Important questions to ask about auto insurance

What’s covered?

The amount of coverage required by law varies from state to state. If you are a cautious person, you might opt for a more expensive policy with better coverage. If you have a lot of assets, experts recommend that you get enough liability coverage to protect them; otherwise, the other party involved in an accident could sue and attempt to collect on those assets.

  • Read the policy: Carefully examine your auto insurance policy to understand exactly what is covered, and work with your agent and insurance company to make the right adjustments to suit your unique situation.
  • Limits: Pay attention to the limits and deductibles set by the insurance policy. In some cases, there will be a maximum payout, which may not be as high as you’re looking for. Or in others, the deductible could be higher than you’re willing to pay out of pocket in the event of a claim.

Are there exclusions?

Sometimes insurance policies will have exclusions, and you’ll end up paying out of pocket for an accident or repair that you thought would be covered.

  • Other drivers don’t have insurance: If you get into a collision with an uninsured driver, you’ll have to pay for repairs out of your own pocket and sue for damages unless you have the proper auto insurance policy.
  • Car theft: Basic insurance policies don’t always cover car theft.
  • Damage from natural accidents: Some insurers don’t cover collisions with animals, tornados, earthquakes, damage from falling objects, etc., unless you specifically pay for these coverages.

Mechanics and replacement parts

Be wary during a claim. Some insurers will push you to use shops in a direct-repair program or use cheaper replacement parts rather than the original equipment manufacturer.

  • Can you choose a service provider?: Choosing your own mechanic is the best-case scenario, but they aren’t always covered by insurance policies. Check the fine print of the policy to see if the insurer has control over which service providers and parts are used for repairs.
  • Are service providers reputable?: If the insurer has the authority to pick your mechanic, investigate them. Look for service reviews online from past claims and from former policyholders.
  • What if the replacement part breaks?: Find out how the insurer handles faulty repairs and how quickly they will take care of it.

Cost

The cost of auto insurance is a big factor in most people’s decision about which policy to choose. If you want to find cheap car insurance with a lower premium, you’ll have to pay a higher deductible to get your car fixed if you get in an accident and need repairs.

  • Premium: The premium is the monthly, semi-annual or yearly price that you pay for your insurance plan.
  • Deductible: Deductibles are the amount of money you are required to pay for a claim before your insurance company starts to pay out. The lower your deductible, the higher your premium tends to be.
  • Coverage factors: Depending on much coverage you opt for (i.e., the limits), the cost of your insurance will vary. Your past driving record, credit rating, distance you drive and even drivers’ education will all affect how much your policy costs.

Optional coverage

In addition to basic auto insurance, there are optional coverages available for drivers with different needs.

  • Collision coverage: Collision coverage pays for the expenses to repair your car after you’ve been in an accident, whether you’re at fault or not. If you drive an older car that isn’t worth much money, it may not be worth it to pay for collision insurance.
  • Comprehensive coverage: This covers things that could happen to your car not related to an accident that might not be covered by standard insurance, such as weather damage, running into an animal or other factors. It’s a good idea to opt for comprehensive coverage if you can afford it, but it can get costly and might not be worth it if you drive an old or inexpensive car.
  • Uninsured motorist protection: This protects drivers in the event that they get into an accident with a person who isn’t insured but is to blame for the accident or in a hit-and-run. It will cover damages to the car and injury in the event that another driver is unable to pay out.

Insurance company ratings

An insurance company’s reputation is important. Good companies should have a quick response time, be adept at handling claims and have excellent customer service.

  • Reviews and complaints: Check the reviews and ratings on an insurance company before purchasing a policy. Be aware of any complaints that have been filed.
  • Handling claims: How long does it take for the company to handle a claim? Do you have to pay out of pocket first or do they cover the expenses immediately?