Confused? Learn auto insurance basics from these handy tools


Auto insurance can seem confusing – especially for first-time car owners. The first thing that you need to know about auto insurance is that every state has different laws about what is and what isn’t required. So you need to know your own state law. Find a link to your state’s insurance bureau using this map.

It’s not that hard to understand auto insurance basics, but sometimes TV or online ads oversimplify things and make it sound like you can just pay whatever you want or that the cheapest coverage is best. It’s really a balance – too much coverage and you are wasting money; not enough coverage, and you might find yourself in a financial fix should you have a bad accident. A lot of it depends on your personal situation.

Your local independent insurance agent would be happy to explain the ins and outs of auto insurance in your state and help you explore coverage options and any available discounts. But if you’re one of those people who likes to do research on your own first, we’ve found a few great tools to help you learn the basics of auto insurance from reliable and objective sources.

The National Association of Insurance Commissioners (NAIC) offers a A Consumer’s Quick Guide to Auto Insurance, a pdf brochure that is quite good.

The next few tools are from the Insurance Information Institute (III) another good place to start your insurance research on auto or other types of insurance.

First, the handy Auto Insurance Jargon Buster, which explains potentially confusing insurance terminology.

Second is a short video auto insurance explainer:

Third, this infographic is a good reference. It talks about the different auto insurance coverage types. There are simple explanations for each, and at the end of each explanation, there is a line indicating whether the insurance is required or optional. You can click for a larger version.

auto insurance basics