Though going without it really isn't an option, car insurance
isn't always the easiest subject to understand. To interpret your
options and get the best deal, you need a basic understanding of how
it functions and what to expect from your auto insurance company.
Since education is your best defense when it comes to buying auto
insurance, InsureMe would like to answer some common questions on
the topic. We hope you find this information useful as you search
for the right car insurance policy.
Why do I need auto insurance?
You need auto insurance for a variety of reasons. First, though
each state determines its own coverage requirements, drivers in
every state must carry proof of some type of auto insurance in order
to drive. Second, auto insurance protects you from financial and
legal obligation when you're involved in an accident. Depending on
the situation, the coverage you choose and your state's insurance
system, it may cover your expenses, those of the other party—or
What kind of coverage is included?
Auto insurance includes three broad coverage categories designed
to protect you from loss.
Property coverage: Pays for damage to or theft of your car
Liability coverage: Covers others against bodily
injury or property damage
Medical coverage: Pays the cost of treatment,
rehabilitation and sometimes lost wages and funeral expenses due
to an accident
How can I find out which types of coverage my state
Contact your state department of insurance, or read up on state
laws at the
Insurance Information Institute. On this page, you'll find
comprehensive requirements listed state by state.
What determines my auto insurance rates?
Your premiums are based on how much risk you present to your
insurance company; what it costs your insurer to conduct business,
and how much money your insurer estimates it will need to pay all
claims during the year. To best determine these answers, your
insurer examines such factors as your age, the make and model of
your car, your driving record, what kind of driving you do most,
where you keep and drive your car, and even your credit rating.
Why do insurance rates vary so much from one company to
Depending on each insurer's claims history experience and cost of
doing business, rates are set independently—and can vary widely.
This is why it's so important to get several quotes before deciding
on the right policy.
Is there anything I can do to reduce my car insurance
Absolutely! Here are a few strategies you should discuss with
your insurance agent:
Establish a safe driving record
Take advantage of money-saving discounts with credits
such as defensive driving, driver training, anti-theft, low
mileage, multi-car and long-time renewal
Choose a higher deductible and pay more expenses
Drive safer cars
Eliminate unnecessary coverage, taking into account
your car's age and condition
Look for group rates through employer-, credit union-
or association-sponsored auto insurance programs
Get several quotes and compare policies
Can my insurance company cancel my policy once I buy it?
Yes, but only if you don't pay your premium or your license is
suspended while your policy is in effect. However, if either of
these happens and your policy is cancelled, you're entitled to at
least 30 days notice and a refund of the unused premiums paid, minus
the cost of cancellation.
Can other people drive my car and still be covered?
Definitely! Since your auto insurance coverage is attached to
your car rather than just to you, anyone who drives your car with
your permission should be covered. However, check with your
insurance company for more specific details.
Does my policy provide coverage when I rent a car?
Yes, most auto insurers today cover rentals under your standard
auto insurance policy. However, if you also purchase insurance from
the rental car counter when you go on a trip, that rental policy
automatically supersedes your auto insurance policy. So make sure
you know for sure what's covered before you purchase any additional,
What should I do if I have an accident?
Get a copy of the police report, take down the other party's
insurance information, and call your insurance company right away.
Your agent can help you determine whether or not you should file a
claim, depending on the situation.
If you have a camera handy, you may also want to take pictures of
the vehicles involved for later proof of damages.
If I'm not at fault in an accident, will my premiums rise
If you have a good driving record with no history of accidents,
it's unlikely that your premiums will increase solely due to one
incident. However if the opposite is true, your insurance company
may assume you're a hazardous driver and increase your rates.
How much do speeding tickets affect my rates?
Although different companies have different practices when it
comes to raising rates, many states have laws against raising
premiums after just one ticket. So, depending upon state laws and
the severity of the violation, your rates may or may not go up with
just one ticket.
My teenager just got his license and, when I added him to
my insurance, my rates went through the roof! What can I do?
Adding your youngster to your policy was the right thing to do
because it protects both him and you in case of an accident.
Unfortunately, you should also expect a natural rise in insurance
rates until he is older and more experienced at driving. Meanwhile,
encourage him to drive defensively, wear his seatbelt, avoid
distractions and keep his grades up. These actions can provide
worthwhile discounts and help him establish a good driving record
which, in turn, helps keep insurance premiums in check.
A lot of people drive uninsured. How can I protect
Uninsured motorist coverage provides the protection you need from
those who carry no insurance. With this type of coverage, your
insurance company reimburses you for bodily injury, medical expense
or death from an accident caused by a driver with no insurance, the
driver of a stolen car or a hit-and-run driver. It does not,
however, cover damage to your car; you need collision coverage for
How do I choose the right insurance company?
Your goal should be to find an insurer with a stable history and
a high level of customer satisfaction. Check out their ratings at
independent sites like A.M. Best
Investors Service, or contact your state department of
insurance, which can also furnish this information.
Now it is time to use what you've learned!
Now that you know the basics of car insurance, let InsureMe
connect you with honest, caring insurers in your area for more
detailed information. By shopping your insurance only once, you'll
make invaluable contacts—and get up to five free quotes in the
Finding great car insurance has never been easier.
This highly informative article was edited and produced by
InsureMe.com personnel specifically for the use of Tale Wins
Insurance Directory readers and it is to be used for purely informational
purposes only. This article is not intended to be used in place of
professional advice. ALL RIGHTS ARE RESERVED for the