Auto Insurance FAQs

Frequently asked questions now are given the solution to their questions. Here are some of the frequently asked questions of consumers.

If I drive without auto insurance, what will happen to me?

If by chance you are caught or stopped by a police officer because you were involved in an auto accident and he found out that you are driving without car insurance or proof of financial responsibility, you will face penalties under state laws. You might be given a fine, or worse is that your driving privileges may be lost if you caught for violation of the financial responsibility law.

Is it a requirement for me to have auto-insurance?

At most states, yes. Laws in most states have the books that require basic auto insurance coverage for every driver, new or old. A few states require only that you demonstrate “financial responsibility.”

Is automobile insurance available for everyone?

Most states require auto insurance for all drivers, so yes. It’s available for everyone. If you are unable to find an insurance company that is willing to accept you, there are risk plans assigned by the state to assure coverage. The risk policies assigned are relatively expensive but they very from state to state. The reason for them being expensive is that a bad driving record makes you a bad risk for any insurer even if they must accept you.

Who is covered by my personal auto policy?

You, family members, friends and associates that you let utilize your car. If your friend or whoever is going to borrow your car, as long as they have reasonable belief that you would have permitted the loan, then they too are covered.

Does car insurance remove the worry of a lawsuit?

You can’t be stopped from being sued by anyone just because you have a car insurance, though somehow it helps. If you are sued as the result of a car accident, the car assurance provide assurance that the financial and legal resources of the company will help you against the suit and would be defending you throughout.

What is auto insurance?

It is a contract with a insurance company that could protect you if ever you are involved in an auto accident. The types of coverage vary and act as a shield against various accident-related expenses, like medical costs, liability, property and vehicle damage.

Some states have a financial responsibility law. What do these laws require?

The requirement includes demonstration that you have sufficient assets to settle any judgments against you that may arise out of a crash. You may be required to post a bond if you do not have insurance after an accident.

I live in a state where I can elect either no-fault coverage or traditional tort coverage. Which one should I choose?

If you are in (no-fault) accident, it depends on how you feel about potentially being in no position to sue for pain and suffering damage. There are some states that have low thresholds for suing, these states are no-fault states. In those no-fault states, you may reduce your premiums somewhat without giving up the ability in suing for most accidents.

My state has a comparative negligence law. How does that work? Who decides how much I was at fault?

The insurance company and the claimant’s negotiation are made through allocation of fault.

There are two main versions on how comparative negligence works in state-by-state variations:

  • Pure Comparative Negligence - The claimant can collect for damages up to the amount of their damages subtracted to the percentage of the damage that was their fault.
  • Modified Comparative Negligence –If he or she is determined to be at fault less than a certain percentage, the claimant is allowed to collect from the other party’s insurance carrier (usually 50% or 49%).

Is it true that auto insurance rates have been falling across the U.S. In the last couple of years?

Yes, the rates have been falling in the last couple of years. There are different factors that affected the falling out of rates, some of which are:

  1. Aging population
  2. Cars tend to be safer as each new model is equipped with more safe devices like airbags and such
  3. Crime rates falling
  4. Drunk driving laws are strictly implemented
  5. Competition increases each year

In respect to car insurance what is an assessable policy?

You can be facing an additional amount if your insurance company has a bad year full of expensive accidents, if you have an accessible policy. Non-assessable policies are mostly written today.

In general, what affects insurance company premiums?

The expense of paying for the accidents and the cost associated with selling them is the key factor in setting auto insurance rates. Expenses are partially offset by investment earnings on the premium dollars that have not been spent although have been received from customers. They may offset expenses and losses in underwriting if investment incomes are good. Surpluses are preferred by companies beyond underwriting and expenses so that investment earnings can build income.

In general, what affects insurance company premiums?

The expense of paying for the accidents and the cost associated with selling them is the key factor in setting auto insurance rates. Expenses are partially offset by investment earnings on the premium dollars that have not been spent although have been received from customers. They may offset expenses and losses in underwriting if investment incomes are good. Surpluses are preferred by companies beyond underwriting and expenses so that investment earnings can build income.

How does the car insurance company decide my own premium?

The company tries to get portfolios for profitable costumers. They try to pick people who are likely to be good at risks since they cannot foresee the future of the business. They decide how much you should pay based on where you fit such risk factors as driving record, age, sex, number of miles driven per year, type of car, and more if they are willing to accept you.

What are the typical rating factors?

The following factors apply, in addition to your driving history:

  1. Vehicle type
  2. How they use the vehicle
  3. Location
  4. Prior insurance coverage
  5. Age, gender and marital status

What should you consider when purchasing automobile insurance to keep your cost down?

How much liability coverage do you need?

  1. Is collision coverage needed?
  2. Is comprehensive coverage needed?
  3. Do you want what kind of deductible amounts?
  4. Can you buy by phone or mail or do you want an agent?
  5. Do you want to utilize multi-quote services?
  6. What discounts might you be qualified for?
  1. Multi car
  2. Car Safety Features
  3. Car Security Features
  4. Driver’s educational attainment
  5. standing of student (If you’re a good student)

I already have car insurance. Are there any ways to cut my costs?

