Frequently Asked Questions about Auto Insurance
How much coverage do I need?
Most people make the mistake of getting the state minimums. Unless your car is old and you have little net worth, you should consider higher limits. For instance, the state minimum in California is $30,000 total liability minimum for all injured parties per accident. Let's say our minimal policy holders damage a modern luxury car (worth $50,000) beyond repair. Yes they saved significantly on their
premiums but now will have to defend themselves in a lawsuit for the $20,000 they owe over and above the policy limits. They could be sued for the difference, and have their wages garnished or have a lien on their credit. A wrongful death lawsuit can be well over $1,000,000.00.
What information do I need to give to my agent or company?
Because premiums are based on multiple facets of your history, carriers need extensive information. Most carriers use credit scoring, so they need a valid social security number. Of course your driving record must be checked, and your occupation. Your marriage status matters because married people are usually less of a risk, and an insurer may want a spouse specifically excluded from a policy if they are living in the house and not covered. Numbers and ages of drivers in the household will be relevant and the address where the car is garaged is useful so the carrier can match your zip code with their loss rates.
What can I do if I can't find coverage?
There are several things you can do. Group auto insurance is an option if you can get it through a professional organization or union.
You can also get through your state's assigned risk program. Lastly, high risk carriers will cover most substandard drivers.
When I purchase a new car, how long do I have to contact my insurance carrier?
Your policies state that it is your responsibility to notify the company when changes occur. Although your existing carrier may cover you from 14 to 30 days after your purchase. But if you have an auto accident, why take a chance when you are going to end up paying for the coverage anyway? With a new car, they depreciate immediately and any losses (absent any gap insurance) will end up in your credit.
Car dealerships are likely to require you to have insurance for your new vehicle before you drive it off the lot. And if you lease a new vehicle, the finance company you deal with may require you have higher limits on liability (bodily injury and property damage coverage).
Can I buy no-fault insurance?
"No-fault" insurance refers to medical coverage which you are required by state law to carry on your automobile insurance. It pays your medical bills with no consideration to who's at fault. No states have pure no-fault system for auto insurance. FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, PA, and UT have a form of no-fault system of insurance. In Florida, Michigan, New Jersey, New York and Pennsylvania, lawsuits for non-economic injuries are limited to "serious" injuries (verbal thresholds). Verbal thresholds are defined differently in each state.
In Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah, lawsuits for non-economic injuries are allowed only over a certain dollar amount in medical bills is reached (monetary threshold).
In New Jersey, Pennsylvania and Kentucky, motorists may reject the lawsuit threshold (choice no-fault) and sue for any auto-related injury. If you live in one of the above states, ask you carrier how for modified no fault plan rates.
Will my insurance cover a rental car in an accident?
Find out how much coverage you have on your own car. In most cases, the coverage and deductibles you have on your personal auto policy would apply to a rental car, providing it's used for pleasure and not business.
If you have comprehensive and collision coverage on your personal auto policy, the limits and deductibles would apply to a rental car. Read your policy for this limitation / exclusion. If you don't have comprehensive and collision (liability only) coverage on your own car, you most likely not be covered if your rental car is stolen or damaged in an accident. Your credit card company you used to rent the car may cover up to a certain limit.
Can I use a different address to get cheaper insurance?
You can but if the insurance carrier finds out (and can prove it), that could be considered insurance fraud and they may deny any claims you have. Insurance fraud in some States may result in fines and / or loosing your driver's license. Insurance fraud is not just a ring of bad guys staging accidents for a living. Fraud can also be considered making misstatement to your insurance company about things that affect your rates, like the location your vehicle is parked at. In short, the savings from a cheaper rate is not worth not being able to use your coverage (the entire reason you are paying for coverage).
How do I get auto insurance after multiple DWIs?
If your employer has a vehicle you can ask to drive that to and from work since your license will most likely be restricted for your job anyway. Another strategy is to surrender your driver's license it and just use the state issued ID card. After 5-10 years, re-apply for your license so the DWI convictions should disappear. Then you'll be able to freely shop for insurance.
Can I buy auto insurance if I don't own a car?
If you own a business, you can also get coverage via a commercial liability policy. Many national carriers that issue non-standard policies (like Survival and GMAC Insurance) offer non owner policies.
