On our previous post on ways you can save money on car insurance, we provided an in-depth analysis on car insurance and the factors that may determine one’s insurance premium rates, as well as a brief guide to help you save money on car insurance. This week we’ve decided to go back to basics and answer 8 helpful frequently asked questions that everyone should know. Keep reading to find out what you should know about car insurance…
1. How does car insurance coverage work?
Regulated at a state level, car insurance covers your car’s repair expenses after an accident, as well as medical bills for you or any passenger. Also, if you’re at fault, it can also cover repair and personal injury protection for costs you may have caused others.
2. What are the different types of car insurance coverages?
There are six types of car insurance coverage: liability, comprehensive collision, uninsured motorist/underinsured motorist, and personal injury protection (PIP).
Each policy covers specific aspects of car insurance. Liability, for example, pays for any legal fees, property damage liability, and/or medical payments if you’re at fault. Uninsured/underinsured motorist coverage protects you if you’re in an accident caused by another driver and they have little or no insurance.
3. What is Full Coverage?
What car insurance lenders call “full coverage” is the union between a collision and a comprehensive policy. Although these two policies are optional, cars that have both policies are considered “fully insured,” since liability coverage is required by law in almost every state.
4. What documents do I need to buy car insurance?
There are two documents you should have in hand: your driver’s license, and your vehicle’s registration documents. If more than one person will be driving your car, you’ll also need to bring copies of their driver’s license. Also, if your vehicle is already insured, you should bring a copy of your existing insurance’s declaration page.
5. Will my car insurance increase if I am in an accident?
This all depends on your policy’s fine print. That said, if you are the at-fault party, there’s a high probability that your premium will go up.
6. How long does an accident stay on your auto insurance record?
It’s common for accidents to stay on your record for a total of three years, starting the moment the accident happened.
7. What’s the risk of having a bare-bones policy?
If the damages of an accident where you’re at fault exceed the amounts stipulated in your policy, you will be held liable and have to pay the difference. You should always consider additional coverage, since, if you don’t have the resources to pay these expenses out-of-pocket, you might be putting assets like your home at risk.
8. What does it mean when I see numbers like 50/100/50 on my auto policy?
These numbers represent limits to your insurance, meaning the total amount that your car insurer will cover on your behalf. The numbers are in the thousands and are usually ordered the following way: Bodily injury per person ($50k), bodily injury per accident ($100k), and property damage ($50k).
The republication of this article was made possible by a collaboration between Flock of Legals and Money. The original article may be found here: https://money.com/best-auto-insurance/.