Auto Insurance

• Liability - This covers other people's vehicles if you slam into them and it is your fault. Legally, this is all you are required to have, which simply protects other drivers. If you only have liability and you crash into a tree, tough luck, your insurance company owes you nothing. Personally, I drive a 1995 Honda Civic that I bought for $2k, cash. I opted to only have liability because I drive safe and my car isn't worth a lot. I also have another vehicle to drive in the event that my car doesn't work. If you had a fancy car, getting more than just liability might be a good idea.
• Collision - This covers your car if you crash it. If your tire goes out and you hit a tree, your insurance company will cover the damages, up to a certain amount, after you pay a deductible. Having collision in place is a good idea if you will be in big trouble without your car.
• Comprehensive - This covers non-collision damage to your car such as fire, theft, etc. Also a good idea to have if you rely on your car heavily for work. Typically if you have your vehicle financed (you have a car loan), the lender will require you to have comprehensive insurance on your car to protect them.

• Coverage Limits - This is the maximum that the insurance company will payout. Say for example your car is worth 20k and your collision limit is 10k. You total your car. Your insurance company will pay you 10k, not 20k.
• Deductible - This is how much you will have to pay out of pocket before the insurance kicks in. Again, say you have a car worth 20k; you crash it and incur $4,000 worth of damage. If your deductible is $500, you will pay the $500 and your insurance company will pay $3,500 of the repairs.

• Driving record - Speeding tickets, at-fault accidents, DUIs, etc all raise your insurance premium. I try to follow all rules of the road since rolling through just one stop sign could hit you in the pocket hard. If your state allows you to go to traffic school to remove tickets, make sure to do that. It might cost a few extra bucks, but it will save you a bunch of money on your insurance.
• Driving qualifications - Some insurance companies will offer discounts to drivers who complete optional drivers training courses. Take advantage of all of these as they will save you money in the long run.
• Type of car - If you drive a high-performance sports car, you will see higher insurance rates than if you drove something slower.
• Miscellaneous demographics such as age, years of driving experience, gender, location, marital status, etc. All of these are statistical factors that help the insurance companies figure out how much to charge you.

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