automobile INSURANCE questions - 25 September 2013 - insurance

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Frequently Asked Questions

What types of automotive INSURANCE are available?

Automobile INSURANCE comes with different types and options. just like cars themselves.  The first is personal liability INSURANCE.  Personal liability INSURANCE is required in most states and covers you and your passengers for medical costs in the event of an accident.  While each state has a minimum standard of personal liability INSURANCE. it is a good recommendation to purchase much more than that. as the minimum will often not even cover realistic expenses should you get into an accident.  Also property INSURANCE is often required.  Beyond that. there are other options.  Gap INSURANCE. for instance. covers several the difference between the car’s totaled value and what you may owe on an automobile lease. This is often required of any new car lease.  There is also fire and theft damage which may protect you from break-ins or natural disasters.  These may be recommended if you live in a high risk area.

Why should I purchase automobile INSURANCE?

In addition to the fact that automobile INSURANCE is required by nearly every state in the country. a person’s automobile is often the second most valuable asset a person has. followed by their home.  Therefore. it makes sense to insure that asset as well as one can.  In addition to covering the vehicle. automobile INSURANCE also provides for coverage of medical bills caused by an accident and. in the case of an at-fault state. coverage if you happen to be the person who is at fault in the accident.  Purchasing car INSURANCE is a no brainer if you own a car.

Can comparative shopping for automobile INSURANCE damage my credit?

As part of the automobile INSURANCE quote many companies will run a consumer’s credit history and obtain a credit score.  A common concern is that this credit check will reduce a consumer’s FICO score.  Thankfully. credit reporting companies will distinguish between a check for liability on INSURANCE and a check for increased credit (which can be associated with higher risk for credit).  Checks on credit for INSURANCE typically are either not counted or are counted as one inquiry.

Should I raise my deductible in order to lower my premium?

Experts recommend that people who want to lower their monthly premium costs by accepting a higher deductible set aside the amount of the savings in an account set aside for no other purpose than to cover the deductible. This is a form of “double INSURANCE” whereby   you self-insure against the higher unknown risk.  Of course. this depends upon your own saving habits.  If you are able to save and maintain financial responsibility this may be a path otherwise you may want to accept the higher premium in order to hedge against a higher risk.

Can comparative shopping for car INSURANCE reduce my bill?

While some car companies will offer discounts for long-term customers. it is still a very good idea to do some comparative shopping every time your INSURANCE policy comes due.  Comparative shopping can give you an idea of what is out there and. even If you decide to stay with your current policy. will let your INSURANCE company know that you are aware that there are options out there.  Also. given the fact that more INSURANCE companies are online than ever before comparison shopping is easier than ever before.

How will adding a teen driver to my car INSURANCE policy affect my premium and coverage?

Teen drivers (or any driver under the age of 25 for that matter) are seen as higher risks than other drivers. and most INSURANCE companies will penalize you for having a teen driver on your policy by increasing your premium.  If you have been with your insurer for an extended period of time. your policy rate may not increase – although as a general rule. it will.  This differs from insurer to insurer.  If the rate increases. you should obtain free auto INSURANCE quotes from other insurers – you might find a better rate elsewhere and it never hurts to shop around.  Be aware that even if your teen does not have a learner’s permit or other provisional driver’s license. your insurer may add them to the policy either way when they reach legal driving age in your state.  (They get information about your children from your application. including birthdays. when you make your personal declarations. so there’s really no way to avoid this).  You can. however. vote with your feet by taking your business elsewhere if your existing insurer becomes less than affordable.

My husband has been charged with DUI. What happens to my automobile INSURANCE now?

DUI is the ultimate reckless behavior and you can anticipate that you will face difficulties with your automobile INSURANCE company as a result – although there are a small percentage of insured that will not be penalized for a first DUI by their insurers.  Most insurers will look for a way to cancel your policy. and if you live in a state that allows the automobile INSURANCE company to terminate you in the middle of your policy period. you may face cancellation of your policy altogether. If the INSURANCE company decides to not cancel your policy. you will definitely be charged a higher rate that reflects the very much higher risk that your household is now seen as.

I was involved in an accident.  Will my automotive INSURANCE policy cover the cost of renting a car while mine is being repaired?

That depends on two things: the type of automobile INSURANCE that you have and who was determined to be at fault in the accident. If you have a comprehensive policy. or a supplemental policy that covers rental car costs. then your INSURANCE will likely “kick in” and pay these costs right away. If you have liability only INSURANCE. the other driver’s automotive INSURANCE will sometimes pay for the costs of renting a car for your use while your car is being repaired. If you are not sure whether you have this protection. refer to your individual automobile INSURANCE policy declarations. or ask your agent or claims adjuster.

Can I choose not to purchase auto INSURANCE if I don’t want to or cannot afford it?

The short answer is maybe. but it depends on the state where you reside.  Most states in the U.S. have very strict laws that require you to maintain at least a liability policy on a motor vehicle in order to drive legally on the roadways.  These laws are called compulsory liability laws. and all states with the

exception of New Hampshire and Wisconsin require that you buy liability INSURANCE for your car.  The minimum amount of coverage varies from state to state. although nearly all of them require that you at least carry bodily injury liability.  All states have laws that require drivers to be able to have sufficient assets to pay for any damage or liability that they cause in the course of an accident. even in states that do not have compulsory liability laws.  Some states go a bit further and will not allow a car to be registered without providing proof of INSURANCE on the car.

Does my automobile INSURANCE policy cover everyone who drives my car?

That depends.  Some policies may cover your automobile when you loan it out to a friend. while others will not. Refer to your individual policy or inquire with your automobile INSURANCE carrier for specific details about your individual policy.

I am planning to purchase a used car that is worth less than $1.000.  Do I really need/have to purchase car INSURANCE for it?

In all but two states (Wisconsin and New Hampshire) you will be required to insure the vehicle regardless of how much it is worth. and even in these two states you will be required to provide proof that you have the ability to pay for any damage that might result from driving the vehicle.  In many states you cannot even register a car without providing valid proof of INSURANCE.  Most people only place the very minimum liability coverage on older vehicles. although you may need to carry higher amounts of coverage on the vehicle if you have a significant number of assets to protect. such as if you own your own home or business.

I’ve been in an auto accident and the other driver did not have automobile INSURANCE! What can I do?

Being involved in an accident where the at-fault party was no insured can be a nightmare. especially if you do not elect to take out underinsured or uninsured motorist coverage. This valuable coverage works to make sure that the expenses you have are met. regardless of the other party’s lack of INSURANCE or inadequate policy limits.  If you do not have this policy. you may need to pursue legal action against the uninsured driver. usually at your own expense.

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