There are here possible ways/options on how you could cut off your costs:

  1. Consider as a backstop against major losses your insurance. It shouldn’t be a way to pay for minor fender benders. Larger deductibles should be selected, make sure you have adequate savings to pay the deductible amount if ever you’ll be in an accident or a crash.
  2. Coverage you no longer need should be eliminated; such as collision and comprehensive for old/used cars that don’t have much value and are not any longer being financed. Watch out though. There have been instances where some people dropped the non-required coverage for vehicles that no longer are being financed when they still had significant value. When heavy losses are sustained, they then have uninsured driver demolished their car.
  3. Discounts that might be offered by your company should be taken advantage. Examples are that of driving education, safety devices, multiple vehicles, security devices, preferred driver, annual/low mileage, retiree, anti-lock brakes, accident free record, non-smoker, etc.

Do auto insurance companies insure the same class of drivers?

No. They don’t. A standard risk would be classified to the average driver with a few violation spread over the years and a vehicle that is not extremely expensive or statistically at high risk of accidents. Some companies however, cover a broader range of drivers while others primarily insure only one segment.

Will my premiums go up if I have an accident?

Depending on the type or seriousness of the accident, on your previous driving record, and on the history with your insurance company, and in most cases it will increase.

What is a deductible?

It is the amount a driver pay towards a claim before your insurance begin to pay.

How do I know if I am being charged the right premium?

The coverage included in your policy and the charge for each one is described in the beginning of your policy. Ask your agent or write to your insurance company for an explanation if you need further explanation than what was stated.

What are the basic types of auto insurance coverage?

The basic types of auto insurance coverage are as follows:

  1. Liability on bodily injury, which provides coverage for body injury claims from the victims you might injure in a crash or accident.
  2. Liability on property damage, which covers any property damages to third parties, such as damages done to another person’s car, which you hold responsible for.
  3. The policy owner and other passengers in the policy owner’s car have medical payments.
  4. Uninsured and underinsured motorist coverage.
  5. Physical damages in your car:
  1. Collision, which covers losses to your car when you are involved in a collision
  2. Comprehensive, which covers most non-collision physical damage to your car, for example weather disturbances cause damage to your car

What is the difference between "split-limit" liability car coverage and "single-limit" liability car coverage?

There are three number used to specify the limits for split-limit coverage:

  1. Liability on bodily injury for each person
  2. Single accident liability for bodily injury
  3. Liability on property damage

Does property damage coverage fix my vehicle if the other driver is at fault and has no car insurance?

No. Collision insurance pays for damage to your car given that it had been in or due to result of an auto accident. It does not matter whose fault it was. Your company may try to recover the amount they paid for your damages from the other driver or his insurance company if the other driver was at fault.

My car is old and not worth much—do I need collision coverage?

You can probably save money on your monthly premium by dropping the collision coverage from your car insurance policy if you have an older car that is not being financed and had been in your backyard for years. The price will be told by your agent and he will also tell you how much that same coverage would pay if your car was totaled.

Does bodily injury damage coverage apply even if I drive someone else’s automobile?

No. Bodily injury liability insurance covers damage for which you hold responsible.

Can I add insurance coverage for a motorcycle to my auto policy?

Yes. Many companies specialize in motor coverage, just research for them through the net. There are sites that are centered on these types.

Does my bodily injury coverage cover me while I am a passenger in someone else’s car?

No. The pays for losses resulting from death or injury in an accident that is your fault are covered by the bodily injury coverage. You must be driving for it to be your fault.

Does bodily injury liability apply to me if I suffer an injury as a pedestrian in an accident involving a car?

Yes. Whether you are in a vehicle or not, it pays for losses resulting from a driver’s negligence. If a vehicle hits you, the driver’s bodily injury liability insurance would definitely pay.

What is no-fault car insurance?

Most claims can be settled without determining whose fault it was. This would eliminate all major costs and speed settlement according to the no-fault theory. The driver’s insurance company pays for small claims under no-fault insurance. Several states have adopted something relevant to no fault insurance, but the details and requirements differ widely from state to state.

May I sue for damages caused in a car accident in a no-fault state?

If the damages exceed a threshold, then you may sue for damages, but it varies from among the no-fault states. The threshold is expressed as either a verbal description of the type of accident or a dollar amount where suits can be made.

What is a dollar threshold for no fault?

It is to determine the dollar amount whether or not cases are litigated. If the Claims fell below the threshold, they are quickly disregarded through the no fault mechanism. The stipulated amount can be litigated if the claims exceed.

What is a verbal threshold?

There is no specified dollar amount that points out the claims to be litigated under a verbal threshold. Instead of undergoing with the no-fault mechanism, the threshold for suing is described in words, thus the word verbal threshold.