Auto Insurance FAQ

Frequently Asked Questions about Auto Insurance

If you have a question or concern we haven't answered on our site, please let us know. Your question will be added to the NextAdvisor Forums so that we and other experts in our community can answer it. Due to volume, we aren't able to respond to every question, but we answer as many as we can.



Can you explain the types of auto insurance coverage available?

Below we cover some of the commonly used auto insurance terms. Terms and coverage offerings can vary by provider. For more specific answers or definitions that aren't covered here, please talk to the auto insurer directly.

Bodily Injury Liability: If the insured person is found legally liable for an accident, Bodily Injury Liability (BIL) pays for costs related to other people's bodily injuries or death. It also provides for legal defense costs if you are sued. BIL covers injury to other people, not to yourself and not to your car. This coverage is mandatory in most states. Coverage is limited to the terms and conditions contained in the policy.

Property Damage Liability: If the insured person is found legally liable for an accident, Property Damage Liability (PDL) pays for damage to others' property resulting from the accident. Usually this property is their car, but it could be a house or other property damaged in the accident. PDL also pays for legal defense costs if you are sued. Coverage is limited to the terms and conditions contained in the policy.

Uninsured / Underinsured Motorist Coverage: If the insured person or their passenger(s) is injured in an accident caused by a driver with no auto insurance coverage or insufficient auto insurance coverage, Uninsured/Underinsured Motorist Coverage (UUMC) will pay for medical expenses and other general damages. UUMC may also pay for injuries that occur in a hit-and-run accident. Coverage is limited to the terms and conditions contained in the policy.

Uninsured / Underinsured Motorist Property Damage Coverage: If the driver or owner of a vehicle is legally liable for an accident but does not have insurance or does not have enough insurance, UUMP will pay for damage to your insured vehicle. Coverage is limited to the terms and conditions contained in the policy.

Comprehensive Coverage: If the insured vehicle is damaged due to an event other than a collision, Comprehensive Coverage (CC) will pay for the damage. For example, CC covers damage to your car if it's damaged by flood, fire, etc. If your vehicle is stolen, CC usually pays for transportation and loss-of-use expenses. CC pays to fix your car less the deductible you select. Coverage is limited to the terms and conditions contained in the policy.

Collision Coverage: If the insured vehicle hits or is hit by another vehicle or object, Collision Coverage pays for the damage to your vehicle. This coverage may also extend to a rented or non-owned vehicle that the insured is using. Collision Coverage pays to fix your car less the deductible you select. Coverage is limited to the terms and conditions contained in the policy.

Do I need to have auto insurance?

Yes, you do. Auto insurance, or proof of financial responsibility, is required in all 50 states. Each state has specific limits on how much insurance you need to have. Check with your state department of insurance to determine what those limits are.

How do auto insurance companies decide what to quote an individual?

A variety of factors influence the price someone will pay for auto insurance. These include, but aren't limited to, age, sex, marital status, type of vehicle, location, annual mileage, driving history, credit score, type/level of coverage and deductible amounts. Auto insurance providers use an algorithm to calculate your rate based on a combination of these factors. When you're shopping for a quote, don't forget to ask what discounts you qualify for. Often discounts can substantially reduce your overall insurance premium.

How can I save more on my auto insurance?

Most companies will offer reduced insurance prices if you purchase your insurance directly from them, rather than going through an individual insurance agency. The easiest way to do this is via their online quote and purchase process. During the application or quote process, you are generally asked a variety of questions that determine if you're eligible for discounts. Make sure you answer these questions as they could save you more money.

Discounts are commonly given for students, applicants with a good driving history and certain types of car alarms. Discounts are sometimes available for customers who are members of certain associations, and those who have taken defensive driving classes. Most insurance companies will offer you a discount if you have multiple insurance policies through them. This means you could bundle your auto insurance with your home insurance, etc.

What are the benefits of buying auto insurance online versus directly from an agent?

Purchasing auto insurance online directly from the insurance provider will usually save you money. Often times the savings will be substantial. Some of the companies we reviewed only offer auto insurance online, but they all have phone numbers so you can speak with an agent at any time. The majority of insurance companies have also automated their claims handling, so if you are in an accident you can easily file a claim online.

Will requesting an auto insurance quote lower my credit score?

No, it won't. Insurance companies do check your credit history during the quote process, but it's a "soft pull" of your information. There are two types of inquiries that can occur during a credit check: a "hard pull" and a "soft pull." A hard pull refers to a credit inquiry for the purpose of obtaining credit, as from a credit card company or a lender. A soft pull is an inquiry that will review your credit score, like an insurance agency does to determine an insurance quote. Soft pulls often aren't listed on your credit report. If they are, the insurance company's name will show up on your report, but the inquiry will not lower your credit score.

What is no-fault auto insurance?

No-fault auto insurance works the way its name implies. Benefits are paid to the participants, regardless of who is responsible (or "at fault") for the accident. The benefits are paid out of each person's own insurance company and the coverage pertains primarily to medical-related losses. Currently, several states have a no-fault insurance requirement. Check with your state to see if it requires no fault insurance.

What is auto insurance?

Auto insurance is purchased for cars, trucks, motorcycles and other types of vehicles. It is a contractual agreement between the insurance company and the insured (policyholder). In exchange for a premium, the insurance company provides protection again losses involving traffic accidents, theft and/or liability incurred in an accident.

Top Auto Insurance

Rating:

Bottom line: A pleasant quote experience and slightly better than average prices makes Geico a solid choice
Rating:

Bottom line: The low premiums are great for those on a budget; only offers coverage to good drivers; slightly lower customer satisfaction ratings
Rating:

Bottom line: Solid choice with the ability to see competitor quotes inline
Rating:

Bottom line: Quick quote and purchase process, as well as solid customer service, gives Esurance a slight edge above the competition
Rating:

Bottom line: Good fit for AARP members interested in top-flight claims and customer service
Rating:

Bottom line: Provides mid-range customer satisfaction levels; lengthy quote process; somewhat pricey
Rating:

Bottom line: Same insurance offering as the The Hartford AARP, but available to non-AARP members; highest pricing of all providers

About Us Blog Contact Us Forums Terms & Privacy Policy Affiliate Program Site Map
Copyright© 2006 - 2017 NextAdvisor.com - All rights reserved.

Advertiser Disclosure: NextAdvisor is a consumer information site that offers free reviews and ratings of online services. Many of the companies whose services we review provide us compensation when someone who clicks from our site becomes their customer. This is how we make money to support our site. The results of our analyses, calculators, reviews and ratings are based on objective quantitative and qualitative evaluation of all the cards on our site and are not affected by any compensation NextAdvisor may receive. Compensation may impact which products we review and write about and where those products appear. We do not review all products in a given category. All opinions expressed on this site are our own.