Car Insurance

The story: Sam’s first fender bender

After a slow parking-lot bump, Sam and the other driver swap insurance info and take photos.

1. Narrator: Sam is backing out of a parking spot and bumps another car. No one is hurt.
2. Sam: Okay. Breathe. Is everyone okay? Then what do I do?
3. Narrator: Sam checks for injuries and moves to a safe spot. Then Sam swaps names and insurance info.
4. Adult: Let’s both take photos and write down exactly where it happened.
5. Narrator: Sam’s liability coverage pays for the other car. Collision, if Sam has it, fixes Sam’s car after the deductible.
6. Narrator: Liability protects others. Collision protects your car.

What you’ll learn

1. Four main coverages

   Liability pays for damage and injuries you cause to others. Collision fixes your car after a crash. Comprehensive covers things like theft, hail or a falling tree. Uninsured motorist covers you when the other driver has no insurance.

2. Minimum vs enough

   Almost every state sets a minimum amount of liability coverage. The minimum may not cover a serious crash, and you could owe the rest yourself. Many drivers choose more than the minimum.

3. Why teens pay more

   Premiums depend on age, driving record, the car, where you live and, in many states, credit. New drivers have more crashes, so they pay more. Ask about discounts, like good grades or a driving course.

4. After a crash

   Check for injuries, and call 911 if anyone is hurt. Move to a safe spot if you can. Swap names, insurance and plate numbers. Take photos. Don’t argue about fault. Report it to your insurer.

Key words

liability coverage

pays for damage you cause to others (not the same as a liability on a net worth sheet)

collision

pays to fix your own car after a crash

comprehensive

pays for theft, weather and other damage that isn’t a crash

uninsured motorist

covers you when the other driver has no insurance

Common questions

Do I need my own policy to drive a family car?

Often a teen driver is added to the family’s policy. Rules vary by insurer and state, so families check with their insurer before the teen drives.

Remember this

Liability protects others. Collision protects your car.

Try it: Pick coverage for the sample driver

1. Sample driver: 17, new license, drives a family car worth about $6,000 (example).
2. Pick which coverages fit, and write why.
3. Or look up your state’s minimum coverage from the fact card.

Pick coverage for the sample driver, or look up your state’s minimums.

Live facts

Numbers that change over time, with when they were last checked and where they come from.

• Your state’s minimum car insurance, and whether credit can affect the price

  Source: NAIC: state insurance departments(opens in a new tab)