10 Common Car Insurance Questions

1. How does car insurance work?

Car insurance is set up to alleviate the burden of an accident from the driver. When a driver is in an accident and they are covered by insurance, their insurance company will cover a large portion or all the repair or new car purchase costs based on their deductible and maximum payout.

2. How do deductibles work?

Deductibles are the minimum amount an insured driver has to pay before their insurance company will begin to cover their costs. A lower deductible means lower out of pocket expenses for the driver, but it also means their monthly premium is slightly higher. If a driver has a $500 deductible and their car sustains $2,000 of damages, the driver will pay $500 and then the insurance company will cover the other $1500. However if the driver’s costs are $350, the driver will have to pay that all out of pocket.

3. Am I required to have car insurance?

Yes. All 50 states require that a car has automobile liability insurance. It differs from state to state how much coverage is needed as a minimum requirement and if you have a lease or loan on your car you may be required to purchase more insurance.

4. Is anyone who drives my car covered?

Most of the time, yes. If the insured has a reasonable belief that the individual can drive the vehicle, they may drive the car and be insured. With a few exceptions, you want to read your insurance policy to see what they are. For example, if you’re living with someone and they are not your spouse, they will most likely not be covered under your policy.

5. Does my insurance cover my vehicle if I’m using it for work?

Most insurance policies do not cover your vehicle if you’re using it to deliver property or people for a fee. If you’re a delivery person or taxi driver using your own vehicle, you would want to ask your work if they can cover your vehicle while you’re on the clock.

6. Do all insurance companies offer the same coverage?

Most insurance companies offer the same basic coverage plans: collision insurance, comprehensive insurance, liability coverage, and a few more. Each individual insurer will likely have their own discounts and special policies however. It’s worth shopping around a bit to find the right insurance for you.

7. What kind of insurance should I buy?

Cheaper insurance isn’t always the best insurance. Each state has its own minimum insurance requirements, while these policies might have low premiums, they could include high deductibles and low coverage limits. When you’re in an accident, your costs run up quick and having a lower deductible by paying a bit more per month can save you thousands of dollars.

8. How is my rate decided?

Your insurance rate is dependent on a number of factors. The primary factors are your driving record, age, gender, marital status, and where you live. Each demographic has a different rate of getting into an accident, so where you fall on these factors will determine the bulk of your rate. There are lesser factors that come into play as well: make and model of your car, your credit, how you’re using your car, and your previous insurance record. The biggest factor by far is your driving record, a pristine record will give you far better rates than anything else.

9. If I’m in an accident, will my insurer pay for original manufacturer parts?

Not necessarily. Aftermarket parts are cheaper to purchase, so insurance companies may push for you to have them installed on your car instead of the OEM parts. You can request that OEM parts be used instead of aftermarket parts, just be aware this may cost more in the end.

10. How will my vehicle be valued?

Insurance companies value vehicles based on the features of your car compared to similar cars and their values. When a report is written about the value of your car, ask to take a look at the report and make sure everything is included in it. Did they forget your navigation system? Correct them. These details are important in getting the best value out of your car from your insurance company.