How does car insurance work?
What is Car Insurance?
810,400 vehicles were stolen in 2020. That’s a whole lot of cars and a whole lot of angry owners. Luckily, most of them will have had car insurance, which offers protection in case of accident, theft, or damage. In essence, car insurance helps manage the financial risks associated with owning and driving a vehicle, because even the most skilled drivers can’t control the actions of other people on the road or completely stave off accidents.
Do You Need Car Insurance?
If you’re not sure whether you need car insurance, the answer is yes, yes you 100% do. In fact, your state likely requires some level of car insurance coverage — at the very least, a minimum amount of liability coverage at the time the vehicle is registered.
Virginia and New Hampshire are the two exceptions, although drivers there are still responsible for damages or bodily injuries they cause in an accident. (And if you live in Bakersfield, CA, you definitely want insurance since, for three years running, it’s had the highest rate of automobile theft in the country.)
Beyond state-specific provisions, your lienholder or lender may require you to carry more than the minimum amount of car insurance while you are in the process of repaying your car loan. If you lease or finance a vehicle, for instance, you will likely be required to have collision and comprehensive coverage.
But even when there’s no legal obligation, having car insurance will protect you from paying medical bills and damages out-of-pocket — and those can cost a lot!
What Does Car Insurance Cover?
Just as no two snowflakes are alike, the same is (mostly) true with car insurance policies. The coverage you receive depends upon a variety of factors, but all policies offer financial protection in the event of an accident.
For example, comprehensive coverage covers losses due to hail, vandalism, or damage due to weather conditions. Liability insurance, on the other hand, provides coverage for bodily injury and property damage of another driver in the event of an accident.
Depending on the type of policy, coverage limits, and other factors, your insurance will provide different protection and coverage. These factors will also play into how much the car insurance costs.
When you purchase car insurance, you can include any of the following:
- Comprehensive coverage
- Collision coverage
- Towing coverage
- Roadside assistance coverage
- No-fault insurance
- Uninsured motorist bodily and property damage
- Personal Injury Protection (PIP)
- Medical payments coverage (MedPay)
- Gap insurance
- New car replacement
- Rental reimbursement
- Mechanical breakdown coverage
- Auto-glass coverage
How Does Car Insurance Work?
First things first, you gotta figure out how much car insurance you need (see: the list above for a sense of all the coverage you *could* include in your car insurance). But bear in mind that buying too little coverage will leave you underinsured. On the other hand, if have too much, you’ll end up overpaying insurance premiums. It’s a delicate balance.
We also recommend reading up on your state’s minimum coverage requirements, which are often outlined on the DMV’s website, for a sense of what you absolutely must have.
When buying car insurance, you’ll be well served to comparison shop. You’ll want to get quotes from at least three different insurance companies since relying on a single quote could lead to overpaying!
How To Make A Car Insurance Claim
Unless you’re a stunt driver, most of us probably don’t think about our car insurance every time we get behind the wheel. And that’s a good thing! Car insurance is a financial safety net: there if you need it, but otherwise — you don’t notice it. If, however, you do find yourself involved in a car accident, you’ll be glad you’ve got it!
And in the case of said accident, what exactly should you do? How does car insurance work, really? Let’s walk through the process of making a car insurance claim, which you’ll need to do in the event your car is ever damaged or stolen.
Call your car insurance provider immediately
If you find yourself in an accident, you’ll want to get on the phone with your insurance provider ASAP. Explain what happened and then ask about the claim filing process, related deadlines, and what your car insurance policy covers.
Gather required information and documents
Unsurprisingly, you’ll need to give evidence to support your claim. Depending on your insurance provider, you may be asked to provide any (or all) of the following:
- Information regarding injuries of any person inside or outside the car
- License plate numbers of any other vehicles involved
- Descriptions of other vehicles damaged in the accident
- Photographs and description of the accident location
- Other drivers’ or witnesses’ contact information
- Names and details of responding police officers
File a claim as soon as you can
Once you’ve collected all relevant information, file a claim by contacting your insurance agent or using the insurance provider's website or mobile app. If you’re not sure, your agent can tell you which method is best.
Ask for a rental car
Most auto insurance policies include a rental car, so contact your insurance provider to ask about getting your hands on one. They’ll also be able to walk you through the related reimbursement procedure.
What happens after you file a claim
There are two final things you need to keep in mind. First, your car insurance rates may increase after you file a claim depending on who was at fault in the accident. Second, the insurance policyholder is required to cooperate with insurance adjusters during the claims process — whether or not they were driving the car at the time of the accident.
Only after the claim has been made and your insurance company has verified it will you receive some form of payment. If you’re unhappy with the process and the service you received from your insurance provider, you may want to consider switching insurance companies.
Find the Best Car Insurance Policies with Marble
Exhausted by the thought of shopping for car insurance? Check out Marble where you can shop, compare, and receive quotes from different auto insurance providers all in one place. And once you’ve found the best policy for your needs and budget, you can store the details in your online wallet. It couldn’t be easier!