Questions To Ask Before You Buy Auto Insurance

When you’re shopping around for auto insurance, it’s very important that you ask your potential insurance provider some questions. Auto insurance estimation is very different from establishing your homeowner’s insurance costs. This will ensure that you not only understand the limitations of your policy, but that you also get the cover that you need to remain insured in the event of an accident. Here are some of the questions that need answering before you sign on the dotted line…

What type of coverage do I need?

Different states have different requirements in terms of the minimum auto insurance coverage you need to have. Car insurance coverages and limits that work for a friend or family member that lives in a different state might not be right for you.

However, although several insurance policies are not a compulsory in your state, they still come highly recommended. These include towing and roadside assistance, GAP cover, comprehensive cover, and more. There are 4 basic types of coverage that may be mandatory in your state. These include:

  • Bodily Injury Liability
  • Property Damage Liability
  • Personal Injury Protection (PIP or No-fault)
  • Uninsured/Underinsured Motorist Protection

Am I protected against accidents with uninsured or underinsured drivers?

More than 12% of all driver are either underinsured or totally uninsured. Discussing UM and UIM cover with your potential insurance carrier is vital to avoid a situation where another driver’s liability cover is inadequate to pay for your medical bills and repairs.

Who will my policy cover to drive my car?

This is a question that many people fail to ask. Imagine for a moment that your 16-year-old child or a friend wants to borrow your car.  What happens when they are in an accident? Insurers have different ways of handling this, so it’s extremely important to get to the bottom of how you will be covered in the event of an accident when someone else is driving your car.

Can I qualify for any discounts?

There are several auto insurance discounts that you are able to qualify for all across the country. You can also check online resources such as this handy online banking information guide and be sure that insurance companies do want to keep your business. These type of discounts can either be driver specific, vehicle specific, or policy specific.

To qualify for discounts, insurers will check details such as your driving history, whether or not you belong to certain organizations, your age, occupation, and whether or not you maintain low-mileage on your vehicle.

Other factors that could make you eligible for discounts include completing an accredited driving course or even adding extra safety features to your vehicle, such as a backup camera, automatic seat belts, river-side and passenger-side airbags, anti-lock breaks, and more.

If my car is totaled, how much will my insurance pay?

This is a very important question to address with your potential insurance carrier. If you don’t iron out this detail with an insurer, you might be in for a massive shock when you try to make a claim in the unfortunate event of your car being a total loss.

Some insurance companies pay out the “actual cash value” (ACV) of your vehicle while others will pay out an “agreed value” when the vehicle is a total loss in an accident.  ACV guarantees the policy will pay the full insured amount of the vehicle.

Agreed value simply means that you and your insurance company have come to an agreement on the value of the vehicle – and this is the amount that will be paid out.

6 Reasons Why Everyone Should Have Auto Insurance

The percentage of drivers without car insurance ranges anywhere from about 4% – 26%  in different parts of the United States. Some motorists don’t want to spend the money. Others believe that nothing bad will happen to them. Nevertheless, it’s important to understand the full benefits of auto coverage if you really want a safety net that will help you to avoid total financial devastation. Auto insurance policies do much more than pay for repairs. Consider some of the following advantages before going another year without coverage:

1. Lawsuit Protection

If you cause a collision, you could face costly legal action. Another driver might expect you to pay for hospital treatments or repairs to a luxury car. You may also need to reimburse them for the wages that they couldn’t earn as a result of the accident. Auto liability insurance shields you from these massive expenses.

2. Repairs and Replacement

According to statistics, the average motorist becomes involved in at least three accidents during a 54-year period. Even a minor crash can easily result in repairs that cost thousands of dollars. If you carry collision coverage, an insurer will pay to fix or replace your car when this occurs. Always keep in mind that even the best drivers can’t always avoid poorly skilled motorists. Comprehensive policies fund repairs prompted by storms, fires as well as vandalism and more.

3. Lending Rules

Many banks and credit unions expect drivers to carry auto insurance. You probably face the same requirement if you lease a vehicle. This is true because lenders and car dealers don’t want to lose money when a car suffers heavy damage in a crash. They know that customers aren’t always willing to make car payments on vehicles that no longer exist. Consequently, the “repo man” could visit your home if you don’t buy insurance.

4. Health Coverage

Car insurance often pays hospital bills when drivers lack medical insurance or have inadequate coverage. Your state’s laws might force auto policies to cover injuries. An insurer may also fund long-term care and dental treatments associated with an accident. This could enable you to avoid paying thousands of dollars in medical bills or bankruptcy lawyer fees. Auto insurance can drastically improve your access to health care.

5. Passenger Protection

If an insurance policy covers a driver’s injuries, there’s a decent chance that it reimburses passengers’ medical expenses too. You won’t need to worry about an injured friend, family member or co-worker’s ability to pay hospital bills. Insurance eliminates the risk that a passenger will ask you to pay these expenses because you made a driving error that triggered a crash.

