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Why is car insurance getting so expensive?

Vehicle insurance has risen steadily, leaving car owners increasingly out of pocket. The rise in annual car insurance rates comes from factors like increasing costs of parts and repairs as vehicle technologies become more sophisticated. More disasters-related claims have also added to costs. If you understand the factors that impact the cost of premiums, you can take action to reduce the impact. 

9 Reasons why your car insurance is expensive

Here are nine major factors affecting your insurance costs. 

1. You live in an expensive location

The cost of vehicle insurance is affected by location-specific factors, like the weather and the crime rate. 

According to Market Watch, full coverage car insurance in the USA averages $2,008. The three most expensive states for car insurance are:

• Michigan: At $3,643 per annum, in Michigan, you’ll pay 81% more than the national average for car insurance.
• Florida: At $3,244, Florida is 62% above the national average. Hurricane claims and uninsured drivers increase the risk for insurers in Florida. 
• Louisianna: In Louisiana, you’ll pay $3,040, 51% over the national average. 

The states offering the least expensive car insurance are:

• Vermont: At $1,199, car insurance in Vermont is 40% lower than the national average due to lower population densities and fewer claims.
• Maine: At $1,238 annually, Maine is 38% below average.
• New Hampshire: The average insurance in New Hampshire is $1,362, 32% lower than the average.

2. You are still young

Car insurance rates are based on risk and younger people are statistically riskier drivers. They tend to indulge in riskier behavior and have less driving experience. That makes them more likely to have an accident. 

Teenagers could pay as much as $8,543 annually, while experienced drivers (26 to 50 years) with a clean record can negotiate the lowest rates. Older drivers may pay a little more as age affects reaction times, increasing their driving risk.

3. You have a bad driving history

A bad driving history indicates that you are a risk and more likely to have an accident and claim damages. The claim history factors impacting insurance premiums include:

• At-fault accidents: If you cause an accident, expect a premium increase. Also important is the number of people involved and the accident severity. 
• DUI/DWI: A conviction for driving under the influence and driving while intoxicated will raise your risk profile and your premiums. 
• Speeding and moving violations: Breaking the rules of the road suggests you disregard traffic regulations, raising your risk of accidents. 

4. Your credit score is low

With a few exceptions (California, Hawaii, and Massachusetts), insurance companies use your credit score to calculate your premiums. They consider your credit score a gauge of your financial responsibility. The lower your credit score, the higher your insurance claim. The logic behind including your credit score in the risk calculation is that there is a correlation between credit scores and the likelihood of an auto accident claim.   

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5. Your car type is expensive to insure

The type of car you drive is a major input into the insurance cost. More expensive cars cost more to replace. Spares and repairs are also rising in price. 

Your vehicle may qualify for a discount if it has a good safety rating from organizations like the National Highway Traffic Safety Administration (NHTSA) or the Insurance Institute for Highway Safety (IIHS).

In addition, insurance companies may load premiums on high-performance cars. 

6. You have an insurance claims history

Insurance companies view your historical claims as a strong indicator of future claims. The more you have claimed in the past, the more you will pay. At-fault accidents will raise your risk profile and your premiums. High-claim accidents will have a larger impact than minor claims. The further back a claim is in your history, the less the impact on the premium. Your coverage will also influence the effect of claims on the insurance. Claims will have a higher impact on collision and comprehensive coverage than on liability only. 

7. You have additional coverage

You may choose to buy full-coverage auto insurance instead of minimum liability insurance. With additional coverage, the insurance company takes more responsibility for the accident costs, so you’ll pay more. Additional coverage may also include costs like roadside assistance and rental car reimbursement. 

8. You have chosen an expensive car insurer

Every insurance company uses different risk assessment tools and may weigh the factors differently. This could result in significantly different premiums from one auto insurer to the next. Auto insurance companies may offer clients discounts for various attributes like low mileage or multiple car insurance. 

9. Marketing conditions

Marketing conditions affect prices in any industry and the auto insurance industry is no different. The number of insurers offering competitive rates and discounts could affect the insurance offerings. Shop around to find the best insurance for you. 

How to reduce your car insurance premium

With so many factors affecting the cost of your car insurance, you can take action to reduce the impact. 

• Compare quotes: Insurance premiums can differ substantially between insurance companies. Shop around and compare premiums with benefits. 
• Increase your deductible: You could reduce your monthly premiums by increasing the deductible. You’ll pay more of the claim if you’re in an accident, but the premium savings could save you a significant sum. 
• Take a defensive driving course: Some insurers offer discounts on liability insurance if you can show that you are less of a risk with a defensive driving qualification. 
• Package your insurance: You could save as much as 10% on your premiums by adding your car insurance to your home insurance or packing two or more cars in the insurance contract. 
• Improve your credit score: Insurers may offer good payers with a credit score of between 690-850 preferential rates. 

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Shop around for vehicle insurance coverage 

Your car insurance premiums may feel like a burden, but they are necessary. Insurance gives you peace of mind. If you have an accident, you’ll be happy to avoid the unplanned expenses. Don’t settle for the first car insurance quote you get. Shop around and work on reducing the impact of manageable factors, like your credit score.  

FAQ 

Learn how to cancel car insurance with simple steps to protect your car and insurance premiums with the necessary vehicle liability insurance. Also, keep reading to see how you can get personalized offers from our trusted partners through MoneyLion!

How to cancel your car insurance

There are a few key initial steps to consider to cancel car insurance. The main points (or potential pitfalls) to keep in mind are:

• Contact your insurance provider immediately if you’re planning to move to a new state to ensure that your policy aligns with the car insurance policies for that state. If needed, plan to change policies or insurance providers. 
• Have another policy in effect before canceling your existing coverage to avoid insurance premiums increasing or fines from your state’s Department of Motor Vehicles (DMV).
• If you won’t be driving for an extended period of time—for example, due to an injury or a long-term trip—you can opt to suspend your car insurance instead of canceling; this will help avoid issues later.

Ready to cancel your car insurance? Follow these four simple steps. 

Step 1: Evaluate your insurance coverage

If you’re canceling because you think you can get better premiums elsewhere, the first key step is to evaluate your current insurance coverage. Compare total insurance premiums, additional fees, coverage amounts, and deductibles to select the best insurance options. To be prepared for your research, you can learn more about what to consider when shopping for car insurance. 

Step 2: Shop for a new policy

When looking for a new auto insurance policy, compare the total rates and coverage amount. For this, you’ll usually need to input the make and model of your vehicle and may need to provide information about your driving history, such as accidents or driving penalties within a certain number of years. 

Look at deductibles, what’s covered, and whether any extras, like roadside assistance, are included. You can also check out comprehensive car insurance and see the breakdown of what influences your car insurance premiums, and then find the best offers below. 

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Step 3: Determine when to cancel your policy

Determining when to cancel your policy is crucial to avoid fees or rising premiums from lapses in coverage. Schedule your new policy to begin before your old policy is officially terminated. This will often involve speaking to both insurers to schedule the dates for starting and ending the next coverage with an overlap to avoid any lapses. 

