41 terms

Auto Insurance FAQ


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What is liability coverage?
Liability coverage insures you against the cost of injury and damage you cause to another in an automobile accident. It's made up of two policies, bodily injury liability, and property damage liability. Auto liability insurance is required in virtually every state.
What is bodily injury coverage?
It's the part of liability coverage that insures you against the injury you cause to others in an auto accident. It consists of two figures. One limits the cost of injury coverage per person injured, and the second limits the total dollar amount of injury coverage (for everyone injured.) This is a very important policy.
What is property damage coverage?
It's the part of liability coverage that insures you against the cost of damage to another's property caused by you in an automobile accident. "Property" includes other cars, houses, fences, telephone poles, etc.
What is medical payments coverage?
This coverage pays the medical bills of the covered driver, family members, and passengers when injured in an accident, regardless of who was at fault. This coverage is required in some states, but not in others.
What is personal injury protection (PIP)?
PIP is similar to medical payments coverage, only it usually covers a broader range of events, including medical bills, lost wages, loss of services, etc. It is required in most no fault states. Georgia does not have PIP.
What is uninsured motorist coverage?
This coverage covers the cost of injury or damage caused by another driver who is not insured. It covers the policy holder, authorized drivers, and any passengers. It usually consists of separate limits for bodily injury and property damage. This policy is required in some states.
What is underinsured motorists coverage?
This coverage pays for injuries and damage caused to the policy holder by a driver with inadequate insurance. It typically pays the difference between the at-fault driver's liability limit and the holder's policy limit. There are separate limits for property damage and bodily injury liability. This coverage is sometimes combined with uninsured motorist coverage under one policy, and may be required in some states.
What is collision coverage?
This coverage helps pay for repairs or fair market replacement cost if your car is damaged in an accident caused by you or an authorized driver. This policy is always optional.
What is comprehensive coverage?
This coverage, also known as "Other than Collision" covers the cost of repairs to or replacement of your vehicle should it be stolen, vandalized, struck in a hit-and-run, or damaged by an "act of God." Covered events vary from policy to policy but usually include fire, flood, and falling objects. This policy is always optional.
What is a deductible?
It's the amount of money that you agree to pay before a certain auto insurance policy kicks in. Deductibles are designed to cut down on insurance costs by eliminating small or frivolous claims. The higher the deductible you're willing to pay, the lower the premium you earn. Collision and comprehensive policies almost always carry deductibles, and sometimes PIP and medical payments policies do too.
What is rental car reimbursement coverage?
It's an optional policy endorsement that helps pay the cost of renting a car while your auto is being repaired for a covered event. (This means you usually need to carry collision and comprehensive to qualify.) Your premium is decided by the amount of reimbursement you want per day.
What is emergency roadside assistance insurance?
It's an optional coverage that covers the cost of towing or immediate roadside repair (like fixing a flat or jump-starting the battery). It does not cover the costs of any repairs done at a garage or service station, however.
What is SR-22 insurance?
The SR-22 is actually a form that high-risk drivers may be required to file with the state before they purchase car insurance. It requires the provider to notify the state should the policy be terminated or canceled. DUIs, multiple speeding tickets, and driving without insurance or valid license are all reasons a SR-22 may need to be filed. The requirement usually lasts for three years after the initial event.
What are split limits and combined single limits of liability?
Split limits of liability provide for separate coverage limits for bodily injury and property damage. A combined single limit policy has one coverage limit for the total cost of injuries and damage. Split limits of liability are much more common.
What is an umbrella policy?
It is additional liability coverage that goes "over" your auto liability limits. An umbrella policy may also increase other coverages, like homeowner's liability or boat liability. Carrying an umbrella policy is a good idea for drivers with considerable assets to protect.
What is gap insurance?
This optional policy insures the driver of a new car for the difference between the car's financed value and its fair market value. Should the car be "totaled" during the first few years after purchase, the owner will be covered for the amount still owed on the car, rather than its market value (which is often much lower). Because it covers only the difference in value, this is a relatively inexpensive policy. Learn more about auto gap insurance.
How does a car insurance company set my premium?
They take a lot of factors into consideration. These include where you live, the kind of car you drive, your age and gender, the level of coverage you want, and your driving record, among other things. The last two factors have the biggest influence on the premium you pay, although all are important. Shop around for the lowest premium.
When can my premium rates increase?
Whenever you renew your policy, apply for a new one, change drivers or vehicles, or are involved in an accident or traffic violation. When your state allows a rate increase, all the insurance carriers will likely raise their premiums. (This has happened a lot in recent years, and is expected to happen even more in the future, so don't be surprised.)
How do speeding tickets or "points" affect my insurance rates?
If your provider asks for an update on your driving record, points or tickets will increase your rate. But you aren't bound to inform them of a ticket, so if they don't increase your premium, just sit tight. (But always report an accident immediately!)
When do insurance companies check driving records?
