Car Insurance - Your Questions Answered

Though going without it really isn't an option, car insurance isn't always the easiest subject to understand. To interpret your options and get the best deal, you need a basic understanding of how it functions and what to expect from your auto insurance company.

Since education is your best defense when it comes to buying auto insurance, InsureMe would like to answer some common questions on the topic. We hope you find this information useful as you search for the right car insurance policy.

FAQs

Why do I need auto insurance?

You need auto insurance for a variety of reasons. First, though each state determines its own coverage requirements, drivers in every state must carry proof of some type of auto insurance in order to drive. Second, auto insurance protects you from financial and legal obligation when you're involved in an accident. Depending on the situation, the coverage you choose and your state's insurance system, it may cover your expenses, those of the other party—or both.

What kind of coverage is included?

Auto insurance includes three broad coverage categories designed to protect you from loss.

  • Property coverage: Pays for damage to or theft of your car
  • Liability coverage: Covers others against bodily injury or property damage
  • Medical coverage: Pays the cost of treatment, rehabilitation and sometimes lost wages and funeral expenses due to an accident

How can I find out which types of coverage my state requires?

Contact your state department of insurance, or read up on state laws at the Insurance Information Institute. On this page, you'll find comprehensive requirements listed state by state.

What determines my auto insurance rates?

Your premiums are based on how much risk you present to your insurance company; what it costs your insurer to conduct business, and how much money your insurer estimates it will need to pay all claims during the year. To best determine these answers, your insurer examines such factors as your age, the make and model of your car, your driving record, what kind of driving you do most, where you keep and drive your car, and even your credit rating.

Why do insurance rates vary so much from one company to another?

Depending on each insurer's claims history experience and cost of doing business, rates are set independently—and can vary widely. This is why it's so important to get several quotes before deciding on the right policy.

Is there anything I can do to reduce my car insurance rates?

Absolutely! Here are a few strategies you should discuss with your insurance agent:

  • Establish a safe driving record
  • Take advantage of money-saving discounts with credits such as defensive driving, driver training, anti-theft, low mileage, multi-car and long-time renewal
  • Choose a higher deductible and pay more expenses out-of-pocket
  • Drive safer cars
  • Eliminate unnecessary coverage, taking into account your car's age and condition
  • Look for group rates through employer-, credit union- or association-sponsored auto insurance programs
  • Get several quotes and compare policies

Can my insurance company cancel my policy once I buy it?

Yes, but only if you don't pay your premium or your license is suspended while your policy is in effect. However, if either of these happens and your policy is cancelled, you're entitled to at least 30 days notice and a refund of the unused premiums paid, minus the cost of cancellation.

Can other people drive my car and still be covered?

Definitely! Since your auto insurance coverage is attached to your car rather than just to you, anyone who drives your car with your permission should be covered. However, check with your insurance company for more specific details.

Does my policy provide coverage when I rent a car?

Yes, most auto insurers today cover rentals under your standard auto insurance policy. However, if you also purchase insurance from the rental car counter when you go on a trip, that rental policy automatically supersedes your auto insurance policy. So make sure you know for sure what's covered before you purchase any additional, short term coverage.

What should I do if I have an accident?

Get a copy of the police report, take down the other party's insurance information, and call your insurance company right away. Your agent can help you determine whether or not you should file a claim, depending on the situation.

If you have a camera handy, you may also want to take pictures of the vehicles involved for later proof of damages.

If I'm not at fault in an accident, will my premiums rise anyway?

If you have a good driving record with no history of accidents, it's unlikely that your premiums will increase solely due to one incident. However if the opposite is true, your insurance company may assume you're a hazardous driver and increase your rates.

How much do speeding tickets affect my rates?

Although different companies have different practices when it comes to raising rates, many states have laws against raising premiums after just one ticket. So, depending upon state laws and the severity of the violation, your rates may or may not go up with just one ticket.

My teenager just got his license and, when I added him to my insurance, my rates went through the roof! What can I do?

Adding your youngster to your policy was the right thing to do because it protects both him and you in case of an accident. Unfortunately, you should also expect a natural rise in insurance rates until he is older and more experienced at driving. Meanwhile, encourage him to drive defensively, wear his seatbelt, avoid distractions and keep his grades up. These actions can provide worthwhile discounts and help him establish a good driving record which, in turn, helps keep insurance premiums in check.

A lot of people drive uninsured. How can I protect myself?

Uninsured motorist coverage provides the protection you need from those who carry no insurance. With this type of coverage, your insurance company reimburses you for bodily injury, medical expense or death from an accident caused by a driver with no insurance, the driver of a stolen car or a hit-and-run driver. It does not, however, cover damage to your car; you need collision coverage for that.

