38 Must-Ask Car Insurance Questions Before Buying (With Our Expert Answers)

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When it comes to obtaining coverage, asking the right car insurance questions is essential to ensure you have the coverage that suits your needs and budget. To navigate the world of auto insurance effectively, you should inquire about various aspects, from coverage types and costs to discounts and claims processes.

Below, we’ve provided answers to some of the most frequently asked questions about auto insurance.

Key Takeaways

  • It is important for drivers to have a thorough understanding of their auto insurance policy to know when they are covered and when they are not.
  • If you experience any confusion about your policy, bring your questions on car insurance to your insurance agent to get clarification.
  • Auto insurance costs $1,982 on average for full coverage but average rates can change based on location, driving history, age and more.
  • It is legally required to have auto insurance in most states.
  • You should shop around every six or 12 months and using an online marketplace service like SmartFinancial can help streamline your efforts.

On This Page

Expand Table of Contents

1. What does car insurance cover?

By default, auto insurance policies provide liability coverage, which pays for damage and injuries you cause to others in an accident and in some states, you may also have coverage for your medical bills and repair bills if the other driver was at fault but uninsured. For an extra cost, you can also purchase physical damage coverage, which will cover damages to your vehicle regardless if you are responsible for the accident.

2. What isn’t covered by car insurance?

Car insurance typically does not cover certain types of incidents and costs, including intentional damages, damages while committing an illegal activity and business use of your car (e.g., providing delivery or rideshare services). In addition, coverage may be excluded for damages incurred while racing or off-roading.

3. How much does car insurance cost?

In 2024, the average annual car insurance cost in the U.S. is $1,982 for full coverage and $549 for minimum coverage.[1] However, actual rates can vary based on location, age and claims history, among other details.

4. How do I get a car insurance quote?

To get a car insurance quote, you will need to provide the insurance company with your personal and vehicle information, the type and amount of coverage you need and when you want your coverage to start.

Ideally, you should compare quotes from at least three to five carriers before choosing a carrier who can best suit your needs.

5. Where can I buy insurance?

You can purchase car insurance directly from insurance companies via their websites or phone lines or through local insurance agents or brokers. Alternatively, you can use an online marketplace like SmartFinancial to get matched with an agent who can research policies based on your coverage needs and budget and match you with the right plan.

6. What can affect my car insurance rates?

Below are examples of factors that that can affect your car insurance rates:

  • Age: Teenage drivers typically pay more for auto insurance.[2]
  • Vehicle details: Luxury cars, sports cars and frequently stolen vehicles tend to cost more to insure.
  • Location: If you live in an area with high theft rates and accident rates, you may be charged more for auto insurance.
  • Credit score: In some states, high-credit drivers pay less for car insurance than low-credit drivers.[3]
  • Coverage: Choosing higher limits and optional coverages will incur a higher premium.

7. What types of car insurance are there?

Most insurance companies will have the following car insurance coverages available for their customers:

  • Bodily injury liability (BI) coverage: This coverage pays for the medical payments of another person when they suffer injuries in an accident you caused.
  • Property damage liability (PD) coverage: This pays for damages that you cause to other people and their property.
  • Personal injury protection (PIP): It covers medical expenses and lost wages, regardless of fault.
  • Medical payments (MedPay): This coverage pays for medical expenses, lost wages and funeral expenses, also regardless of fault.
  • Uninsured and underinsured motorist (UM/UIM) coverage: It protects you during an accident with an at-fault driver who doesn't have insurance or not enough coverage.

In addition, many insurance companies offer the following optional coverages:

  • Collision and comprehensive coverage: Collision insurance pays for damages to your car after a crash, while comprehensive insurance covers non-collision damages (e.g. theft, vandalism, hail). Both of these coverages are usually required if you are financing or leasing your car.
  • Gap coverage: Gap insurance pays the difference between what your car is worth and what your insurance company will pay you when your car is totaled or stolen.
  • Roadside assistance: This coverage provides support services for motorists in distress, such as towing, tire changes, jump-starts, lockout help and fuel delivery.
  • Rental car reimbursement: Rental car reimbursement pays for the cost of a rental vehicle while your car is being repaired due to a covered insurance claim.

