they must report the new vehicle. On the other hand, first-time car buyers are required to have car insurance to take possession of the vehicle. Driving without insurance is illegal in almost every state.

What documents do I need to get car insurance?

You should already have most of the documents needed to get car insurance – your driver’s license, vehicle registration, and vehicle information (license plate, make, year, etc.). If you end up buying an insurance policy, it’s a good idea to have a voided check because most insurance companies accept auto-pay ACH payments. If you plan on adding anyone else to the insurance policy, you will need to make sure any additional drivers bring their licenses as well.

How much insurance do I need for my car?

Your car does not necessarily dictate the amount of insurance you need – your state does. However, it’s a good idea to make sure your minimum coverage covers the cost of your vehicle. If you drive a $300,000 Lamborghini, your state’s minimum coverage requirements will come nowhere close to covering the cost of the vehicle if it gets totaled in an accident.

When financing a car what insurance do I need?

When you finance a car, you often need additional coverage on top of the state’s minimums to secure the loan. In addition to the minimum coverage, you will need both comprehensive coverage and collision coverage. Financing companies require this since they may have to repossess the vehicle if you default on your payments.

What information do I need to get car insurance?

For starters, you should have all the information relating to the vehicle you want to insure – the year, make, model, and so forth. You also need to provide the insurance company with a copy of your driver’s license. When you apply for auto insurance, the insurance carrier will check your driving history to determine your monthly premium.

When buying a new car do I need insurance?

Yes, you do need insurance if you buy a new car. It doesn’t matter whether the car is used or new – you need at least the minimum coverage mandated by your state. Furthermore, if you’re financing the new car, you will need to make sure you have the coverage minimums required by the financing company. Related: Government car insurance.

Do I need to change car insurance when I move?

Yes and no. If you move to a new state, then yes, you do need to change your car insurance policy. You don’t necessarily need to switch companies, though. If you move within the same state, then you may need to just notify your insurance company of your address change.

What do I need to get a car insurance quote?

Getting a car insurance quote is simple – you need to provide information such as where you live, your age and gender, and the make and year of your vehicle. This information will help the insurance company estimate your monthly premium. You may also be asked questions about your driving history.

What do I need to add a car to my insurance?

If you buy a car and want to add it to your insurance, you need to do so as soon as possible. Most insurance companies will give you a grace period of one week to add the new car to your policy. After this time is up, you will be liable to pay for any accidents caused while driving.