How do I choose the right insurance company?

Your goal should be to find an insurer with a stable history and a high level of customer satisfaction. Check out their ratings at independent sites like A.M. Best or Moody's Investors Service, or contact your state department of insurance, which can also furnish this information. Return to the Menu

Car Insurance That Fits Your Needs

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When hopping behind the wheel, most people assume they'll travel safely from point A to point B. But unfortunately, that's not always the case. Driving accidents usually occur when they're least expected, and even a minor fender-bender can lead to high-cost repair bills or escalated medical expense.

That's why auto insurance is so important. By offering physical and financial protection for that fateful day when a mishap just can't be avoided, this type of insurance pays medical or car repair bills when they're needed most—as long as protection is adequate.

Taking a Closer Look

When shopping online for the right insurance protection, it's important to examine both lifestyle and budget before signing on the dotted line. Keep in mind that each situation is unique, so making the right decision about which coverage types to purchase depends in large part on a person's finances.

For instance, take a look at income and debts. For the household that is already struggling to make ends meet, this probably isn't the time to skimp on coverage. Instead, with only slightly higher premiums, most people can add uninsured motorist or additional liability protection to their basic motor policy, possibly saving hundreds or even thousands of dollars in case of an accident.

Other factors to consider when deciding which auto coverage to purchase include:

  • Assets owned
  • Dependent family members
  • Emergency funds or savings accrued

Since each of these factors help determine a person's ability to bounce back during financial setback, getting a handle on finances and disposable income really helps when choosing the rightinsurance plan.

Monitoring Changes—and Your Car Insurance Policy

Once a policy has been selected based on personal finances, car insurance coverage should be examined at least once a year to determine whether or not changes are due. As life situations shift, particular coverages may no longer be necessary; while a need for others may prove a wise substitute.

As changes like the following occur, we recommend checking with an insurance agent to help ensure adequate coverage 365 days a year.

  1. Marriage
  2. Divorce
  3. Pregnancy
  4. Home purchase
  5. Car purchase
  6. Job change
  7. New business purchase
  8. Loss of income
  9. Support of elderly parent or other relative
  10. Retirement

Changes like these can have substantial impact on the amount of car coverage needed and the price of insurance premiums. For example, when couples marry, they become one—and so do their auto insurance policies—often leading to lower insurance rates.

When older policyholders retire, certain coverages may no longer be necessary. One car may also be sufficient now, causing rates to drop along with annual mileage—which means additional policy discounts.

When moving to a new home, insurance rates may fluctuate up or down, depending on the home's location and the driving records of other drivers in the area. Before buying or renting a new home, find out how making that particular move will affect car insurance rates. Return to the Menu

How to Buy Car Insurance

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If you're not satisfied with your insurance company; you need to insure a new car or you'd like to find out how to get a better deal on car insurance, this information is for you. Use it to weed through the car insurance maze, and you'll be on your way to the most secure coverage money can buy.

1. Do Your Research

Since car insurance isn't exactly optional, we recommend you make things easy on yourself by shopping online. You can even sit at home in your pajamas if you want; just get comfortable. Log on to your computer and you're set to go.

Now:

  • Find out what types of coverage your state requires—and at what levels. To find out your state's requirements, we recommend this page from the Insurance Information Institute (III). Remember, since insurance is regulated state-by-state, what you'd need in one state isn't necessarily what you'd need in another. So if you plan on moving out-of-state soon, be sure to check out the requirements where you're heading before you get there.
  • Think about personal finances. While you want to make sure you're adequately covered, you don't want to get yourself in so deeply that you can't afford your car insurance premiums. If you feel you're already paying too much, take a look at your budget and determine what you can reasonably afford, either annually or monthly. Then keep this amount your goal as you shop online for car insurance.
  • Find out what's on your driving record. By ordering a copy through DMV.org, you'll know exactly what you're up against when it comes to buying car insurance. A small fee may be required but, in most states, you can order online and save the hassle of waiting in line. Another Tip: You may also want to get a copy of your credit score, since insurers may use both your driving and credit histories to determine car insurance rates. You can also purchase these online from any of the three credit reporting agencies: Experian, Equifax or TransUnion.
  • Determine what (if any) additional coverage you'd like to buy and set your deductible levels. If you're worried about totaling that new car, you might want to consider collision insurance. If, on the other hand, you're concerned about colliding with someone with no insurance, uninsured driver coverage might be just the thing.

    Your options are numerous, so read up on car insurance to get educated before you sign on the dotted line. Your deductible is simply the amount you pay out of pocket before your insurance company starts picking up the tab when you have an accident. The higher your deductibles are, the lower your car insurance premiums will be. $500 and $1,000 are common deductible levels for car insurance.