What are the cheapest cars to insure?
If you guessed large, American and low book / resale value, you guessed right. The top ten cheapest cars to insure (2004) are Buick LeSabre, Oldsmobile Silhouette, Honda Odyssey, Buick Park Avenue, Pontiac Montana, Mercury Grand Marquis, Buick Century, Chevrolet Venture, GMC Safari, & Oldsmobile Bravada.
If someone wrecks my car, does their insurance pay if they are at fault?
Not if you gave them permission to drive. The primary coverage is from whoever insured the vehicle. That does not mean your insurance will not try and recover the cost from the driver (called subrogation). If they have been specifically excluded from the policy or have stolen the car, the vehicle's insurance policy won't cover damage.
Do I own a sports car for insurance purposes?
That depends on horsepower, stick shift, two doors, stock and after market modifications (i.e. turbo or superchargers), etc. Some carriers do not like faster, high performance vehicles. If your car make and modifications increase your premiums, call several rare or collectable car insurance carriers.
Will my insurance replace a worn windshield?
If you have glass replacement included in your coverage and you get a noticeable cracks in your car window, you should have it replaced minus your deductible. Minor pitting or chipping may not be covered or considered normal wear and tear.
How will my DUI conviction raise my premiums?
Your plan may be canceled or at best your premiums will increase. Some carriers will cover you if you provide an SR-22 certificate of financial responsibility. Even if you have many points or a reckless driving conviction, States usually allow you to drive to and from work. Lastly, each State has an assigned risk program for people with horrendous driving records.
Do I need medical payments coverage if I have health insurance?
Treatment for medical injuries in a car accident will be covered by the auto insurer first and then health insurance over and above the auto policy limits. It's a good idea to have both. Health insurance carrier will initially pay for medical treatment, because they are contracted to. Any medical costs that exceed the limits on your policy will be presented to pay by your health insurance carrier. The health insurer must determine who they will pursue, after all the health insurance claim (and their costs) have been caused by someone. The health insurer can investigate the at fault driver and/or insured to determine if you have uninsured and underinsured motorist coverage.
How much will my insurance go up when I add my teen?
That depends on the insurance carrier, and if your son or daughter have their learners permit or driver's license. When your gets their driver's license, they will be able to drive alone most of the time without a parent. Many accidents are caused by immortal teenagers who drive too fast and with not enough experience. Your rate will go up substantially but not as much as if they were on their own insurance.
What if I let my old auto insurance policy expire?
Try and renew the policy with the old carrier, especially if they have loyal customer or safe driver discounts. Some carriers may give you a 30 day grace period but you may have to pay back premiums. Many State DMVs get notification automatically when your insurance coverage lapses. You might get a request for proof on insurance in the mail from them. If you get one of these notices, ask if you can back date the policy with the new company. You may not get the lowest rates, but penalties for driving without insurance can be substantial.
How do you lower the cost of coverage?
If you must lower your cost, increase your deductible and drop your coverage amounts. If you have no assets and an older car, get the state minimums. If your car is over 3-5 years old and / or has high mileage, consider dropping your collision coverage.
Do I need to purchase new coverage if I move out of state?
It depends on several things, if your current carrier offers coverage in that state and if you will be maintaining a permanent address in your current state. Your current insurance policy covers throughout the US.
How much will speeding tickets increase my insurance premium?
Your state may have limits when and why auto insurers can change policyholders' premiums. Some states do not allow insurers to raise your rates after just one speeding ticket or moving violation. On a first offense, you may see no or minimal change in premiums. Also different companies have their own unique pricing when it comes to raising rates. Insurers may raise rates by a specific amount per violation, number of total offenses and / or points.
Will buying an SUV increase my rate?
The cost to insure an SUV is generally 10 to 20 percent higher than a car. Rates for SUVs are generally higher than for automobiles because of the damage they do to pedestrians and other vehicles. SUVs can be costly to repair and more likely to be stolen or rollover in an accident.
Each insurance company bases it's rates on it's own experience & losses, marketing strategies (advertising), discounts available, etc. We recommend
Comparison Market, they offer online binding, a dependable interface and many top rated carriers.
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