8. What type of insurance do I need if my car is leased?

To lease a car, you will be required to have auto insurance that both meets your state’s minimum insurance requirements and includes comprehensive and collision insurance.[4] You may also be required to have gap insurance on your policy.[5]

9. Is car insurance required?

Liability car insurance is legally required in nearly every U.S. state, with some states requiring additional coverage like uninsured motorist insurance or personal injury protection. There are two exceptions: New Hampshire drivers can forego coverage if they can demonstrate proof of their ability to cover accident costs out of pocket and drivers in Virginia can pay an Uninsured Motor Vehicle fee of $500 in lieu of maintaining auto insurance coverage.[6][7]

10. When do I need car insurance?

In most states, you must show proof of insurance when registering your car or renewing your car registration and is legally required before you can drive a car on a public road.[8]

11. What do I need to provide when applying for car insurance?

When applying for car insurance, you'll need to provide several key pieces of information to the insurance company. This includes:

  • Full name and date of birth
  • Address
  • Personal information such as marital status, Social Security Number, educational level and whether you own a house
  • Driver’s license information
  • Vehicle identification number (VIN)
  • Traffic ticket and accident history
  • Claims history
  • Whether the vehicle is for commute or pleasure
  • Desired coverage

12. How much car insurance do I need?

Depending on which state you live in, you may have to carry one or all of the below types of coverage. In addition, the minimum limits can range with some states requiring higher limits than others.[8]

  • Bodily injury liability coverage: $15,000 to $50,000 per person and $30,000 to $100,000 per accident
  • Property damage liability coverage: $5,000 to $25,000 per accident
  • Uninsured/underinsured bodily injury coverage: $20,000 to $50,000 per person and $40,000 to $100,000 per accident
  • Uninsured/underinsured property damage coverage: $5,000 to $25,000 per accident
  • Personal injury protection: $5,000 to $50,000 (only for states that offer no-fault insurance)

It is possible to buy limits above the required minimum, which may be recommended if you added your accident-prone teenage driver to your auto policy or if you bought a new car.

13. Will my insurance company pay for a new car if my car is totaled?

If your car is totaled and you have collision insurance, your insurance company will pay the actual cash value (ACV) of your vehicle which deducts for depreciation factors like age and wear and tear.[9] For new cars, you can eliminate the depreciation deduction by purchasing new car replacement coverage.[10]

If the other driver was responsible for causing the accident, then their liability insurance should pay toward your purchase of a new car

14. Can I get temporary car insurance?

Temporary car insurance isn’t a specific product sold but it may be possible to find a carrier who can sell you a six-month policy and allow you to cancel it with a prorated refund without incurring a cancellation fee.[11]

15. What is gap insurance?

Gap insurance pays the difference between the actual cash value of your vehicle and the balance still owed on your financing or lease agreement if your car is totaled or stolen. Without gap insurance, you could be left paying off a loan for a car you can no longer use.

16. What is comprehensive coverage?

Comprehensive coverage insures your car against non-collision damages or losses such as theft, vandalism, natural disasters like floods, storms or earthquakes, fire, falling objects and collisions with animals.

17. What is collision insurance?

Collision insurance is a type of car insurance coverage that pays for the repair or replacement of your vehicle if it's damaged in an accident with another vehicle or object, such as a fence or a tree. This coverage applies regardless of who is at fault for the accident.