6. Professional Guidance

When a collision takes place, you can rely on insurance company personnel to help you take the right steps and return your life to normal as quickly as possible. Staff members will suggest desirable mechanics and assist you in the process of dealing with the other motorist’s insurance provider. You’ll benefit from their experience with similar situations, especially if you’ve never been involved in an accident before.

Don’t Neglect Your Auto Insurance Policy

Always keep in mind, auto coverage offers valuable financial protection for you, your passengers, your car, and fellow drivers. It’s your only safety net and protection against expensive repairs you can’t pay and medical bills you can’t afford. Not only that – auto insurance enables you to meet borrowing or leasing requirements.  So remember, an accident can occur at any time regardless of how carefully you drive, but you won’t need to worry about facing tremendous financial hardship if you carry adequate coverage.

Leasing vs Financing: How It Affect Auto Insurance

Auto insurance is compulsory from just about everybody who owns a vehicle. Roughly 1 out of 3 American drivers choose to lease their cars. Most of the remaining motorists use loans to pay for vehicles. When you make this decision, it’s wise to consider the insurance implications. You may need to sign up for different types and/or amounts of coverage depending on whether you borrow or lease. Here are some of the most important factors to consider when it comes to insurance on your leased or financed vehicle:


Both leasing companies and lenders expect customers to buy auto policies. They normally require motorists to acquire liability, collision, as well as comprehensive coverage. These lienholders may also cap your deductible at $500 – $1,000. If you don’t carry the right insurance, your vehicle may even face repossession.

Same Premiums

Regardless of whether you lease a car or take out a loan to finance one, insurers will charge the same rates on equivalent policies. The difference is that banks and leasing companies tend to require different coverage limits.

Liability Coverage

Leasing firms usually expect drivers to obtain better liability insurance than banks or state governments demand. Leasing firms often require customers to buy policies with property damage limits of $50,000 or higher, and medical coverage caps of at least $100,000. These amounts are several times higher than state law requirements.

You may wonder why leasing companies have such strong concerns about liability… The problem is that these businesses can face legal action if a customer causes an accident and doesn’t have sufficient insurance. A victim could file a lawsuit against the person leasing the vehicle and ask it to pay hospital and car repair bills.

High-End Autos

Some lessees find that they have much higher insurance bills because leasing gives them the ability to travel in newer or more expensive vehicles. It’s not uncommon for people to pay lease termination fees after realizing how much more it costs to insure a recent luxury or sports car.

Total Losses

If a crash damages your vehicle beyond repair, most collision policies pay the auto’s used resale value. They only supply larger amounts when drivers spend extra money on full replacement insurance. If a financed car’s worth exceeds the loan balance, the insurer will pay you the remaining money. On the other hand, leasing companies often retain any excess funds.

It’s not unusual for people to owe more than their cars are worth. If the vehicle is totaled in an accident, the motorist may still need to pay more cash to a lender or person leasing the vehicle. The good news is that gap coverage can protect you in this situation. It will pay off the remaining loan or lease balance.

Gap Insurance

Insurers and lessors sometimes refer to gap insurance under other names, such as “waiver of depreciation” coverage. Either way, it greatly improves your ability to afford another vehicle after a serious accident. Be sure to consider purchasing it whenever you buy a new auto, make a small down payment, or purchase a car with a low resale value.

Leasing firms frequently provide gap insurance. They’ll add the premiums to your monthly payments. However, it’s not always included; remember to ask about this coverage when you lease a vehicle. On the other hand, auto loans normally don’t come with gap insurance. You’ll need to buy it separately if you want this type of protection.

Dropping Coverage

As long as you lease cars, you must keep paying for full auto coverage. Financing gives you the option to drop collision and comprehensive policies after you’ve paid off the loan. You can just buy liability coverage to follow the law. However, you may benefit from retaining full insurance if you always own late-model cars.

The bottom line is that you’ll probably need to buy more coverage when you lease an auto. Nonetheless, you won’t pay higher premiums than you would if you bought an equivalent policy for a financed car. Gap insurance protects both borrowers and lessees when accidents “total” their vehicles. It’s more likely to be optional for owners.

Stacked vs. Unstacked Auto Insurance

Any driver can buy car insurance when you want to be protected against collisions, but even though insurance is required, some drivers still neglect to buy it.  If you are involved in an accident with a motorist who has inadequate insurance, you may be in need of an uninsured (UM) or underinsured motorists (UIM) coverage.
These type of policies will pay for your medical and/or repair bills if the other driver’s insurance is not adequate. However, the limits on this coverage will depend on whether you have a stacked or an unstacked plan.

What’s the Difference?

