Buying car insurance in the 21st Century is supposed to quick and easy, right? Well, for most people, it generally is. However, there are different types of car insurance policies that need to be considered by many car owners, and that can throw a wrench in an online policy.
What if your car is not a run-of-the-mill SUV or Subaru WRX, with just a few thousand miles on it? There are car owners out there that have unusual cars, or maybe they use that unusual car for unusual reasons. Can they get a quick quote online and cheap insurance fifteen minutes later? It’ doubtful.
This article is for the rest of us who didn’t know that we needed special insurance to insure our 65 Mustang Convertible that we spent seven months restoring.
This article is also for those car owners who moonlight through a ridesharing company like Uber or Lyft. And, this article is for car owners who use their vehicle for business.
At the end of the day, we need choices. There are many car insurance companies to choose from. Make sure you are picking the correct one.
Why are there different types of Car Insurance?
The type of car insurance you need depends on several aspects:
- The state your car is garaged in
- The kind of car you need to insure
- What you use your vehicle for
- If your car is a “special vehicle”
- Your driving record has major issues
The State You Live In
Right now, you may be thinking a car is a car, so what difference does it make what state my car is garaged in?
Just to make things a little more complicated, you should understand that different states require different types of insurance coverage, and they set the minimum limits as well.
These state requirements have nothing to do with protecting your car but everything to do with protecting other drivers from injuries or property damage you might cause in an at-fault accident.
Some states, like Florida, are called no-fault states (more about that later) and also have very low minimum liability limits. In fact, in Florida, car owners are not required to carry bodily injury liability coverage unless they are in an at-fault accident or are ticketed for a major moving violation like DUI or Reckless Driving.
Then you have other states that are on the other side of the spectrum where the minimum liability limits are unusually high, and uninsured motorist is required
For example, the minimum liability limits in Michigan are 20/40/10, which translates to $20k per person and $40k per accident for bodily injury plus only $10k for property damage liability. But Maine requires 50/10/25 in liability limits plus 50/100 in uninsured motorist limits and $2k in medical payments coverage.
So you can see, the state you live in does impact the type of car insurance you buy. You can find the minimum liability requirements in each state by visiting the Insurance Information Institute.
The good news is, when you click on your state below, you will go through a series of questions that will make sure the quote you get will meet the minimums in your state.
The Type of Car You Need to Insure
Most people buy vehicles according to their needs. For example, John Doe, who is married with two kids and a Chihuahua will likely own an SUV, Mini-Van, or a station wagon.
However, if John Doe was single and in his late 20s, he’d probably own a Charger, Mustang, or a Ram Truck and maybe even a Harley, but that’s for another article.
Yes, each vehicle we’ve just listed will likely be okay with a traditional personal auto policy unless the Mustang was a restored 1965 convertible, or the Ram Truck was a 1 ton that John regularly used in his construction business.
On the other hand, if John Doe was very wealthy and prefers to scream down the interstate in a sports car like a Lamborghini, Bugatti, or Ferrari F60, he’d typically have a tough time getting a traditional auto policy because many companies will not accept expensive cars that can break the sound barrier.
How You Use Your Car Affects the Type of Insurance You Buy
A lot of people typically get hung-up on this one. For example, if you own a 1-ton pickup that’s in your name but you primarily use it for a home remodeling business you own, you’re going to need a commercial auto policy rather than a personal auto policy.
That’s actually a good thing, however, because you can get higher liability limits and coverage for your tools in a commercial auto policy but not in a personal auto policy.
Smart business owners generally understand that they’ll need to carry $1 million in liability coverage instead of the $100,000 like most people buy in a personal auto. Spoiler Alert: commercial auto insurance usually doesn’t cost more than personal auto insurance.
It’s important to note that some personal insurance policies will allow some business use like when a realtor drives clients around to look at properties or if you are using your car to earn some money ridesharing, but consider the risk with business use of the vehicle and get advice from a licensed agent before you accept a personal auto policy when you use your car primarily for business.
If Your Car is a “Special Car”
This section is for all those wrench turners out there who dream of restoring that 57 Chevy they found in an abandoned barn out in the boondocks. Or, maybe your grandfather or great grandfather passed and left you a 51 Packard in mint condition.
In these cases, when your car is “special” (for this article “special” means restored or antique), a traditional personal auto policy won’t cut it.
When you insure your vehicle under a personal auto policy, your comprehensive coverage and collision coverage is based on the actual cash value of your vehicle or depreciated value. Because of this kind of valuation, insurance companies are not going to cover a restored classic or antique for the appraised value.
If someone steals that 51 Packard from your garage while you’re on vacation, you are not going to get the appraised value for it unless it’s insured under a Classic Car policy. The family car policy that you have will offer liability coverage, but there’s typically no way they will offer comp and collision coverage for a classic or antique car.
Your Driving Record will Affect the Type of Car Insurance You Buy
Let’s go back to Florida for just a moment. If you recall, we stated that Florida does not require bodily injury liability coverage unless you’re in an at-fault accident or found guilty of a major driving violation like DUI or reckless driving.
If any of these happen, you violate Florida’s Financial Responsibility Laws, and your license will be suspended until an insurance company provides an SR-22 form on your behalf. SR-22 is not a type of insurance but rather, a form the insure sends to the state to show proof that you purchased bodily injury liability coverage according to the state minimum acceptable limits.
In other words, you had to buy insurance that you should have had in the first place after you violated a financial responsibility law by crashing into someone or someone’s property or getting caught driving while intoxicated or maybe both.
This new shiny insurance policy doesn’t pay for an accident you already had; however, it only pays for an accident you have in the future.
And while we’re talking about Florida, you should know that the state only requires a car owner to carry $10,000 in property damage coverage. That limit will fall well short of covering you if you crash into someone in a new car, an expensive car, or property other than a car, like someone’s house.
Finding the Right Type of Car Insurance for You
Now that you know why you can’t buy every type of car insurance online in 15 minutes or less, you will likely understand that unless you own a typical vehicle and only use it for personal driving, you need to speak with an experienced and reputable insurance agent to get the right type of car insurance for the vehicle(s) you own.
Frequently Asked Questions
What type of car insurance should I buy?
The type of car insurance you need depends on several aspects:
– The state your car is garaged in
– The kind of car you need to insure
– What you use your vehicle for
– If your car is a “special vehicle”
– Your driving record has major issues
What type of car insurance should I buy if I use my car for business?
It’s important to note that some personal car insurance policies will allow some business use like when a realtor drives clients around to look at properties or if you are using your car to earn some money ridesharing, but consider the risk with business use of the vehicle and get advice from a licensed agent before you accept a personal auto policy when you use your car primarily for business.
How much will my car insurance cost?
When you insure your vehicle under a personal auto policy, your comprehensive coverage and collision coverage is based on the actual cash value of your vehicle or depreciated value. This is just one factor that determines the cost of your car insurance. An experienced agent can give you advice on what policy to purchase based on your personal needs.