Step 4: Contact your current provider

Once you have a new policy, you’ll have to contact your existing car insurance provider. Each company has different policies for cancellation. Some may charge a cancellation fee, while others may require a 30-day notice before cancellation. Speaking to an agent from the company can help clarify the necessary steps.  

Call, mail, or fax your provider

The simplest option to cancel your car insurance policy is to call the insurer. If your insurer has an app, you can request cancellation in the app or on a website. 

However, some insurers will request a written cancellation request. While these have become less common, you’ll need to include key information if you have to provide a letter requesting your coverage to end. 

The letter should include your full name, the policy number, and the date you want to cancel the policy. If you paid for the full policy upfront and a few months of coverage remain, you can request a refund for the unused part of the policy. You may be able to fax this letter or be required to mail it.  

Visit your provider’s office

If you prefer to do things in person and your insurance provider has a local office, you can visit the office and request cancellation. The provider can clarify any additional steps needed, such as whether you need to sign a cancellation request or submit a letter requesting cancellation. 

Let your new provider handle it

Sometimes, after signing up for a new auto insurance policy, the new provider will cancel the old policy for you. They can get confirmation of cancellation from the old provider. You can also request a policy cancellation notice directly from your previous insurer. If you do not receive a notification, you can ask them to provide one as a written transaction record.

Reasons to cancel your auto insurance

There are so many reasons to cancel auto insurance, such as relocating across the country or overseas, changing insurance companies, or no longer using your vehicle for driving. Even a short move could mean canceling auto insurance. For example, if you’re moving to New York City from upstate New York, you might decide to sell your car and cancel the auto insurance policy. 

Likewise, a move just across state borders could mean a change of auto insurance if your existing provider doesn’t cover your new state. Of course, if you sell a car without plans to replace it, you should cancel your auto insurance policy. And if you own an older vehicle, you might weigh the risks and decide to drop optional collision and comprehensive coverage. 

What happens after you cancel your policy?

After you cancel your auto insurance policy, you should receive a statement or confirmation of cancellation from the auto insurance provider. Whether you get a refund or must pay additional fees when you cancel depends on the insurer’s policy and what you’ve already paid. 

If you paid your premium in advance, for example, for a year, and canceled before the term ended, the insurance company might refund the remaining balance. Many auto insurers will prorate your refund by calculating the days your current policy was in effect and refund the difference.

However, each state has its own statutes and regulations about how insurance companies handle refunds. Check your state policies and contact the insurance company to confirm refund eligibility. If you can switch plans close to when it is set to renew, you can notify the insurer and switch without worrying about recovering a refund. 

You might also have to pay a cancellation fee. Each state determines whether a cancellation fee is allowed. If fees are allowed in your state, the insurer will set the fee and deduct it from any prorated refund. If no refund is owed, you’ll receive a bill. 

Some insurers charge what’s called a short-rate fee. In that case, they charge a percentage of the unearned insurance premium, usually around 10% of the refund amount. Other insurers charge a flat fee. Knowing your state’s requirements can help you be prepared for the cancellation fees.   

What if your insurance provider cancels your policy?

There are car insurance cancellation laws to prevent the insurer from dropping your policy for no reason. However, in some cases, your insurance provider may also cancel your policy. For example, if your driver’s license has been revoked or you regularly miss payments. 

You should never “cancel” your insurance by just not paying. That can lead to a host of complications down the road. While the provider will eventually cancel a policy for nonpayment, you’ll have to pay charges for coverage up to that point and possible additional fees. 

It can also make securing car insurance in the future more difficult. If you plan to find a new car insurance company, the missing payments could make securing affordable rates more difficult. But even in that case, you should be able to get auto insurance in the future.

The revocation of a license is permanent, so you will not be able to get auto insurance after your license is revoked. However, if your license is suspended, you may still be able to get insurance, but you might have to pay a higher premium. 

Final tips on canceling car insurance

Canceling car insurance isn’t difficult, but requires some attention to avoid common mistakes. If you’re switching to a new policy for any reason, the key is to ensure an overlap between your new and old policy. If you cancel the insurance because you will no longer drive, cancel the policy only after you sell or stop using the vehicle. 

Communication is key to ensuring you don’t get hit with unexpected fees. Start by speaking with your existing insurance provider, understand the terms of the new insurance provider, and set the dates for cancellation. If you’re looking for a lower monthly premium, you can also check tips to lower your car insurance to potentially save more. 

FAQ 

If you’ve been deemed ineligible for a standard insurance policy, high-risk insurance may be right for you. This guide will help you understand this specialized coverage option, or you can search for a policy below.

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Understanding high-risk auto insurance coverage

Also known as non-standard auto insurance, high-risk auto insurance coverage is designed for individuals considered at higher risk for making an insurance claim. This risk can be based on statistical likelihood as well as a driver’s past behavior. 

High-risk insurance premiums are usually much higher than standard policies because policyholders are considered to be a greater liability to the insurer. 

What makes you a high risk for auto insurance?

Insurance providers may deem you as “high risk” if you:

• Have a history of moving violations or accidents
• Have no history of auto insurance 
• Have a history of lapses in coverage
• Are a new driver with limited experience
• Have poor credit
• Drive a high-value vehicle such as a sports car

Any of the above criteria will indicate that you have a relatively high likelihood of insurance claims. Depending on your provider, you may not qualify for a standard policy, but you can still qualify for a high-risk policy.

What is covered by high-risk auto insurance?

Most high-risk auto insurance policies offer basic coverage such as:

• Liability insurance
• Collision insurance
• Comprehensive coverage
• Uninsured/underinsured motorist protection
• Medical payments/personal injury protection (PIP)

Some providers may also offer add-ons and customizations that include roadside assistance, rideshare coverage, and more.

What isn’t covered?

High-risk policies typically don’t extend coverage to:

• Drivers excluded from the policy
• Intentional acts or damage
• Commercial use
• Other drivers using the car without permission
• Certain acts of God
• Personal belongings stolen from the car
• International travel

Make sure to check your policy carefully for exclusions and other stipulations that could affect coverage.

How much is high-risk auto insurance?

Your high-risk auto insurance rates can vary by your age, insurance provider, credit score, and other important factors. Here’s a breakdown of the major factors influencing your perceived risk level and insurance costs.

Teen drivers

According to the CDC, teen drivers have a higher risk for automobile accidents and lack the skills to avoid risk-taking behaviors. 

Car and Driver magazine states that the average insurance premium for two parents and a teen is $447 per month. For teens pursuing insurance on their own, the average annual cost is $8,108 for a 16-year-old female and $9,422 for a 16-year-old male.

Speeding tickets

Speeding tickets are citations issued by law enforcement for violating the posted speed limit. Even a single traffic ticket can raise your insurance rates. According to data from Forbes Advisor, a speeding ticket can raise your insurance premium by 24%, which comes to an additional $380 per year, on average.

Multiple accidents

Insurance providers often raise rates after an automobile accident. One report indicates that insurance premiums increase by $665 per year after a single accident. Filing multiple claims within a short time (such as a year) may cause your rates to increase still further, though it depends on the number of claims and their severity.

DUI

In many cases, a standard auto insurance policy is no longer an option after a DUI. Additionally, a DUI can raise your rates by 70% on average, so you can expect high insurance premiums with a high-risk auto insurance policy. 

