Auto Insurance is a big business and a necessity in most states of America, if you are to drive around without being penalized by the law. The wide range of choices and diversity in coverage options available for auto insurance can confuse you to the hilt. Most people do not care about their auto insurance until either it
is about to expire or they are involved in some accident. Here are some of the most frequently asked questions related to auto insurance, put up by most experienced as well as the first time insurance buyers.
What is Auto Insurance?
It is a legal contract between the insurance provider and the insurance seeker. Under this agreement, the buyer is entitled to pay an insurance premium to the provider who in exchange agrees to pay a fixed compensation to the insured person, if some unfortunate incident happens. The situations covered are clearly stated in the agreement.
Why do I need Auto Insurance?
You need an auto insurance policy to keep you and your family protected from any legal and financial implications that may arise due to you being involved in an accident. Apart from this reason, it is required by the Federal Law for you to carry at least some minimum amount of insurance cover (liability coverage) in most of the states.
What are the different types of Coverage options available?
The basic types of insurance coverage offered in most of the American states are Liability coverage that includes bodily injury liability, property damage liability and personal injury liability cover. Then there is collision coverage, comprehensive coverage and uninsured/underinsured motorist’s protection cover. Although, there will be some other types of cover also available in your state depending on the local law.
What do those individual numbers present in the minimum insurance limit of a state mean?
The numbers present in the form: 1/2/3 specify the individual cover limits in thousands of dollars for bodily injury per person in an accident, bodily injury for all the persons in an accident and the property damage, respectively.
Where can I get an auto insurance quote?
If you are looking to buy insurance for your car, then the first step to it is to obtain an insurance quote for you. You can either get a quote online over the internet or ask the local insurance agent.
What if I have an old car, do I still need insurance?
Yes, even if you own an old car, you still need insurance. However, you can drop the expensive coverage (comprehensive or collision) and opt for a more economical one because if your car is damaged in an accident, then the cost of physical repair might be more than the worth of the car at that instant.
Do I need insurance for a leased or financed car?
Yes, apart from the basic liability cover as required by your state, you will have to buy either comprehensive or collision coverage as per the requirement of your lender.
What are the critical factors that will influence my premium?
The insurance companies take many factors in account while deciding on your insurance policy. These factors include your age, gender, zip code, driving record, your family members driving record, number of years of driving experience, type of car you own and it’s crash test ratings, your credit score and your car’s yearly mileage. However, the individual policies of different insurance companies differ and the weightage they give to each factor.
How can I lower my car insurance rates?
All the major insurance providers offer some discounts to their customers. Generally, discounts are given for your driving record, safety instruments installed in your car, healthy credit score, number of years of driving experience and multiple car insurance.
Can I insure more than one car?
Yes, as a customer you are allowed to insure more than one car under the same auto insurance policy. Nevertheless, there is an upper limit to the number of cars that can be insured under a single policy, for each insurance company.
What is the difference between collision and comprehensive coverage?
Well, this is one of the most commonly asked queries. Collision coverage pays for the damage done to your car only in situations of it being hit or collision with some object like another car, building, tree, etc. While a comprehensive coverage, as the word means covers you financially for all types of situations for instance theft, vandalism, fire, flood, hailstorm, collision, etc.
What is the meaning of a “no-fault” automobile insurance?
Although, no-fault auto insurance is not available in all the American states but wherever they are applicable, it allows the victims of automobile accidents to be compensated for medical expenses as well as for loss of income by their insurance provider. The compensation is made not considering who was at fault in the accident.
What is meant by an auto insurance claim?
An auto insurance claim means a request that you register with your insurance company to be compensated for the financial losses covered under the agreement. If you sustain any bodily injury or some damage is done to your car in an accident, then you must file a claim with your insurance company to be paid for all the expenses incurred by you.
What if I am traveling and an accident happens in some other state?
Most of the companies now provide their customers a special out-of-state auto insurance coverage. This special coverage will automatically provide you the cover required for the state in which you might be traveling.
Would my insurance rates increase if I were involved in an accident?
The change in your insurance rates will depend on whether you were at fault in the accident or not. Normally, if you were not at fault in the accident then your insurance rates remain unchanged.
