Auto insurance is a necessary part of car ownership. The only way to avoid auto insurance is to stop driving, which is something most people are not willing to do. Nevertheless, there are many ways to save on car insurance, and not all policies are created equal. By matching your habits and needs with the right policy, you can ensure that you don’t pay too much for insurance even while protecting yourself and your family.

There are generally two types of insurance: full coverage and liability. A liability-only policy protects you against lawsuits for damages or injuries that you cause. Full coverage insurance does this while providing protection for your own vehicle. Within liability and full coverage policies, there are several different coverage options, so you can customize your policy to suit your needs.

Who Needs Liability Insurance?

Liability insurance is the basic type of insurance required by state law. All vehicles that are driven on public roads require basic liability coverage. The two primary types of liability coverage are bodily injury and property damage; both are necessary in most states. Liability insurance comes with limits, and an insurance company will only pay up to the amount of the limit. Anything over that limit is your responsibility to pay as the car’s owner. Different states will require different limits, so you should always check state laws before buying coverage in an area.

Liability coverage will not pay for your own vehicle. Liability-only policies are good for older-model vehicles that are not worth repairing. They’re also good in situations where you don’t drive the vehicle often or have enough money to pay for repairs out of pocket. Because liability-only policies are cheaper than full coverage, they’re a popular choice for many budget-conscious people.

Who Needs Full Coverage?

Full-coverage auto insurance includes liability, collision, comprehensive and first-party medical coverage. These coverages generally have no limits, but they will have deductibles; this is the amount that you’re expected to pay as your portion of repairs. These policies are generally only limited by the value of your vehicle, but injury coverages usually have set limits.

If you want insurance to pay for your repairs after an accident, you will need the first-party coverages offered by full-coverage insurance. Additionally, full coverage is required for vehicles that are being leased or financed. There is no legal requirement to have full coverage outside of this.

The more coverages you carry on your policy, the more it will cost. Full coverage insurance is more expensive than a liability policy, but it provides more complete protection. People with new or valuable vehicles should maintain full coverage even if the car is fully paid off. Once a vehicle’s replacement cost has dropped, the owner can shift to a liability policy.

Other Coverage Options to Consider

You don’t have to purchase auto insurance in an “all or nothing” manner. You can purchase individual coverages a la carte to customize a policy to suit your needs. For example, you might choose to add injury coverages to a liability policy without buying collision or comprehensive insurance. There are several types of coverage you can carry such as collision, comprehensive, uninsured motorist, PIP, medial payments, rental car reimbursement and more.

Not all insurance companies define “full coverage” in the same way. For example, some companies refer to “full coverage” as any policy with both collision and liability coverage. Customers may ask for a full coverage policy and not realize that they don’t have all of the coverages they wanted.

Be sure to check with your agent to remove this ambiguity. You’ll want to review your policy’s exact coverages, limits and deductibles before agreeing to any contract. This will prevent you from being caught with insufficient coverage after an accident happens, and helps keep you from paying for more insurance than you need.

Each additional coverage will add expense, but you can trim costs by modifying the coverages themselves. For example, you can raise your deductibles or lower your limits. This will lower the cost of your policy without sacrificing any of the coverages you might want.What Type of Car Insurance Should I Buy?, 10.0 out of 10 based on 1 rating