25 Questions to Ask When Buying Auto Insurance

Fran Majidi
September 24, 2019

When searching for affordable car insurance, you can’t just look at price alone. You have to take a deeper look at what you’re paying for. It’s important to have the right protection with car insurance because you never know when you’ll find yourself in a car accident. No one ever anticipates having a collision, but it happens to the best of drivers. That’s why it’s important to know a little bit about insurance and how it works before you make a commitment to which car insurance is right for you. We’ve done all the research for you and created a list of Frequently Asked Questions about buying insurance. Take a look before you start comparison shopping car insurance options here.

1. Will my job affect my car insurance coverage?

You’ll be surprised to find out that your job does determine your rate. So do other personal bits of information, like your marital status and where you live. Insurance companies are in the business of assessing risk and mitigating it. If you live in a high-crime neighborhood, your rates will be higher, in case of theft or vandalism. People who are married are found to exhibit less risky behavior than single people. Certain jobs also indicate Your insurer is not snooping on you (well, not really), but most companies do have formulas that are based on risk mitigation. If you’re seen as a risk taker, you’ll pay more for insurance.

2. Who’s covered by my car insurance?

In some cases, liability insurance will follow you when you’re using someone else’s car. Generally speaking, however, your car insurance covers your vehicle and covers drivers included in your policy and who live with you unless they are excluded from your policy. There is such a thing as permissive use, which means that if you allow someone to use your car, usually they are covered. You should consider adding people and excluding others on your car insurance policy, depending on whether or not you allow the usage of your car. If someone you live with--possibly a roommate--has really high insurance rates, and you never loan them your car, it may be wise to exclude them on your policy so they don’t raise your rates. However, if you exclude this person and s/he gets into an accident, you will not be covered.

A permissive user does not necessarily need to be listed on your policy. Usually, your express permission renders a driver a permissive user. With that said, you may be entitled to less coverage if a friend borrows your car and has an accident as opposed to you having the same accident. Ask your agent before you buy so you understand the terms. In some cases, if you aren’t fully covered for an accident with your liability coverage, the driver’s personal insurance kicks in and the liability portion of their car insurance will pay the gap.

3. What’s covered if my car is in an accident or gets damaged?

What’s covered in an accident often depends on who is at fault, except in no-fault states. Ask your insurance agent about what kind of coverage you’re required to have so you know. In no-fault states, drivers are required to carry Personal Injury Protection, which means that both insurance companies pay for damages incurred in the accident. However, in most states, if you are at fault, your liability insurance covers damages and injuries to the other driver, his/her car and passengers. If your car is damaged and the accident was your fault, your collision coverage will cover it. Collision insurance is not a required coverage, but if you don’t have it and cause an accident, your repairs will come out of your wallet. Insurance will not cover you. The same goes for a comprehensive insurance: say you hit a dead deer on the road or your windshield gets cracked or someone vandalizes your car: You are responsible for your own repairs unless you have some form of comprehensive insurance. If your car is stolen, you may be out of luck if you do not have comprehensive insurance.

Even if you have the collision and/or comprehensive insurance needed to cover the cost of damages, there are limits on coverage. You should keep an estimate of your car’s maintenance and repairs in mind when you elect limits.

You should also keep in mind that some insurers will not cover manufacturer parts, meaning they will use aftermarket parts which are inexpensive. If this matters to you for whatever reason, make sure your agent addresses this concern as you shop around for insurance carriers.

4. What if I have an accident and someone is injured?

The liability portion of your car insurance not only takes care of property damage, but it also covers personal liability. You will be covered, up to limits, for the costs associated with the injury of another driver or their passenger(s). Most people do not carry high enough limits to cover a severe or catastrophic injury claim or death. When you don’t carry enough coverage, you are liable to a personal injury lawsuit after limits are reached. This is why it’s wise to carry as much liability coverage as possible within your budget.

5. What are my state’s required minimums?

This is a very important question to ask your agent, and it’s important for you to become somewhat knowledgeable about what your policy covers and what it doesn’t so you’re not in for a big surprise if you find yourself in an accident. Liability insurance for both physical damage and personal injuries is required in every state, with different minimums. In no-fault states, you’re also required to carry personal injury protection (PIP) and accidents are often a shared cost regardless of who’s at fault.

6. Do I have enough car insurance?

This is an important question to ask your agent after you honestly share with him/her your driving habits. If you’re prone to accidents, it’s a wise idea to raise your liability limits. You may be paying a little bit more but it’s better than paying thousands out-of-pocket as a result of a lawsuit. You should also consider collision and comprehensive insurance if you will not be able to take care of damages to your car as a result of an accident that was your fault. Some people even have gap insurance, which pays the remainder of their car loan if the car is totaled and not fully covered by your collision insurance because the worth of the car is less than the remaining balance on your car loan.