How to save on high-risk auto insurance costs?

While a high-risk auto insurance policy will be more expensive than standard coverage, there are still ways you can save on your insurance costs. Here are some tips on how to keep your rates as manageable as possible.

Maintain a clean driving record

Speeding tickets and accidents may raise your rates, but that also means that avoiding these incidents can lower them. The longer you can go without receiving a speeding ticket or getting into an accident, the more likely your insurance provider will be willing to reduce your rates. 

Drive a safe and reliable vehicle

Sometimes, even the car you drive affects your insurance premiums. Sports cars, for instance, are harder to insure since they’re associated with more car accidents and cost more to repair. Driving a safe and reliable vehicle (a standard sedan, for instance) can keep your rates low and may help you avoid costly accidents.

Increase your deductible

You might be able to secure a lower monthly premium if you agree to a higher deductible. A deductible is the upfront cost you pay before your insurance coverage kicks in. 

By agreeing to pay more upfront, your insurance provider will offer you lower monthly payments. Just make sure that you have enough money to cover a higher deductible.

Take advantage of available discounts

Ask your car insurance provider about any available discounts. Bundling home and auto insurance is a common way to save on both policies. And if you’re married, you and your spouse may find lower rates with multi-car policies.

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Consider taking a defensive driving course

Providers may offer discounts if you take a defensive driver course. Even if your insurance provider doesn’t make such accommodations, these courses can improve your ability to react and respond to roadway hazards, minimizing your risk of future accidents.

Improve your credit score

Your credit score will also affect your insurance rates. You can help improve your score by making consistent, on-time payments to your creditors, or consider using a credit builder loan to improve your credit score and bring your insurance rates down.

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Avoid filing small claims

When it comes to insurance rates, the fewer claims the better. If you’re in a minor accident with minimal damage, you may be better off paying out of your pocket rather than risk a rate hike from your insurance company. 

Legally, most states still require you to report all accidents to your insurance provider. But when you can avoid filing a claim, this can save you money long-term. 

How long does high-risk insurance last?

Car insurance companies typically look at the last 3 to 5 years of your driving record. Likewise, you can generally expect your high-risk policy to last 3 to 5 years, though some infractions (such as a DUI) may push this period to 10 years. 

Reduce costs while improving your driving habits

High-risk insurance policies can provide coverage, even to those with a blemished driving record or little driving experience. While these policies will cost a bit more than standard coverage, following some of the above tips can reduce costs while also improving your driving habits.

FAQ

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Understanding full coverage auto insurance

Certain lenders may require you to prove that you have car insurance before they’ll hand over money for an auto loan. They may use the term “full coverage” which doesn’t have a universal definition. Instead, the term usually refers to the minimum coverage that meets state law and protects your car. 

Liability insurance, for instance, is a state requirement. Comprehensive and collision coverage assist with repairs. Other coverage, like uninsured motorist coverage, medical payments, or rental reimbursement, is optional. These additions may be useful, especially for high-risk drivers, but they could drive up the total cost of insurance. 

How much is the cheapest full-coverage auto insurance? 

Full coverage auto insurance can vary from person to person. Shop around for your insurance – a number of factors impact the total cost. 

Age 

Insurance rates are typically higher for younger drivers. Rates usually drop once you turn 25, which is the same age rental car companies start recognizing drivers as safe. The rate you pay at age 25 could be almost 50% lower than what you pay when you’re 18. 

Senior Citizens

Senior citizens may also pay higher rates for car insurance. The period from age 25-74 typically has the lowest rates. Once you hit 75, your rates will start going back up. 

State where you live

Each state will have different market rates for repairs and different laws on how much coverage you need. Factors like that mean the rate your insurance company charges for your auto policy will change depending on where you live.

Credit score (fair, good, excellent)

Having a good credit score may encourage insurers to offer you a lower premium. Creditors consider a score of 580 to be fair; a “good” score starts at 670; a score of 740 to 800 is very good; above 800 is excellent. 

Some states don’t allow auto insurers to consider credit scores when deciding premiums.

After you get into 1, 2, and 3 accidents

Insurance companies will usually take into account who’s at fault for an accident before raising rates. If the crash was your fault, you may see your auto insurance bill go up by about $665 per year. Rate hikes vary depending on your auto insurer, and could be as much as 20-40%. Getting in more accidents will only make it go up even higher.

After you get a speeding ticket

A single speeding ticket might not make your auto insurance rate go up, but several of them will likely have an impact. The actual amount you wind up paying will vary, but Progressive says a speeding ticket can raise your rate by 15%. That’s partially because you may lose any discounts you had through a safe driver program. 

After DUI

Some insurers will not give you a policy after you’ve gotten a DUI or DWI. Those that still do will see their rates go up. At Progressive, your first DUI will raise your rate by about 13% on average nationwide. Some law firms have found rates can go up by as much as a third. Other analysts believe it could go up closer to 70%, adding nearly $1,500 to your car insurance bill.

DUIs stay on your record for 3-5 years, depending on the state. After that, your insurance rate may go down again.

Gender

Men tend to get in more traffic incidents , especially deadly ones. As a result, auto insurers often charge men more than women. 

A 25-year-old female driver will pay around $1,870 a year on average for her car insurance. A male of the same age could pay $94 more than that, with some companies charging the average 25-year-old male driver $1,964 a year.

For military veterans

Many large auto insurers offer discounts of up to 15% for military veterans. That may apply to those in the service, veterans, and people affiliated with certain military organizations. For example, Geico also has discounts for emergency deployments.

8 Ways to get the cheapest full coverage auto insurance

Full coverage auto insurance may be non-negotiable. Look out for yourself by making sure you’re getting the policy with the best coverage at the best price.

1. Compare quotes from multiple insurance providers

Remember that not all insurers have the same set of standards. The same amount of coverage for car insurance with one company might be cheaper with another.

2. Increase deductibles to lower premiums

Choosing to have a higher deductible in the event of an accident will lower your rate. This is a risky move, because if you get in an accident you’ll likely have to pay more out of pocket, but some customers might prefer lower premiums. 

3. Look for discounts

Research what discounts different insurers offer. Some may knock a few bucks off your rate if you join certain programs, show you’re a good student, switch to paperless or automatic billing, and more.

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4. Bundle auto insurance with other policies

Bundling polices means getting coverage for different items through the same insurer, like home and auto. That can save you as much as 25% on your policy.  

5. Know what to forgo

You can skip some coverage and save a few bucks on your overall policy. For example, if you have a backup vehicle, maybe you don’t need to pay for car rental reimbursement. 

6. Maintain a good driving record

The better your driving record, the lower your insurance costs. Speeding tickets and other run-ins with the law will raise your rates. 

7. Choose a vehicle with safety features

Safety features can lower your insurance premiums. Those include anti-theft devices, collision-warning technology, anti-lock brakes, and rear-view cameras. Since those tools lower the likelihood that your insurer will have to fork money over, they make you low risk and therefore lower your rate. 

8. Improve your credit score

Make on-time payments, consider taking out a credit builder loan or other small loans, to hopefully increase your credit limit if it’s low. A higher credit score may get you lower auto insurance rates.

