How Car Insurance Works: 7 Must-Know Facts to Protect Your Ride
Table of Contents
Understanding how car insurance works is essential for every driver. At GI Auto Insurance, we believe informed customers make the best decisions. Whether you’re new to driving or revisiting your coverage, this guide will help you grasp the essentials of auto insurance and feel confident behind the wheel.
What Is Car Insurance?
There are several types of coverage, each offering different protection. The key is knowing which ones are required and which are optional—depending on your state, vehicle, and needs.
1. The Different Types of Car Insurance Coverage
Understanding the types of coverage is the first step in learning how car insurance works:
Liability Coverage
This is mandatory in most states and includes:
Bodily Injury Liability: Covers medical expenses for injuries you cause to others.
Property Damage Liability: Covers damage to another person’s property.
Collision Coverage
Pays for damage to your own car from collisions, regardless of fault.
Comprehensive Coverage
Covers non-collision incidents like theft, vandalism, or natural disasters.
Personal Injury Protection (PIP)
Covers your medical expenses and sometimes lost wages after an accident.
Uninsured/Underinsured Motorist Coverage
Protects you if you’re hit by a driver who has no insurance or insufficient coverage.
Learn more about these terms from the National Association of Insurance Commissioners
2. How Premiums Are Calculated
Several factors influence your insurance premium:
Driving history
Age and gender
Credit score
Vehicle make and model
Location
Coverage level
Good drivers with clean records tend to pay less. But bundling policies or installing anti-theft devices can also reduce your cost.
3. How Deductibles Work
A deductible is the amount you agree to pay out of pocket before insurance kicks in. Choosing a higher deductible often means a lower premium—but make sure it’s an amount you can afford if an accident happens.
4. What Happens After an Accident?
Here’s how car insurance works in a typical claim process:
File a claim with your insurer (many now offer app-based filing).
An adjuster investigates the claim.
Your car is evaluated and repairs estimated.
Your deductible is subtracted, and your insurer covers the rest (if within coverage limits).
Pro Tip: Take photos, gather witness info, and call GI Auto Insurance immediately after an accident.
5. Why You Need the Right Coverage
Without adequate coverage, you could face:
Out-of-pocket expenses
Legal consequences
License suspension
Even if you’re a great driver, uninsured motorists and unpredictable weather make the right policy essential.
6. State Requirements vs. Recommended Coverage
Texas, like most states, requires liability coverage, but often, minimum limits aren’t enough. GI Auto Insurance helps you balance cost and protection to get customized coverage that actually protects you.
Check your state’s requirements here: Texas Department of Insurance – Auto Coverage Info
7. How GI Auto Insurance Makes It Easy
We know insurance can feel confusing. That’s why GI Auto Insurance offers:
Fast, free quotes
No license? No problem!
Bilingual agents (English and Spanish)
4 convenient DFW locations
Online form and same-day coverage
Want help understanding your options? Contact GI Auto Insurance now or call us at 214-352-1600.
Ready to get covered?
Don’t wait for an accident to understand how car insurance works. Get expert advice today from GI Auto Insurance.
Click here to contact us now or call 214-352-1600 to speak with an agent.
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Frequently Asked Questions
It typically doesn’t cover routine maintenance, intentional damage, or using your car for commercial purposes unless specified.
If your car is financed or leased, you likely do. Otherwise, it depends on your car's value and risk exposure.
Yes, especially at GI Auto Insurance. We help many customers without a license get legal coverage.
Bundle policies, increase deductibles, maintain a clean record, or ask about discounts.
You could face fines, license suspension, and vehicle impoundment. It’s not worth the risk.
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