Car Insurance FAQs

Car insurance is designed to protect you financially when you drive a vehicle. It helps pay for damages and injuries that happen under covered events. This includes everything from car accidents, vehicle theft, hailstorm damage and much more.

It’s important to know how much coverage you need. Almost every state requires a minimum amount of insurance, but in many cases, it isn’t enough if you get involved in an accident. For example, California drivers are required to have at least $5,000 in property damage coverage. If you cause an accident and seriously damage someone’s new car, the repair bill is likely going to be much more than $5,000. Anything over that amount will come out of your pocket. So, it’s important to know how much protection will give you peace of mind on the road.

The cost of car insurance is dependent on a wide variety of factors and no two people will pay the same. However, the national average annual cost of car insurance is $1,771 for full coverage and $565 for minimum liability.

The number one way to lower your car insurance is to be a good driver. The longer you drive without accidents or claims, the better your rates. Pick a reliable car that doesn’t cost too much to repair and has easy-to-find parts.

Every insurance company offers discounts to its customers. There are discounts for being a loyal customer and there are discounts for being a new customer. You can get a discount for being a senior citizen, first responder or member of the military. Discounts are handed out for going “green”, installing anti-theft devices and having safety features. You should ask your agent to tell you if you qualify for any discounts.

No. Car insurance will not pay for routine maintenance and service.

Only if you add rental car reimbursement to your policy.

There are different types of insurance fraud. If you lie on your application for car insurance and get caught, you could be prosecuted for fraud. If you falsify an accident report, that could be fraud. Insurance fraud is a major crime and can result in prison.

In some states, insurers are allowed to use credit scores as one of many factors used to arrive at someone’s final premium. Insurers like to point to studies that show people with higher credit scores are less likely to have an accident, as well as more likely to pay their bill. However, some states have forbidden insurers from using credit scores when opening a new policy or renewing a policy – and more states are considering it. These states are California, Hawaii, Maryland, Massachusetts and Michigan.

Fair or not, if you’ve shown a likelihood of filing claims due to past driving incidents (even ones that are not your fault), most insurers will penalize you with higher premiums. Those with clean driving records get the best rates because insurers are “betting” they will not file a claim in the future. If possible, take care of repairs out of pocket. If an accident is not your fault, let the other driver’s carrier pay for repairs. If that isn’t enough to fix your car, you may need to look into filing a lawsuit. Shop around for insurance companies that offer affordable coverage for those with a less than stellar driving history and/or accident forgiveness.

Most insurers will have a minimum amount you can set for your deductible. This could be $250 or $500 or something else. However, you are free to set your deductible higher and, in many cases, that’s a good idea. Your deductible is the amount you pay before your insurance kicks in to pay the rest (or up to your policy limits). A higher deductible means less money out for the insurer and more money out for you. This should lead to a lower overall premium. Just be sure you can come up with the money for your deductible if necessary.

Your insurance cost is determined by many different factors. Some factors you cannot change, such as your gender and your age or where you live (unless you move). However, there are certain things you can control that could make your insurance go up.
• Have an accident and file a claim: Anytime you file a claim, you run the risk of increasing your premium.
• Buy a more expensive luxury or sports car: Insurers look at what it will cost to replace or repair your vehicle in the event of a claim.
• Put a teen driver on your policy: Unfortunately, it’s a fact of life for many parents. Take heart in that your insurance rate will only be higher for a few years.
• Moving to a new zip code: One factor underwriters look at is how many accidents and claims come out of certain areas, usually by zip code. If you move into such an area, your rates could increase.

Almost everybody can qualify for some type of discount on their car insurance. Are you a new customer? Discount. Are you a returning customer? Loyalty discount. Is your vehicle older and easier to repair? Discount. Is your car new with all types of innovative safety technology? Discount. As you can see, there are numerous discounts out there and you may qualify for more than one. One large discount is given for bundling, which is using the same carrier to insure different things, such as your home insurance and your car insurance.

GAP in Guaranteed Asset Protection. What that means is that if your new car is totaled or stolen, your GAP insurance will pay off the difference between what you owe and the actual cash value of your vehicle. Once you drive your vehicle off the lot, it begins to depreciate. If it is totaled soon after, you’ll likely owe more than it’s worth on the market. For example, if you bought your vehicle for $40,000 and it is totaled soon after, it may be worth $35,000 ACV. GAP will pay that $5,000 between what you owe and what it’s worth.

If you live in an at-fault (or tort) state and you cause an accident, your state-required liability will help pay for the injuries of injured people. You can be held responsible for anything over that amount and your own medical costs will be out of pocket unless you have health insurance that will pay for these injuries.
If you live in a no-fault state, you will be required to carry some form of medical coverage, such as personal injury protection (PIP) or medical payments (MedPay) to address your own injuries. The other driver will also use their own insurance to pay for their medical costs.

Anybody who will regularly drive your vehicle should be listed on your policy as a covered driver. Many insurers would prefer any drivers in your household – even those who probably won’t be driving your car – to be listed on the policy. These people don’t necessarily need to be listed as covered drivers, however.