Auto insurance: what to actually carry

Auto insurance is a collection of separate coverages bundled into one policy. Most states require a minimum, but the minimums are usually way below what you actually need to protect yourself. Understanding each piece lets you build a policy that's both properly protective and not over-insured.

The coverage types

• Liability — covers damage you cause to others' cars, property, and bodies. Required by law. This is the most important coverage.
• Collision — pays for your own car's damage in an accident, regardless of fault. Required if you have a car loan.
• Comprehensive — pays for damage to your car from non-collision events (theft, vandalism, hail, animals).
• Uninsured/underinsured motorist — covers you if hit by someone with no or inadequate insurance. Surprisingly common; worth having.
• Medical/PIP (personal injury protection) — covers medical bills for you and passengers.
• Gap insurance — covers the difference between what you owe on the car and its depreciated value if totaled. Important for newer financed vehicles.

Where to save

• Raise your deductible from $500 to $1,000 (saves 10–15% on premium) if you have enough in savings to absorb the extra out of pocket.
• Drop collision/comprehensive on old cars where the premium exceeds the replacement value.
• Shop around every 2–3 years. Loyalty is rarely rewarded in auto insurance.
• Bundle with home/renters for a discount.
• Ask about telematics (driving habits) programs — safe drivers can save 10–30%.