7. Will I be using the car for work reasons?

Be very careful if you use your car for business reasons because you’re only covered for personal use. If you use your car for regular business use, you’ll want to get commercial auto insurance coverage. With regular car insurance, it’s fine if you use your car to commute to and from the office but if you’re using it as a Lyft or Uber driver and you have an accident, you won’t be covered fully unless you have what’s called rideshare insurance. There are brief periods of time when the rideshare company’s insurance doesn’t cover you and your personal insurance doesn’t cover you either. That’s where rideshare insurance comes in.

8. Do I need collision and comprehensive insurance?

If you carry a loan on your car, you’re probably required to carry both collision and comprehensive insurance. However, no state requires that you have either of these coverages.

Unless you have money to pay for your own repairs or the complete loss of your car to theft or a total loss in the event of an accident that is your fault, you need collision and comprehensive insurance. The only time it doesn’t make sense to have these coverage is when your car is worth nothing or close to nothing. Basically, you should not be paying your car’s worth of insurance (or more) a year, right? Also, keep in mind that you will only get paid out the Kelly Blue Book value of your car the day it was involved in an accident, if it’s totalled. It’s always a good idea to be acquainted with what others are paying for the same model/make/year of your car so it comes as no shock if you get a smaller check in the mail than you anticipated.

Comprehensive insurance works very much like collision and pretty much takes care of all losses that are not classified as a collision or rollover.

9. Why should I buy uninsured and underinsured motorist protection?

If you find yourself the victim of a hit-and-run accident, this protection will cover you. It will also cover your repairs and losses if the other driver is at fault but carries no insurance. Of course, you have the option of suing that driver, but often, that person does not have the means to pay the losses either. As irritating as paying for damages may be, chances are that you’ll spend far less money buying uninsured/underinsured motorist insurance than if you paid for repairs out of pocket.

10. Will my credit affect my car insurance rate?

In some states, like California, it’s illegal to run a credit check to determine a car insurance rate, but in many states it’s perfectly legal to do so. If your auto insurance rate seems high, you may want to ask your agent if your credit score is used to determine your rate. If it is, and your credit score is low, you may want to work hard to raise that score to pay less in car insurance every month.

11. How should I choose a deductible?

Choose a deductible that you can afford to pay. Understand that you must pay a deductible before your coverage begins. The lower your deductible, the higher the monthly premiums and vice versa. If your deductible is $1,000 and you are at fault in an accident that will cost you $10,000 to fix your car, you pay $1,000 and the insurance company will pay for the rest, unless your car is worth less than $10,000, at which point the insurance company would pay you the worth of the car, whatever that may be according to Kelly Blue Book on the day of the accident.

12. Do I qualify for discounts?

Most people qualify for discounts one way or another. You may get a discount for having multiple policies, like home and auto insurance or renters and auto insurance. If you have a clean driving record you’ll get a safe driver discount. You may even get a discount if you have a masters degree or a PhD. Go over all the available discounts the carriers you’re considering an offer with your agent. Also, many newer model cars have safety equipment that may earn you a car insurance discount. Other discounts include: pay-in-full discount, multi-car policy discount, good student discount, veterans/military discount, mature driver discount and more.

13. What are my payment options?

You have a few different payment options with auto insurance. You can usually earn a discount if you pay for six months or a year upfront. Otherwise, the carrier or agency can set up a payment plan for you, which may consist of a downpayment and as few as two payments or a monthly premium.

14. What’s the value of my car?

Kelly Blue Book is the resource most often used to determine the value of your car. The value of a car changes and usually depreciates over time so consult this guide to see what others in your area are paying for the same model/make/year car.

15. Does the insurance company have a 24-hour claims service?

This is an important question to ask your agent because there’s nothing worse than having to wait until Monday to speak with someone if you have a car accident over the weekend. Also, some insurance companies have mobile apps that make filing claims and uploading images of the damage easy to do.

16. Will the insurer pay for original manufacturer parts if my car needs repair?

Most insurers use aftermarket parts, which are much less expensive but also cause your car to depreciate more in value. For most people this stipulation is not a deal breaker but if it matters to you, you should ask.

17. Does my insurance agent have my best interests in mind?

The best way to find a good agent is to use a comparison-shopping engine like the one at SmartFinancial. This way, you’re getting multiple quotes so you know they will be competitively priced. Most insurance agents are hardworking and honest individuals. If they push you to raise your limits, they may have your best interests in mind. They may have experienced seeing insurance claims filed on similar cars like yours. However, there are always shady characters in any profession. If you have a clunker worth about $800 and your agent is trying to get you to pay an extra $1,000 a year protecting it, no, your insurance agent doesn’t have your best interests in mind. Use your common sense, get educated here with these questions and you’ll be able to tell if your insurance agent has your back.

