Car Insurance FAQ's
How much car insurance coverage do I need?
The specific amount of car insurance coverage needed will vary depending on the insurers circumstances and requirements. Some of the key things to consider is how much you are able to pay out of pocket if you are involved in an accident. If you can cover a higher amount of out of pocket costs then you may choose a policy which has a higher deductible but lower monthly payments. The type of vehicle that you are driving will also affect how much courage you require. Some vehicles, such as larger SUV's which can cause more damage, will require greater coverage than other vehicles.
Will my insurance be affected if I'm making payments on the car?
Car insurance is typically affected if you are making payments on the vehicle. In this case you may be required to have comprehensive and collision insurance as well as liability coverage. You will need to check with your car insurance provider to see whether you need to have this additional coverage.
What is a modification and how does it affect car insurance?
Any change that is made to a vehicle which is different from its factory setting either to improve its function, appearance, performance or simply customise it to the owners requirements is termed a modification. This can include both interior and exterior changes to the vehicle. Examples of modifications including adding a new audio system or changing the size of the valves or cylinders. If the vehicle has modifications it will usually result in higher insurance premiums than would be required if the vehicle was still in factory condition.
What is courtesy car coverage?
With courtesy car coverage you will receive a courtesy car for the length of time it takes to repair your vehicle. You will not be charged for the use of this vehicle but you will usually have to pay for the cost of gas. If your car is written off or stolen and not recovered then you will usually receive a courtesy car for a fixed period until the claim is settled.
What is a deductible?
The deducible is is the part of the claim that the customer is responsible for paying. So for example if the policy has a deductible of $200, and an accident results in $1000 of repairs, then the insurer will cover $800 worth of the the costs.
Can you add or remove coverage during the policy?
Most car insurance policies allow you to add or remove coverage during the middle of your policy. Before taking out a car insurance policy assess whether you are able to make these changes. Making changes to your policy may also affect your premiums. Ask about the costs involved before making changes to your policy.
Why is the actual car insurance premium different to the quote I received?
The actual car insurance premiums may change during the time period between you have received the quote. It is possible that during this time period the rates will have been revised. This could mean any time increase or decrease in the price of your car insurance. Changes to your driving record, or the driving record of other people on policy, can also change the price of your premiums.
Car Insurance Pricing
It is important to understand how your car insurance price is determines when shopping for a new car.There are actually many factors considered by auto insurance companies when they calculate the risk involved in providing insurance coverage. Here is a list of the things factored into your car insurance quote:
Coverage Required -
If you own your car then you can often get away with only carrying liability coverage which is the cheapest type of coverage. Those looking to finance a car purchase will find they are required to carry full coverage which will always be more expensive.
Like it or not, women generally pay less for car insurance than when and the reason is very simple. When it comes to several driving risks like DUI, speeding tickets and accidents men are a much higher risk than women.
Driving Violations & Accident Claims - Obviously having moving violations and accidents on your driving record make you a higher insurance risk and will raise the cost of your auto insurance.
The best rates offered generally ranges between 25-70 assuming you have not had accidents or moving violations. Prior to age 25, teens and new drivers tend to pay the highest rates because they tend to speed more as well as not wear seat belts and are slower to recognize a hazardous driving situation. Drivers over the age of 70 also tend to pay higher rates because they generally suffer from impaired vision at higher rates as well as have a slower response time and take prescription medications at a higher rate.
Safety Equipment -
You can lower your insurance rates by having safety equipment installed in your vehicle such as automatic safety belts, anti-theft devices, rear view cameras, tire pressure monitoring and stolen vehicle recovery systems. Each of these features help insurance companies limit claims making you less of a risk.
Type Of Vehicle -
The year, make, make, model and value of your auto are all considered because they all have a factor when calculating the risk to ensure. Older cheaper cars may cost less because the worst case scenario for a insurance company is to pay off a total loss as a result of an accident. The less overall value of your car, the less the insurance company will have to pay out. Auto categorized as sports cars as well as 4X4 trucks will tend to pay higher rates. Luxury vehicles will also pay higher rates because the cost to repair is much higher.
Auto Insurance companies use credit-based insurance scores as a factor in quoting you a new policy. There are some states that have outlawed this practice, but it is still common in most states.
The Area You Live -
The areas you live is assessed a risk factor based on statistics such as auto theft rates, accident rates as well as demographics.
As you can see, there are many factors being considered when a auto insurance company provides you with a quote for coverage and any one of them can cause a severe rise in your rates. Taking care of the factors within your control such as moving violations, accidents, type of car and keeping your credit in good shape should allow you to keep your insurance costs reasonable. When looking to buy a new or used car that you are going to finance, it is important to factor in your potential monthly insurance rates along with your car payment to make sure you can afford the vehicle you want to buy.
Maximize Your Savings
Getting car insurance is a must for many reasons. Aside from the benefits it provides, car insurance is also required under current laws in certain states. But this does not mean that you should get the first insurance that comes your way without considering its price. You should know that you do not have to pay that much for this service. Here are tips on How to Save on Car Insurance.
