Getting the Right Coverage for Your Car

Car insurance is a necessity

If you have a car or truck, then you must have car insurance. In fact, the law requires you to have it. Each car that a family owns needs to be insured. If it’s not and you get pulled over by a police officer, they will write you a ticket!

So, you don’t have a choice about getting car insurance.

Car insurance when you’re young

By law, you cannot get your own car insurance in most states until you turn 18. Before age 18, you will typically be added to your parent’s or guardian’s insurance.

Once you turn 18 and are legally an adult, you can get insurance on your own. However, you’re not required to do so. In fact, your parents can keep you on their insurance as long as they want.

Smart Money Tip: Being young means you’re more expensive to insure

Insurance policies for teens and even adults up to age 25 are much more expensive than they are for older adults. When your parent or guardian adds you to their policy, their costs will probably go up significantly.

Just be aware of this and drive carefully so they don’t need to make a claim. And if they ask you to let the insurance company monitor the vehicle while you’re driving, agree! Apps that monitor your driving habits can reduce insurance costs.

How car insurance works

1. Each time you or your family buy a car, it needs to be insured.
2. If your family already has an insurance policy, they call their insurance agent and add the new car to the policy.
3. For each car on the policy, you designate drivers of that vehicle.
   1. Only people listed as drivers of that vehicle are insured to drive it.
4. Each driver will get an insurance card.
   1. If you get pulled over by a police officer or get into a car accident, you will need to show your insurance card, so you always want to keep it with you.
   2. You can add a digital copy of your insurance card to the digital wallet on your smartphone so you always have it.
5. If you get into a car accident that is your fault, then make a claim on your insurance.
   1. The insurance company will pay the cost to repair the other vehicle if someone else was involved in the accident.
   2. If the car is “totaled,” meaning that a mechanic says it can’t be fixed, then insurance pays the value of the car so the person you hit can get a new one.
   3. Depending on the policy you have, the cost to repair or replace your car may be covered as well.

Types of car insurance coverage

Depending on the state where you live, you will need to have a minimum amount of car insurance. But you can have a policy that covers more than just the minimum  

• Liability coverage is required to drive a car. It covers the cost to repair or replace a car that you hit if the accident was your fault.
• Collision coverage is the coverage you get to pay for the repairs. If your car is totaled, it will pay the value of the car at the time of the accident. This is not required and if you have an old car that doesn’t have a high value, it could make sense to skip collision coverage because it can cost more than the car is worth.
• Comprehensive coverage is also optional. It covers things that liability and collision coverage don’t cover. So, you’re covered if your car gets stolen or a bad storm knocks a tree onto the car.
• Personal injury protection (PIP) covers costs for medical bills if you or your passengers are injured in a car accident. In many states, PIP is required.