Whenever you apply for a new policy, they'll check. If you're renewing your policy, or adding a new vehicle or driver, they might.
Will my premium increase if I report an accident to my insurance company for which I was not at fault?
It shouldn't. However, if you've had several such accidents in a relatively short period of time, your provider might assume that there is something reckless about the way that you drive, and increase your premium.
How much will adding a teenage driver to my policy cost?
Probably a lot. Teens fall into the age group that statistically drives the most dangerously. However, you might be able to earn a discount if your teen is a good student or drives an older model car. (And if the car is old enough, you won't need to carry collision and comprehensive on it, further reducing costs.) Learn more about teen car insurance.
How will having a kid in college affect my insurance rates?
If your kid is attending a school over 100 miles away without a car, your premium should decrease. However, if they'll be bringing a car with them, they should probably be listed as the vehicle's primary driver, and that may cause a slight increase in your premium.
Will marrying someone with a poor driving record affect my rates?
If you share the same policy, yes. But you could cut costs by getting two policies and carrying less optional insurance (collision and comprehensive) on the high-risk driver's vehicle.
Why do insurance companies ask for information on my credit history?
It's been shown that, all else being equal, drivers with poor credit are more likely to file claims than drivers with good credit. The theory is that people, who are careful with one aspect of their lives (money), are more likely to be careful in another aspect (driving). It is, however, illegal for insurance companies to use this information in a few states.
How do I get the most car insurance for my dollar?
Keep your deductibles high and your liability limits high. You'll get a lot more coverage for your cash that way.
If someone borrows my car, are they covered under my auto insurance?
If they are a licensed driver with your permission to use the vehicle, yes.
Is my American auto insurance valid in other countries?
In Canada, it is. In Mexico, maybe not. In the rest of the world, it isn't. However, Mexico's liability laws are a little different from ours, so it's not a bad idea to get a temporary Mexican policy if you'll be travelling there by car.
Will my policy cover me if I rent a car?
You'll usually automatically have the same level of coverage on the rental car as you do on your standard policy. (Check your policy for details.) Paying for the rental car with a credit card can offer even more protection. However, be aware, that in the event of an accident, the rental company may charge additional administrative, loss of income, and replacement cost fees that your standard policy won't cover. So buy the additional insurance if it makes you more comfortable.
Am I covered for a car accident that happens in another state?
An American car insurance policy is good throughout the country. However, some policies change their coverage a little depending where you have an accident. (Michigan does this, for example.)
How much liability car insurance do I need?
As much as you can afford. Liability is probably the single most important policy you carry on your car, especially if you have a lot of assets to protect. What's more, a big increase in protection translates into a relatively small increase in your premium. So you get a lot more security for a little extra cash.
Do I need medical payments or PIP coverage?
It depends. If you have good health insurance, you may not. Many of the same events that medical payments cover will already be covered by your health plan. On the other hand, passengers in your car (other than family members) usually won't be covered by your health insurance but will be under a medical payments policy. If you live in a no fault state, you'll probably need PIP to be covered for pain and suffering, lost wages, and medical expenses. (And it will usually be required by law.) Georgia does not have PIP.
Do I need uninsured and underinsured motorist coverage?
We think it's a good idea. Around 14% of drivers nationally are driving without insurance, and uninsured coverage is your only protection against them. We recommend you carry the same levels of this coverage as you do in liability.
How much auto insurance is required in my state?
Minimum limits in Georgia are 25/50/25
How high should I set my deductible?
As high as you comfortably can. A small increase in your deductible can allow you to make a big increase in more important coverages, like liability.
Do I need special insurance if my car is leased?
You might. You'll probably be required to carry comprehensive, collision, and maybe auto gap insurance. Check with your lessor for any special requirements.
Do I need to get auto insurance before I buy a new car?
If it's your first car, yes. If you already own an insured vehicle, your current policy will cover the new car for thirty days. But you'll have to have collision and comprehensive already. And tell your insurer about the new vehicle as soon as possible!
How much insurance do I need on a used car?
You should carry the same levels of liability, medical, and un/underinsured motorist coverage as you would on a new car. But collision and comprehensive are optional. If the car isn't worth much, it may not be worth in the premiums on these policies to insure it.
Do I need to purchase auto insurance in a different state if I'll be living there temporarily?
If your stay will be six months or fewer, probably not. You'll be covered under your old policy. Any longer, and you might want to switch.
Can I temporarily suspend my auto insurance if I won't be driving my car for a while?
It may be more hassle than it's worth. You have to suspend the registration and turn in the tag to avoid penalties. You might have to reapply for a policy and some companies charge higher rates if you haven't held continuous coverage for a while. And if your car is financed, the lien holder may require that you maintain coverage on the car whether you expect to be driving it or not.
Do I need an umbrella policy?
If your assets are considerable, yes. We suggest an umbrella policy for anyone with assets over one to two million dollars, though some may be comfortable with more or less protection.