Car Insurance FAQ

Car insurance is a complex subject and often knowing what questions to ask is as important as what you already know. Here are some of the most common FAQs that insurance buyers ask.

Q. Is anyone who drives my car covered by my car insurance?
A. Yes, as long as you have given them permission to use the car and believe that they are capable of driving the car properly.

Q. What liability limits should I have?
A. State mandated liability limits are only the minimum coverage you should have. The average should be $100,000 per person for bodily injury, $300,000 per accident for bodily injury and $100,000 per accident for property damage. However, this will vary depending on individual circumstances.

Q. What is the difference between collision and comprehensive coverage?
A. In the case of collision coverage you are covered when there is an accident involving another car. Comprehensive insurance covers you against loss through fire, flood, theft, vandalism and other such occurrences. Ideally, your coverage should encompass both.

Q. Why does my driving record influence the premium I pay?
A. Statistics show that people with a record of traffic violations and previous accidents are more likely to be involved in accidents in the future so the chances of the insurance company having to pay a claim are higher. Increased premiums help to insulate the insurance companies against these projected losses.

Q. Why does my insurance cost me more than the agent said it would?
A. A premium is calculated based on the information you provide and factors like where you live, what kind of car your drive, what it is used for, the amount of coverage you want and your driving record. If you have provided incorrect information on any of these issues, it will show up when the insurance company does its verification. The resulting quote will be based on the corrected information that the company has obtained and this may be higher than what the agent, who based his figure on the information you provided, may have initially quoted.

Q. My car is a total loss. Will I get what I think my car was worth?
A. Insurance companies pay for total loss on the basis of the market value of a car at the time of the accident. This may be lower than your perceived value. If you feel this figure is too low and can provide supporting documentation for a higher compensation, you can negotiate with the insurance company.

Q. What happens if my car is totaled and the insurance company pays me less than the outstanding loan amount?
A. The insurance company will pay you based on the market value of the car which can be affected by many factors like an economic downswing, poor maintenance etc. which could result in a reduced payment. Loan amounts can increase due to rising interest rates, penalties etc. If you fear that this could happen to you, many states allow the purchase of Guaranteed Auto Protection (GAP) coverage. This additional policy will cover the difference between the market value of your car and the balance loan amount.

Q. What are Car Financial Responsibility Laws?
A. These laws state that you must be able to pay for any costs that may be incurred to others because of your driving a car.

Q. What happens if I drive without insurance?
A. The laws vary from state to state but irrespective of the differences, driving without insurance is a serious offense and if you are caught, could be looking at stiff penalties, fines or even jail time.

Q. My children have drivers licenses but do not my drive my car. Do they need to be insured?
A. Car insurance policies require that every person licensed to drive in your family or home must be listed on our policy unless they have completely separate policies of their own.

Q. Will insurance pay for car rental while my car is in the workshop?
A. Only if you have rental coverage added to your policy. This will be limited to a per day expenses and also to a specific number of days.

Copyright © 2011 | All Rights Reserved. | About Us| Privacy Policy | Terms and Conditions| Contact Us| Site Map