1. Look for package deals
Package deals are among the best ways to save on car insurance. Many companies offer big discounts when you purchase more than 2 policies from them. The more policies under your name, the bigger the discounts you can enjoy.
2. Make a deal during seasonal discounts
Although car insurance is a necessity, you do not have to purchase it immediately. At some point in a year, insurance companies offer seasonal, holiday and even periodical discounts. Discount prices depend on the company’s preferences. If you are not too much in a hurry to get your car insurance, you can close a deal for a policy with a company during their discount season. You will surely save big by doing this.
3. Choose policies with high deductibles
It is highly advisable for you to choose policies with high deductibles. The savings, however, may be lesser if your car is older than 10 years. If you drive safely and have little to no history of car wrecks, policies with high deductibles will boost your savings.
4. Consider group plans
Car insurance policies, in some companies, can be availed by groups. When you enter into a policy as a part of a group, you can surely enjoy big discounts. There are certain requirements, however, for the company to allow your group to avail of the car group insurance. You and other members of the group must meet these requirements to avail of the group program.
5. Be loyal
Insurance companies usually offer “loyalty award” discounts to clients who have been working with them for several years. Do not hop from one company to another annually just because of the changes in rates. Once you enter into a policy with a company, be sure to stick with such policy until the end. You will surely reap a reward of big savings when you become their loyal customer.
6. Update your policy
There are certain situations in life which can reflect positively on your car insurance policy. These include marriage, change of residence and even installation of car alarm. Such situations can entitle you to discounts as long as they are included in the agreement between you and your insurance company. Nonetheless, in order to avail of discounts, you must not forget to update your information entered into the policy. If you get married, for example, you should indicate during renewal that you are now married.
For your safety and protection, you should never drive your car without the needed insurance. Find a good car insurance company now and use the tips on How to Save on Car Insurance to maximize the benefits.
Types of Car Insurance
Car insurance protects motorists against financial loss if they have an accident. It is a contract between a motorist and the insurance provider. The motorist agrees to pay premium and the insurer agrees to pay for losses as defined in the policy.Car insurance provides liability, medical and property coverage:
a) Liability coverage will pay for legal responsibility to other people for property damage or bodily injury
b) Medical coverage will pay for the expenses of treating injuries, lost wages, rehabilitation, and even funeral expenses
c) Property coverage will pay for theft or damage to your car
A car insurance policy comprises 6 different types of coverage. You are required to buy some of these coverages in most states. If you are financing your car, your lender may also have these requirements. Most car policies are for 6 months to one year. Your insurance provider should communicate to you via mail when it is time to pay your premium and to renew your policy.
Types of Car Insurance Coverage
There are 5 types of car insurance coverage. Liability coverage is the most basic type. It protects you when you cause an accident. Usually, you can only choose liability coverage when you own a vehicle outright. If it is financed, both the lender and the insurer will most likely demand that you have full coverage. This full coverage policy can include 5 kinds of coverage, or a certain combination as explained below:
1. Property Damage Liability
This covers for damage to other people’s property caused by your car, whether you are driving it, or somebody else is driving without your consent. In vehicle accidents, it usually means somebody else’s vehicle is damaged. However, this coverage also covers damage to other kinds of private and public property, such as fences, guardrails, homes, telephones, or any other buildings/structures your vehicle may have hit.
2. Bodily Injury Liability
This pays for injuries you or any member of your family on the policy cause to someone else. It applies if you cause the injury when driving your own car, or if you are driving somebody else’s car with their permission.
3. Comprehensive Coverage
With this coverage, you’ll be compensated if your vehicle is damaged by something else in an accident with someone else’s vehicle, or if it’s stolen. Natural calamities like earthquakes, tornadoes, hail, falling objects, fire, vandalism, or collision with animals like birds or deer can cause minimal to extensive damage. It also pays for a cracked or shattered windshield.
4. Collision Coverage
As the name suggests, this coverage pays for damage to your car caused by colliding with another object or car, or your vehicle flipping over. It also covers damage resulting from potholes. If you cause an accident, collision pays for repairs to your car, minus the deductible. If an accident is not your fault, collision will still pay for repairs to your car, but you still need to pay your deductible.
4. Medical Payments/Personal Injury Protection
If an accident injures you or other passengers in your car, personal injury protection (PIP) pays for treatment. Sometimes the coverage may extend to additional medical costs such as rehabilitation, and can also cover other costs resulting from accident injuries like lost wages, or even funeral costs.
5. Uninsured & Under-insured Motorist Coverage
If you or anybody else with permission to drive your car has an accident where a hit-and-run or uninsured driver is at fault, this coverage will pay for damage to your car. It also pays you if that driver doesn’t have sufficient coverage to cover the total cost of your car. This coverage also covers you if you’re hit by a car as a pedestrian.