Life Hacks

A 360° Guide of Car Insurance in 2022: Why Is It Important?

July 27, 2021

Nearly 215 million drivers carry car insurance in the US. Is it worth it? Actually, yeah! According to those same statistics, motor vehicle crashes cost almost $1 trillion in losses a year. Not convinced?

Imagine this: you're driving down the road, and suddenly another car T-bones yours from the side. Whiplash sets in as your car spins out of control. The other driver doesn't have insurance, so now you not only have to fix your car but also deal with the pain and suffering from the accident. As if that wasn't bad enough, now your rates are going to skyrocket because of that accident. 

Car insurance is an important part of being a driver, and it's something that you should consider before getting behind the wheel. In this guide, we'll walk you through everything you need to know about car insurance so that you can make sure that you're fully covered in case of an accident.

What is Car Insurance?

Let’s take a step back for a second and dive into what exactly is car insurance. 

Here’s the textbook definition: Car insurance is a type of insurance that helps to protect your car from damage or theft. It is typically required by law in most states, and it can help to cover the costs of repairs or replacement if your car is damaged in an accident. 

There are many different types of car insurance, and it is important to choose the right one for your needs. Here’s a breakdown of the different types of car insurance followed by their average costs.

The Different Types of Car Insurance

The most common type of car insurance is liability insurance, which covers the costs of damages that you may cause to another person or their property while driving. 

Other types of car insurance include collision and comprehensive insurance, which cover the costs of damage to your own car in an accident. 

There are also a variety of discounts and incentives that can help to lower the cost of your car insurance, so it is important to shop around and compare rates before choosing a policy. Outside of those, though, you might be interested in unique types of car insurance. Here are a few.

Car Insurance for New Drivers: Car insurance for new drivers is typically more expensive than it is for experienced drivers. This is because new drivers are considered to be at higher risk, and so insurers charge more to cover them. In some cases, it may be possible to get a discount by having another experienced driver listed on the policy.

Short-Term Car Insurance: Short-term car insurance is a type of insurance that provides coverage for a short period of time, typically between one and 28 days. This type of insurance is often used by people who need to drive a car but do not own one. Keep in mind that the premium for short-term car insurance is typically higher than the premium for regular car insurance, and the coverage is usually much less comprehensive.

Car Insurance for Young Adults: Car insurance rates for young adults are notoriously high. The reason for this is twofold. First, young adults are inexperienced drivers and are therefore more likely to get into accidents. Second, young adults are also more likely to take risks when driving, such as speeding or driving while under the influence of alcohol. As a result, insurers view young adults as a high-risk group and charge accordingly.

The Cost of Car Insurance

Again, how much car insurance cost varies greatly depending on quite a few factors. Namely, what affects your rate will be:

  • The type of car insurance you choose
  • Your personal financial situation, including your credit score
  • Your driving history

Overall, though, what is the average cost of car insurance? Currently, it’s $1,630 per year, which comes out to about $136 per month.

Why Is Car Insurance Important?

There are numerous benefits of car insurance. However, outside of benefits such as being protected and not having to pay out-of-pocket costs in the case of an accident, car insurance is simply important.

It’s important because it protects drivers financially in the event of an accident. If a driver is at fault for an accident, their insurance will cover the cost of damages to the other driver's vehicle. If a driver is not at fault, their insurance will cover the cost of their own repairs. In either case, car insurance ensures that drivers are not left with large bills to pay out of pocket. 

Additionally, car insurance is required by law in most states. This means that drivers who do not have car insurance are breaking the law and could face penalties such as fines or revocation of their license.

As a result, driving without car insurance is not only risky but could also result in steep fines and penalties. Ultimately, car insurance is important because it can help to protect you financially in the event of an accident.

What Happens if You Drive Without Car Insurance?

So, what happens if you drive without car insurance? If you live in a state that requires car insurance and you drive without it, you could face a number of penalties. These can include fines, the suspension of your license, and even jail time. 

In addition, if you're involved in an accident without insurance, you could be held liable for any damages caused. That means you would have to pay for any repairs or medical bills out of your own pocket. 

So, if you can't afford car insurance, it's better to not drive at all than to take the risk of driving without coverage. However, if price is an issue for you then keep reading. We’ll talk about how to find the best car insurance rates.

What Affects Your Car Insurance Rate?

There are numerous factors that go into determining your car insurance rate. Some of the most common ones include a low credit score, your age, auto accidents, and tickets.

According to a Bankrate study, here are some interesting statistics that help you understand what affects your car insurance rate:

  • A credit score decrease can lead to an increase of just over $1,300 a year for an annual premium.
  • A speeding ticket could lead to an increase of about $30 per month in your premium.
  • Car crashes (that are your responsibility, not someone else’s), can increase your premium by over $2,400 per year.
  • Thinking about drinking and driving? It’s not worth the cost. Getting a DUI can lead to an increase in your car insurance costs by over $3,300.

Other factors, such as a lapse in insurance along with adding teen drivers, for example, can also increase your premium, whether that’s monthly or annual. Our best advice? Don’t be reckless while driving and try to work on increasing your credit score.

Where to Get Car Insurance

There's no one-size-fits-all answer to the question of where to get car insurance, as the best place to get it will vary depending on your individual circumstances. 

However, there are a few general tips that can help you find the right policy for your needs. First, shop around and compare rates from multiple providers. Second, consider getting quotes from both direct insurers and agents representing multiple companies. And finally, make sure to read the fine print and understand the terms and conditions of any policy before signing on the dotted line. 

By following these simple tips, you'll be well on your way to finding the best car insurance for your needs. 

Get a Car Insurance Quote

A car insurance quote is an estimate of how much you'll pay for car insurance coverage. When you get a quote, you'll need to provide some information about yourself, your car, and your driving history. 

Based on this information, the insurance company will give you a price for coverage. The price will be based on a number of factors, including your age, the type of car you drive, and your driving record. 

In most cases, the quote will also include a car insurance deductible, which is the amount you'll have to pay out of pocket before the insurance company pays for any damage.

Ready to get started now? Get cheap car insurance quotes here.

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