Wednesday, November 9, 2011

Guest Post: Five Frequently Asked Question About Car Insurance

Car insurance can be a very confusing subject for a lot of people. And unfortunately, the only time many of us think about insurance is when we really need it. By educating yourself about car insurance you can be sure you're making wise decisions when it comes time to make a purchase, and know exactly what your coverage is if and when you do get into an accident.

Let's take a look 5 of the most frequently asked questions about auto insurance. Read on, because some of the answers may surprise you.

Question 1: What can happen if I decide not to purchase car insurance and still drive my car?

Answer: Almost all states have very strict laws regarding the responsibility of drivers to purchase car insurance. If you ignore these laws, you risk losing your driver's license, having your car taken away, and also open yourself up to expensive law suits should someone be injured. It's a wise move to cover yourself by purchasing car insurance.

Question 2: Does my driving record affect how much I will have to pay for insurance?

Answer: Your driving record will affect how much your insurance premium will be. Insurance companies typically look back around 5 years, consulting with the registry of Motor Vehicles in your state. Any past accidents or moving violations you've had will show up on your record. Statistics show that drivers with these sorts of issues tend to be a greater risk.

Question 3: Are there minimum requirements for car insurance?

Answer: Every state requires you to carry some sort of liability auto insurance. A substitute for that would be to prove financial responsibility, but this is only accepted in a few states. As far as financial requirements, the minimums vary widely depending upon where you live, so you'll have to check your own state's insurance commissioner. By driving into another state, you automatically get that state's minimum coverage.

Question 4: I have insurance, but what if someone else is driving my car, are they covered?

Answer: Yes, in almost every case, and it does get a bit tricky. If someone has your permission to drive your car, and you have reason to believe that they can operate it safely, they should be covered. Here is the tricky part. Everyone in your household must be listed on your insurance policy if they have a license, in order to be covered when driving your car. Even this differs from policy to policy, so be sure to check with your agent to know what your specific policy covers.

Question 5: What other coverage do I need besides liability?

Answer: Again, each state has specific requirements, so to know for sure you'll need to do some research for your living area. However, if you have a loan on the vehicle, most lenders will require you to carry full coverage auto insurance, which is the addition of collision and comprehensive insurance. These types of insurance cover the cost of repairing the car so the lender can get its money back if the car is totaled. Once again, talking to your insurance representative can answer many of the more specific questions you have regarding the details of your policy

Bonus Question - Do all states have financial responsibility laws?

The answer is yes. All states require you to prove financial responsibility to be able to operate a motor vehicle. Just what that proof is differs from state to state, but everyone would agree that the easiest way to offer such proof is to purchase car insurance. Car insurance protects you in many different ways, and every responsible driver should have an up to date insurance policy.

As you can see, unraveling the mysteries of auto insurance can be quite a task. Do your research before shopping for quotes so you can be better prepared to make a wise purchasing decision. It will also help you "talk insurance" with your agent when the time comes.