FAQ on vehicle insurance

FAQ on vehicle insurance

FAQ on vehicle insurance

There are a lot of questions people tend to ask about insurance for their vehicles. Some of these questions are quite situation-specific while others are general and are asked quite often. And even those who consider themselves experienced in the domain of insurance often fail to understand some basic principles. In order to minimize the risk of following insurance misunderstandings here are some of the most common insurance questions answered in a comprehensive manner.

Why is car insurance mandatory?

Having insurance for your vehicle is used as a proof of financial abilities to cover liability towards third parties after an accident takes place. In other words, it's used to prove that you can pay for the damage and injuries you may cause during an accident.

What will happen if I get caught driving without insurance?

Depends on the state you're licensed in. You can face a fine, license suspension, vehicle confiscation and even time in custody depending on the local laws. In some states you won't be even able to get a registration plate without providing a valid insurance policy.

Does the type of car I drive affect my rates?

Of course! There are numerous factors affecting the final rates you'll be charged with by the auto insurance company. However, the car you drive has the largest weight in the equation and can seriously affect your rates. In general, sports cars, performance vehicles, luxury autos and cars with high theft rates cost more to insure than all other types of vehicles. The particular car make, model, engine volume, top speed, security measures and safety features are all evaluated by the insurance company.

Does no fault insurance mean that I will always be not at fault in an accident?

No. No fault auto insurance only means that your costs will be covered regardless of who was at fault in the accident. But it doesn't free you from liability to third parties and driving record entries if you have actually caused the accident.

If my friend uses my car and crashes it it's his insurance company who will cover the costs, right?

Wrong. Unless your friend has your car included into his auto insurance policy it's your policy that will pay for the damage and injuries. Since the policy covers the particular vehicle, it really doesn't matter whom do you lend your vehicle for temporary use. Of course, if it is not stolen.

Why should I shop around for auto insurance?

Like with any products, insurance rates may vary significantly from one company to another. Each provider uses a particular way of calculating their rates and there's always a possibility to get a policy for a more competitive price by shopping around. Of course, if you're not bothered by the costs and aren't looking forward to minimize them you are free to buy the very first policy you run across.

Hopefully, these answers have given you a better understanding of the basics behind vehicle insurance. Feel free to search for specific answers online or ask your insurance agent if you have any particular questions.

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