Auto insurance can feel like a maze of unfamiliar terms, numbers, and “what-ifs.” Whether you’re insuring your first car or reevaluating your current policy, understanding what your coverage actually means can be the difference between peace of mind and a financial nightmare.

Below are answers to some of the most frequently asked questions about auto coverage, simplified and backed by real facts.

Do I Need More Liability Coverage Than the Minimum Required by Law?

The short answer: Yes. State minimums are designed to meet legal requirements, not to fully protect your financial future. For example, California’s minimum liability limits are $30,000 for injury to one person, $60,000 for injury to multiple people, and $5,000 for property damage. But what happens if you cause an accident that results in $100,000 in damages? The rest could come straight out of your pocket.

According to the Insurance Information Institute (III), more than 12% of drivers nationwide are uninsured, and many more are underinsured. Opting for higher liability limits provides broader protection and could help you avoid personal lawsuits in a serious accident.

Should I Consider an Umbrella Policy?

If you have assets like a home, savings, or investments, an umbrella policy can be a smart move. These policies provide additional liability protection beyond the limits of your home or auto insurance. They also cover legal defense costs if you’re sued. An umbrella policy can offer an extra $1 million or more in protection often for just a few hundred dollars per year. It’s especially valuable for families, professionals, or anyone with financial assets to protect.

Should I Raise My Deductible?

Raising your deductible (the amount you pay out-of-pocket before your insurer covers the rest) can lower your premium. For example, increasing your deductible from $500 to $1,000 might save you 10–20% on your annual premium. However, this only works if you have the savings to cover that higher deductible in case of an accident. It’s a smart cost saving tool. Just make sure it’s not financially risky.

When Should I Add My Teen Driver?

As soon as your child gets a learner’s permit or driver’s license, you need to add them to your policy. Most insurers require it and delaying could result in uncovered claims. Farmers offers a teen education resource called You’re Essential to Safety (Y.E.S.), which helps young drivers and their parents understand the risks and responsibilities of the road. Bonus: Teens who complete certified safety programs may even qualify for discounts.

Do Red Cars Cost More to Insure?

Despite the myth, color doesn’t impact insurance rates. Insurance premiums are based on factors like your car’s make, model, age, engine size, safety features, and your driving history. Not whether your ride is fire-engine red or sky blue. The idea that red cars cost more is a long standing myth with no basis in reality.

To Summarize:

Auto insurance isn’t just a legal requirement, it’s a critical layer of protection for your finances, your future, and your family. Take the time to review your coverage, understand your limits, and ask your agent the right questions. A few smart choices now can make a world of difference when you need them most.