Considering a way to build your credit? Join MoneyLion WOW membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check**.

Getting full auto coverage at affordable rates

The rate you pay for your auto insurance depends on a wide variety of factors. But you don’t have to simply accept your fate! You have plenty of ways to lower your rate and customize your coverage.

FAQ 

What does it mean for a car to be totaled?

According to car insurance companies, a car is totaled when the cost to repair the car exceeds a percentage of the car’s value, usually 75%. 

Insurance companies will look at the following:

• Vehicle age
• Vehicle mileage
• Points of impact from the accident
• Repairability
• Airbag deployment

With these signs, depending on your coverage, your auto insurance company may reimburse you for the current market value of your vehicle. If your car is old, has high mileage, or has extensive damage to the frame, your insurer will probably consider it totaled.

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What happens to my car if it’s declared totaled?

In most cases, if the car is declared totaled, the insurance company takes possession of it and pays the policyholder the actual cash value of the vehicle before the accident. If the car is financed, the insurer typically pays the lender first; any remaining value will go to the owner or policyholder. 

After the insurance company takes possession of the car, it is usually sold to a salvage yard, auctioned off as a salvage vehicle, or sold for parts. Sometimes, the owner may choose to keep the car, but it will have a salvage title. 

If the vehicle totaled is part of a logistics business, you can file a report with the U.S. Accident Management Center (AMC).

Who gets the insurance check when my car is totaled?

How much you’ll get paid depends on whether you own the vehicle outright. If you still owe money on an auto loan, the lender will be paid by the insurer first. If you own the car without any loans or liens, you will receive a check for the value assessed by the insurance company. If there is a loan, the check usually goes first to the leasing company or the lender.

If you owe money on the vehicle, you should notify the lending company that your car has been totaled. Lenders typically require payment in full for the loss of your car, which is usually paid directly by the insurer. In some cases, the insurer will pay you, and you’ll be responsible for the full repayment of the loan. 

In addition, who the insurance policyholder is will affect the payout. In most cases, the policyholder is the vehicle’s registered owner, so they are entitled to the insurance payout. When a lienholder, such as a bank or financial institution, has a financial interest in the vehicle, it may receive the payout directly, and you’ll receive the difference between what was owed to the lender and the assessed vehicle value. 

Example 1: You own an SUV valued at $20,000. You had an auto loan on it but have already paid it off, so you own the vehicle outright. When the insurance company takes possession of the vehicle, you’ll receive a check or a transfer for the value of $20,000, minus any deductible you have on the policy. 

Example 2: You own a vehicle valued at $20,000. You took an auto loan for $15,000 and have paid back $8,000. When the insurance company took possession of the vehicle, the lender received a check for $7,000, the remainder of the loan value. You receive a check or a transfer for the value of $13,000, minus any deductible you have on the policy. In some cases, the lender will receive the full $20,000 check and then send you a check for the difference. 

How long does it typically take for the insurance company to process a totaled car claim?

It can take anywhere from a few days to a few weeks for an insurance company to process a totaled car claim, although it could take up to 30 days. Some states have requirements limiting insurance companies’ time to process claims, ensuring you get your payout faster. 

What types of insurance will cover the cost of a totaled car?

Not all insurance policies cover a totaled car, such as specialized insurance for young drivers or high-risk drivers. The three main types of coverage that may pay for a totaled car are collision coverage and comprehensive coverage.

Comprehensive coverage

Generally, comprehensive coverage covers the vehicle’s value when it is destroyed by fire, weather-related events, vandalism, theft, or other issues that aren’t covered by collision coverage or related to a driving accident. With comprehensive car insurance, you’ll get the full value of the totaled car minus any deductible.  

Collision coverage

If the vehicle collides with another vehicle, a guardrail, a tree, or a building, collision coverage will cover the car’s value minus any deductible. Collision coverage usually covers any collision, regardless of whether it’s your fault or another driver’s. If there is a deductible, you’ll be responsible for that amount. 

Full-coverage car insurance

If you have full-coverage car insurance, it generally rolls comprehensive coverage, collision coverage, and liability coverage into a single insurance policy. This insurance will cover the full value of the totaled vehicle, regardless of the reason for the damage, minus any deductible.   

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How is the actual cash value (ACV) of a totaled car calculated?

ACV is used to determine how much of a payout you will receive for a totaled vehicle. A totaled car’s ACV is the assessed market value at the time of the accident or loss. The vehicle’s age, mileage, condition, and pre-existing damages can all affect ACV. Your insurance company will calculate ACV by subtracting depreciation, damages and wear and tear from the market value to reach the replacement cost value.

Can I negotiate the ACV of my totaled car with the insurance company?

Yes, you may negotiate with the insurance company. If you believe the insurance company’s valuation is too low, you can negotiate and provide evidence to support your claim for a higher ACV. To build sufficient evidence, consider including recent sales listings of comparable vehicles in your area or repair quotes from trusted mechanics.

Protecting Your Vehicle

If you’ve got adequate insurance coverage, even if the worst happens, you’ll recoup the vehicle’s market value. While it may take some persistence to get the claim through — and you can always negotiate — the crash doesn’t have to be a financial loss, even if processing takes time. Whether the vehicle is financed or not, its current market value will determine your payout. 

FAQ 

Understanding full coverage car insurance

Full coverage car insurance is a group of different coverage types — it’s not a policy itself. It gets its name because it protects against most kinds of damage.

If you’ve just financed a car, there’s a good chance your lender requires you to have full coverage insurance. But even if your car is paid off, you might want the extra peace of mind that only being fully covered can bring.

What are the components of full coverage car insurance?

Full coverage car insurance is usually a combination of three car insurance policy types.

Collision coverage

If you only have liability coverage and you cause an accident, your car’s repair costs are on you. Collision coverage pays to fix your car even if you’re at fault, though, as you might guess, it’s more expensive than liability and comprehensive coverage.

Comprehensive coverage

Comprehensive coverage pays for repairs or replacements if your car is damaged outside of a collision with another car or object. For instance, it usually covers weather damage, vandalism, theft, damage from falling objects, or damage from hitting an animal.

Comprehensive coverage can help you avoid expensive repair bills in the event of unexpected damage. However, it may add a significant amount to your monthly premium.

Liability coverage

Almost every state requires you to have liability coverage. This protects you if you’re at fault in an accident. It typically covers the costs and expenses of anyone you injure.

Liability coverage can protect you from financial ruin if you cause a serious accident. If you’re caught driving without it and you live in a state where it’s required, you may face criminal charges.

Is full coverage car insurance mandatory?

Most states require you to have liability insurance but not comprehensive or collision. However, full coverage is mandatory for some lenders. If you are financing a car, your lender might require you to have full coverage insurance until the loan is paid off.

If you’re looking for a way to save on car insurance, MoneyLion can help! Get a quote in minutes, compare, and save an average of up to $1,500/year with Savvy.

Do you need full coverage car insurance?

Even if you aren’t required to have full coverage insurance, you might decide to get it. Here are some things to consider.

Age and condition of the vehicle

If your car is brand-new or close to it, it might be worth protecting your investment with a full coverage policy.