  • Get the low-down on discounts. Do you have a great driving record? Are you a student with outstanding grades? Maybe you drive a car with a high safety rating? Have you ever taken driver's education? All these situations qualify you for driver discounts, which can really add up!

2. Gather Quotes

It's time to apply for car insurance by gathering quotes. You'll need the following information for this step:

  • The name, age, sex and driver's license numbers of all drivers in your household
  • Your car's make, model and year of manufacture
  • Your current insurance policy
  • Your vehicle registration
  • The approximate number of miles you drive annually
  • The purpose for which you use your car
  • Where you park your car overnight

Now, fill out the quote box at the top of this page so we can start matching you with local car insurance agents. The application only takes a few minutes, but with the savings you'll experience, it's definitely worth a little time.

3. Check References

When you start receiving car insurance quotes, you'll want to check insurer references to make sure you're dealing with reputable companies.

Start with your state department of insurance, which you can find by clicking on your state here. Then go to an independent rating service, like A.M. Best for further information. Here you'll find customer service and financial stability ratings that may prove invaluable in choosing the right insurance company.

4. Review Offerings

Before you settle on a car insurance policy:

  • Carefully review the quotes and policies you've received
  • Make sure each policy includes the coverages you requested
  • Ask yourself if the premium payments fit your budget
  • Talk with each agent to find out how comfortable he or she makes you feel and determine the level of service each one provides

Remember, the cheapest policy isn't always the best. When it's time to file a claim, you need an insurer you can count on. Depending on what's more important to you, additional services may be worth a few extra coins. 

5. Buy the Right Policy

Now that you've narrowed down your choices and chosen the policy that's right for you, your insurance agent will handle all the details. After all, that's what he or she is trained to do.

Make sure you have contact information so you can call your agent if you have questions when you receive your policy. Meanwhile, your agent should give you a temporary binder to serve as proof of insurance. Carry it with you, or in your vehicle, until your policy arrives by mail. Then file it away and substitute your proof of insurance card, which should be small enough to carry in your wallet.

A note of caution:Don't forget to cancel your previous insurance policy!

You're On Your Way!

Now that you know how to buy car insurance, you're on your way toward the right car insurance at the right price.

So take advantage of this information and click on one of the links to the right to find the right car insurance for you. The results might just surprise you! Return to the Menu

Coverage Options Overview

The different car insurance coverages offered on an auto policy, including Bodily Injury, Property Damage, Uninsured Motorist, Comp and Collision.

An auto insurance policy provides the policyholder with financial and legal protection against losses that may be incurred from owning and operating a vehicle. The Insurance Information Institute describes a car policy as a contract between the insured and the insurer. This insurance contract provides protection that is packaged into six basic types:

  • Bodily Injury liability
  • Property Damage liability
  • Medical Payments
  • Uninsured Motorist’s protection
  • Collision coverage
  • Comprehensive coverage

In the book “Personal Finance,” author Jake R Kapoor further classifies auto insurance coverage into two categories:

  1. Bodily injury Coverages: Bodily injury liability, Medical Payments and Uninsured Motorist’s coverage
  2. Property Damage Coverages: Property damage liability, collision and comprehensive physical damage

1. Bodily Injury Coverages

Bodily Injury Liability Coverage

This is a form of liability coverage that is paid out to cover bodily injury to another party, for which the insured is legally liable (responsible). Bodily Injury coverage may also pay out for the other party’s lost wages, rehabilitation or funeral expenses. In the event that the policyholder is sued for damages, the legal expenses incurred in the lawsuit are covered under liability coverage.

Medical Payments or Personal Injury Protection (PIP)

This coverage pays for the medical expenses of injuries to the driver and passengers in the policyholder’s car. Personal injury protection (PIP) is a more comprehensive type of coverage than Medical Payments. In its broadest form, PIP covers not only medical payments, but also lost wages, the cost of rehabilitation and funeral expenses.

Uninsured Motorist and Under-insured Motorist Coverage

This coverage will pay for medical expenses for injury to the driver or passengers, which results from an accident with an uninsured driver or from a hit-and run.

Underinsured motorist coverage pays out if the other driver is at fault but does not have sufficient insurance to pay for the total loss. It will also cover the policyholder if he or she is hit as a pedestrian.

2. Property Damage Coverages

Property Damage Liability Coverage

This is another type of liability coverage, and it pays for damage caused to another person’s property. Typically, this means damage to someone’s vehicle, but includes coverage for damage to any structures that are hit, such as lamp poles, telephone posts, fences or buildings.

