FAQ


Liability Auto Insurance

An umbrella policy can be a surprisingly cost-effective way to give yourself an extra layer of protection in case you ever surpass your liability policy’s limits — something that’s not unlikely to happen if you’re involved in a serious accident. According to the Insurance Information Institute, you can get a $1 million personal umbrella liability policy for about $150- $300 a year, and additional millions cost even less.

Requirements for liability coverage vary by state. Generally, you’ll see these requirements listed as three separate numbers representing coverage requirements regarding injury limits per person, injury limits per accident, and the property damage limit per accident. For example, 25/50/25 (Alabama’s state requirements) mean you’ve got a $25,000 injury limit per person, $50,000 injury limit per accident, and $25,000 property damage limit per accident. Most experts agree that it’s better to purchase more than your state’s minimum requirements, since you’re on the hook if costs exceed your minimum payments. When it comes to choosing liability coverage, 100/300/100 is considered standard, though you may want to go higher if you have substantial assets in order to protect yourself against a lawsuit.

Yes, you do. Liability auto insurance is required by law for drivers in just about every state, and it typically includes coverage for bodily injury and property damage caused by you when you’re behind the wheel during an accident. It doesn’t cover damage to your own vehicle or your medical expenses if you’re at-fault — only others. (Live in New Hampshire? Auto insurance isn’t required at all in the Granite State, but you must prove that you have enough money to meet the state’s Financial Responsibility Requirements in case you’re in an accident.)

Uninsured and underinsured motorist coverage will come in very handy if you’re ever in an accident caused by someone who doesn’t have insurance, or someone who doesn’t have enough insurance to cover the damage they’ve caused. Most experts recommend purchasing the same coverage limits as those on your own liability coverage.

Protecting Your Own Vehicle

A comprehensive policy covers damage to your vehicle caused by incidents like bad weather, fire, floods, something falling on your car, or hitting an animal with your car. If you got a loan to buy your car or you’re leasing it, your lender may require comprehensive coverage. You should also strongly consider it if you live in an area with higher risks of incidents like destructive weather or vandalism. Otherwise, it comes down to cash: If your car is newer and would cost a lot for you to repair or replace, you probably need comprehensive coverage. If your car is older, not in the best shape, and its actual cash value is relatively low, you’ll need to consider whether the payout you’d get from your insurance company is worth the premiums you’ll pay.

A collision policy covers damage to your own vehicle if you’re in an accident, whether it’s caused by you or someone else. If you got a loan to buy your car or you’re leasing it, your lender may require collision coverage. Otherwise, as with comprehensive coverage, it comes down to cash: If your car is newer and would cost a lot for you to repair or replace, you probably need collision coverage. If your car is older, not in the best shape, and its actual cash value is relatively low, you’ll need to consider whether the payout you’d get from your insurance company is worth the premiums you’ll pay.

A deductible is the amount of money you’ll pay out of pocket before your insurance kicks in. The higher your deductible, the lower your premiums will be, since you’re assuming more risk. You need to decide how much cash you’re prepared to part with if you’re in an accident, and whether you’d rather pay more monthly for the comfort of knowing you have that additional protection.

Other Coverage Options

Laws and details vary between states, but typically both Personal Injury Protection (PIP) and Medical Payments Coverage (MedPay) cover injuries sustained in an automobile crash. However, PIP coverage is more comprehensive, offering coverage for lost wages, loss of services (like cleaning, childcare), funeral expenses, and survivor’s loss. Check your state’s laws for whether these coverages are required or recommended.

If your car is damaged, you’ll likely need another form of transportation while it’s being repaired. Loss of Use Coverage kicks in here to cover the cost of a car rental. It’s a wise add-on if you have no other form of transportation available to you, but it may not be necessary if you live near public transportation or if you own a second vehicle you can use while the other one is in the shop.

Towing and labor cost coverage is a typically inexpensive add-on that can come in handy if your car breaks down on the side of the road. However, you may be able to get the same coverage for a better price and more straightforward service through an automobile club like AAA or Amoco. Be sure to read the fine print before committing to the service through your insurer to make sure you’re actually getting what you think you’re getting.

Getting Covered

An insurance score is a rating used by insurance companies to predict how likely you are to file a claim — and to pay your premiums on time. Different companies use different systems to arrive at your individual rating, but typically they’ll take into account factors like your driving record and credit history.

Improving your credit score is one way to improve your insurance score, because by showing the insurance companies that you’re fiscally responsible, you’re also suggesting that you’re responsible behind the wheel. Pay your bills on time, avoid racking up too much debt, and generally work to keep your accounts in good standing. And, of course, keep your driving record as clean as possible by avoiding speeding tickets and accidents. Read more here.

We move, we get older, our families evolve, our cars depreciate. Life changes every year, which is why it’s a good idea to compare auto insurance quotes annually. The Insurance Information Institute recommends getting at least three quotes. If you’ve been in an at-fault accident or had a traffic violation, you should also shop around after the third and fifth anniversaries of the incident. (Source: Nerdwallet)

First of all, it’s important to find out why your policy was cancelled, as this information will likely come in handy when you’re looking for new coverage. You may also be able to speak to your current provider about reinstating your coverage, though it may require some negotiation of your terms (like your deductible or coverage). If they refuse to reinstate your policy, you will have to shop around to find a new provider, and you may have to explain why your previous insurer dropped you.

Paying for Car Insurance

Shopping around for coverage is one way to lower your auto insurance costs, but you may be able to work with your current company to get a better rate. Consider things like increasing your deductibles, dropping unnecessary coverage, and taking advantage of discounts for low mileage, safe driving, or taking a defensive driving course. Don’t be afraid to ask your insurer to help you out — that’s what they’re there for! Read our guide for more advice on lowering your premiums.

Your rates may be recalculated for a number of reasons, the most obvious of which are filing an accident-related claim or being convicted of a moving violation like speeding or running a red light. If you move or buy a new car, you could also see a spike in your premium if your new zip code and/or vehicle are considered more of a liability to insurers.

Dealing with Accidents

If you’re in an accident, it’s important to call the police to file an official accident report. For a serious accident, you may want to locate witnesses and get their contact information. You’ll also want to exchange insurance information and contact details with any other drivers involved in the accident. Document the damage with photos and write down any details you may forget. Then call your insurance company as soon as possible to file a claim.

A claim is simply a request to your insurance company to assist with damages you’ve suffered or caused in a car accident. You can start the claims process by calling them, though some companies all you to file a claim online or through an app. Your insurer will then assign someone to work on your claim. It’s their job to help you through the entire process of getting the money and assistance you need to move forward.

This depends on your policy and the laws in your state. If you have uninsured or underinsured motorist coverage, and the other person is at fault, your own policy will step in to pay for damages. If you are at fault for the accident, you may still be required to pay for damages to their vehicle.

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