Most drivers are unfamiliar with auto insurance until they have to start researching their own policies and want to save money. And even then, the insurance jargon, the location-specific rules, and the variety of choices in policies can make it so much more complicated. You might be surprised to learn that if you have questions about auto insurance, chances are extremely high that someone else wants to know the answer too. Below are the most common Car insurance Questions
Common car insurance questions: answered
What if I don’t buy auto insurance?
Not purchasing auto insurance could have serious consequences. In almost all states, drivers are required to purchase at least a minimum amount of required coverage, such as liability, uninsured motorist, and medical coverage.
Without liability insurance, for example, you would not have any financial protection against being sued for damages. Paying for another driver’s expenses out of your own pocket could wipe out your entire savings and put your assets, such as your home, at risk.
Depending on the type of policy you purchase, having insurance could help keep your out-of-pocket expenses to a minimum.
Can’t I just buy full coverage insurance?
The term “full coverage” is misleading. Full coverage insurance is not a type of policy, but rather it refers to a more robust policy that provides more than the state-required coverage types. Typically, the term “full coverage insurance” refers to a policy that includes collision and comprehensive, plus the other coverage types required by the state.
On the other hand, minimum coverage is the lowest amount of coverage you can purchase while still satisfying the legal requirements of the state you reside in.
A full-coverage policy offers a greater amount of financial protection versus the bare minimum. But full coverage is more expensive, so you might find it helpful to compare multiple providers and policy options to align as close as possible to your budget.
Can I buy a car on the weekend and get my auto insurance the next business day?
That depends on your current auto insurance status. If you already have an auto insurance policy, you may have coverage for a newly-acquired vehicle before you officially add it to your policy.
Many companies provide automatic coverage for newly-acquired vehicles, so if you get a car on Saturday and wait until Monday to change your policy, you might be covered. If you know you are shopping for a different or additional vehicle, talk to your agent or company first to understand how your coverage is set up.
If you don’t have any insurance at all, the answer is no. You will likely need to show proof of insurance to drive off the car lot, so you probably won’t be able to wait until the next business day to get coverage. That being said, many companies offer weekend call centers, or you might be able to purchase a policy entirely online.
What factors can affect my auto insurance premium?
Quite a few factors impact how much you pay for car insurance premiums, and some have a greater impact than others. Your location, age, make and model of the vehicle you drive, the number of miles you drive each year, and your driving history are all large factors contributing to the overall cost.
Other factors that may play a role in the cost of premiums, depending on the state you live in, are your marital status, gender, occupation, and credit score. Ultimately the insurance providers base rates on the amount of risk they feel you pose as a driver.
Can I be denied auto insurance?
You can be denied auto insurance coverage. Typically, this is due to someone being considered too high of a risk to insure with a carrier based on their eligibility criteria. Carriers can deny coverage for numerous reasons, but common reasons include too many tickets or accidents on your driving history, having a DUI, or having an auto insurance policy lapse.
You can also be denied coverage for reasons out of your control, such as if a carrier stops insuring vehicles within a certain ZIP code or state, resulting in the nonrenewal of your current policy.
What happens if I lie about my driving history?
It may be tempting to avoid telling the entire truth about your driving history, but doing so will only make the situation worse.
Suppose you obtain car insurance quotes without providing all the details of your driving history.In that case, your quote could change drastically when the auto insurer pulls your motor vehicle report (MVR) and your Comprehensive Loss Underwriting Exchange (CLUE) report. Once those reports are pulled, your rates will reflect the risk based on your actual driving history.
This could lead to significant rate increases and even a cancellation of your policy, depending on what incidents appear on your record.
What is a deductible?
A deductible is an out-of-pocket expense you would be responsible for paying if you had to file a claim with your insurance provider. This typically applies to comprehensive or collision coverage, although personal injury protection (PIP) and uninsured motorist property damage (UMPD) coverage might also have it, depending on the state you live in.
For comprehensive and collision coverage, you can choose the deductible amounts. The amounts usually range from $0 to $2,000. The more you are willing to pay out of pocket, the lower your premiums will be.
How can I get discounts for my auto insurance?
Most insurers, both large and small, offer a range of discounts. The more popular discounts include bundling policies, multi-car, good student, and safe driver discounts.
You may also find discounts for being employed by a specific company or for being a member of the military. The exact discounts vary from one provider to the next, so be sure to review all available options for the most savings.
Can my car be “too old” to get coverage?
Generally speaking, a vehicle isn’t too old to get coverage. However, you may not have all coverage options available to you if your vehicle is too old. For example, collision and comprehensive may not be an option because it may not be worth it to the insurance provider to repair a vehicle that is too old.
How do auto insurance companies determine my risk?
Each insurance provider has its own way of calculating and assigning risk to each driver. But generally speaking, the factors used to determine risk include your ZIP code, age, vehicle, miles driven per year, and driving history. Other factors may vary by state laws, including gender, occupation, and credit. In some states, it is illegal to use these factors when determining risk.
The bottom line
Auto insurance can get confusing. The good news is, when you take the time to find the answers to the questions you have regarding car insurance, then you are more likely to make an informed — and potentially cost-saving — decision for your own policy.
A Bankrate.com writer, Sara Coleman has three years of experience in writing for insurance domains such as The Simple Dollar, Reviews.com, Coverage.com and numerous other personal finance sites. She writes about insurance products such as auto, homeowners, renters and disability.