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.

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.