Commonly Asked Questions About Auto Insurance
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Car insurance can be complicated, and it’s natural to have questions about how to find the best insurance, what’s covered, and how much protection you really need. That’s why we’ve answered the most common auto insurance questions for you. Whether you’re shopping for car insurance or just want to make sure you have the right policy, these answers can help clear up some confusion.
Shopping for Auto Insurance
Where can I buy car insurance?
You can purchase your auto insurance policy directly from a car insurance provider or from an independent insurance agent that has access to multiple carriers. We always recommend that you shop around for auto insurance quotes from several companies before selecting your policy. This helps to ensure you get the best price for your coverage needs.
How much does auto insurance cost?
Car insurance costs range widely, and they depend on many different factors. The location in which you live, the length of your commute to work, the vehicle you drive, your age, your marital status, your credit rating, and more can all affect your rates.
When should I shop for car insurance?
There’s never a wrong time to shop for car insurance. We recommend that at the bare minimum you compare auto insurance rates before your renewal period. But, it’s also a good idea to shop for a new policy anytime you experience a major life event such as moving, buying a different vehicle, or adding a new driver to your policy. If it’s been a few years since you were in a car accident or received a moving violation, you may be eligible for lower rates as well, so it’s time to shop around.
Does my vehicle affect my car insurance rates?
Your vehicle make and model absolutely affects how much you pay for car insurance. Vehicles that hold their value or are more likely to be stolen or involved in collisions will cost more to insure. That’s because insurance companies have to consider the likelihood that they’ll have to pay a claim and how much they might have to pay out.
Does my red car cost more to insure?
No, the color of your car doesn’t impact your insurance rates. There is no statistical data to prove that red cars are involved in more accidents or that their drivers receive more speeding tickets than those with vehicles of other colors. As a result, insurance companies don’t increase premiums based on your vehicle’s color, but they might up those premiums if your car is a more expensive model.
What car insurance discounts are available?
Car insurance providers offer many discounts. You may be eligible for multi-vehicle and multi-policy discounts, and many providers offer discounts to good drivers. Some insurance companies will reduce your premium slightly if you sign up for paperless billing, and you may save additional money when you pay your policy annually instead of monthly, or if you opt for an automatic payment plan. This is just the tip of the iceberg, so be sure to ask about all available discounts you might qualify for.
How Auto Insurance Coverage Works
What does car insurance cover?
Your car insurance coverage will largely depend on the type of policy you have. Your state will set minimum auto insurance coverage, which is typically a policy that only includes coverage for liability and property damage for the people or property that you injure or damage in an accident. If you have a loan or lease you may be required to carry a higher limit of liability coverage and you will also be required to have comprehensive and collision coverage on the vehicle with the lease or loan. From there you can personalize your insurance so it’s right for you.
What is liability insurance?
Liability insurance helps to cover the expenses that other people might experience if you are at fault in an accident. It will help to pay for bodily injury and property damage expenses, and is mandatory in most states. It can help to protect you from having to pay for these expenses out of pocket, and offers protection if another driver sues you.
What is personal injury protection?
Personal injury protection coverage, or PIP coverage, helps to ensure that your medical bills are paid after an accident. It’s effective no matter who was at fault. PIP can also cover lost wages resulting from your injuries and even funeral expenses. Some states require PIP, while others consider it optional.
What is collision coverage?
Collision coverage helps pay for the damage your vehicle sustains in an accident, whether that’s with another vehicle or an object like a fence or tree This coverage also applies to the unfortunate situation when another vehicle hits your car and flees the scene if the at-fault driver cannot be tracked down. You will pay a deductible before your collision coverage kicks in.
What is comprehensive coverage?
Having a collision with a vehicle or other object isn’t the only way your car can be damaged. Comprehensive coverage will pay for expenses like vehicle repairs or a replacement, after your car is stolen, you collide with an animal, a tree falls on it, or from a major natural disaster like an earthquake or flood.
What is gap insurance?
Gap insurance covers the gap between what you owe on your vehicle loan and the total amount your insurance company would pay if your vehicle were to be totaled. It helps to prevent you from having to make car payments on a vehicle that you no longer have. You may or may not need it, depending on how large your car loan is.
How much car insurance do I need?
Every state sets its own minimum insurance requirements, so the insurance you need will partially depend on where you live. These minimum insurance requirements are a good start, but likely won’t provide enough protection to keep you from making a substantial out of pocket payment if you’re in an accident.
Instead of only securing state minimum coverage it’s important to think about your financial situation and how much risk you are comfortable with in the event of an accident or other event that damages your vehicle. It’s typically always a good idea to have more insurance than the minimum requirements. If you don’t have enough liability or property damage coverage to pay claims, your personal assets can be accessed and your wages may even be garnered to cover the costs.
Does my car insurance cover other drivers?
Car insurance typically follows the car, not the driver, so your insurance company might pay for damages that result from an accident when someone else is driving your car.
