Property damage liability coverage pays for the damage you cause to another’s vehicle or other property (like a fence, pole or building) in an at-fault accident.
Uninsured and underinsured motorist coverage pay for your injuries (and, in some states, your property damage) if it was caused by a driver who either lacks sufficient coverage or any coverage at all.
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Personal injury protection (PIP), also known as no-fault insurance and only available in certain states, pays for medical expenses you and your passengers incur following an accident, regardless of fault. It also accounts for non-medical expenses incurred as a result of an accident, such as lost wages or the cost of childcare.
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Medical payments coverage is similar to PIP insurance coverage but includes only payments for medical expenses. It is required in some states and optional in others.
Comprehensive coverage pays for damage to your car caused by non-collision losses like fire, theft, vandalism and storm damage. Comprehensive also pays for damages caused by hitting an animal and cracked windshields.
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Collision coverage pays for damages to your vehicle caused by a collision. If you collide with another car, tree, pole, building or pedestrian, your collision coverage is the part of the policy that will pay for the damage to your vehicle.
These are the main types of auto insurance coverage, but there are more types of car insurance coverage available that may be worth discussing with your insurer. For example, you might consider adding gap insurance if you buy a newer car or ridesharing coverage if you drive for a company like Uber or Lyft. Additionally, each state has its own car insurance laws, and each driver is unique. Talking with a licensed agent can help you determine the best auto insurance coverage types and limits for your needs.
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What factors affect your car insurance options?
Other factors exist that significantly influence your car insurance company options. Each insurance company has underwriting metrics that affect your eligibility and rate.
Driving record: If you have a history of at-fault accidents, tickets or DUI convictions, you may find fewer companies to choose from since high-risk drivers are not eligible for coverage from every carrier.
Age and driving experience: Younger drivers have less experience on the road, leading to a higher accident frequency. This can often lead to higher car insurance rates. Unless you’re in Hawaii or Massachusetts, which ban age as a rating factor, the best company for drivers insuring young drivers may be ones that offer student or telematics discounts to offset premium increases.
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State and city: States have different insurance laws, accident statistics, crime rates and living costs. Because of this, insurance companies may not be available in certain states or even in some cities or ZIP codes.
Vehicle make and model: Each make and model of vehicle has unique features which impact the likelihood of accidents, the severity of accidents and the cost to repair the vehicle itself. Because of this, insurers may not insure certain vehicle types.
Credit-based insurance score: In most states, elements of your credit history are used to determine how likely you are to file a claim, which can affect your rate and eligibility with certain companies.
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Insurance lapse history: Because most states require drivers to have at least minimum levels of coverage, insurance lapses can result in higher premiums when you take out a policy again. You may also be considered a higher risk and have fewer options when shopping for car insurance companies.
Learn how to find the best rates on car insurance
Although you can’t control some of the factors that are used to determine your car insurance rate, there are a few things you can do to help secure a competitive rate:
Shop around: Car insurance companies use unique rating algorithms to determine your premium, so you’ll get a different rate with each carrier. Shopping early — up to a month prior to your renewal date — can be helpful, as it allows you time to gather quotes and make a decision. Most companies require at least a month’s down payment, so make sure you account for that in your budget.
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Utilize discounts: You may find a lower rate if you get a quote from a company that offers several discounts you can apply to your policy
Participate in a telematics program: Telematics discounts are programs that track your driving habits. If you are a safe driver, you could save on your premium.
Keep a clean driving record: At-fault accidents and tickets are signs that you may engage in risky driving behaviors and can significantly increase your rates.
Consider your vehicle: While not the most practical step for everyone, you could consider shopping for a different vehicle if you need to lower your rates drastically.
Set realistic expectations: For example, if you have a DUI conviction on your record, your version of a competitive premium is likely to be higher than someone with a clean driving record.
What customer satisfaction metrics should you consider?
It may not be as obvious as price or coverage options, but customer satisfaction is just as important as those other metrics when you shop for car insurance. After all, you want to make sure your company is there for you when you need it most — when you file a claim. Third-party rating agencies, which maintain neutrality, provide a basis for understanding a company’s overall level of service, number of complaints and financial strength ratings. These metrics help you gain a deeper view of a carrier’s performance and can help you choose a company based on more than just a quoted rate. This helps ensure you find a carrier that meets all of your needs. To determine a company’s level of service, consider taking these steps:
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Look at J.D. Power scores: J.D. Power is a data analytics company that conducts several annual reviews of the car insurance industry, ranging from customer and claims satisfaction to digital tool satisfaction. J.D. Power is a trusted name in the industry, and its ratings — particularly those that apply specifically to your region — could help you choose a carrier based on customer satisfaction.
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Consider NAIC Complaint Index: The NAIC keeps a record of customer complaints filed about insurance companies and compiles them into a Complaint Index. A 1.00 Index is the baseline number of complaints expected in a given year. A rating below 1.00 indicates fewer complaints than average, and conversely, a rating above 1.00 indicates more complaints than average.
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Review AM Best financial strength ratings: AM Best rates the historical financial strength of various companies, specializing in the insurance industry. A financial strength rating gives you an idea of a company’s past ability to pay claims. A higher financial strength rating may indicate that a company has historically been financially stable.
Talk with current policyholders: If you know someone who has their car insurance with a company you are considering, ask them about their experience. You can ask about general service, billing and payment service, and claims service to get a sense of what it’s like to be insured with that company.
Car insurance industry trends
Inflation has been a headline news story for months, and with good reason. In a Bankrate survey from September 2022, 55 percent of Americans said that their income hasn’t been able to keep up with the increased cost of household expenses, including insurance premiums. Bankrate’s proprietary rate data indicates that the average cost of full coverage car insurance rose from $1,771 per year in 2022 to $2,014 per year in 2023. This is a 14 percent increase, and rates are expected to continue rising throughout 2023. Insurance rates are reactionary — claims get more expensive, and companies increase premiums in response. This means that, even if inflation cools, we’ll likely feel the effects of higher rates for a while.
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As premiums continue to rise, it’s important to understand how car insurance costs are affected. If you are facing a premium increase upon your next policy renewal, shopping for a new car insurance company may be worth considering. But the price isn’t everything. As vehicle repairs and medical care costs increase, finding the best coverage for your needs is also crucial. Ensuring you have proper coverage could help reduce the financial risk of being underinsured. Bankrate’s editorial team continues to monitor the insurance industry and speak to industry experts.
Industry experts weigh in
Bankrate talked to three experts in the car insurance industry to get their takes on the current environment.
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Bankrate utilizes Quadrant Information Services to analyze 2023 rates for ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:
$100,000 bodily injury liability per person
$300,000 bodily injury liability per accident
$50,000 property damage liability per accident
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$100,000 uninsured motorist bodily injury per person
$300,000 uninsured motorist bodily injury per accident
$500 collision deductible
$500 comprehensive deductible
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To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2021 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
Additional car insurance ratings methodologies