Auto Insurance Basics provides a wealth of essential information about auto insurance.

There may be an occasion where you need to cancel a policy, perhaps to switch providers and you can find detailed instructions on how best to go about this by clicking on the links. We also give you useful tips on how to successfully pursue auto insurance claims and if you are ever confused about any insurance terms, be sure to check out our glossary.

If you have auto insurance or have ever been pulled over, you likely know the importance of proof of insurance or financial responsibility.

Finally we provide information on commercial auto insurance as well as some easy tips on purchasing auto insurance online.

Knowing the basics of auto insurance is one of the best ways you can arm yourself with knowledge and avoid costly mistakes.


What is auto insurance?
Auto insurance is vital to protect you from financial loss in case you are ever in an accident that is your fault. Auto insurance is effectively a contract between you and your insurance company and as long as you pay your premium, they will pay any losses as defined by your policy.

Can I drive without insurance?
You should never drive without insurance. Every state requires drivers to meet their minimum liability coverage requirements or have proof of financial responsibility.

What does a basic auto insurance policy cover?
There are up to six types of coverage from which to choose: bodily injury liability, property damage liability, personal injury protection, uninsured/underinsured motorist, collision, and comprehensive coverage. Each component is priced separately and your state will require you to purchase some but not all of them.

How much coverage is needed?
Nearly every state requires minimum amount of liability insurance coverage. You can usually guarantee you will need more than the minimum amount because accidents typically cost far more. If you are found legally responsible for more than your insurance covers, you could end up paying for the difference out of your pocket, which could easily wipe out your finances. Make sure you speak with your insurance agent or company representative about retaining higher liability limits or consider an umbrella or excess liability policy, which will pay for costs when your basic coverage is exhausted.

What insurance company should I choose?
You should choose an insurance company that provides excellent customer service at a reasonable price. They should have a proven track record of financial stability and be licensed to insure vehicles in your state. Finally, an insurance company should inspire confidence that you are protected in the event of an accident no matter who is at fault.

What personal information do I need to give to my agent or insurance company?
You will need to provide things such as address, vehicle specifics (year, make, and model), Social Security number, and other very basic information. You should also be able relate your insurance history and any information about other drivers on the policy. Be prepared to possibly give them permission to review your driving record and credit history.

Do I need insurance if I lease a car?
You must insure a vehicle even if you are leasing it. In fact most dealerships and financial institutions will require comprehensive and collision coverage in addition to your state's minimum liability requirements. They may require GAP coverage as well.

What if I can't find coverage?
If you cannot find coverage due for some reason, you can utilize two options: use your state assigned risk pool or find a high-risk policy from an insurance company that covers high-risk drivers.

What's the difference between a cancellation and a nonrenewal?
A cancellation is when your insurance company terminates your policy for non-payment, fraud, or if your driver's license is suspended or revoked. A nonrenewal is when the driver or insurance company chooses not to renew the policy when it expires.