Driving history

If you’ve caused accidents in the past or have a history of reckless driving, full coverage insurance might be a good idea.

Geographical location

If you live in an area prone to hail, tornadoes, or other events that might damage your car, full coverage or at least comprehensive coverage is a good idea.

Your risk tolerance

If you’re someone who is generally risk-averse, you might find that you enjoy better peace of mind when you have full coverage.

Financial affordability

Full coverage can be expensive. Take a look at your finances to see if you can comfortably afford to pay it.

How much does full coverage car insurance cost?

What is a full coverage car insurance policy’s cost? It varies based on a few different factors.

Vehicle make and model

Newer, more expensive cars cost more to repair and replace, so they’ll be more expensive to insure.

Age and driving experience

Usually, younger and less experienced drivers pay higher premiums, as they pose a greater risk to the insurance company.

Driving record

If you have a history of reckless driving, DUIs, or speeding tickets, your premiums will be higher because the insurance company sees you as a risk. However, many insurance companies only look back three to five years.

Location

Insurance companies consider some locations to be high-risk. If you live in an area with higher crime rates or a higher rate of accidents, your premiums might be higher.

Credit score

Some insurance companies factor in your credit score when deciding your rate. Higher scores generally mean lower premiums.

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Annual mileage

If you spend a lot of time on the road, you’ll likely have higher premiums than drivers who don’t.

Coverage limits and deductibles

Low-deductible policies tend to be more expensive than those with high deductibles. Likewise, higher coverage limits will make your policy more expensive.

Insurance Score

Insurance companies may calculate an insurance score that predicts how likely you are to file claims. This is somewhat similar to your credit score, but insurance companies don’t reveal exactly how they calculate it.

If you’re looking for ways to save on car insurance, MoneyLion can help! Save hundreds* on auto insurance by turning on Driver Score powered by Zendrive⁴, a program that measures your safe driving habits, such as your speed, braking, and acceleration.

*Average savings is based on program data. Not all drivers will be eligible or qualify for an offer or discount. Actual savings varies based on your driving behavior. Not valid in CA or certain other states.  

How to find the best full coverage car insurance policy

What is a full coverage car insurance policy? The answer varies by insurance provider. Here’s what to do before you pick yours.

Review different insurance companies and their offerings

Go beyond just getting quotes. Make sure you understand what is and isn’t covered under each company’s policy.

PRO TIP! If you’re curious about other auto insurance options, MoneyLion can help. Search numerous insurers and find savings in seconds at the Auto Insurance Marketplace. Plus get free support with some partners when you make the switch.

Understand coverage options and policy details

Reading the fine print is critical when choosing a policy. You’ll also want to understand the different coverage types each provider offers.

Seek professional advice and assistance when needed

Insurance can be hard to understand if you aren’t an expert. If you can, reach out to an insurance agent or similar professional for guidance. Independent insurance agents don’t work for a specific company, so they may be more likely to give you unbiased advice.

Is Full Coverage Insurance Right for You?

Full coverage insurance can keep you and your car protected against the unexpected. But it may not be right for everyone — you need to weigh the potential benefits against the cost of your premiums.

Want to make smart financial decisions? MoneyLion can help!

FAQ

We’re going over everything to know about car insurance premiums and the factors that affect how much you pay. Whether you’re a new driver or a seasoned motorist, you’ll want to take a look at this guide for advice on how to find the coverage that best suits your needs.

What is a car insurance premium?

A car insurance premium is the amount of money you pay to an insurance company in exchange for coverage. It’s a regular payment typically made on a monthly, biannual, or annual basis, depending on your policy. 

Your premium amount is determined based on factors, such as: the type of coverage you choose, your driving record, the make and model of your vehicle, your age, and your geographical location.

The concept behind how a car insurance premium works is simple. Insurance companies pool premiums collected from policyholders and use those funds to pay for claims that arise.Each policyholder’s premium is calculated according to the level of risk they present to the insurance company. 

PRO TIP! If you’re curious about other auto insurance options, MoneyLion can help. Search numerous insurers and find savings in seconds at the Auto Insurance Marketplace. Plus get free support with some partners when you make the switch.

Factors affecting car insurance premium

Car insurance premiums vary from driver to driver. They can be as unique as individual drivers themselves because premiums are determined by a wide range of personal factors. 

Age 

Younger drivers usually face higher insurance rates because they carry greater risk. According to the CDC, the risk of car crashes among teens ages 16 to 19 is higher than any other age group. Young drivers tend to be involved in more accidents, making them a greater liability for insurance companies. As a result, insurance providers often charge younger drivers higher premiums to offset this risk.

Driving record 

If you have a history of accidents or traffic violations, such as speeding tickets or DUIs, it’s likely that insurance companies will view you as a higher risk to insure. This factor can translate to higher premiums to offset the potential cost of future claims. 

On the other hand, a clean driving record with no accidents or traffic violations can work in your favor when it comes to accessing lower car insurance premiums. If you’re a high-risk driver, take a look at these tips for finding the best insurance. 

If you’re looking for ways to save on car insurance, MoneyLion can help! Save hundreds on auto insurance* by turning on Driver Score powered by Zendrive¹, a program that measures your safe driving habits, such as your speed, braking, and acceleration.

*Average savings is based on program data. Not all drivers will be eligible or qualify for an offer or discount. Actual savings varies based on your driving behavior. Not valid in CA or certain other states. 

Vehicle type 

Insurance companies take into account factors about your vehicle, such as the make, model, and year of your car. Cars that are more expensive to repair or replace, or have a higher theft risk, generally come with higher insurance premiums. 

The reason for this boils down to the fact that the insurer would have to pay more in the event of a claim. Additionally, certain vehicle models may have higher accident rates or be more prone to damage, resulting in higher insurance costs.

Deductible amount 

The deductible is the amount you pay out of pocket before your insurance coverage kicks in. Generally, a higher deductible will result in a lower premium, while a lower deductible will increase your premium. 

By choosing a higher deductible, you are taking on more financial responsibility in the event of a claim, which reduces the risk for the insurance company and thus lowers your premium.

Coverage limits

Coverage limits refer to the maximum amount your insurance company will pay out in the event of a claim. The higher your coverage limit, the greater protection you will have, but this can also lead to higher premiums. 

Insurance companies are taking on more risk by agreeing to pay out a higher amount in the event of a claim, so they tend to charge higher premiums to compensate for that increased risk.

Credit score

Some insurance companies use credit scores as a factor in assessing risk and determining premiums. A higher credit score generally indicates to the insurance company that you are more financially responsible, which makes you a lower risk to insure. As a result, having a higher credit score may result in lower insurance premiums.

If you’re looking to save on your car insurance premium, it’s recommended to focus on boosting your credit score. You can do this by paying your bills on time, keeping your credit utilization rate low, and avoiding opening too many new accounts in one go. 

Considering a way to build your credit? Join MoneyLion WOW membership and apply for up to a $1,000 Credit Builder Loan with a competitive rate and no hard credit check*.