There are many variables that can affect how this works though. Most policies will cover a driver who you have given permission to to use your car, as well as other drivers listed on your policy.
An exception is if you opted to exclude a driver from your policy ahead of the accident. In this case, the policy the car is on wouldn’t cover the incident.
If you’re thinking of letting someone borrow your vehicle, it’s a good idea to review your car insurance and the driver’s car insurance policy. Call your insurance company ahead of time with any questions to make sure everyone is protected when you let someone else get behind the wheel of your vehicle.
Do I need different insurance for other types of vehicles?
Depending on the type of vehicle you drive, your insurance needs may vary. For example, if you use a vehicle for commercial use, it needs to be covered by a commercial auto policy. Alternatively, you may have the option to list the vehicle under “business use” on your personal auto policy providing it does not have signage on it or is used for specific tasks such as snow plowing, delivery, rideshares, etc. Other vehicles, like RVs and motorcycles, may also need special policies.
Does car insurance cover rental cars?
In most cases, your car insurance will cover a rental car like it is your own vehicle providing at least one of your owned vehicles carries full coverage (liability, property damage, comprehensive, and collision), but it’s important to consider this question on a case-by-case basis. If you only have liability insurance, you will be required to take out comprehensive and collision coverage on the rental car for extra protection. Keep in mind that if you only have the state-mandated minimum insurance, the value of the rental car may exceed your policy limits, and you could still be financially responsible if you were in an accident.
If you have any questions, contact your insurance company or independent agent directly to verify what your coverage includes.
Do I need rideshare insurance?
If you are driving your car to earn money for a service like Uber or Lyft, you need rideshare insurance.. Adding rideshare insurance onto your existing coverage is pretty affordable, and coverage ranges from about $10 to $30 per month. However, a lot of personal auto insurance policies specifically exclude vehicles used in a rideshare program or ones that are used for delivery of goods such as food. It is important that you consult with your insurance carrier or independent agent to make sure your auto policy will cover a claim if you use your vehicle in one of these ways to earn income.
What if I forget to pay my premium?
If you forget to pay your premium, your car insurance provider can provide you with a 10-day notice to give you extra time to pay. If you do not pay in that time period, they will cancel your policy. It’s best to submit a rush payment during that 10-day period to maintain your coverage. If you don’t, you will need to contact your insurer to find out if your policy is eligible for reinstatement. Until your insurance is reinstated, it’s illegal to drive your car. Allowing your auto insurance to cancel may create a lapse in coverage even if the policy is reinstated. This can create fines assessed by the Department of Motor Vehicles in your state and lapses in insurance coverage that could end up costing you more on your premium if you move to a new policy.
Will my car insurance rates drop automatically over time?
Not always. Time alone is not a reason for your insurance rates to get more affordable. Instead, insurance companies consider factors like your driving record, credit rating, the value and age of your vehicle, and where you live to determine your rate. If you experience life changes, like getting married or moving, it’s important to let your insurance company know about these changes, so they can update their information. As you become eligible for lower rates, your insurer may reduce the rates automatically, but in some cases your policy may need to be rewritten to reflect the changes.
Should I bundle my car insurance?
Bundling your car insurance with other policies, like a homeowner’s or renter’s insurance policy, can save you money. However, before you decide to bundle, make sure that the insurance policies offer you the type of coverage you need for both your car(s) and the home or rental you need to protect. Bundling insurance is only beneficial if you’re getting the coverage you need at decent rates. You may want to shop around to make sure you’re getting the lowest prices on all of your insurance policies before deciding which one company you want to use or figure out if it makes more sense to split the policies between two carriers.
Car Insurance Laws
What happens if I don’t buy car insurance?
If you don’t have insurance for your vehicle and still drive, you could face stiff penalties like court fees, the suspension of your license and registration, and even jail time. Plus, if you’re involved in an accident while driving without insurance, you will be financially responsible for the damages that occur, and the other driver could take you to court. The exact penalties will depend on which state you live in and are driving in.
It’s always best to make sure you’re insured before you get behind the wheel, and know that car insurance doesn’t have to be expensive. Compare.com can help you to find affordable insurance so that you’re protected when you’re on the road. Compare.com users save an average of $720 per year on car insurance.
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What is an SR-22?
The SR-22 is a form that your insurance company needs to file on your behalf if you have a history of high-risk behavior while driving, such as having driven without insurance or having had your license suspended. The form proves that you are insured and your state might require this form in order for you to maintain your driver’s license.
What happens if I lie about my driving history to my car insurance company?
If you lie about your driving history to your car insurance company, you could face significant fines. Some drivers might lie about past accidents, tickets, or even the number of drivers that will be on the policy in an attempt to save money.
Insurance companies check your driving record, so they’re likely to discover many of these lies quickly. When they do, they consider it fraud and might raise your rates, deny coverage, or issue a fine.
It’s important to be honest about every element of your driving history and insurance needs. Remember, even if you have a bad driving record, with time, those accidents and tickets will fall off, and your car insurance rates will drop.
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