Shopping for Auto Insurance – there’s more to it than choosing the Gecko…

Auto Insurance is one of those things - we almost all use it, but most of us know little of the details.

It's also one of the first major expenses you'll deal with as an adult.  So, we decided to break down the basics and identify some online sources from which you can get more information about auto insurance.

One of the first things to remember when shopping for auto insurance is to do just that - shop.  Too many people, teens included, will settle or go with the easiest option.  Knowing what you're looking for and actually calling or going online to compare companies you are considering will give you much more honest information than just allowing an insurance company to "shop for you."  Later in life, there may be some bundling you can do, like many households do with television, telephone, and Internet.

First of all, let's define auto insurance - it's simply a way to protect yourself and your assets in case of an accident.  There may not be much to protect right now, but there certainly will be in the future.  Driving without auto insurance is simply not an option.  Nearly everyone will have some accident at some point in their life (probably sooner rather than later) and therefore knowing your coverage, and choosing a reputable company can make all the difference.

For every state there are at least 3 figures we'll need to pay attention to:

  1. How much coverage is required for an individual injured in an accident,
  2. How much coverage is required total for all those injured in an accident, and
  3. How much coverage is required for property damage in case of accident.

Some states are also requiring Personal Injury Protection (PIP), for oneself, or Underinsured/Uninsured Motorist Coverage.  This means that even though everyone should theoretically have auto insurance, some may be carrying too little or illegally operating a motor vehicle with no insurance at all.  This is added coverage that will protect the insured party, sometimes referred to by the term "Full Coverage."

Now, just because each state has a minimum (some even have no minimum) for coverage amounts required, those amounts may not be enough.  Again, this is protection for yourself and your assets - so if someone is seriously injured or property is severely damaged, those individuals involved could sue for more than what your insurance covers- which means you'll have to pay out of pocket.  So, the key is to find the right balance of protection and cost effectiveness.  Ideally, it  is safe to say that a driver would want to carry more than the minimum required state coverage.

www.Edmunds.com is a great place to research automotive related topics, insurance included.  They have a great list of each states minimum coverage requirements.

State
Liability limits (in thousands of dollars)
Uninsured/Underinsured motorist coverage required?
Alabama
25/50/25
No
Alaska
50/100/25
No
Arizona
15/30/10
No
Arkansas
25/50/25
No
California
15/30/5
No
Colorado
25/50/15
No
Connecticut
20/40/10
Yes
Delaware
15/30/10
No
D.C.
25/50/10
Yes
Florida
10/20/10
No
Georgia
25/50/25
No
Hawaii
20/40/10
No
Idaho
25/50/15
No
Illinois
20/40/15
Yes
Indiana
25/50/10
No
Iowa
20/40/15
No
Kansas
25/50/10
Yes
Kentucky
25/50/10
No
Louisiana
10/20/10
No
Maine
50/100/25
Yes
Maryland
20/40/15
Yes
Massachusetts
20/40/5
Yes
Michigan
20/40/10
No
Minnesota
30/60/10
Yes
Mississippi
25/50/25
No
Missouri
25/50/10
Yes
Montana
25/50/10
No
Nebraska
25/50/25
No
Nevada
15/30/10
No
New Hampshire
Not required 25/50/25
Yes
New Jersey
15/30/5
Yes
New Mexico
25/50/10
No
New York
25/50/10
Yes
North Carolina
30/60/25
Yes
North Dakota
25/50/25
Yes
Ohio
12.5/25/7.5
No
Oklahoma
25/50/25
No
Oregon
25/50/10
Yes
Pennsylvania
15/30/5
No
Rhode Island
25/50/25
Yes
South Carolina
25/50/25
Yes
South Dakota
25/50/25
Yes
Tennessee
25/50/10
No
Texas
25/50/25
No
Utah
25/65/15
No
Vermont
25/50/10
Yes
Virginia
25/50/20
Yes
Washington
25/50/10
No
West Virginia
20/40/10
Yes
Wisconsin
Not required 25/50/10
Yes
Wyoming
25/50/20
No

It is easy to see that each state will differ, and it's important to know what your state requires.  This list may change over time, so it's important to research at the time you will be purchasing.  Something that many consumers don't know is that each state has a Department of Insurance.  The Insurance Consumer Advocate Network (ICAN) keeps listings for each state, so this is a great place to learn about the latest updates to each states minimum coverage and laws regarding auto insurance coverage.

Also, keep in mind that just because you can afford a certain vehicle's monthly payment - insurance may be completely unaffordable based on that vehicle.  For instance, newer vehicles, sport/luxury, or even a vehicle that is considered easy to steal, all may dramatically affect insurance rates.

These are just the basics of auto insurance - there's a lot more that can be analyzed to find cost savings.  For example, it may be most cost effective to purchase insurance right from an agency directly as a young adult.  As one gets older, however, and starts to accumulate more assets like a house, or begins to start a family, an insurance agent can be a great tool to bundle policies and get a better level of service than when purchased directly from the company.  Still, more and more companies will sell insurance directly to an individual now; this is quite different than years ago when nearly all business was done through a local insurance agent.

More information can be found on Edmunds.com's Little-Known but Important Car Insurance Issues

Sources -www.Edmunds.com;

www.ican2000.com