95 percent of American households own a car. That’s a lot of cars…but also a lot of car insurance. Keep reading to learn more about this new age necessity.

Auto Insurance

If you own a vehicle, you’ve probably heard of auto insurance, an insurance policy that protects vehicle owners from the financial losses of getting into a car accident. Auto insurance is required in every state except Virginia and New Hampshire, but the minimum amount of insurance differs in each state.

Auto insurance minimum requirements are usually expressed as three numbers separated by slashes: XX/XX/XX. The first XX is the bodily injury liability coverage for one person, the second XX is bodily injury liability coverage for all injuries, and the last XX is property damage liability coverage.

So, what happens if you’re responsible for a car accident? Liability insurance will cover the cost of property damage and medical bills for the other people involved. Although most states require you to have at least some liability coverage, it is recommended that you have at least $500,000 worth of liability coverage. Collision coverage pays to repair or replace your car if you’re ever in an accident. Although it is not required, you may want to consider it if your car is new or valuable. For all personal property damages NOT due to a collision, you can expect comprehensive coverage to pay to replace or repair your car. Like collision coverage, comprehensive coverage is not required, but is recommended for valuable cars.

Auto Premiums

The cost of your insurance premium depends on many factors, including the policy you choose. Your monthly premium will be higher with more coverage, a more expensive policy, and a lower deductible. The cost of insurance also depends on the kind of car you drive (as usual, the safer, the better!). Car insurance providers usually offer discounts to customers who drive safer vehicles based on the vehicle’s safety rating. The cost of your insurance also depends on your driving record. Getting into a car accident can increase your insurance premiums significantly – accident-prone drivers tend to pay higher premiums than safer drivers – so be sure to drive with caution! Unfortunately, auto insurance policies have exclusions. Most policies won’t pay for intentional damage, freezing, damage to property owned by the insured, normal wear and tear, or mechanical failure.

An auto insurance deductible is the amount of money you have to pay before your insurance coverage graciously kicks in. Let’s say you’re in an accident that causes $4,000 worth of damage to your car. If your deductible is $500, you will only have to pay $500 toward the repair. The insurance company pays the remaining $3,500! This also means that if the damage is $400, you will have to cover the entire thing.


If you own a car, unless you live in Virginia or New Hampshire, you have to have auto insurance (and you should still get it even if you live in either one of those states tbh…). Most people only have liability insurance, which means that if they cause an accident, their insurance will pay for the damages of the other party. However, if you feel like you need more protection, look into collision or comprehensive coverage. Finally, to keep your premiums as low as possible, drive a safer car and don’t cause accidents!