Common Car Insurance Questions: What You Should Know

Every state in the country mandates the carrying of some form of auto insurance, with New Hampshire being the exception. Even in the Granite State, however, you must demonstrate proof of financial responsibility to drive a vehicle. Despite the fact that the vast majority are required to carry it, many do not fully understand auto insurance, how it works, and the impacts a driver can have on the rates they pay.

Below are some of the most common car insurance questions to help you better understand this valuable, yet sometimes confusing loss prevention product.

How does car insurance work?

Car insurance is designed to minimize your financial loss in the event of an automobile-related incident. These can include physical damages to vehicles, injury-related expenses, legal expenses, and even a replacement vehicle while your vehicle is being repaired following a covered accident.

At the very least, car insurance keeps you legally compliant in your state. At most, it absolutely minimizes any financial pain you may experience following an accident or theft.

Do I need auto insurance?

If you are of driving age, odds are you are required to have automobile insurance to operate a motor vehicle. With the exception of New Hampshire, the other 49 states require some form of automobile insurance to drive legally.

What happens if I drive without car insurance?

If you are involved in an automobile accident without automobile insurance it can lead to everything from devastating financial losses to traffic citations, and loss of your driver’s license. Even if you are stopped for a minor traffic citation, driving without insurance can lead to fines and court costs.

Are there different kinds of car insurance?

Common forms of auto insurance include:

• Liability Coverage. (Mandatory in most states)
• Uninsured and Under-insured Motorist Coverage
• Comprehensive Coverage
• Collision Coverage
• Personal Injury Protection

Do I need personal injury protection insurance (PIP Coverage)?

There are ten states, including Florida, that are referred to as “no-fault” states. These states require drivers to carry Personal Injury Protection or PIP insurance, to cover their own medical costs in the event of injuries sustained in an automobile accident.

How much auto insurance do I need?

If by “need” you mean how much are you required to carry in your state, it varies. Here are some examples:

• Florida – $10,000 property damage liability per accident and $10,000 in PIP protection.
• Delaware – $15,000 bodily injury liability per person, $30,000 bodily injury liability per accident and $10,000 property damage liability per accident
• California – $15,000 bodily injury liability per person, $30,000 bodily injury liability per accident and $5,000 property damage liability per accident
• Virginia – $25,000 bodily injury liability per person, $50,000 bodily injury liability per accident and $20,000 property damage liability per accident

As you can see, requirement change in each state. Keep in mind, these are the legal MINIMUM requirements established by law. These minimums may not be sufficient for you.

How long does it take to get a car insurance quote?

Today, you can get multiple quotes quickly and easily online. Comparison auto insurance websites like those offered by eTags are designed to get you online quotes quickly and easily. You may save hundreds on your automobile insurance with a quick online quote.

What is comprehensive car insurance?

Comprehensive coverage covers non-accident related losses to your vehicle including vandalism and theft. It is legally optional but may be required by the financial institution that financed your vehicle.

What type of car insurance should I get?

Your state minimum is a place to start. If you have an older or high mileage vehicle you may be able to do without comprehensive or collision coverage. If you have a lot of assets to protect, you’ll want to get far more than state required minimum coverage. If you don’t have a secondary or back up vehicle and require a car for work, you’ll want rental or replacement vehicle coverage. Your best coverage will depend on your particular situation.

What is the average cost of car insurance?

That will depend on where you live. Car insurance premiums vary widely state by state ranging annually from under $900 in Maine to over $2400 in Michigan. Liability only rates will be less expensive.

How much does car insurance cost?

Again, this depends on where you live and the type of coverage you desire. The three least expensive states include Maine, Ohio, and Idaho while the three most expensive are Michigan, Louisiana, and Connecticut. Rates you pay will be impacted by the coverage you choose and other personal aspects like your credit rating, age, driving record, and more.

What is an auto insurance deductible?

An automobile insurance deductible is the amount of out of pocket expense you will incur before your coverage kicks in. For example, if you have a $500 deductible and have an accident resulting in $3000 in damage, you would pay the first $500 and your insurance provider would pay the remaining $2500.

The amount of your deductible is one of many factors that will impact your car insurance premiums. The higher your deductible, the lower your premium.

Am I overpaying for car insurance?

You probably are. Many Americans are, simply because they do not shop around or compare frequently enough. To find out for sure, get an easy to use, online quote. Many wish they would have compared far sooner when they discover what they could have been saving.

