Top Auto Insurance Questions Answered

These are some of the things to look at with your agent in order to make sure you get the most appropriate coverage as well as know you policy.

What type of coverage do I need?
Each state has its own requirements, but in most states auto liability insurance coverage is mandatory. This can be divided into two different types: bodily injury liability and property damage liability. In the event of an accident where you are at fault (you caused the accident) the bodily injury liability will pay for bodily injuries sustained by third parties (the other driver, pedestrian, etc.) and it may pay wages lost as a result of injuries. In this scenario your property damage liability would pay for any property damage to others (their car, their bike, their fence). In both cases your insurance would only pay up to a certain amount - the policy limit.

It's important to note that this type of coverage does not cover damage to your own vehicle when you are at fault and therefore additional coverage such as collision and comprehensive auto insurance is definitely worth considering.

How high is my risk?
Risk assessment by auto insurance companies is based on a number of factors, such as age, sex, occupation, where you live and how long you've been driving. Rates for first time drivers are likely to be high and people with criminal records are also going to be marked as a higher risk. The greater the risk, the higher your premium.

Who is covered in my policy?
Depending on the extra individuals added to your policy (younger or first time drivers or a partner with a DUI on their record) this can considerably raise your premiums, although drivers considered a lower risk may not affect it much.

How do I decide what my deductible should be?
Consider that if you are involved in an accident you will have to pay the pre-agreed amount, the deductible, which will go towards repairing the damage before your auto insurance company will cover step in and cover the rest of the costs up to the policy limits.

If you choose to have a low deductible in order to have less out of pocket in the event of an accident consider that having a higher deductible can substantially lower your premium which leads to savings over time. Determine how much you could pay out of pocket in the event of an accident and start from there.

Are there discounts I might qualify for?
There are a number of ways you can lower your premiums. Be sure you ask what discounts are available and that you may be eligible for. For example, if you are a student, discounts can apply for getting good grades. Other discounts may be given for extra safety features your car might have such as air bags.

What are my payment options?
Auto insurance is a big financial commitment, so working out how you're going to pay for it is essential. You will have options of discounts when paid in full for the year or in 6 month increments. The most common payment is paying on a per month basis, but keep in mind that this option could make your annual cost higher.