Stacking your coverage means that you increase your level of UM/UIM coverage when you have more than one vehicle. Many drivers find that it doubles or triples their limits. When the need arises, they can potentially combine their stacked policies to make a bigger claim.

Unstacked insurance coverage, on the other hand, treats each vehicle’s coverage separately, no matter how many cars you insure.

Advantages of Stacked Cover

When a crash involving an under or uninsured driver takes place, the standard coverage cap may prove inadequate. For example, a $25,000 uninsured motorist policy will likely not supply enough money to fund hospital treatments for a seriously injured driver and multiple passengers. If you buy stacked policies on two cars, this cap increases to $50,000. A third vehicle would add another $25,000. Underinsured coverage limits also rise accordingly.

Advantages of Unstacked

The only major advantage of unstacked insurance is that it costs somewhat less. Insurers must charge significantly more to provide two, three, or even four times as much coverage. Nonetheless, it’s worth taking the time to ask an insurance agent about the difference in price. It varies considerably from one region or insurer to the next. You may find that stacking’s extra expense is easy to afford.
Both stacked and unstacked policies cover the same types of accidents and costs. Regardless of what insurance you choose, the caps reset when a new crash occurs. Any uninsured motorist policy with a $50,000 limit will pay up to $50,000 in costs associated with each separate collision.

Value of Protection

Only approximately 13 percent of U.S. motorists don’t have liability coverage. This means that you’re not particularly likely to suffer a collision with an uninsured driver. It might make more sense to spend the extra cash on comprehensive insurance or better health coverage.
Nevertheless, uninsured motorists remain much more common in some states than others, and the above-mentioned statistic doesn’t include underinsured drivers.
You should think about several different factors when comparing stacked vs. unstacked auto insurance. Such considerations include how often you drive, how much disposable income you have, your state’s laws and its percentage of uninsured motorists. Stacked coverage holds greater value in states like Florida and Oklahoma, where more than one-fifth of the drivers lack insurance.

Only One Option?

If you own a single vehicle or live in a state that doesn’t allow stacking, an unstacked policy is your sole choice. Slightly more than half of U.S. states permit stacked coverage. Specific rules on stacking also vary; they’re more restrictive in places like Oregon and Kentucky. Experienced insurance agents will be able to provide further details, so it’s always a good idea to talk to a professional about your options.

Types of Auto Insurance Policies To Consider

When it comes to auto insurance, it’s ultimately your responsibility to ensure you are protected at all time. There are several types of insurance policies to consider when you own or lease a vehicle. Always keep in mind that one policy may not be enough to cover all your specific needs. You may be required to look at an additional policy to avoid any major financial setbacks.

Here’s an easy list of the top policies you absolutely have to consider when you own a vehicle:

Liability Insurance

Liability insurance is a standard element of most auto insurance policies. This policy is a legal requirement in all states and will protect the driver of a vehicle in the event of any damage or injury they may have caused. This policy will protect the insured party when he or she ends up in a lawsuit arising from claims and will have to foot the medical bills or repair costs owed to a third party.

Personal Injury Protection (PIP)

Even though this is not a requirement in most states, it is still highly recommended that drivers have PIP.  Should you ever be involved in an accident, the insured party can collect maximum benefits like medical bills and loss of income. PIP will pay out whether the accident was the fault of the policyholder or not.

Underinsured and Uninsured Motorist Cover

Roughly 1 in every 8 drivers not insured. Should you ever be involved in an accident with a driver who caused the accident and they are also uninsured, this type of policy will have you covered.  UM and UIM will pay for your medical bills when the other driver has no insurance, or their insurance does not have adequate liability coverage to pay for your medical bills.

Collision Coverage

Collision coverage will pay for damages caused by an accident with another vehicle, or objects such as trees, street lights, telephone poles, or guard rails. Although it is not a requirement in most states, this type of coverage will still be required by your lender.

Comprehensive Cover

Should your vehicle be damaged by a collision, natural disasters, theft, or vandalism, you will be protected under comprehensive insurance cover. Comprehensive cover is not required in all states but it may be required by your lender. It might not make sense, however, if you have an older vehicle because the premiums and deductibles may not make financial sense. Always do your research from reputable sources such as online banking information guide.

Towing and Roadside Assistance

This type of coverage can come in very handy when you have an emergency breakdown. This policy will help you to get some roadside assistance alongside the cost of towing in the vehicle and rental of a new vehicle. It does have its limits, however, and it will not cover for any replacement parts.

GAP Cover

As soon as you drive your new vehicle out of the lot, it loses value. This means that there’s a period where the value of the car is less than the actual loan amount. If you are in an accident during this period, GAP cover will pay out the difference between the actual value of the vehicle versus the total loan amount still outstanding.

