Car insurance policies can be confusing. Because of this, questions can arise that need simple straightforward explanations in everyday terminology. Here are five frequently asked questions about car insurance with simple answers.
What is the difference between collision and liability insurance, and when do I need them?
Legally, you must have liability insurance to drive a car. This is the insurance that pays for damage to the other vehicle, other property, and other people if you cause an accident. This insurance protects them and you. It covers their expenses after the accident. It also keeps your assets from being taken to retire their claims against you. You can also get prestige car insurance at the cheapest premium as long as you know how to choose the right provider. Hence, it is important to be careful when selecting an insurance company for your car.
Collision insurance is the coverage that is designed to pay for the damage to your car. It will pay to repair your vehicle when the accident is your fault, or if the other driver is not properly insured. Where liability pays from the first dollar of loss, collision insurance comes with some type of deductible that must be paid before the insurance company starts to provide coverage. This amount can range from about $250 up to $2,500 or more.
Why do I need comprehensive insurance?
Comprehensive insurance fills in most of the gaps between collision and liability insurance. If your car is stolen, it is comprehensive insurance that pays for it. When the windshield gets broken by a rock flying up from a car in front of you on the highway, you will make a comprehensive claim. Vandalism damage and storm damage to your car are both paid by the comprehensive part of your policy.
If I do not own a car, should I still buy car insurance?
If you are going to drive a car, you need car insurance. When you borrow someone’s car, usually you are covered by their policy. However, to be certain that you are legally insured, you need your own policy. Car insurance companies sell a non-owned auto insurance policy for this type of need. You buy insurance to protect you when you drive a borrowed or rented car.
What are the best ways to lower my car insurance rates?
The best way to lower car insurance rates is to keep a clean driving record. This means no traffic tickets and no accidents for at least three years. Next, keep young drivers off of your policy. While parents may have a problem with this one, many drivers need to specify that no one will drive your car who is below 26 years of age. Keep your credit record in good shape. Poor credit scores affect insurance rates.
Avoid buying sports cars or cars that are known to be a favorite of car thieves. Check with your agent before you buy a car to make sure that it will not spike your insurance rates. Finally, shop for new insurance every two or three years. Insurance companies like to creep up the rates for their existing customers. By shopping every few years, you can make sure that you have the best rates for the best coverage available.
How do I file a claim when I have an accident or other problem?
While the exact process can vary a little from company to company, there are some steps that are wise to take. If you have a local agent, start the process by contacting him or her. The agent will be glad to give you guidance about how to proceed. If you purchased your policy online, through the mail, or over the telephone, you will need to start by looking at your insurance card. It will usually have a telephone number for filing a claim. If it is not clear, consult your policy. It will have the claim process spelled out somewhere inside.
Regardless, the first step is always to contact your insurer. You will need to file a police report for an accident. After that, take your cues from the insurance company. Do not be afraid to ask questions or make follow-up phone calls to check on the progress of the claim.
