Auto Insurance 101

Some insurance policies are optional and some are less so. For example, almost every state in the country requires drivers to carry auto insurance. However, the types of auto insurance coverage and rates available vary widely, so it pays to know a thing or two about it. Check out the basics in Auto Insurance 101.  


How much will car insurance cost me?

There’s no clear, blanket answer for this because insurance companies set premiums per individual based on factors like gender, age, and credit and driving history. Where you park your vehicle can also determine your rate, which is why it’s important to keep your garaging address updated. However, according to Bankrate, auto insurance in the United States averages $563 per year for minimum coverage and $1,738 per year for full coverage.


When should I apply for car insurance?

This is one of the most important lessons of Auto Insurance 101. Shop for insurance before purchasing your car because you must be covered when driving home from the lot. Of course, the type of vehicle you drive can affect your rate. So, simply give your insurance agent all of your other information before you buy the car and then fill in the vehicle details once you decide which one to purchase.


What does this protection cover?

The answer to this question depends on the kind of policy you buy. Like other types of insurance, higher premiums will give you more protection. Full coverage will take care of damage caused by theft, falling tree limbs, at-fault accidents, and more.

However, you don’t have to pay for full coverage. If you just want the minimum protection required by Kentucky law, simply purchase bodily injury liability and property damage liability protection. This will cover costs associated with another driver’s injuries and vehicle damage after an accident for which you have been deemed at-fault. Your policy must also include basic reparations benefits. 

We suggest you choose more than minimum coverage, though, because that doesn’t provide a lot of protection. Our experts say you should choose a policy with limits of at least $50,000-$100,000 in bodily injury coverage and $50,000 in property damage coverage. Homeowners need more protection for their assets, so we suggest they get a minimum of $100,000-$300,000 in bodily injury coverage and $100,000 in property damage coverage.


Does my car insurance cover other drivers?

Typically. Auto insurance tends to follow the car instead of the driver. 


Does my vehicle affect car insurance rates?

Yes. The year, make, and model of your vehicle can help determine the rate. New and luxury cars are often more expensive to insure because they’re worth more.


Can I get a discount?

Several factors can help you earn auto insurance discounts. Carriers might lower your rate if your vehicle has safety features or a car alarm, and you might also get a discount for insuring more than one car with the same company. Carriers also offer discounts based on factors like customer loyalty, demographics, affiliations, and driving history, so remember to ask what discounts are available when shopping for insurance.


What is gap insurance?

This is one of the more obscure lessons in Auto Insurance 101. A carrier will only offer gap insurance to the original owner or leaseholder of a new vehicle. This type of coverage kicks in when your car is stolen or totaled and you still owe more on the auto loan than the vehicle’s depreciated value. This protection can help bridge the gap between what you owe and the depreciated value.


Does my teenager need extra insurance?

Most likely. We recommend umbrella insurance policies for all new drivers. Accidents are stressful enough. We don’t want you to struggle with financial difficulty, as well.