Collision Insurance Coverage

This is physical damage coverage that pays for damage to the insured vehicle, if it results from collision with another vehicle or object. It will also cover damage resulting from impact with a pothole, or from flipping over.

Comprehensive Insurance Coverage

This type of coverage will pay for damage to the vehicle caused by something other than a collision with another vehicle or with an object. This includes damage resulting from fire, falling objects, hail, earthquake, riot or animals. Theft and vandalism as well as cracked or shattered windshields are also covered under comprehensive coverage. Return to the Menu

Liability Insurance: What It Is and Why It's Important

Many of us experience times in our lives when we're liable—legally obligated to pony up money because of injury to someone else or damage to things that aren't ours.

Fortunately, we have insurance for such regrettable episodes.

If you drive you probably have some level of liability protection through your car insurance. (Having a minimum amount of liability protection is a requirement in all 50 states.)

If you own a home, there is also a good chance you have some protection against the financial risks of homeownership (the biggest risk: getting your knickers sued off). While liability coverage through a home insurance policy is not required by law, it's one of the wisest investments you can make as a homeowner.

Where does one get liability insurance? Most individuals get liability coverage through an underlying policy, such as car insurance, or homeowners and renter's insurance. Another source of liability protection is through an umbrella liability insurance policy.

If that last term is unfamiliar, umbrella liability insurance essentially provides another layer of protection to your homeowners and auto insurance policies. Let's say you cause a 15-car pileup, and you're responsible for $700,000 in damages (it was a big wreck) but your auto policy limits pay out to $300,000 per accident. An umbrella policy will make up the difference. Or maybe a houseguest slips on your daughter's roller-skates and subsequently decides to finance his retirement by suing you for everything you've got. If you've got a minimum of liability protection under your homeowners policy, you'll notice it can go pretty fast.

We Americans love both driving our cars and suing each other. As long as those two activities remain national pastimes, it's a good idea to beef up on your liability coverage wherever you can! Return to the Menu

 

Auto Insurance Cost & Your Ride

The cost of auto insurance is based not only on your driving record, but also the year, make and model of the car you own. If you are currently looking for a car, or if you are looking to buy a new car in the future, you should always check with an insurance agent to see what the cost of insurance will be. There are many factors that determine if your car will have high auto insurance premiums.

The types of cars that tend to have higher auto insurance premiums are:

  • Cars with high-tech accessories - Insurance companies take these high-tech toys into account when valuing the replacement cost of your car. Also, some of these accessories make your car a target for theft.

  • Sports Cars - Statistically, sports cars are more dangerous than the standard automobile. Sports-car drivers also tend to get more tickets than other drivers. Due to the added risk, your auto insurance company will charge you more for this type of car.

  • Expensive/Luxury Vehicles - Generally speaking, the more a car costs, the more it costs to fix or replace it. Auto insurance companies realize this, and they charge luxury-car owners more for insurance.

  • Vehicles Commonly Stolen - For one reason or another, certain car makes and models are targeted more often by car thieves. If you happen to own one of these models, your auto insurance will cost more due to the higher risk of your car being stolen.

  • Extremely Small Vehicles - While your compact car may get great gas mileage, chances are it will sustain massive damage if you are in an accident. This means it will cost your insurance company more. Therefore, your premium will be higher.

  • High Performance/High Horsepower Vehicles - If you buy a car with a high horsepower engine and/or high performance features, you are, statistically speaking, more likely to speed and drive dangerously. Once again, this makes you a greater risk for a car insurance company, and you will pay more for insurance.

  • Large SUVs - If you are involved in an accident while driving a large SUV, you are more likely to cause serious damage to the other car than if you were driving an average-sized car. If the accident is your fault, chances are the resulting damages to the other car will be more costly for your insurance company.

Knowing what vehicles cost more to insure will help you make wise decisions when purchasing a new car—and help you secure affordable car insurance! Return to the Menu

Getting Car Insurance Quotes, from Beginning to End

The average American driver spends about $700 a year on car insurance, according to the Insurance Information Institute (III). This is a significant amount, so it is important to be sure you are getting the best car insurance quotes—up front—before you decide on a policy.

Car insurers base quotes on several factors related to both you and your car. Your driving record is one of the most important factors considered. A large number of tickets or insurance claims make you a higher claims risk, resulting in higher rates.

Where you live also helps determine what you pay, as does your age. Certain areas have higher incidence of car theft and accidents, and mature drivers tend to have fewer insurance claims. If you drive a more expensive car—or one that costs more to repair—you can expect to pay more for auto insurance. Large coverage amounts also translate into higher prices.

