5 car insurance facts: Understand rates, discounts, coverages, and requirements

1. Various factors can affect your auto insurance rate

Car insurance providers review several factors when determining how much your policy will cost. Here are a few to keep in mind:

• Your age: Younger drivers often pay higher premiums, since their lack of experience behind the wheel can contribute to higher accident risks. While insurance doesn’t automatically drop at age 25, your rates may gradually decrease between ages 25 and 30. Senior drivers may see their car insurance rates rise as well.
• Your driving record: If you have a history of being involved in accidents, getting speeding tickets, or committing other traffic violations like DUIs, your insurance may be more expensive.
• Your vehicle: Factors like make, model, age, and safety features influence insurance rates. Also, the technology common in many newer vehicles typically costs more to repair.
• Your location: If you live in an area with higher crime rates, traffic congestion, frequent insurance claims, or accident frequency, your rates may increase to reflect this increased risk.
• Your policy: The coverages you choose, along with deductibles and coverage limits, will affect your premiums.

There are many more factors that can collectively affect your rate, so make sure to talk with an agent to see what else you should know.

2. Auto insurance discounts can help you save

It’s important to be able to find a car insurance policy you can afford. Most auto insurance providers offer various discounts to help policyholders save money. These discounts may vary by insurance company, but some common ones include:

• Multi-car discount: If you insure more than one vehicle with the same insurance company, you may qualify for a discount on your premiums.
• Advanced quote discount: Get a quote at least a week in advance from the day you need your insurance coverage, and you may qualify for a discount. 
• Transfer discount: If you’ve had car insurance with another carrier for six months or more and start a new policy with another insurer, you may get a discount. 
• Defensive driving discount: Completing a recognized defensive driving course can sometimes lead to a discount on your auto insurance premiums.
• Anti-theft discount: Vehicles equipped with anti-theft devices may be eligible for lower insurance rates.
• Homeowners discount: If you own a home and insure it, a homeowners discount may be applied. Some states also offer discounts for those who have renters insurance.
• Payment frequency discount: If you make your payments quarterly, every six months, or just once a year, insurers may offer a discount.

3. Car insurance can cover towing and rental car costs

Car insurance can cover towing and rental car costs, but it depends on coverages you add to your policy. 

Rental car coverage is an optional add-on to many auto insurance policies. If you have rental reimbursement coverage, your insurance may help cover the costs of renting a vehicle while your car is being repaired after an accident. This coverage typically has specific limits and conditions, such as a maximum daily allowance and a maximum duration for rental reimbursement.

4. Car insurance typically follows the car, not the driver

Standard auto insurance policies follow your car wherever it goes, no matter who’s driving. If you lend your car to your friend and, while your friend is driving, they get into an accident. Your insurance—not your friend’s—would provide coverage.

However, it's important to note that some policies may have restrictions on who is covered or may require the policyholder to add specific drivers to the policy for coverage to apply.

Some states don’t require you to have a standard auto insurance policy. So, you may opt for a named driver policy instead. With a named policy, the coverage extends only to the individuals explicitly named in the policy. This means that if someone not listed as a named individual drives the insured vehicle and gets into an accident, they may not be covered by the insurance policy.

Additionally, if someone has their own insurance policy and drives your car, their insurance may act as primary coverage, with your policy potentially providing secondary or supplemental coverage, according to Hearst Autos Research. Insurance regulations and coverage rules can vary by jurisdiction and insurance company, so it's always best to clarify any questions or concerns with your insurer to ensure you have the appropriate coverage in place.

5. Auto insurance is required in 49 of 50 U.S. states

To avoid legal penalties, you need to comply with your state’s minimum insurance requirements and ensure you’re financially protected in the event of an accident. Most states require vehicle owners to carry bodily injury liability and property damage liability at minimum. Some states also require drivers to carry personal injury protection (PIP) and uninsured/underinsured motorist coverage.

Even in New Hampshire—the one state that doesn't require car insurance—drivers are still financially responsible for damages they cause in an accident. This makes car insurance a good investment for those drivers as well.