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AUTO INSURANCE FAQ
Does everyone have to have auto insurance?
Yes, automobile liability insurance, or proof of financial responsibility is required in all fifty states. Although each state sets their own limits on how much insurance is needed, these are only minimum limits and in most cases additional coverage is needed if you don’t want to have to pay additional expenses out of pocket. If you have a lease or loan on your car you are usually required by the lender to have comprehensive and collision coverage in addition to the state required liability coverage.
What Happens if I Choose Not to Purchase Car Insurance and Still Drive My Car?
That depends on the state you live in. Most states have stringent laws about having car insurance and if you don’t choose to follow these laws by not purchasing car insurance, there can be tough penalties and fines.
Is anyone who drives my car covered?
In most cases, yes, as long as they have the permission or reasonable belief from the insured that they can use the vehicle. The insured is the person named on the insurance policy and their spouse if applicable.
There are some exclusions, so you would need to look at your particular insurance policy to make sure. Remember, everyone in your household must be listed on your insurance policy if they have a license. For example, if a girlfriend you live with uses your car, she may not be covered if you did not list her on your insurance policy. On the other hand, if you live separately, she could use your car with your permission and be covered.
What are the minimum requirements?
Liability is required in every state unless you can prove financial responsibility otherwise. Limits vary widely from state to state and, if you carry the minimum limits, when you drive into another state you will automatically assume that state’s minimum liability requirements.
How does my driving record affect my insurance premium?
The premium you pay is a direct reflection of your driving record for the past three to five years depending on the insurance company. Insurance companies order driving records from the DMV of your residence state and from other states where you’ve been licensed. Statistics show that drivers with tickets and accidents are more likely to have accidents than drivers with clean records.
My car was totaled and my policy did not pay what I think my car was worth. Why?
Most auto insurance policies pay the actual cash value (ACV) of a vehicle totaled in an accident. The ACV is equal to the market value of an auto immediately before the accident.
Insurers must use a fair and reasonable method to determine the value of your car. If you have concerns about their decision you may be able to negotiate with your insurer by telling them why your car may have had more value that what the insurance company originally determined.
My teenager just got his license, but I do not allow him to drive my car. Does he need to be insured?
In most cases, yes. Automobile insurance policies require every licensed person in your household to be listed on your insurance policy unless they have a completely separate policy of their own. This includes a teenager who just received their licence or a college student who still uses your address as their residence and/or visits regularly on weekends, vacations, etc.