18. What is personal injury protection?

PIP, also called no-fault insurance, is a first-party benefit in an auto policy that pays for medical expenses, funeral fees, and sometimes lost wages, regardless of who caused the car accident. PIP is required in some states, offered but not required in certain states and not offered at all in other states.[12]

19. Does car insurance automatically renew?

Car insurance policies often automatically renew at the end of each policy term as long as you continue to pay your premium as usual. Most insurers will send a renewal notice before the end of your current policy period but you can notify your insurer if you do not want to renew your policy for another term.

20. Can I cancel my car insurance policy at any time?

You can cancel your car insurance policy at any time. You may be entitled to a refund of any prepaid unused premium, although with some companies, you may incur an early cancellation fee.[13]

21. Does my insurance cover me if I’m driving some else’s car?

In general, if you drive a friend’s car with their permission, your friend’s auto insurance policy would be primary coverage and your auto insurance would be secondary coverage. That means if you’re held liable for the accident while driving their car, your friend’s policy would pay toward the losses and if the damages exceed their limits, your coverage would cover the difference.[14]

22. Does my car insurance cover other drivers?

Your car insurance may cover drivers not listed on your policy if they drive your car with your permission. The caveat is that the drivers can't use your vehicle regularly.

23. Do I need rideshare insurance?

Rideshare insurance is necessary if you drive for Uber, Lyft or some other rideshare company because your personal car insurance will not cover the commercial use of your vehicle.

24. Do insurance companies offer discounts?

Many car insurance companies often offer a variety of car insurance discounts to encourage safe driving and customer loyalty, such as:

25. Can a car insurance company deny me coverage?

A car insurance company can deny your car insurance application or nonrenew your policy if you’re deemed too high of a risk to insure. Common indicators of a high-risk driver include having a DUI history, getting into multiple car accidents recently and committing several moving violations. In addition, you can get denied coverage if you’ve missed several payments or you were caught committing insurance fraud (e.g. lying on your application).

26. Can I bundle car insurance with home insurance?

Many insurance companies offer a multi-policy discountif you choose them to insure both your vehicle and home.

27. What is a car insurance premium?

Your car insurance premium is the amount you pay to keep your insurance active. Payments are typically made monthly, quarterly, every six months or annually.[15]

28. Is car insurance tax deductible?

Car insurance is usually not tax deductible, except when used for business purposes like driving to project sites or rideshare services. If a car serves both personal and business use, you can deduct a portion corresponding to business use. For instance, if 40% of your driving is business-related, you can deduct 40% of eligible car expenses.[16]

29. Can I get car insurance if I don’t own a vehicle?

Yes, non-owner car coverage is available to drivers who need to meet their state’s minimum insurance requirements but are driving a car that they do not own.

30. Can I insure a car that’s not in my name?

Insuring a car that's not in your name can be challenging, as insurance companies typically require the policyholder to have an insurable interest in the vehicle. This means that the policyholder must stand to suffer a financial loss if the car is damaged or destroyed. The closest coverage you'll be able to get is non-owner car insurance.

31. How long do I have to add a new car to my insurance policy?

Many insurance companies provide a grace period of up to 30 days during which you can add a new vehicle to your existing car insurance policy.[17] That said, sooner is always better and you should double-check this information with your carrier.

32. How often should I shop for car insurance?

It is generally recommended to shop for car insurance every six months to a year or after a major life event such as getting married or your teenage child getting their driver’s license.[18] This practice allows you to compare rates and ensure you are continuously getting the best deal on car insurance.

33. How long do accidents stay on your car insurance record?

Insurance companies will generally only look at the last three to five years of your driving history when it comes to calculating your rates.[19]

34. How do I file a car insurance claim?

Filing a car insurance claim typically involves several steps:

  1. Call the police: Ensure the safety of everyone involved and call the authorities. Avoid admitting fault — leave it to the insurance companies to determine.
  2. Get contact information and take pictures: Note the time and location, gather insurance information from the other parties involved and obtain witness statements if available.
  3. Contact your insurance company: Be ready to provide all the details gathered from the accident scene.
  4. Verify your coverage limits: Your policy will pay up to the limits of your policy after you've paid your deductible.
  5. Get an estimate from a repair shop: Your insurance provider will likely have a list of repair shops for you to use, however, you can find your own. Keep in mind, though, that you may need to pay the difference should your repair shop charge more than what your provider will cover.
  6. Accept the settlement and complete repairs: It can take up to four to five days for the repairs to be finished.[20]

