Do All Car Insurance Companies Offer the Same Coverage?
Last Updated on May 16, 2021
Each car insurance company claims to offer the best car insurance at the best price. But are car insurance companies really that different? Or are they all selling the same policy at the same price?
Today, we’re explaining everything you need to know about how car insurance differs between companies.
All Car Insurance Companies Offer the Same Level of Basic Car Insurance Coverage
Each state has certain minimum car insurance requirements. When you buy car insurance in that state, your car insurance is guaranteed to meet those minimum requirements.
Your car insurance will also meet the minimum requirements if you drive to a different state: as long as you’re just visiting that state (and not moving permanently), your car insurance will always meet those minimum qualification levels when traveling between states.
Minimum car insurance limits vary widely between states, but they can also vary widely between insurance companies. Certain companies exclude all types of damages, for example, while others are more inclusive.
Full Coverage Versus Basic Liability Insurance
All states except two (New Hampshire and Virginia) require drivers to have basic liability insurance. Basic liability insurance includes property damage liability coverage and bodily injury liability coverage.
When you have basic liability car insurance, your car insurance will cover any medical bills and other personal injury expenses incurred by other people you injure (using your bodily injury liability coverage) and any property damage you cause (through your property damage liability coverage).
Some drivers opt for full coverage, which adds collision coverage and comprehensive coverage to your policy. These policies cover the cost of repairing your own vehicle after an accident or a non-accident-related incident – like hail damage or a tree falling on your car.
To summarize, here are the three basic parts of car insurance:
Basic Liability Coverage: This is the bare minimum coverage provided by all car insurance policies. Your car insurance is guaranteed to meet the minimum liability limits in your state. In California, for example, all car insurance companies provide a minimum of $15,000 of bodily injury liability coverage per person, $30,000 of bodily injury liability coverage, and $5,000 of property damage liability coverage. Each state has its own limits. Your car insurance will (at least) meet the minimum limits in your state of residence. It will also rise to meet the minimum limits (if necessary) in any state you’re visiting.
Collision Coverage: Collision coverage covers the cost of repairing your own vehicle after an accident. Collision coverage is optional in every state.
Comprehensive Coverage: Comprehensive coverage covers all non-accident-related damages. If a branch falls on your vehicle or hail damages your car, then comprehensive coverage will cover the cost of repairing your vehicle. Comprehensive coverage also covers the cost of vehicle theft, vandalism, and break-ins. Comprehensive coverage is also optional in every state.
Some States Require Different Types of Car Insurance
When you buy car insurance in your state, that car insurance is guaranteed to meet the minimum required levels in your state.
As mentioned above, the coverage limits will vary between states. Some states require $5,000 of property damage coverage and others require $25,000, for example. However, the types of required car insurance can also vary.
Drivers in North Carolina, for example, are required to have uninsured and underinsured driver insurance. This insurance protects you against drivers without insurance or drivers with too little insurance. When you buy car insurance in North Carolina (and other states that require uninsured/underinsured driver insurance), any car insurance policy you buy will include this coverage automatically.
Similarly, drivers in Florida and 11 other states are required to have personal injury protection, or PIP. This coverage is required in no-fault states, where car insurance covers your own medical bills regardless of fault. When you buy car insurance in Florida and other states, your car insurance will include personal injury protection by default.
Differences Between Car Insurance Companies
There are differences between types of car insurance. There are also differences between car insurance companies.
Some companies offer free perks to all drivers, for example. Other companies offer barebones policies at rock-bottom prices. Some of the major differences between insurance companies include:
Car insurance companies compete with each other on price. Some insurers emphasize value for budget-conscious drivers, offering the cheapest possible car insurance that lets drivers legally drive on the road.
Other insurers emphasize premium service at a higher cost. Some drivers are willing to pay a little more money for better customer service, for example.
Claims satisfaction varies widely among insurance companies. Some insurance companies have consistently high rates of claims satisfaction, which means customers are generally happy with how a claim was processed, the payout they received, and the way they were treated.
Is it easy to contact your insurance company? When you pick up the phone, do you have to wait on hold for an hour? Does your insurance company offer a 24/7 claims line? Is it easy to report a claim or change your policy? All of these factors influence customer service.
Some cheap auto insurance policies exclude various things. They might exclude glass coverage, for example, or forbid you from making a claim for flood damage. Some of the common car insurance exclusions include:
- Hitting your own car
- Delivery driving (say, when delivering pizzas)
- Rideshare driving (Uber, Lyft, and other rideshare companies)
- The vehicle being used as a residence
- Injury to an employee
- Normal wear and tear
- Damage caused by racing
- Broken glass
- Mechanical failure
- Non-permanent electronics
- Police seizure or lawful repossession
- Unapproved vehicle modifications
- Illegal activity
- Driving outside the United States
Inclusions and Perks
Higher-end car insurance companies, meanwhile, might charge higher prices but offer expanded coverage. Your insurer might include some of the excluded items listed above. A good car insurance company may cover your vehicle when driving in Canada and Mexico, for example, or offer automatic glass coverage.
Some insurers waive the deductible in certain situations. A good insurance company will waive your deductible for glass coverage, for example, because the cost of repairing a windshield is often less than the cost of your deductible. A cheaper policy will not include glass coverage.
Types of Insurance Offered
If you have a boat, an ATV, a classic car, and an ordinary SUV, then you may want to get insurance for all your vehicles from the same company. Some insurance companies offer all types of vehicle insurance. Other insurers only offer auto insurance.
Bundling Opportunities and Other Insurance Products
It may be in your best interest to get home and auto insurance from the same company. Getting multiple insurance products from the same company allows you to bundle the policies together to save money. It’s also more convenient: you’re dealing with one company for all your insurance needs.
Insurance is governed by each state in a different way. States have different rules regarding car insurance. Some states require relatively high liability limits, for example, while other states require personal injury protection. When you buy car insurance in your state, however, your policy is always guaranteed to meet or exceed your state’s minimum limits. Your insurance limits will also rise to match the limits of any state in which you’re traveling.
Insurance can also vary between insurers. Some insurers are known for offering high-end customer service and claims satisfaction at a higher price. Other insurers are known for offering barebones, rock-bottom coverage at the cheapest possible price.
To sum up, all insurance companies offer the same basic level of coverage, but coverage limits, policy features, and add-ons can vary widely between insurers.