Your car's sticker price, safety standards and the likelihood of theft also come into play when getting quotes on car insurance. So if you are buying a new car, look for safety features and anti-theft devices. Many insurers offer policy discounts for these features.

Where to Buy Insurance

You can find what you need in various places, but the first and most commonly searched place is the Internet.

With the almost daily expansion of the World Wide Web, many car insurance companies like InsureMe now give you the ability to search for competing quotes online. This enables local insurance agents to provide you with quotes by email or over the phone, saving you time and money.

Rate quotes are also available through employer plans, over the phone and by U.S. mail. You can pick up the phone and contact insurance companies listed in your phonebook's yellow pages, or write to insurance companies at the addresses listed to find out what car insurance will cost you. These methods, however, are generally more time consuming—and may not result in the affordable car insurance rates you can get on the Internet.

How to Lower Cost

Even with all these defining factors, car insurance can vary greatly from one agent or company to another.

The III supplies these money-saving tips to lower your car insurance premiums:

  • Comparison shop, using resources such as your state insurance department for information. (The InsureMe Web site is also a great informational resource!)
  • Compare insurance costs before you purchase a new car. Different types of cars mean different quotes.
  • Ask for higher deductibles. This can substantially lower out-of-pocket expense.
  • Reduce or drop coverage on older cars.
  • Buy multiple policies from the same insurance company.
  • Maintain a good credit history.
  • Ask about group insurance through your employer, or a professional or educational association.
  • Seek out all possible discounts.

How to Select an Insurer

Choosing an insurance company is not an easy task. Consider these things when deciding which one to go with:

  1. Price—can vary greatly from company to company
  2. Stability—helps ensure future claims payment and availability
  3. Service—includes efficiency and customer satisfaction
  4. Comfort—makes dealing with the company less stressful and more satisfying

In most states, there are dozens or even hundreds of car insurance companies to choose from. Prepare yourself ahead of time, do your research and request your free quotes today. Return to the Menu

 

Auto Insurance Basics That Save

Buying auto insurance is a little like ordering a gourmet hamburger: once you've got the "guts" of it, anything else layered on top is simply extra.

Food aside, most people purchase the bare minimum in insurance protection for their automobiles. But what they don't know about their auto policy could cost them.

Not only can they end up without additional "toppings" that could spare them later distress, pain and expense; they could also end up forking out a lot of money on auto repair and medical bills unnecessarily.

Did You Know?

One of the best ways to save money on auto insurance is to compare policies side by side.

But before doing so, it's wise to have some automobile insurance basics under the belt. This builds a solid foundation of knowledge that helps ensure the right auto policy at the right price.

Consider these important facts:

  • Every state requires drivers to carry vehicle insurance. Foregoing auto protection could result in license suspension or revocation, costly fines, high insurance costs, and even confiscation of personal assets if an at-fault auto accident occurs and someone gets hurt.
  • The insurance policy follows the automobile—not the driver. If someone else borrows the vehicle and causes an accident, the auto policy in effect on the offending vehicle is the one that pays out—and high auto insurance rates may result.
  • Items left in the auto often aren't covered under a traditional car insurance policy. Instead, those items may be compensated for under a renter's or homeowners policy, if one is in effect. Before deciding on an automobile policy, talk to a licensed auto agent, who can help determine the coverage needed for those types of items in case of theft.
  • Some auto insurance companies offer "accident forgiveness" that could keep rates from skyrocketing in case of accident. Ask an agent about this type of automotive plan, which usually allows  one or two accidents before hiking automotive rates.
  • Excessive driving raises vehicle insurance rates. Insurers base the price of auto premiums partially on the number of miles driven annually. So it just makes sense that those who drive more pay more. To keep auto mileage low, take advantage of other means of transportation available—or walk whenever possible—to keep insurance rates low.
  • It's usually not wise to make small auto claims. Though doing so may help get damages repaired, it may also cause auto premiums to rise more than the cost of those repairs. Instead, set up a savings account which can be used  for just such incidences.
  • It's cheaper to insure multiple automobiles under the same policy than under separate plans. Bundling cars together earns the insured a discount, and helps save money on the right auto insurance plan.
  • Some companies offer military personnel discounts. For maximum savings, let the insurer know before shipping out both the return date and where the automobile will be parked or stored during the tenure.

With a clear understanding of principles like these, it's easy to compare insurance policies; choose the plan that best protects automobile, driver and others on the road, and save money over the life of the policy.

Auto Insurance that Fits

Whether buying just the basics or topping them off with extras, the first step to saving money on auto insurance is understanding the basics. Once you've got that down, request your free auto insurance quotes for the right coverage that fits. Return to the Menu