Your Top 3 Auto Insurance Questions Answered

In an effort to address some of the most frequently asked questions in the auto insurance industry, we’ve put together a simplified yet concise explanation regarding the rules and restrictions of your auto insurance policy. In no particular, here are the top 3 most frequently asked questions.

1. What Factors Will Affect My Insurance Premiums?

Several factors will be considered by insurance carriers to help calculate your premiums. Some of the top determinants include:

a) Age

Teenagers will pay higher premiums because they are 3 times more likely to be involved in an accident. Drivers over the age of 50 will generally receive cheaper auto insurance.

b) Gender

Men are more likely to be in accidents and, therefore, younger women qualify for cheaper rates. However, this difference disappears over time.

c) Location

Urban areas are generally subject to higher premiums due to all the risks related to living in an area with more traffic. There may also be a higher chance of the vehicle being stolen.

d) Marital Status

Married couples are statistically less likely to be involved in an accident and could qualify for cheaper rates.

e)  Driving Record

Insurers will take a look at o see if you have any previous claims. If you have a good record, you’re more likely to qualify for discounted rates.  Accidents, speeding tickets, and other infractions could all serve to increase your premiums.

f) Type of Vehicle

Certain cars demand higher insurance premiums because they might be more likely to get stolen, the cost to replace or repair it might be higher, as well as other factors such as whether or not it’s more likely to be pulled over.

2. What are Some of the Most Common Auto Insurance Discounts?

Most insurance companies offer some type of discounts based on several specific criteria and there are several factors insurance companies will look at to determine premiums.

Remember, many discounts require that you take some form of action to actually benefit from them. Here are some of the most common discounts that you can qualify for:

a) Compare quotes

This is arguably the easiest way to get a discount. When you compare estimates, you’re doing more than just comparing prices to find the best one. Discussing all your options also means that you have the opportunity to check if you qualify for discounts you were previously unaware of. Be sure to compare at least 3 quotes from different insurance companies.

b) Bundling policies together

If you take more than one policy with the same insurer, you might be able to save. Bundling your policies together will allow you to save on each policy individually. You can also get discounts if you insure more than one vehicle at a time. Not all insurers will offer multiple-vehicle discounts, but many do, so it’s always worth discussing your options when trying to figure out what type of discounts you may qualify for.

c) Club discounts

Being a member of selected auto clubs and credit unions could make you eligible for discounts. Always check with your organization as well as your insurance carrier if they honor these type of discounts.

d) Defensive driving

Not all insurance carriers will, but many offer you some discount for completing a defensive driving course. Successfully completing one of these courses can knock as much as 10% off of your premium. Also, speeding tickets and other transgressions can add roughly 40% to your insurance premiums!

e) Higher deductibles

Raising your deductibles is probably one of the easiest ways to qualify for a discount. However, be sure that you can actually afford to pay the deductible should you ever need to. The key to making this work is having access to some emergency savings to cover your deductible.

f) Low-mileage discounts

If you only do short commutes with your car and you are managing to keep the mileage low, you could qualify for discounts from your insurance carrier. Be sure to ask them about your options if your yearly mileage is under 15,000 miles.

g) Good student discount

Full-time students can qualify for discounts by fitting into the “good student” criteria set out by different insurance companies. Although the term varies greatly from one company to the next, being considered a good student could knock 10% off your insurance premiums.

h) Extra safety features

If your car has extra safety features such as anti-lock brakes or a passive alarm system, you may be eligible for insurance discounts.  It’s always a good idea to ask your insurer what else may lower your premiums.

i) Good credit

Insurance companies consider the fact that there is a direct link between people who have a bad credit record and the likelihood of them making a claim.

Although bad credit may is not as bad as a tainted driving record,  your credit history may still affect your ability to apply for auto insurance.

Some companies do not offer bad credit auto insurance. However, many companies do recognize the need for drivers with bad credit to have insurance.

But beware…if you don’t match some insurance carrier’s highest standards, you will likely be charged more, even if you have never had any accidents. Always compare estimates from several different companies before you sign on the dotted line.

3. Can I Still Get Auto Insurance If I Don’t Have a License?

With a few exceptions, the resounding answer to this questions is definitely a NO. However, there’s no law against buying a vehicle without a license, but without a valid driver’s license, you are not able to drive legally…

There are, of course, certain specific criteria that will allow for you to own auto insurance without actually having a valid U.S.drivers license. Keep in mind that these are very limited, however, and will include the following:

  1. Has your license has been suspended or revoked?
  2. Are disabled and you own a car you won’t be driving yourself?
  3. Do you want to keep the title to a car that’s in your name?
  4. Will someone else be driving the vehicle but they are unable to hold the title to the vehicle themselves?
  5. Will you be maintaining legal control over a vehicle until the designated driver meets the legal requirements?
  6. Do you have a Mexican identification card? This may be substituted for a valid U.S. driver’s license.