A Guide to Car Insurance for Beginners

Buying car insurance is a daunting prospect, especially if you are a new car owner. This guide explains how car insurance works and walks you through some of the things you should look for in an insurance policy.

Buying car insurance is so difficult because there is no stated price. In fact, when you go looking for it, nobody will even give you any sense of what you could expect to be paying. The reason for this is that rates vary wildly, and, as one of the guys I wound up with on the phone told me, "two people could be identical in every way and still pay different amounts."

Car insurance rates vary based on the age and sex of the driver, (teenage guys beware) the type and age of the car, where the driver lives, what he does, whether he smokes, etc. There may be discounts for drivers who have had clean driving records for a certain amount of time, who have taken a defensive driving course, who are good students, who have cars with certain safety devices, who have good cars, who have new cars, etc. Expect to do a lot of shopping.

That brings me to one other point: one-stop internet search engines. Websites like GEICO can give you a whole batch of quotes from different insurance companies and will let you order online, but watch out. While this is certainly useful, GEICO told me that the minimum I would be paying was $300 a month. I shopped around and am now paying less than $1500 annually. Don't get scammed.

There are also a great number of options when it comes to your insurance policy. Here is a rundown of the basic categories of insurance you will be able to get. There will be a wide variety of options for coverage in each category.

Liability

This is the base insurance that everybody needs. It covers damage to persons and property other than yourself and your own, and is usually measured in tens if not hundreds of thousands of dollars. Liability coverage might be described as 50/100/30, which would mean up to $50,000 compensation for injury or death per person, $100,000 total, and $30,000 property damage. States have minimum requirements for this, but watch out. If you get in a bad accident with minimal coverage, you could be financially ruined.

Collision

Collision insurance covers damage to your own vehicle. Rates go by type and age of your car. Don't even worry about this if you have an old car-it will cost more than it is worth. If, on the other hand, you have a shiny new Lexus, you will want this.

Uninsured Motorist

What if someone with minimal or no insurance hits you and wrecks your car? With uninsured motorist insurance, you will be much more likely to see money.

Medical

Medical covers your hospital bills should you get into a bad accident. Worry about this if you don't have extensive medical insurance.

Comprehensive

There are lots of things that could do your car in short of an accident. You theft, vandalism, natural disasters, and coconuts falling from the sky to contend with. Comprehensive coverage will shield you from such evils, but again, don't bother with this if you have a new car.

Good luck in your search, and remember to shop around. Don't pay more than you need to, but don't skimp. Remember that a bad accident with minimal insurance could spell disaster.