Auto Insurance - FAQ
Auto insurance provides a way for drivers to demonstrate financial responsibility if they cause an accident or are hit by a driver who does not have sufficient funds to pay for the damage they caused. Auto insurance coverage exists because you could be held legally responsible for injuring someone or damaging someone's vehicle or property in the event of an at-fault accident. Also, it is necessary because you could be hit by a driver who does not have enough money to pay for your injury or the damage they caused to your vehicle or property.
Drivers who fail to demonstrate financial responsibility in the event of an at-fault accident can have their driving privileges suspended and face other tough penalties such as expensive fines and criminal charges.
Not all states require their residents to purchase auto insurance coverage, but 49 out of 50 states do, with New Hampshire being the only state that currently has no motor vehicle laws requiring drivers or vehicle owners to purchase and maintain auto insurance coverage.
However, all states do require drivers to demonstrate financial responsibility in the event that they are legally responsible for an accident. Auto insurance is the easiest and most affordable way for drivers to demonstrate that they are able to provide sufficient funds if they cause an accident.
When shopping for auto insurance, you should give very careful consideration in choosing the right coverages. You will be required to purchase at least the minimum requirements as mandated by your state's motor vehicle laws, but the total damages from an accident can easily exceed the state's minimum required coverages. One thing to consider is that you can never have too much liability coverage, as it is impossible to predict how much the total damage may be if you are involved in an accident.
Also, with the costs of health care constantly rising, selecting higher limits for liability and other coverages that would pay for medical bills is necessary to avoid having to come up with thousands of dollars for medical expenses.
You do not have to purchase collision and comprehensive coverage to protect your own vehicle, unless your vehicle is financed and it is required by your lending institution or lease agreement.
To learn more, click here for our guide: How to Determine the Right Policy for You.
There are many different factors that go into determining your auto insurance quote. Insurance companies try to determine how much risk you pose to them as a driver. To do this, they require information regarding your age, gender, marital status, driving history, vehicle location, total number of miles driven, and many other factors. They then use this information to calculate your auto insurance rate, or premium.
To learn more about how quotes are calculated, click here for our guide: What Goes Into a Quote?
One way to make sure you are getting the best rate on auto insurance is by requesting quotes and comparing the prices of different insurers. It is best to request quotes from an agent that represents multiple companies, as each company offers different prices for the same amount of coverage.
When comparing insurance quotes, always make sure that you are comparing "apples to apples". Be certain that you are comparing quotes with the same liability limits, coverages, and benefits, and then determine which one offers you the best value.
Also, make sure that you are getting an accurate rate before you choose to purchase a policy. If you have not yet provided a company with your license number or vehicle identification number, the quote price is most likely inaccurate. Before purchasing a policy, it is best to speak with a representative to make sure that the final quote price is accurate and your driving record has been taken into consideration.
To compare multiple quotes in just a few minutes, click here to Request a Quote.
Once you find a lower rate with a different company, switching should be a quick and easy process and can usually be done over the phone. Policies regarding early termination vary by state and between different insurance companies, so it's best to refer to your current policy terms regarding cancellation prior to making a decision.
Some states mandate that drivers can legally switch insurance companies at any time, without paying any sort of cancellation fee or charge. In fact, you may even be entitled to a refund if you paid your total premium in full. If you find a lower rate from another provider, you can feel free to purchase a new policy, then terminate the current one.
Other states have motor vehicle laws that say if you choose to cancel your policy before it expires, you may be responsible for paying a premium penalty, which must be weighed in your decision when comparing different quote prices.
Note: To avoid having a lapse in coverage, make sure the new policy you purchase is in affect before canceling your existing policy.
Policies regarding transfer of coverage to a rented or borrowed vehicle can vary by state and between different insurance companies, so it's best to refer to your current policy terms first, before renting or borrowing a vehicle.
Often times your liability coverages from your personal auto policy can be transferable to a rented or borrowed vehicle that is damaged while being driven by you. This transfer of coverage is usually only available to for rented or borrowed vehicles being operated within the United States and Canada. You should always check with your carrier before hand though!
Also, talk to your credit card company about coverages they offer. Many cards will offer extended coverage if you use their card to rent the car.
My friend asks to use my car to run a few of their own errands, will my auto insurance policy cover him/her while they are driving my vehicle?
Yes, as long as they are legally allowed to drive and you gave them permission to borrow your vehicle, as a non-owner operator, they will be covered by your insurance policy.
Have more questions? A Consumer United advocate is a great resource and can help you pick the policy that matches your needs best, not to mention find discounts and rates you may have never found yourself.