What are the benefits of car insurance?

The most significant benefit of car insurance is that it will cover your medical bills and repair costs after an accident. Below we'll cover a few more benefits and why it's advantageous to have auto insurance.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Feature Writer Rachel Bodine

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent Daniel Walker

UPDATED: May 23, 2022

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Things to remember

  • Auto insurance protects your property and helps cover damages after an accident
  • Minimum liability auto insurance is required in nearly every state
  • Some lenders will also require full coverage and GAP insurance on auto loans

Car insurance provides protection when you drive. Your car insurance policy covers you, your vehicle, and your passengers in the event of an accident or natural disaster. 

If there is an accident, your insurance company will pay for damages covered by your policy. However, you will be responsible for these costs out of pocket if you don’t carry the right type of coverage.

Carrying the state minimum liability auto insurance is the law, but how much car insurance do you need? Keep reading to learn the advantages of having the right kind of car insurance and where you can find the most affordable auto insurance rates in your state.

Then, enter your ZIP code above for car insurance quotes from top companies in your area.

Why do you need car insurance?

There are many car insurance benefits, and most will keep you out of trouble with the law. In most states, you need to have car insurance because it’s the law. The amount of car insurance coverage required will vary by state, but you’ll likely need to carry at least liability coverage to drive your vehicle legally.

Without liability auto insurance or personal injury protection, you could be looking at high medical bills, court fines, and civil liabilities if someone is injured or killed in an accident you caused. Failing to have insurance at the time of an accident could also result in felony charges if DUI or reckless driving are involved.

Other benefits of car insurance include protection from uninsured drivers and hit-and-run accidents. 

For example, say you were injured in a major accident where the other driver drove away before you could exchange information. If you carry full coverage car insurance, your injuries and vehicle damage would be covered by your policy.

Unfortunately, your auto insurance rates will go up every time you file a claim and use your car insurance.

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What kind of car insurance do I need?

The different types of auto insurance coverage can be broken down into three categories:

  • Insurance required by your state
  • Insurance required by your car lender
  • Optional insurance coverage

State insurance laws determine the required amount of coverage. For example, most states require liability auto insurance, but some states require additional personal injury protection (PIP) or medical payments coverage (MedPay). 

However, if you are leasing or still making payments on your vehicle, you are required to carry more coverage by your lender. 

Most banks and lending institutions require full coverage and GAP insurance on auto loans. Full coverage car insurance protects your vehicle in accidents, natural disasters, theft, and vandalism, while GAP insurance coverage pays for the remaining amount on the loan if the vehicle is totaled.

Optional insurance coverages aren’t required by law or a loan, but you may choose to add them if you drive a newer vehicle, have younger drivers on your policy, or live in a high-risk area. 

The most popular optional insurance add-ons are the following:

  • Roadside assistance
  • Glass protection
  • Collision
  • Comprehensive coverage

Collision and comprehensive coverage are considered optional because they aren’t required by law. 

However, if you want to be protected from all kinds of risk, you will want to carry collision and comprehensive add-ons in a full coverage policy. This will raise your auto insurance rates, but it will save you money in the event of an accident.

How much does car insurance cost?

The biggest disadvantage of car insurance is the cost. However, you can lower your auto insurance rates by shopping online with multiple companies. This will allow you to compare different rates based on your driving record and the kinds of discounts available to you.

To get started, take a look at how much the top 10 companies charge for auto insurance based on driving records.

Average Annual Auto Insurance Rates by Driving Record
CompaniesAverage Annual Rates by Clean Driving RecordAverage Annual Rates With One AccidentAverage Annual Rates With One DUI ConvictionAverage Annual Rates With One Speeding Violation
USAA$1,933.68$2,516.24$3,506.03$2,193.25
GEICO$2,145.96$3,192.77$4,875.87$2,645.43
American Family$2,693.61$3,722.75$4,330.24$3,025.74
Nationwide$2,746.18$3,396.95$4,543.20$3,113.68
State Farm$2,821.18$3,396.01$3,636.80$3,186.01
Progressive$3,393.09$4,777.04$3,969.65$4,002.28
Travelers$3,447.69$4,289.74$5,741.40$4,260.80
Farmers$3,460.60$4,518.73$4,718.75$4,079.01
Allstate$3,819.90$4,987.68$6,260.73$4,483.51
Liberty Mutual$4,774.30$6,204.78$7,613.48$5,701.26
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Auto insurance quotes can vary by thousands of dollars between companies, so it can pay to shop around with at least three different insurers to see which can offer you the most competitive rates.

What are the biggest advantages of car insurance?

Is car insurance required? Yes, but even if it wasn’t, the advantages of car insurance far outweigh the disadvantages.

Here are the top three reasons why you need auto insurance:

  • Personal accident coverage. Insurance covers damages to your vehicle and medical bills and ensures reliable transportation.
  • Third-party liability protection. Insurance protects you from at-fault accidents and uninsured or underinsured drivers.
  • Affordable insurance is available. You can save money on auto insurance by remaining claim-free, adding discounts, and tracking good driving habits with usage-based auto insurance.

There are numerous additional advantages to having car insurance, so make sure you protect yourself and your vehicle with the proper coverage.

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The Advantages of Car Insurance: What You Need to Know

If you’re unsure how much car insurance you need, start with your state minimums and then consider whether adding more coverage to your policy would be a good choice. Keep in mind that your auto loan or lease agreement may require you to carry additional coverages.

Fortunately, you can compare coverage options with multiple companies online to find a policy that fits your budget. We recommend comparing three different insurers to get the most accurate auto insurance quotes.

Enter your ZIP code below to access car insurance quotes from multiple companies today.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

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