Car Insurance Information: FAQ about Auto and Vehicle Insurance

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Car insurance will help protect you and your car from financial and legal troubles. But the car insurance policy you choose and use depends on what you need and what your state requires you carry.

Car insurance is one of those things you just can’t avoid, even if you try to. But as with anything this complicated, you probably have a lot of questions – well, we have a lot of answers. How convenient for you!

Does everyone have to have auto insurance?

The biggest question on your mind right now is whether you even need to deal with car insurance. YES, yes you do. While Wisconsin, New Hampshire, and Florida don’t have a law saying you HAVE to have insurance, you still want to have it in place in order to keep you from broke after an accident.

The law requires car insurance in other states, so yes, yes you do have to have it. Everyone.

What are the components of auto insurance?

Auto insurance is simply a policy in which you pay money in order to have certain protection in the event of an accident or theft of your car. The insurance policy may contain parts that cover liability, medical expenses, loss or damage, PIP, etc. At the very least, insurance will cover liability, which means the policy will pay for accidental (not intentional) damage or bodily harm your car caused someone else.

What is “”no-fault”” auto insurance? 

‘No fault’ is the term used to describe the states that require PIP policies. PIP is Personal Injury Protection, which is a policy that pays for the medical expenses of the insured driver during an accident, no matter who is at fault.

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What is liability insurance? 

Liability insurance pays for accidental bodily harm and property damages to others in the accident. This insurance can also cover lost wages, pain and suffering, as well as medical expenses. Court costs and legal expenses can also be covered by this policy.

What are split limits?

Split limits are the way the insurance company breaks down your insurance policy. For example, you might have a split of 40/20/10, which means that 40 percent of your liability costs are covered, 20 percent of medical expenses can be covered, and 10 percent of physical damage is covered. By thinking with these splits, you can get customized coverage.

What is medical payments insurance?

Medical payments insurance is insurance that will help cover any medical costs that are the result of a car related accident.

What is personal injury protection, or PIP? 

Personal injury protection, or PIP, is only required in certain states (like Michigan) and it covers the medical expenses for the insured driver in the accident, no matter who is at fault.
What are Car Financial Responsibility Laws?

Each state has Car Financial Responsibility laws which state what the drivers in an accident are liable to pay in the event of an accident.

What happens if I choose not to purchase car insurance and still drive my car?

Nothing happens when you choose not to purchase car insurance and still drive your car. But when you get pulled over, that’s when things get tricky. You can get your license suspended, your registration revoked, and you might even head to jail in some cases.

Is anyone who drives my car covered?

When you buy car insurance, you are generally buying a policy just for yourself and for the trouble you get yourself into. In order to get others covered by your policy, you will need to let the insurance company know, let them decide whether or not to cover them, and then you’ll need to pay more to get them covered.

What are the best liability policy limits? 

The best policy limits are hard to define because everyone’s budget considerations are different. In general, the more insurance coverage you can get, the better. As much as you can afford. Around$50,000 for liability coverage is a good place to start.

What is the difference between comprehensive and collision car insurance? 

Comprehensive insurance is insurance which covers not only what happens in an accident, but also what happens when Mother Nature tries to rough up your car. Or if your car is stolen, this insurance helps out. Collision insurance is only for?collisions.

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What are the minimum requirements for car insurance? 

The minimum requirements for car insurance will vary from state to state, so check with your local insurance laws. In most cases, liability insurance is the bare minimum you need to have.

Why does my insurance cost more than my agent said it would? 

You obviously didn’t pay attention during your quote. When you sign up for insurance, you will also need to pay taxes on your insurance as well as underinsured and uninsured motorist fees – to cover those on the roads who can’t pay in an accident. If you’re concerned your agent is screwing you, talk to them – before they leave town.

How does my driving record affect my insurance premium? 

If you’re getting into accidents all the time, chances are good you’re going to need your insurance company to pay up more often. And the insurance company won’t like it. To keep you from simply driving recklessly, the insurance premium will go up each time you have an accident that is your fault – and often when it’s not your fault.

Why is it harder to get insurance with bad driving records?

Insurance companies really don’t like to take risks. They want to take on insurance customers who aren’t going to file claims like those with bad driving records are keen to do. You can still get insurance with a bad driving record, but realize it will cost you.

My car was totaled and my policy did not pay for all of my car, why?

Chances are good you didn’t have as good a policy as you thought you did, or you still needed to pay your deductible. You’re not likely to get off scot free when you get into an accident, especially when it was your fault.

My teenager just got his license, does he need to be insured?

EVERYONE needs to be insured – especially teens who are more likely to get into accidents than experienced drivers. They can be added to their parents’ policies to make it easier for them to pay a lower insurance rate.

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What do insurance companies consider when deciding cancellations?

Some insurance companies will cancel policies of people who have a long record of accidents and legal troubles on the road. These people are too risky and will end up costing the insurance company more than the customer is actually paying into their policy.