Best auto insurance

Auto insurance

Most states mandate basic personal auto insurance and provide you with some financial protection in case of an accident. But is it enough? What are the options? Learn how car insurance works and what types of coverage are available.

Drivers Think They Have Insurance They Don’t Have

Many drivers think they have car insurance that isn’t available. For instance, 50% of those surveyed thought their car insurance policies included accidental death and dismemberment (AD&D) insurance. However, AD&D insurance is not a part of car insurance policies.

At least 40% of drivers believe they have coverage that doesn’t exist in a car insurance policy:

  • 47% of drivers think “additional living expenses” coverage is part of their auto insurance policies. This coverage is part of homeowners and renters insurance.
  • 49% of drivers think their auto insurance includes “extended crash protection,” which isn’t an actual coverage type.
  • 41% say they have “vehicle emissions” insurance in their auto insurance policies. There is no coverage for vehicle emissions.

Young drivers ages 18 to 25 are most likely to believe they have coverage that doesn’t exist:

  • 74% believe they have AD&D insurance in their auto insurance policies.
  • 69% say their car insurance covers “additional living expenses.”
  • 68% think they have “extended crash protection,” which doesn’t exist.
  • 65% believe their car insurance covers “vehicle emissions.”

Mistakes like these mean that drivers may be surprised by what’s not covered by their insurance when they try to claim a car crash or other vehicle damage.

Most Don’t Know What Types of Auto insurance Cover Common Situations

We asked drivers to identify the types of car insurance that would cover common problems. Across the board, most respondents were not able to identify the correct coverage.

Most drivers do not understand liability car insurance, which is the foundation of auto insurance and is required in most states. Only 31% of drivers knew that liability insurance would pay out for fence repairs if they crashed into a neighbour’s fence. Here, 60% chose a wrong answer, and 9% said they didn’t know.

A majority (59%) of drivers did not know that comprehensive coverage would pay for damage from a tree branch falling on their car.

Cheap car insurance can help with many of our stupid mistakes while driving, but only 33% of drivers knew that collision coverage would pay for vehicle damage if they accidentally backed into a pole. For this question, 57% of drivers chose the wrong answer and 10% said they didn’t know.

The biggest knowledge gap was about uninsured motorist coverage. Only 3% of drivers knew that none of the standard insurance types listed would cover the injuries an uninsured motorist sustains if they crash into your vehicle. (Uninsured motorist insurance covers your injuries from an uninsured driver.)

Related: Business Insurance – Types, Benefits, And Coverage

Summary: Most Drivers Lack Basic Auto insurance Knowledge

Auto insurance is meant to be a financial safety net if you cause a crash, get injured or accidentally damage your vehicle. However, our survey found that this safety net has a lot of big holes due to a lack of basic auto insurance knowledge.

Question Correct Answer Percent Of Drivers Giving A Wrong Answer
If someone else crashes into you and they are injured but they don’t have Auto insurance, what type of Auto insurance would pay for their medical bills?
None of the above (choices were liability, collision, comprehensive and uninsured motorist coverage)
85% got it wrong
If you cause an accident, what type of car insurance would pay for the other driver’s vehicle damage?
Liability coverage
62% got it wrong
If you accidentally crashed into a neighbor’s fence, what type of auto insurance would pay for the fence?
Liability coverage
60% got it wrong
If a tree crushed your car roof, what type of auto insurance would pay?
Comprehensive coverage
59% got it wrong
If you backed into a pole, what type of car insurance would pay for your car damage?
Collision coverage
57% got it wrong
If your car is damaged by a flood, what type of auto insurance would pay for the damage?
Comprehensive coverage
56% got it wrong

Drivers ages 18 to 25 were the most likely to give wrong answers, and in general, correct answers increased as age groups got older, but then decreased at age 77 and up.

For example, most young drivers (91%) believe that car insurance will pay out if their car won’t start. Only 3% of young drivers correctly chose “none of the above” from the choices given. But 62% of drivers ages 58 to 76 knew that none of the coverage types listed would cover a vehicle that won’t start.

With Auto insurance rates rising across the country, understanding what coverage you’ve paid for (or haven’t purchased) becomes increasingly important. Unfortunately, most drivers are hitting the road without understanding the financial consequences of a crash.

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