How Does Car Insurance Work? TIME Stamped

James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor’s degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.

These programs tailor your premium based on how much you actually drive. For drivers over 60, Nationwide emerges as the go-to option for affordable car insurance, offering the cheapest rates in 14 states, including Alabama, Arkansas and Colorado. Auto-Owners follows closely, leading in affordability in five states, such as Idaho and Illinois. With a clean driving record, first-time drivers can expect their insurance rates to drop over time.

Choosing optional coverages allows you to customize a policy to your needs. Teen drivers who buy their own policies can expect to pay very high rates. We found the average car insurance cost for a male driver age 16 is $9,422 a year. Sure, you want to find car insurance at the best possible price.

Cancel Your Old Car Insurance Policy

Different insurance companies have different ways of assessing risk. Some may offer special packages or discounts for first-time drivers. Overall, MoneyGeek analyzed 2,474,515 quotes from 607 companies across 3,523 zip codes to determine the cheapest car insurance premiums for drivers of various profiles and needs. State Farm offers the cheapest coverage for 16-year-olds at $2,300 yearly. Nationwide is the go-to for affordable rates for first-time drivers over 25, 40 and 60, with annual costs of $2,440, $2,055 and $1,919, respectively.

For example, if your car is currently worth $10,000 and you owe $12,000 on the loan, you might be willing to absorb the difference if your car is totaled. But if you have a $30,000 car loan on a $22,000 car, you might not be able to afford to pay the $8,000 gap. Whether you need gap insurance depends on how much you have left on your car loan or lease and what the vehicle is worth.

How Driving Experience Influences Your Car Insurance

Car insurance helps lessen the impact of such a financial loss on you and anyone else involved in an accident. Your license has been suspended but you want to maintain continuous coverage. Basic information like the name and date of birth for every driver on the policy. Our ratings take into account a product’s cost, features, ease of use, customer service and other category-specific attributes. While the rates shown are a helpful starting point, they’re no substitute for personalized quotes. Answer a few questions to start your quotes in 3 minutes or less.

If you don’t want to pay in full, you can typically choose monthly installments. You might be able to get a small discount for using automatic withdrawals. If your car breaks down or gets a flat on the side of the road, roadside assistance insurance pays for services such as a tow truck, jump-start or locksmith. This coverage provides roadside assistance if your vehicle is disabled on the side of the road, including help with flat tires, a dead battery, or an empty gas tank. Pet Insurance, Motorcycle Insurance, and Travel Insurance is not underwritten by Travelers or its Affiliates (“Travelers”).

Check out these common types of car insurance coverage:

Most states require you to have minimum amounts of liability insurance coverage; some also require you to have other coverage types, such as uninsured motorist coverage. Auto insurance companies all calculate their rates differently, resulting in a wide range of prices—sometimes by thousands of dollars a year. It’s smart to compare car insurance quotes from multiple companies.

Read more about car insurance Netherlands here.

Premiums are what you pay monthly, biannually or yearly to maintain a car insurance policy while deductibles are amounts you pay when you file a claim. If you have comprehensive coverage you can file a claim for repairs. If you have a $500 deductible, your insurer would give you a check for $4,500 to cover damage. You’d be responsible for paying the additional $500 toward repairs. Liability insurance covers injuries and property damage suffered by others if you’re at fault for an accident. It also covers your legal defense and any settlements or judgments if you’re sued because of an accident. At the very least, you must buy your state’s minimum car insurance requirements.

Offers a usage-based insurance program for good drivers who want to reduce their auto insurance costs based on driving habits. Collision and comprehensive coverage may save you from extensive out-of-pocket costs if your vehicle is damaged in an accident or other covered event. Drivers with an at-fault accident on their driving record pay around 42 percent more for car insurance on average compared to drivers with a clean driving record. But because car insurance companies have their own proprietary underwriting systems, the cost of car insurance for each individual will vary from carrier to carrier. Despite car insurance being a highly individualized product, there are ways to help estimate car insurance costs.