Frequent Answers and Questions – FAQ
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No doubt you’ve identified how the world of car insurance is – well, let’s just say it’s complex. When you apply for insurance, a company is going to look at many factors.
Type of Car
Generally, the more expensive the vehicle, the more you pay for auto insurance.Location
Because of the higher frequency of issues like theft, accidents and vandalism, urban drivers may pay more than those in rural areas.
Simply how much the Car is Driven
People who drive a lot for work or commute an extended distance usually pay more than those who drive less.
Age, Sex and Marital Status
Accident rates are likely to be higher for drivers under 25, especially men, which often means higher insurance prices. Marriage may bring costs down.
Driving Record
Drivers with poor driving records usually pay more for coverage than individuals who have been accident-free for a few years.Coverages
Insurance policies include a number of coverages. Generally, the more coverage you buy, the higher the cost.
Deductible
A deductible is a component of a loss that you’ve agreed to pay with your own money. Generally, the higher the deductible, the cheaper your premium.
How Can I Save Money? There are numerous steps you can take to try saving money on auto insurance:
• Buy a cheaper car. Generally, the more expensive the automobile, the more expensive it is to insure.
• Do your safety research. Insurers often pay increase premiums for cars which have been an even greater risk for damage or occupant injury.
• Ask about discounts. Typical discounts include those for good students, insuring multiple vehicles, accident-free driving plus much more.
• Drive less. Consider joining a motor vehicle pool or take alternate transportation whenever possible. Mileage reduction will help lower your premiums.
• Drive carefully. Insurers love a clean driving record.
• Consider Multiline: Many insurers will offer discounts if you are using them for multiple coverages. -
Everything you need to know about finding the right auto insurance.
Auto insurance, whether you want it or not, is an essential, legal requirement for all drivers. It protects drivers in the event of an accident and ensures that mechanical and cosmetic repairs will be made to damaged vehicles. Additionally, auto insurance covers the medical costs of car accident victims. In all but two states auto insurance is a legal requirement to drive. In New Hampshire, the one state where it is optional, drivers still must prove that they have enough money to cover damages that they may cause while driving.
These are the basic elements of an auto insurance policy:
Liability. Liability coverage pays for damages you are responsible for in the event of an accident. It covers both property and medical damages that you may cause and also provides you legal protection in the case of a lawsuit. Liability insurance is required in all but two states.
Collision. Collision coverage will repair your car even if you are at-fault in an accident. These is a set dollar amount that you contribute to the repairs (called a deductible), and your insurance company pays the rest. If your car is totaled, your insurance company writes you a check for the cash value of the vehicle. Collision coverage is optional.
Comprehensive. Comprehensive coverage is for any malady that may befall your car through something other than an accident. This includes theft (though only the worth of your car, not your belongings inside the vehicle), vandalism, damage from flood, fire, falling trees, and most other hazards. Comprehensive coverage is also optional.
Personal Injury Protections (PIP). PIP is an additional sort of medical protection that is required in no-fault states and optional in all others. It covers medical expenses for you and your passengers. If PIP isn’t required in your state, it is likely that your medical coverage is sufficient.
Uninsured Motorist. Uninsured motorist protection covers your expenses when you’re involved in an accident with a driver that doesn’t have insurance or doesn’t have enough insurance. You are also covered for injuries sustained while you’re a pedestrian. While not usually a requirement, uninsured motorist protection is often worth the extra premium dollars.Every state is unique in its requirements, and every insurer works a little bit different. Still, these basic elements are part of nearly every policy. It’s a good idea to speak to a local agent that’s familiar with the insurance laws of your state who can advise you on how much or how little insurance to purchase.
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Save money by shopping around for your teenager’s policy
Teen drivers are expensive to insure, and with good reason. Due to their inexperience and penchant for reckless behavior, teen accident rates are dramatically higher. If you’re planning on adding a teenage driver to your existing policy, brace yourself for a significant rate increase. Teenage boys are almost twice as expensive to insure as girls, but you can expect a jump with either.
Be sure to talk to new drivers about defensive driving and the dangers of driving drunk or under the influence of drugs. Car accidents are the number one cause of death in teenagers; it’s imperative to have a conversation about this. If your state doesn’t have a graduated driver license program that restricts when and with whom teens are allowed to drive, consider enacting your own rules. States with these programs have been extremely successful in curbing accident rates in new drivers 10-30 percent.
There are ways to make the increased premiums sting a little less. Students that carry a “B” average receive discounts, as do students that are away at school. Cars that are expensive for adults to insure are even more so when it comes to teens. It’s best to stick with low-horsepower sedans and wagons and avoid small, sporty cars. Impress on them the importance of obeying traffic laws and posted speed limits. If you thought insuring a teen was expensive before, wait until they get a couple of tickets—it won’t be pretty.
Insurers’ rates for teens vary dramatically, so it’s worth getting quotes from a few different companies. It’s nearly always cheaper to add a teen to an existing policy instead of purchasing a separate one, so you might want to take the time to see if you can find yourself a lower rate in the process.
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Your location might have a huge effect on your insurance rates.
The state you live in plays a large role in how much you pay for car insurance. Your rates will reflect the number of vehicle thefts in your area and the number of uninsured drivers, along with local body shop rates.In addition to these factors, every state has its own set of rules for liability coverage minimums. Some states require as much as $100,000 worth of injury protection and up to $25,000 for property protection. Other states, if you’re willing to assume the risk, require as little as $10,000 for medical expenses and $5,000 for property damage. If you’re looking for a bargain rate, you’re not going to find it in a state with high minimums. Ten states operate under an entirely different set of rules for “fault” than other states. Check our our article on no-fault auto insurance states to learn more.