Location

Your location can play a significant role in determining your car insurance premium. Insurance companies typically take into account areas with higher rates of accidents, theft, and vandalism. If you live in an area with a higher frequency of accidents or a higher crime rate, you are more likely to file a claim, which means the insurance company will need to spend more on claims. As a result, they may charge higher premiums to offset these potential costs.

Annual mileage

The more you drive, the higher your risk of being involved in an accident. Insurance companies consider this risk when determining your premium. If you drive longer distances, you are more likely to encounter hazardous situations on the road, increasing the likelihood of an accident occurring. As a result, higher annual mileage generally leads to higher premiums.

Gender

Data shows that male drivers are more likely to be involved in accidents and to engage in risky driving behavior. As a result, younger males will tend to pay more in car insurance premiums than their female counterparts. 

Keep in mind that individual driving records and history play a significant role in determining premiums, so not all male drivers will automatically face higher rates.

Marital status

It’s not uncommon for insurance companies to grant lower car insurance premiums for married couples versus single individuals. Studies have shown that married individuals are less likely to engage in risky driving behaviors and are more likely to adhere to traffic laws. As a result, they may be more likely to benefit from potential savings on their car insurance premiums.

How the type of car insurance coverage affects your premium

Choosing the right car insurance coverage is crucial when it comes to protecting yourself and your vehicle in case of an accident or other unforeseen incidents. Not all coverage options are created equally. Some may have a different impact on your car insurance premiums than others.

Liability coverage

Liability coverage covers the expenses related to injuries and property damage to others if you’re at fault in an accident. It’s typically a legal requirement in the majority of U.S. states. 

It typically includes two components: bodily injury liability and property damage liability. Choosing higher liability coverage limits will result in a higher premium, as you’re purchasing more protection from potential third-party claims.

Collision coverage

Collision coverage pays for damages to your own vehicle in a collision with another vehicle or object, regardless of fault. If you choose a high deductible for collision coverage, your premium may be lower, but it also means that you may have to pay more out of pocket in case of an accident.

Comprehensive coverage

Comprehensive coverage protects your vehicle from non-collision incidents such as theft, vandalism, natural disasters, and animal collisions. Premiums for comprehensive coverage can vary based on factors like your deductible amount and the region’s risk of certain perils.

Why it is important to compare car insurance premiums

Taking the time to shop around and compare car insurance premiums can work to your benefit in a number of different ways. Most importantly, comparing car insurance premiums is one of the best ways to find the right coverage at the most affordable price.

By simply accepting the first offer without exploring other options, you may be missing out on potential savings. Insurance providers vary in their rates and policy offerings, and by comparing different premiums, you can gain a more comprehensive overview of what you could qualify for. 

Doing so can help you evaluate which solution would work best for your situation and which offers the lowest price. 

Understanding car insurance premium changes

It’s important to note that your auto insurance premiums are not necessarily set in stone. A number of reasons could cause your car insurance premiums to change.

One of the most common reasons for a shift in your insurance policy has to do with your driving record. Accidents and moving violations may impact your premiums as insurers consider these incidents as indicators of risk. 

You may also choose to adjust your auto coverage over time. You could add or remove coverage options or adjust your deductibles. Additional factors that insurers consider is the type and age of your car, your age, and credit score.

To manage your car insurance premiums effectively, make sure to regularly review your policy. Assess your coverage needs and make adjustments where necessary.

Ways to save money on car insurance premium

When it comes to cutting down your monthly expenses, looking for ways to save on your car insurance premium can be a good place to start. 

Maintaining a clean driving record

Insurance providers often reward safe drivers with lower rates because they are considered less likely to make claims. By avoiding accidents, traffic violations, and other driving infractions, you may be able to benefit from accessing reduced rates. 

Keeping your driving record clean not only helps you save money but also promotes safe driving habits, which can prevent accidents and protect yourself and others on the road.

Bundling policies

Many insurance companies offer a variety of insurance products, including home insurance, renters insurance, and life insurance. By purchasing multiple policies from the same provider, you may be eligible for significant discounts. 

Consider exploring the options available through your insurance provider to see if bundling multiple policies is a viable option for you.

Increasing deductibles

By increasing your deductibles, you’ll assume more of the financial risk in the event of an accident or damage to your vehicle. As a result, your insurance provider may reward your willingness to take on a higher deductible by lowering your premium. 

However, before making this decision, be sure that you have enough savings to cover the increased deductible in case of an incident. Balancing your risk tolerance and financial capabilities is key when considering this strategy.

Navigating Car Insurance Premiums with Confidence

Your car insurance premium isn’t just a bill; it’s a reflection of the peace of mind that your auto policy provides. It’s influenced by a multitude of factors, from your driving history to the coverage options you select. 

By being informed about how premiums work and exploring ways to manage and optimize them, you can make sound decisions that not only protect your vehicle but also align with your financial goals. 

FAQ 

PRO TIP! If you’re curious about other auto insurance options, MoneyLion can help. Search numerous insurers and find savings in seconds at the Auto Insurance Marketplace. Plus get free support with some partners when you make the switch.

8 ways to lower your car insurance

If you want to learn how to lower your car insurance premiums, you might start with these nine tips. You’d be surprised at how everything from your driving record to your credit score and your age can influence your car insurance cost.

1. Improve your credit score

Auto insurance companies use your credit score when factoring in your car insurance premium. Their logic is that a better credit score will result in your making timely payments and being a safer, more responsible driver. If your credit score is in the 690-850 range, that should be high enough for you to get preferred rates. If your credit score is in the 689 or lower range (which industry experts would say is average at best), try boosting your score for a lower rate. 

You can try improving your credit score by doing the following:

• Pay all your bills on or before the due date
• Don’t close any credit cards 
• Address any collection accounts
• Apply for a Credit Builder Loan

Once you raise your credit score, shop around for car insurance and see if you can beat your current premium.

Healthy credit is crucial. You can help build yours with a MoneyLion WOW membership! As a member, you’ll unlock the ability to apply for a Credit Builder Loan that’s helped more than half of our members raise their score by 27 points in 60 days!¹

A Credit Builder Loan is a small loan that is held in a secure account while you make monthly payments. As you make your payments, those  payments are reported to all three credit bureaus to help boost your credit score.

Why would this help you? When you pay off your Credit Builder Loan on time, you can reduce your debt-to-income ratio and show positive payment history – both of which could help improve your credit score. By improving your credit score, you could qualify for lower interest rates on future loans or refinancing options.

Join MoneyLion WOW and apply for up to a$1,000 Credit Builder Loan with a competitive rate and no hard credit check. You’ll also unlock the full suite of MoneyLion WOW’s exclusive features, including cashback², VIP deals and discounts³, and added benefits to your favorite MoneyLion products.

2. Bundle your policies

Consider adding your car insurance to an existing homeowners or other policy to potentially save through bundling. Insurance companies usually offer anywhere from a 5%-10% savings for bundling your products. You can bundle your car with another vehicle, your home, or a rental property if you have one. Check with your agent on all the ways you can bundle policies to save.

