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Car Insurance FAQ

Car insurance FAQ, or more commonly known as frequently asked questions, are not few and far between.  No matter what state you live in, auto insurance tends to be a confusing topic; therefore FAQ can be numerous.

Because car insurance is a mandatory coverage, we must all deal with it at some point or another.  But there is good news: no, we won’t guarantee we’ll save you 15% on your car insurance, but we can help answer some of those questions with a convenient car insurance FAQ!

Car Insurance FAQ #1:  What Do The Different Coverages On My Policy Mean?

Depending on your state, you may have different coverages required on your policy.  However, here are the definitions for the main coverage types you will see:

  • Bodily Injury: This is typically mandatory liability coverage (check with your specific state website).  It covers medical attention for injuries sustained in an accident where you are at fault.
  • Property Damage: Another typically mandatory liability coverage, this will cover damage to property during an at-fault accident.
  • Medical or Personal Injury Protection: This covers you and your passengers for medical attention for an at-fault accident.
  • Comprehensive:  This coverage is for vandalism, theft, windshield cracks or other acts of nature.  It will cover repairs to your vehicle.
  • Collision:  This will pay for repairs to your vehicle after an at-fault accident.
  • Uninsured BI or PD: This coverage protects you in case you were involved in a not at-fault accident, but the other party wasn’t carrying insurance.  It will pay out for repairs to your vehicle.

Car Insurance FAQ #2: Is There A Difference Between Cancellation And Nonrenewal Of A Policy?

Yes is the simple answer.  A policy may be cancelled for non-payment of a policy or misinformation given to obtain a new policy.  Nonrenewal of a policy occurs when risks on your policy increase enough for an auto insurance company to decline a policy for future renewals.

For example, if you have received a DUI or have been involved in multiple at-fault accidents, an insurance company can choose not to renew your insurance for a future policy term.

Auto Insurance FAQ #3:  How Does My Credit Score Affect My Auto Insurance Rates?

Not all states are able to use credit as a factor for auto insurance (i.e. Pennsylvania).  However, if your state is able to use credit as a determining factor in your insurance, it can affect you in a few ways.

If your credit rating is high, it can be a positive element in determining your premium.  However, if your credit rating is below a certain point, it can reflect negatively upon your premium.

Most insurance companies look as credit as a level of risk; statistically, a low credit score can predict that payments may not come in on time or even that those with low credit scores have a higher incidence of claims.

Auto Insurance FAQ #4:  What Affects The Price Of Auto Insurance?

Again, it will depend where you purchase your insurance.  However here are some key elements to keep in mind when applying for auto insurance.

  •  Your personal driving history, as well as others listed on your policy, will be the biggest portion of your insurance premium.  Those with a clean driving history will clearly have better rates than those that have multiple accidents and tickets.
  • Coverage and the corresponding limits will also influence the premium.  If you choose the state minimums with liability only, obviously your premium would be lower than if you take the higher limits and full coverage (comprehensive and collision).  Keep in mind, though, that you want to balance a low premium with adequate coverage.  Cutting corners can be catastrophic once that accident occurs.
  • Geography will always play a role in your insurance rates.  Are you in an area that is prone to car accidents?  Or are you in a rural area where you are lucky to see another car once a day?  This one is less of a controllable factor, but it is still beneficial to understand what will increase or decrease your premium.
  • How far is your commute to work?  Studies have shown that the longer your work week commute is, the more chances you have to get into an accident.
  • Your vehicle type will always affect your price.  Compare the damage a Honda Accord could do during an accident to a Ford F150.  Further, if you have a newer vehicle, it will typically be more expensive to insure based off what it will cost to repair.
  • Lastly, age is a big determining factor.  Unfortunately it affects you at the beginning and the end of your driving career.  As a new driver, you have less experience driving and are prone to accidents.  And once drivers hit a certain age nearing retirement, statistics again show that you are prone to accidents.

Auto Insurance FAQ #5:  How Can I Save Money On Auto Insurance?

Depending on the state and the insurance company, many discounts are available.  Here are a few to ask your potential insurance company about before purchasing your policy.

  • Multi-vehicle discounts can provide some relief.  By combining vehicles onto one policy, you can often save money.
  • Good driver discounts are offered by some companies to reward those that have been accident or ticket free for 3-5 years.
  • Multi-line discounts are in place to encourage customers to insure auto and homeowners policies in the same place.
  • Anti-theft discounts are usually calculated automatically, but if you have extra protection in your car such as Lo-Jack, it never hurts to ask.
  • Good student discounts are especially helpful when adding new drivers onto the policy.  Often times the insurance companies will require proof (such as the student’s report card), but the discount makes the effort worth it.

These are a few discounts to keep in mind, but nothing lowers your premium like old-fashioned good driving!  Take extra caution out on the road and the reward will come in the form of less headaches and better yet, lower premiums.

Put The Auto Insurance FAQ To Use: Start Searching Now!

Now that you have the answers to the questions you have been searching for from our auto insurance FAQ, start your search today for a better policy!  Use our free search tools to find a lower car insurance premium now!

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