How do I get a discount on my insurance policy?

There are many ways in which you can get discounts on auto insurance. These include taking advantage of:

• Safe driving discounts
• Good student discounts
• Anti-theft and safety equipment discounts
• Good credit rating discounts
• Discounts for annual or semi-annual payment of premiums
• Auto-payment monthly discounts

Who has the cheapest auto insurance?

Various companies specialize in certain markets. Some attract older, safer drivers, while others are willing to target younger, higher risk drivers. Prices will range accordingly. The best you can do is to compare rates annually.

Who is covered by my auto insurance policy?

Your vehicle will likely be covered under the “permissive use” provisions of your auto insurance policy. This allows you to allow relatives and friends to occasionally drive your vehicle while being covered under your policy. To be covered, however, they must have a valid drivers license.

What about auto insurance for unlicensed drivers?

Unlicensed drivers won’t be covered by auto insurance. This can create “gaps” in coverage which usually results in higher premiums. If possible, keeping continuing coverage will qualify you for the better rates.

How much do new drivers pay for auto insurance?

New drivers, especially teen drivers, tend to pay the highest rates for auto insurance due to their inexperience and high claim rates. Rates will begin to decrease as drivers age and get married, assuming, of course, they maintain a safe driving record.

Where can I find cheap car insurance for young drivers?

While finding “cheap” car rates for teens may be a challenge, you can find the lowest prices available by getting online quotes. Comparing is the best way to get cheaper rates for teens and other drivers.

Do you have to insure your teenage driver?

Yes. In fact, your insurance application will usually require you to list all licensed drivers living in your household. This includes your teenage driver, if you want them covered, and to be able to drive legally.

How much is the average insurance for a teenage driver?

The average cost of a teen driver’s auto insurance can be double that of an adult driver. You can save by insuring a teen through the parent’s policy and through programs like good student discounts. You may also qualify for discounts through the completion of a drivers training program.

If your car is totaled, how much does insurance pay?

This will depend on a variety of factors including the value of your car, the amount of your deductible, and what the salvage value of your wrecked vehicle is. For example, if your car is valued at $10,000, and your deductible is $500, and the salvage value of your car $500, your insurance company should pay you $9000.

Determining if a car is “totaled” is always a matter of economics. If it costs more to repair the car than it is worth (or close), an insurance company is likely to view the vehicle a total loss.

What type of car insurance do I need to drive for Uber or Lyft?

Both Lyft and Uber offer coverage while a passenger is in the vehicle but not when traveling to or from a pickup. You should contact your car insurance company and ask them about adding a commercial rider to your personal auto policy to be fully covered.

What type of car has the cheapest insurance?

Staying away from luxury and high performance cars and SUVs will likely save you on your car insurance.   According to an article in Forbes Magazine, the top five cheapest cars to insure for 2017 include Jeep Liberty 2WD, Honda CR-V, Jeep Wrangler Black Bear 4WD, Jeep Renegade Sport 2WD and the Honda Odyssey. Your rates will vary depending on other personal factors like age, driving record, credit rating and more.

Does my car insurance cover my rental car?

Most auto insurance policies will cover a car rental based on the coverage that is in the original policy. This means that if you do not have collision coverage on your main policy, the rental car will not be covered for damages in an accident. In some cases, the credit card used to secure the rental car may include coverage or suppletal insurance may be secured from the rental car company.

What type of rental car insurance should I get?

Supplemental car insurance offered by rental car companies can be very expensive. You are better off making sure you have full coverage on your policy and that a rental car is included in that coverage prior to renting a car. You can also check with the credit card company you use to rent the vehicle to see if they have included coverage.

What if someone borrows my car and gets into an accident?

You’ll be covered under the permissive use provisions of your auto insurance policy basedon the coverage your current policy has. If that coverage is insufficient, you can turn to the insurance company of the borrower.

Can I cancel my insurance policy?

Yes, but some policies require a specific notification period. If you’re receiving a discount for paying insurance in advance, the insurance company may withhold that discount from any refund due.

Where can I compare car insurance quotes from different companies?

When you use a tool like this, you can get quotes from multiple companies easily and quickly. You simply compare the rates and make the decision best for you! You could be saving hundreds of dollars in just a few minutes.

Many of us will drive miles out of our way to save a few cents on a gallon of gasoline or to use a loyalty card but will not take the few minutes it takes to compare auto insurance rates online. You’ve got nothing to lose and potentially hundreds of dollars to save!