Auto insurers offer a variety of car insurance discounts available, and you might qualify for some. Check to see if your company offers any discounts and contact your agent about applying for them. Some common car insurance discounts are:

• Good student: Students who maintain a specific GPA are eligible for this discount
• Claims free: Requires no claims filed 
• Military: Military personnel past and present qualify for this discount. 
• Senior: 65+ years and older
• Loyalty: Clients who maintain coverage with the company for a certain time frame and continue coverage
• Pay in full: Pay your auto insurance premium for the year at once and get a discount
• E-pay: Sign up for monthly automatic payments to unlock this discount
• Bundling: Insure another vehicle or your home to qualify for a bundling discount
• More: Discounts vary from company to company, see what ones your provider offers

3. Install an anti-theft device

Some insurance companies charge you a lower premium for having an anti-theft device in or on your car because it will make it harder for your vehicle to be stolen, thus lowering your risk as a driver. Lower risk = lower premium.

Some examples of anti-theft devices you can install:

• Alarms
• Tire locks
• Wheel locks
• GPS tracking system

4. Check insurance before you buy

If you’re in the market for a new vehicle or trading in your old one, get an insurance quote before you buy it. The make and model factor when it comes to what you pay for insurance. Get auto insurance quotes from multiple companies on the exact vehicle you are looking at. This action will help you determine if you can afford the monthly bills (car payment, insurance, parking, fuel) associated with the vehicle before making the purchase. 

If you’re looking for ways to save on car insurance, MoneyLion can help! Save  hundreds* on auto insurance by turning on Driver Score powered by Zendrive⁴, a program that measures your safe driving habits, such as your speed, braking, and acceleration.

*Average savings is based on program data. Not all drivers will be eligible or qualify for an offer or discount. Actual savings varies based on your driving behavior. Not valid in CA or certain other states.  

5. Get pay-as-you-go insurance

This tactic has the potential to save on car insurance if you don’t have a long daily commute and use your vehicle sparingly. This type of insurance creates a custom rate based on your mileage. Your insurance company will keep track of your miles through a GPS or installed device on your vehicle. Your car insurance premium will likely change month to month, so be sure to plan accordingly. You can do this by averaging up a few months’ payments and determining how much you’re usually spending. 

6. Increase your deductible

Depending on your car insurer, you may be able to lock in a lower car insurance rate by raising your deductible. You’ll pay more out of pocket in the event of an accident, but you may save more money long-term.

7. Take a defensive driving course

Your car insurance company may offer discounts on your liability insurance (or other policies) if you complete a defensive driving course. These courses demonstrate safe driving habits, which make you less of a liability, thus lowering your car insurance premiums.

8. Drive fewer miles

Ask your auto insurance company about discounts based on mileage. For instance, if you have a short commute or don’t take many road trips, your insurer may extend a low-mileage discount.

Make the Most of Your Budget

You can’t avoid car insurance, but you can try to control the costs. Learning how to lower your car insurance payments will help you make the most of your budget. Keep these methods in mind the next time you get insurance quotes and make sure your agent is thorough with your policy by adding all your eligible discounts.

If you can, take the bus or ride your bike and get a low-mileage car insurance policy. Invest in your vehicle by adding anti-theft devices to lower your risk of having to file a claim. Work on your credit score and look for discounts.

FAQ

That’s where collision insurance comes in. It might just be your vehicle’s ultimate lifesaver. This article dives into the world of collision insurance and explains what it is and why it is so crucial for protecting your vehicle.

What is collision insurance?

Collision insurance is a type of auto insurance coverage that protects your vehicle in the event of a car accident. It can be particularly valuable if you have a newer or more expensive vehicle.  It’s also important if you rely on your vehicle for work and other priorities. Collision insurance helps cover the cost of repairs or replacement for your vehicle, regardless of who is at fault. 

This coverage is particularly useful for accidents where no other party is involved or when the other driver’s insurance is insufficient to cover the damages. It could also be helpful in the event of a hit-and-run. But it won’t typically cover damage caused by natural disasters, vandalism, or theft, which is where comprehensive insurance comes into play.

PRO TIP! If you’re curious about other auto insurance options, MoneyLion can help. Search numerous insurers and find savings in seconds at the Auto Insurance Marketplace. Plus get free support with some partners when you make the switch.

How does collision insurance work?

When it comes to understanding collision insurance, two key components to consider are your deductibles and premiums. A deductible is the amount you’ll pay out of pocket before your insurance company covers the remaining expenses in the event of an accident. 

A premium is the regular payment you make to your insurance company to maintain coverage. The amount of your premium is determined by your coverage level, risk profile, and the insurance company’s calculations.Insurance companies will use premiums to cover their costs and generate profit.

When filing a collision insurance claim, first contact your insurance company and provide the necessary details about the incident. You may be asked for photos or a copy of the police report. The insurance company will assess the damage and estimate the cost of repairs or replacement. 

Once your claim is approved, you may be required to pay your deductible before receiving the insurance payout.

How much does collision insurance cost?

The cost of collision insurance varies depending on several factors. Take a look at the factors that will have the biggest impact on pricing.

Type of vehicle

Generally, more expensive and luxurious vehicles will have higher collision insurance rates because of the higher repair and replacement costs associated with them. Less expensive and older vehicles may have lower rates as their repair costs are typically lower.

Driver’s age and driving history

Younger, less experienced drivers tend to face higher collision insurance rates because they are statistically more likely to be involved in accidents. Additionally, drivers with a history of accidents or traffic violations are considered higher risk and may be charged higher premiums.

Geographic location

The location where the vehicle is primarily driven and parked could impact the cost of collision insurance. Areas with higher rates of accidents or theft will likely have higher premiums. Urban areas with heavy traffic and crowded parking conditions may also result in higher rates because of the increased risk of accidents and damage.

Coverage limits and deductibles 

Collision insurance policies tend to be highly customizable and as a result, come in a wide range of prices. Higher coverage limits and lower deductibles will generally result in higher premiums. Insurance companies may charge a higher premium to offset their potential payout.

Insurance companies’ policies 

Different insurance companies have different pricing structures and underwriting guidelines, resulting in a wide range of premium rates. It’s important to shop around and compare quotes from multiple insurance providers to find the most suitable and cost-effective option for your situation. 

Search numerous insurers to find savings in seconds. Plus get support when you make the switch. See offers.

Benefits of collision insurance

Collision insurance offers several benefits. Take a look at some of the most noteworthy. 

Financial protection

Collision insurance provides financial protection by covering the repair costs or the total loss of your vehicle in the event of an accident. Whether you’re at fault or not, having collision coverage ensures that you are not left to bear the brunt of expensive repairs or replacement costs. Knowing that you’ll have some protection from costly accidents offers peace of mind.

Flexibility in vehicle choice

By having collision insurance, you can confidently choose the vehicle that suits your needs without worrying about potential financial losses in case of an accident. This is particularly important if you’re leasing or financing a vehicle, as collision coverage is often a requirement. 

Coverage for different types of accidents

Whether it’s a single-vehicle accident, a collision with another vehicle, or an accident involving a stationary object, collision coverage will help cover the costs of repairs or replacement. 

Factors to consider when choosing collision insurance

When choosing collision insurance, you’ll want to take into account the following factors.

Vehicle age and value

If your vehicle is older or has a low market value, the cost of collision insurance may not be worth the potential payout. In this case, it might be more prudent to invest in liability insurance, which covers damage to other vehicles but not your own.

