Car insurance questions and answers

Car insurance can be confusing and knowing a little bit about policies and coverage is helpful. Of course, some people are content to feel secure that they are protected by a car insurance policy and don't want to know the details.

Most individuals, however, want to be more informed and are asking questions about car insurance. Here are a few common questions and answers about car insurance that can give you a head start to learning more.

How does a car insurance company calculate my premiums?

There are plenty of factors involved in premiums for car insurance. Your age and gender are two things that affect premiums, but where you live, how far you need to drive to work, and what make and model of car you have factor into the equation. Models of vehicles commonly stolen, such as high-end or sports cars, tend to have higher premiums for car insurance. The type of coverage you choose also affects how much your premium will be. Frequent claims or people with poor driving records tend to pay higher rates for car insurance.

Can my premium for car insurance increase?

Yes, it can. If your vehicle coverage changes because you drive often or far, your rates are calculated according to your time on the road. A change in the number of drivers for your car might make your premiums increase. Drivers who have frequent traffic violations will also see their rates go up, as these individuals are considered a higher risk on the road. Also, some insurance companies will increase your premium if you have a car accident, so stay safe on the road.

If I have a car accident, and it wasn't my fault, will my premium go up?

Generally, if you have an accident and weren't at fault, your premium should stay the same. Frequent claims to your insurance because of car accidents will make your premiums increase. Insurance companies like drivers that are safe on the road, and if they think you may be a reckless or risky driver, the insurance companies will charge you higher premiums.

Do teenagers affect the premiums of my car insurance?

Teenagers are in a group that tends to increase car insurance premiums quite a bit. After all, teens are just beginning their driving experience and are in a high-risk group for accidents. Insurance companies prefer drivers who have proven to be safe and responsible behind the wheel. Expect to pay more for your policy if you include a teen.

Is sharing a car insurance policy a good idea?

Sharing a policy can be a good idea for some couples, as you'll only pay one premium instead of two. However, if one of you has a poor driving record or has many past insurance claims, it may be best to take two separate policies.

One person may have higher premiums but the other person's premiums will be lower and the two will even out or even be less expensive than sharing an insurance policy.

My insurance company is asking about credit information. Is this normal?

It can be, depending on where you live. Car insurance companies want drivers who are responsible, and one way of knowing how responsible you are in general is to take a look at your financial history. If you've been careful with your finances and have a good credit record, then insurance companies believe you'll be just as responsible while driving. But before handing over your credit information, check your state laws. Some states have legislation that prevents insurance companies from using credit information.

I'm planning on taking my car on a trip. Will I be covered by my car insurance policy?

That depends where you're traveling to. If you're taking a trip to Canada on pleasure or business, your American policy covers you. If you're thinking of going to Mexico, though, it might be a good idea to get a temporary insurance coverage from Mexico. If you're traveling within the United States, you shouldn't have any problems at all.

What does my car insurance policy cover or protect me from?

In a word, loss. Insurance protects you in case of loss of your vehicle or damage to the same. Your policy should cover costs of repair or replacement of your car, but your insurance may also cover some other things. Medical expenses or medical claims from other persons involved in an accident, towing charges, any vandalism to your vehicle or theft, and legal expenses are common areas of coverage. Your car insurance policy might ensure coverage for all these things or only some of these expenses, so check your policy to be sure.

Are there things I can do to reduce my car insurance premiums?

A few things you can do will lower your car insurance premiums. Installing an anti-theft device or car alarm will lower your premiums. Choosing to bike or walk to work instead of taking your car is another. You can keep premiums low by purchasing a car that isn't very new or flashy or one that isn't often stolen. The less insurance claims you make, the better; when driving, drive safely and responsibly. Accidents and traffic violations cause premiums go up, and a clean driving record will keep your rates low.

Do all insurance companies offer the same premiums for the same type of coverage?

Not at all. Car insurance companies are competing with each other for your patronage. When it's time to renew your policy, shop around. Call different companies and ask for a quote based on the same type of coverage you already have. Compare rates with your current insurance policy. If one company offers you a lower rate than what you're currently paying, ask your insurance company to match the rate, and if they can't, take your business elsewhere.

What type of insurance coverage do I need for my car?

That depends on your needs. A good rule of thumb for car insurance coverage is that if you don't own your car outright, you should make sure that your vehicle is completely covered with collision coverage for full repair or replacement in case of accident. Otherwise, you could easily end up making loan payments on a stolen car while having to take out a new loan to buy a replacement vehicle.

Comprehensive coverage will cover expenses in the case of a theft, a fire, or a flood. Liability coverage will cover costs if you're at fault in an accident and have damaged another person's vehicle. Liability coverage will also cover the other person's medical expenses or loss of wages related to the accident.