18. Do I need gap insurance?

If you owe more money on your car loan than the car is worth, you need gap insurance. The reason for this is this: if your car is worth $25,000 and you owe $30,000 in loans, there’s a $5000 balance that your car insurance won’t pay if you total your car. You’ll be out $5,000 or may have to continue making payments on the car until you pay off the balance. If you buy gap insurance on a car with an upside-down loan, you’ll get the full amount that you owe on the car.

19. I don’t own a car. Do I need car insurance?

If you borrow one or more cars regularly, it’s a good idea to have a non-owner auto insurance policy. If you are involved in an accident that is your fault, the owner of the vehicle’s auto insurance may not pay up to limits on the car accident when they learn that you were behind the wheel. With a non-owner auto insurance policy, you’ll be able to help cover damages. Without it, you and the owner of the car you borrowed may be liable to a lawsuit for damages and injuries. If you live with the person whose car you use regularly, you should have that person include you on their primary policy. If you are excluded from their policy, there will be no coverage for the accident at all. If you are a relative of the person whose car you borrow, you should also be included in their policy.

20. Does the color of my car affect my insurance rate?

The idea that insurance companies charge higher insurance rates for red cars is a myth. There’s absolutely no rate drop or rate hike based on the color of a car. What does affect your insurance rate is the value of the car and how expensive it is to fix if it needs repair. Also, sports cars are often indicators of risk and owning one may raise your rate.

21. How much does car insurance cost?

Rates for car insurance vary widely and based on how much coverage you elect. Affordable car insurance is often very minimal and leaves one exposed to repair costs. Factors that determine car insurance rates include the following: driving experience, the value of your car, your occupation, marital status, driving history, credit score, garaging address, and the number of miles you drive a year. On average, a six-month premium can range anywhere from $300 to $1000, depending on coverage, driving history and discounts added.

22. How can I lower my car insurance premiums?

The simplest way to lower your car insurance premiums is to raise your deductible. However, keep in mind that if you are in an accident, you’ll have to pay that amount before your collision or comprehensive coverage take effect. Avoid accidents and drunk driving at all costs. If you live in a state that runs credit checks to determine insurance rates, raise your credit score. If you live in a high-crime area, you can find a safe garaging address to lower your rate. If you have a tendency to file lots of claims, stop doing that and only file claims on accidents you can’t cover on your own; many claims mean a rate hike and possibly even cancelation. Get married! Seriously, married people have lower car insurance rates. Drive a cheaper car: your insurance gets more expensive the more valuable your car is and the more expensive repairs on it will be. A few other things you can do to lower car insurance premiums is to take a defensive driver or driver education course. The less you drive, the less you pay in insurance so live near work and make sure you get the proper discount if you drive 5,000 miles or less a year. Also, bundling policies brings down your rates so bundle home and auto or renters and auto!

23. Do I need rental car insurance?

If you have no insurance at all, you should buy rental car insurance at the car rental shop. If you own or lease a car and have full coverage (collision and comprehensive), it will extend over to the rental car and you are covered but it’s best to call your insurance company and ask. Also, if you plan to use a credit card, ask how much they cover. The insurance rental car companies sell is usually very expensive so don’t buy it if you can avoid it. Another consideration when considering rental car insurance is your health insurance policy. Do you have adequate health insurance? If not you may want to consider buying additional coverage unless you have medical payments coverage or personal injury protection coverage on your primary car insurance policy. If you are concerned about traveling in a rental car with lots of valuable content, you are only covered for these by your homeowners or renters insurance policy. If you are renting a car abroad, you’ll need to speak with your agent to see if you have less expensive options than the rental car shop’s insurance. However, your U.S auto insurance will likely not apply to cars rented outside of the U.S. Even in Mexico, U.S. auto policies and credit card insurance will not apply. It’s important to buy Mexican liability insurance. Also, consider personal accident insurance if traveling in Mexico. Ask your credit card in advance to see if they will cover the loss damage waiver or if you need to buy it in Mexico.

24. Is the car insurance I’m considering from a good company?

It’s important to insure your car with a good insurance company with financial strength. That’s why buying cheap car insurance is tricky. You don’t want to buy a product from a company that will cease to exist or won’t have the funds to pay for a covered claim. Comparison shop car insurance instead for competitive rates from top carriers by visiting here.

25. Does how much I drive affect my car insurance rate?

The more you drive, the higher the chances that you’ll have an accident. You pay more the more miles you drive in a year. The less you drive, the less you pay in car insurance. You’ll get the lowest rate for auto insurance the less you drive. Often, you get a steep discount if you drive 5,000 miles a year or less.

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