Car Insurance FAQ

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If you own a car, you need to have car insurance to protect yourself and others in the event you have an accident. But if you've never had car insurance, you probably have a lot of questions. These run the gamut from how to shop for car insurance to how much insurance you really need. 

Just the Facts

What does car insurance cover, and just as important, what does it not cover? Does the kind of car you drive affect your cost for car insurance? Can you get auto insurance if you don't own a car but drive other people's cars? And what the heck is GAP insurance? 

All these questions and more are answered in this list of Top Car Insurance FAQ regarding car insurance coverage, car insurance laws, and saving money when shopping for car insurance.

Most Frequently Asked Car Insurance Questions

We all know that if you drive a car, there are laws that require you to have auto insurance. But where can you buy car insurance? How much insurance do you need, and how much should you pay? Let's find out.

Where can you Buy Car Insurance?

There are lots of different car insurance companies. You've seen the ads and TV commercials by companies such as Geico, Progressive Insurance, Farmers Insurance, and State Farm. They all claim to be able to give you superior coverage for less cost. You can find these companies and more on the Internet and there are online tools that compare car insurance companies so you can get an idea of how much the average American pays. 

Once you have an idea of which auto insurance companies you'd like to research further, you can request a quote through individual insurance agents where you live or online. You really can save money by comparing auto insurance quotes when selecting a car insurance company that fits your needs.
he price you pay for car insurance depends on where you live, your age, what kind of car you drive, if you have a clean driving record and other factors. However, the average price for premiums can give you a good idea about national averages on annual car insurance rates.
 
As of this writing, here is a list of average annual rates on car insurance from some of the biggest carriers in America today:
 
Company -- Average annual cost
Nationwide | $1,463
State Farm | $1,383
American family | $1,227
GEICO | $1,139
USAA | $1,048 (For Military families and government employees)
In most states, driving without insurance is illegal and will leave you financially at risk should you have an accident. Once you know which vehicle you are buying, call your car insurance agent, give them the vehicle year, make, model, and Vehicle Identification Number (VIN) so that you'll be insured before you drive the car off the dealer lot.
The short answer is, yes! The brand and model of car you drive has a lot to do with what you pay for car insurance. So does the cost of the vehicle. If you have a car with lots of high-end luxury amenities and the latest technology, your car insurance is likely higher than if you drive a car known for high safety ratings. Sports cars will always cost more than minivans. It all comes down to how much it would cost the insurance company to repair or replace the vehicle. The more it costs, the more you'll pay to insure it.
There are lots of different discounts available today from auto insurance companies. There are discounts for students and military personnel, reduced rates if you are a good driver with no accident history, and even discounts if you drive a fuel-efficient vehicle such as a hybrid or all-electric car. One discount you may have heard of involves "bundling" all your insurance needs with the same carrier. You can save by bundling your home insurance with all your vehicle policies including cars, motorcycles, boats, motorhomes, ATVs, jet skis and snowmobiles.
Typically, basic auto insurance covers bodily injury, property damage, and liability coverage for any damage you might cause to other people, vehicles, and property. Collision and comprehensive coverage take care of damage done to your vehicle whether it has been in an accident, has been involved in a fire or other natural disaster, or if it was vandalized or stolen. Uninsured Motorist coverage protects you in the event of having an accident with a driver who doesn't have insurance or is under insured, and Personal Injury Protection (PIP) insurance covers medical expenses and other damages.
First off, make sure you are covered by at least the minimum amount of car insurance required by your state. But you'll likely need more than that if you are ever involved in a serious car accident. Generally, liability insurance limits are 100/300/100. This covers $100,000 in damages per person, $300,000 per accident for bodily injury, and up to $100,000 per accident for property damage. Uninsured Motorist protection and PIP helps to pay your medical bills if you are hit by an uninsured person. Also make sure you have comprehensive and collision insurance to protect your car from being damaged, totaled, lost, or stolen.
 
Car insurance will repair damage to your car that happens in an accident, but it does not cover general wear and tear to the vehicle. You will have to pay for ongoing auto service and maintenance yourself. Likewise, if someone breaks into your car, your auto insurance will pay to repair the shattered window but will not reimburse you for any personal belongings stolen such as your smartphone or laptop.

You'll want to check with your insurance agent for the answer to this one. Some policies have a clause that covers any driver who has permission to use your vehicle. The same is true if you drive someone else's car. Check to see if your policy covers you no matter whose car you are driving.
 
It is very likely that your auto insurance covers you when you rent a car, but you're probably not covered at the same limits as in your personal car. If you have liability coverage only, call your insurance agent to see if it includes coverage for rental cars, and if not, it is easy and inexpensive to add full coverage when you rent a car. You can also purchase additional coverage directly from the car rental agent when you pick up the vehicle.
 
Liability Insurance pays for any damage you cause to another driver and their property in an at-fault accident. It is broken down into bodily injury and property damage coverage.
Comprehensive insurance is usually sold with collision coverage and liability insurance as part of your auto insurance coverage. It covers damage to your vehicle other than the damage that occurs during an auto accident. This includes if your car is vandalized or stolen. It covers natural disasters or "acts of god" such as fire, flood, hail damage, mudslides, trees, or boulders falling on your car, or even a buffalo charging into your Subaru or a bear destroying your interior looking for snacks.
Collision insurance is usually paired with Liability and Comprehensive insurance as part of your full coverage car insurance package. It covers damage to your vehicle regardless of who is at fault in an accident. It also covers any damage caused if you hit a stop sign, tree, or other stationary object.
 
In the event of a serious accident where your car is totaled, GAP Insurance covers the difference between what your vehicle is currently worth and the amount you owe on the car through an existing car loan or lease. This is important if you owe more on the car than it is currently worth.
 
Personal Injury Protection (PIP) insurance covers medical bills, lost wages, and even funeral expenses if you or your passengers are involved in an accident. It is also known as "no-fault" insurance and is required coverage in all no-fault states.
 
Every state has its own specific laws when it comes to required car insurance and the amount of insurance, but it is mandatory in every state except Virginia and New Hampshire and even those states have minimum requirements. Check with your local DMV or visit the Insurance Information Institute for car insurance laws by state here.
If you drive without car insurance and are stopped by police for a traffic infraction, you will likely get a ticket and in some states, your license will be suspended for one year and you will have to purchase car insurance in order to get your license back. If you are involved in an auto accident without liability insurance, you will be held responsible for all damage you cause and will have to pay for all medical bills to yourself and others involved as well as pay for all damage to your vehicle, the other car or cars and all other property that is damaged. In some states, you can even face jail time.