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Vehicle Insurance: Why, What, & How Much?

Written by Todd Clay. Posted in Research Last Updated: 02/10/2011

The vehicle insurance you have to have, what is available out there and how much it is going to cost you.

A Car Accident is Exactly the Reason for Vehicle Insurance

I hope the person at fault had the required insurance.

For all drivers on the road, vehicle insurance is a necessary requirement (some would even call it a necessary evil).  It is also very confusing.

Some may wonder if they really do have to have insurance to drive or is it just something that the insurance companies push to make more money.  Others have no idea what type of vehicle insurance is available or even how much this extra driving expense is going to cost them.

Do I Have to Have Vehicle Insurance?

Vehicle Insurance (also called car insurance or auto insurance)  is required in most states if you wish to own and drive a vehicle.  Exactly what type you have to have will depend on your situation.

If you own your vehicle and have a clean driving record, the only coverage that you are required to carry on your vehicle is liability insurance.  However, this coverage only pays for the medical bills and damages that you cause to another person.  Liability insurance does not cover any of your own medical bills or damages to your vehicle if you are the reason for the accident.

In the event that you do not own your vehicle and have a loan on it, your lender will require that you also carry comprehensive and collision coverage on your vehicle.  These coverages protect their investment by making sure that damages can be fixed and also that your loan is at least mostly paid off in the case that the car is totaled in an accident.

If you have a bad driving record or have been caught without insurance, the state may require that you carry SR-22 insurance.  This works as both security to the state that you have insurance in place while you are driving and a certain kind of punishment for your past bad driving decisions.

The minimum vehicle insurance required differs from state to state.  You can find out what is required in your state by talking to a local insurance agent or contacting your state’s Insurance Commissioner’s office.

What Kinds of Vehicle Insurance are Available?

Vehicle insurance comes in all shapes and forms.  It can come in the form of a policy that provides coverage for private passenger vehicles that are used for day to day use or it can be created to cover a classic car that is kept in storage most of the year.  Policies are also available for smaller commercial vehicles that are used to transport people (taxi cabs) all the way up to special policies written for large trucks used to transport goods across country.

How Much Does it Cost?

Shopping for vehicle insurance is very similar to shopping for clothes.  Clothes come in different sizes, shapes, colors, material and are put together by different designers.  The price of each piece of clothing depends on what options you choose.  This is the same for vehicle insurance.

The price that you end up paying for vehicle insurance depends on the size of your liability limits and deductibles, the shape or type of your vehicle, how colorful your driving history is and what coverages you need to make up the fabric of your policy.  On top of all that, each company that designs or puts together the policies charge different rates.  Some companies are very cheap and then there are the designer companies that charge an arm and a leg for the same coverage that the cheaper companies offer.

So there is no one price that you can expect to pay for vehicle insurance.  To find out how much it is going to cost you, get quotes from local insurance agents and also to the insurance companies that sell direct. Just make sure that you are getting quotes for the same coverage to get the best idea on the prices.

One tip for shopping: get quotes from multiple carriers is by using the quote form at the top of this page.

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Todd Clay

Todd Clay is a former insurance agent with the largest insurance company in the United States. He earned his Bachelor’s from the University of Texas. He’s worked in several fields but has specialized in insurance, financial-related information, and technology. He blogs at Car Insurance Guidebook.

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