35. How many car insurance claims am I allowed each year?

There is no specific limit to the number of car insurance claims you can file in a year, although filing claims excessively can result in your insurance company canceling your policy or refusing to renew it when the term ends. Keep in mind that filing just one claim can result in a rate increase when you renew your policy.

36. Will my credit be affected if I get a car insurance quote?

Getting a car insurance quote typically does not affect your credit score because insurers usually perform a soft inquiry, which doesn't impact credit score.[21]

37. What happens if I don’t have car insurance?

Going without insurance means you could have a lapse in coverage, which can lead to higher rates when you decide to get auto insurance. Also, forgoing coverage means you will be paying for any damage caused to your vehicle or another person’s out of your pocket if you’re held liable.

38. Why is it important to shop for car insurance?

Shopping for car insurance is crucial because it allows you to compare different policies and rates, ensuring you find the best auto coverage at the most affordable price. Comparison shopping also helps you stay informed about new discounts and coverage options, which can change over time and impact your insurance needs.

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  1. NerdWallet. “How Much Is Car Insurance on Average in 2024?” Accessed Jan. 17, 2024.
  2. Pronto Insurance. “Why Do Younger Drivers Get Higher Insurance Rates?” Accessed Jan. 17, 2024.
  3. Allstate. “Does Your Credit Score Affect Your Car Insurance Rate?” Accessed Jan. 17, 2024.
  4. Insurance Information Institute. “Insuring a Leased Car.” Accessed Jan. 17, 2024.
  5. Nationwide. “What Is Gap Insurance?” Accessed Jan. 17, 2024.
  6. New Hampshire Insurance Department. “2022 Automobile Insurance Consumer Frequently Asked Questions,” Page 5. Accessed Jan. 17, 2024.
  7. Virginia Department of Motor Vehicles. “Financial Responsibility Requirements.” Accessed Jan. 17, 2024.
  8. Registration data was obtained from individual state Departments of Insurance, Motor Vehicles, etc.
  9. Integrity Insurance. “Is It Better To Have Actual Cash Value or Replacement Cost?” Accessed Jan. 17, 2024.
  10. Liberty Mutual. “New Car Replacement Insurance.” Accessed Jan. 17, 2024.
  11. Direct Auto. “What To Know About Canceling Your Car Insurance Policy.” Accessed Jan. 17, 2024.
  12. Allstate. “Personal Injury Protection (PIP) Coverage (AKA No-Fault Insurance).” Accessed Jan. 17, 2024.
  13. Erie Insurance. “How To Cancel Car Insurance.” Accessed Jan. 19, 2024.
  14. Allstate. “What Happens If Someone Drives Your Car and They Get Into an Accident?” Accessed Jan. 18, 2024.
  15. Allstate. “What Are Insurance Premiums, Deductibles and Limits?” Accessed Jan. 17, 2024.
  16. Internal Revenue Service. “Topic No. 510, Business Use of Car.” Accessed Jan. 19, 2024.
  17. Liberty Mutual. “5 Steps for Insuring Your New Car.” Accessed Jan. 17, 2024.
  18. Travelers. “How Often Should I Review My Insurance Coverage?” Accessed Jan. 18, 2024.
  19. Experian. “How Long Does an Accident Stay On Your Insurance?” Accessed Jan. 17, 2024.
  20. J.D. Power. “Parts and Staffing Issues Challenge Dealer Service Departments.” Accessed Jan. 17, 2024.
  21. American Family. “Insurance Quotes & My Credit Score?” Accessed Jan. 19, 2024.

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