In general, people that live in large cities and densely populated areas pay more for insurance. This is because having more cars on the road increases the likelihood of accidents. Accident data from specific zip codes is often used to determine rates. Occasionally, sparsely populated areas have abnormally frequent accidents or disproportionately high medical expenses (usually due to hospital proximity). Insurance rates will reflect this.
Unfortunately, there isn’t anything you can do to lower surcharges from living in a high-risk area. Where you live is one of several factors that, like your age or gender, you can’t change. If you’re looking for ways to save money on insurance—and there are plenty—this isn’t one of them.
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There are dozens of obscure terms in the insurance lexicon. Most of them are of interest only to people that work in the industry but it’s vital for everyone with an auto insurance policy to understand these ten fundamental terms. If you don’t understand them, you can’t know whether you have enough coverage, whether you are getting a good deal, or whether you have the right policy for your needs.
Premium
A payment made to an insurance company (typically monthly) obligating them to pay insurance claims according to the terms of your policy.Deductible
A deductible is a sum of money that a policyholder pays out-of-pocket so that their insurance company will pay their claim. Most auto insurance policies have deductibles, but they vary widely in their amount. Often there is an inverse relationship between the amount of a deductible and the amount of a premium. Policies with high deductibles generally have a lower premium and policies with high premiums generally have a lower deductible.Bodily Injury Liability
This type of coverage protects you if someone is injured or killed by your vehicle. Provided that the dollar value of your coverage is large enough, this can fund your legal defense and even pay for any legal judgments against you, if an injured party or their next of kin take legal action against you. This does not cover you or anyone in your vehicle; medical payment/ personal injury coverage does.Collision Coverage
This pays for any damage to your vehicle resulting from a collision with another vehicle or object. For older vehicles, this coverage may not be worthwhile since it is usually limited to the cash value of the covered vehicle.Physical Damage Coverage
Also known as comprehensive coverage or Other-Than-Collision (OTC), if your vehicle is damaged by something other than a collision, this will generally cover it.Medical payment or personal injury coverage
These cover injuries to the driver and passengers in your vehicle. It may cover injuries to pedestrians as well, depending on the policy.Property Damage Liability
Quite simply, if your vehicle damages someone else’s car or other property, this coverage will pay for the damages. Some insurance companies offer a version of this coverage that includes protection from legal claims filed as a result of damage to someone’s property.No-Fault Insurance
Some states have adopted no fault insurance as a way to reduce lawsuits stemming from car accidents. In no-fault states, drivers are generally prevented from suing other drivers unless they are seriously hurt. In no fault states, if one gets in an accident involving another driver, your insurance claim is paid by your own insurance company, rather than the other driver’s insurance company.Uninsured Motorist Coverage
This comes in two forms: Bodily Injury, which covers an insured driver and their passengers in the event that they are injured by an uninsured driver and Property which covers damage to your vehicle caused by an uninsured motorist.Gap Insurance
When you drive a new car off the lot, it immediately loses a sizable percentage of its value. If it then gets totaled in a crash, you owe the dealership for a new car but the insurance company will pay you the “Blue Book” value for a used car. Gap insurance helps drivers avoid this problem by paying the difference between what a driver owes and what they are paid if the vehicle is totaled -
Auto insurance, whether you want it or not, is an essential, legal requirement for all drivers. It protects drivers in the event of an accident and ensures that mechanical and cosmetic repairs will be made to damaged vehicles. Additionally, auto insurance covers the medical costs of car accident victims. In all but two states auto insurance is a legal requirement to drive. In New Hampshire, the one state where it is optional, drivers still must prove that they have enough money to cover damages that they may cause while driving.
These are the basic elements of an auto insurance policy:
· Liability. Liability coverage pays for damages you are responsible for in the event of an accident. It covers both property and medical damages that you may cause and also provides you legal protection in the case of a lawsuit. Liability insurance is required in all but two states.
· Collision. Collision coverage will repair your car even if you are at-fault in an accident. These is a set dollar amount that you contribute to the repairs (called a deductible), and your insurance company pays the rest. If your car is totaled, your insurance company writes you a check for the cash value of the vehicle. Collision coverage is optional.
· Comprehensive. Comprehensive coverage is for any malady that may befall your car through something other than an accident. This includes theft (though only the worth of your car, not your belongings inside the vehicle), vandalism, damage from flood, fire, falling trees, and most other hazards. Comprehensive coverage is also optional.
· Personal Injury Protections (PIP). PIP is an additional sort of medical protection that is required in no-fault states and optional in all others. It covers medical expenses for you and your passengers. If PIP isn’t required in your state, it is likely that your medical coverage is sufficient.
· Uninsured Motorist. Uninsured motorist protection covers your expenses when you’re involved in an accident with a driver that doesn’t have insurance or doesn’t have enough insurance. You are also covered for injuries sustained while you’re a pedestrian. While not usually a requirement, uninsured motorist protection is often worth the extra premium dollars.
Every state is unique in its requirements, and every insurer works a little bit different. Still, these basic elements are part of nearly every policy. It’s a good idea to speak to a local agent that’s familiar with the insurance laws of your state who can advise you on how much or how little insurance to purchase.