Driving record and history

If you have a history of accidents or claims, you may be at a greater risk of future collisions. In such cases, collision insurance could provide you with peace of mind knowing that you will be covered in the event of an accident. Take a look at some tips for high-risk drivers. 

State and lender requirements

In some states, collision insurance is mandatory, and failing to have it may result in legal consequences. If you have a loan or lease on your vehicle, your lender may require you to have collision insurance as part of the financing agreement.

Personal financial situation

Premiums for collision insurance can vary depending on factors such as your age, location, and driving history. You also will need to consider the deductible. If you have a tight budget or limited savings, you may want to choose a lower premium with a higher deductible. Keep in mind that a high deductible may result in more out-of-pocket expenses in the event of an accident.

If you’re looking for ways to save on car insurance, MoneyLion can help! Save hundreds* on auto insurance by turning on Driver Score powered by Zendrive¹, a program that measures your safe driving habits, such as your speed, braking, and acceleration.

*Average savings is based on program data. Not all drivers will be eligible or qualify for an offer or discount. Actual savings varies based on your driving behavior. Not valid in CA or certain other states.  

Tips for maximizing the benefits of collision insurance

To maximize the benefits of collision insurance, keep a few key tips in mind.

Regular maintenance and vehicle safety

By keeping your vehicle in good condition, you reduce the risk of accidents and minimize potential damage. Regularly servicing your vehicle and ensuring that all safety features are working properly can help prevent avoidable collisions. This includes maintaining the brakes, tires, and suspension as well as regularly checking the lights, wipers, and mirrors.

Safe driving practices

Following traffic laws, avoiding distractions, and maintaining proper speed limits could help you reduce the risk of accidents. By being a cautious and defensive driver, you can minimize the chances of collisions and damage to your vehicle.

Compare insurance providers and policies

By comparing policies, you can determine which ones offer the most comprehensive coverage without straining your budget. Look for insurance providers that have a good reputation for handling claims efficiently and providing excellent customer service. 

It’s also critical to take the time to understand the coverage options available, including deductibles, limits, and additional benefits. 

Alternatives to collision insurance

When it comes to protecting your vehicle, collision insurance is often the first type of coverage that comes to mind. Alternative types of insurance could still provide important protection for your vehicle and wallet.

Liability insurance

Liability coverage is designed to protect you in case you cause damage to another vehicle or property during an accident. While it does not cover the cost of repairing your vehicle, it could save you from having to pay out of pocket for damage caused to others. Liability insurance is required by law in most states, making it a crucial aspect of any car insurance policy.

Comprehensive insurance

Comprehensive insurance covers a wide range of incidents, such as theft, vandalism, fire, or damage caused by natural disasters like hail or floods. While comprehensive insurance may have a higher premium compared to liability or collision insurance, it provides a broader level of protection and peace of mind against the unknown.

Navigating collision insurance: Protection after the unexpected

Collision insurance is a valuable financial safeguard for vehicle owners, providing peace of mind when unexpected accidents occur. Nevertheless, it’s only one piece of the puzzle. A well-rounded insurance policy considers other aspects such as liability and comprehensive coverage. By tailoring coverage to your needs, you can hit the road with confidence knowing that you’re prepared for whatever may come your way.

FAQ 

PRO TIP! If you’re curious about other auto insurance options, MoneyLion can help. Search numerous insurers and find savings in seconds at the Auto Insurance Marketplace. Plus get free support with some partners when you make the switch.

Understanding how insurance coverage works if someone crashes your car

Each insurer has different rules, but most of them focus on the car rather than the driver. Most insurers will recognize that your insured car got involved in an accident and needs repairs. The insurer may require the driver to cover financial costs under certain scenarios. For instance, the driver becomes responsible if that person is unlicensed or stole your car.

Permissive vs. non-permissive use

Insurance companies will look at the relationship between you and the driver when assessing financial responsibility. It ultimately depends on whether you knew the driver was in your vehicle or not.

Permissive use

Permissive use applies when you knowingly give permission for someone to use your car. You may have let a friend or family member drive your car. In most cases, your insurer will cover the damages incurred for permissive use. 

Non-permissive use

Non-permissive use occurs when a driver steals your vehicle or uses it without your knowledge or permission. Most car insurance policies do not cover damages for this type of accident. Your best paths to receiving compensation for the accident are to file a police report and pursue legal action against the driver who used your vehicle without your permission.

Potential consequences and financial ramifications

When someone who is not on your insurance policy crashes your vehicle, it will likely have financial ramifications. The context surrounding the accident impacts how much you will have to pay and the hurdles along the way.

Increased insurance premiums

Your insurance company will typically raise your premiums if your vehicle gets involved in an accident. If a driver who is not on your policy crashes your vehicle, you may be held responsible for damages and injuries. This accident may be considered an at-fault accident at the discretion of the insurer.

Out-of-pocket expenses

Out-of-pocket expenses could get expensive, especially if you have a high deductible, the vehicle gets severely damaged, or the driver requires medical services. This risk could strain your finances, so it’s important to be careful about who gets to drive your car.

Deductible payments 

You will have to pay a deductible before your insurer starts to cover the damages. Deductibles vary based on the terms of your policy. Paying higher premiums before the accident results in lower premiums. However, if you opt for low premiums for your policy, you will face a higher deductible. This upfront payment can prove to be costly.

Damage to your vehicle’s resale value

Some drivers want to sell their vehicles in a few years because of changing preferences, cutting costs, bringing in additional cash, and other factors. You may not be thinking about selling your car, but damages that are incurred could hurt its resale value if you decide to sell. Car facts will show that your vehicle got involved in an accident, and that could hurt your profits from a sale.

Preventive measures for car owners

Anyone can get involved in a car accident. While you can’t control every factor, such as the drivers you share the road with, it’s possible to take several preventive measures. These are some of the strategies you can use to decrease the likelihood of getting involved in an accident.

Stay off the road late at night

Most drivers are less alert as the day continues, especially if you drive in the middle of the night. Car accidents happen more often from midnight to 6 a.m., so it can help if you stay off the road during those times. Driving on highways could lead to more severe injuries and vehicle damage. However, you are more likely to get in an accident on a smaller road.

Staying off the road late at night can minimize the likelihood of a high-risk driver getting into an accident. These types of safety protocols can help ensure you don’t have to file a claim in the future.

Review your policy

It may have been several years since you got your first car insurance policy. It’s a good idea to review it to see if you are happy with the coverage, premiums, and deductible. 

Get additional coverage options

Car insurers sell additional policies and riders that strengthen your existing car insurance policy. You can add medical payment coverage, uninsured motorist coverage, and other safeguards to your existing policy. These safeguards will increase your monthly payments, but they could save you thousands of dollars if an accident takes place.

Protecting the People in Your Car and Your Finances

Being protective about who goes in your vehicle can minimize the amount of damage your vehicle incurs. When it’s time to hand the keys to your children, try to teach them good driving habits and make sure they aren’t driving around past midnight. Car insurance policies offer many protections, and if you want a little more coverage, insurers have extra riders and other products.

FAQ