What Kind of Auto Insurance is Right for Me?
Selecting the right auto insurance is often a lot more personal than people realize. We all have different factors: where we live, the type of car(s) we drive, our age, our driving and credit history, our education level and marital status and so much more. These variables and others can impact the rates we are quoted from the insurance companies we purchase our auto insurance from.
With so many options available, how do you know what auto insurance coverages and companies are a smart choice for you? Your helpful insurance experts at Answer Financial are here to help answer some of the questions you might have before making any decisions.
Why do I need auto insurance?
Although laws vary, most states have mandates in place for drivers to carry personal auto insurance. If you were to get into an accident, basic auto insurance can offer you some financial assistance. However, the type of insurance coverage you have will determine what losses you and the other driver(s) involved can receive financial assistance for:
- When I’m at fault
If you cause an accident, it’s likely you will be liable to pay for injuries and property repairs incurred by the other driver. Most states require all drivers to carry liability insurance to help cover expenses for this very reason.1
- When someone else is at fault
If you’re involved in an accident that is not your fault, your insurance company can guide you through the process of filing a claim through the at-fault driver’s insurer. If you need immediate financial assistance for damages or medical bills, you may be able to file a claim with your own insurer.
- When someone else is at fault but they’re uninsured or underinsured
All too often, responsible drivers are involved in accidents with drivers who either don’t have insurance or don’t have enough to cover the damages they cause. While you may not be required to purchase uninsured and underinsured motorist coverage, it’s a smart idea that is often affordable and can help cover unexpected medical expenses and property damages.2
What coverages do I need?
If you own your car, you have a lot more flexibility in your coverage levels than you do if you lease or are financing your vehicle. Since everyone is in a different financial situation, it’s smart to consider a worst-case scenario when selecting your coverage levels.
For example, imagine if you caused an accident that resulted in your car being totaled, the other driver’s car being totaled and multiple people suffering injuries (drivers and passengers). If it would be a financial burden to pay for these damages out of pocket, it’s wise to purchase enough coverage to protect yourself financially. If you’re not sure how much coverage you need, our insurance experts are standing by on chat or over the phone to help guide you in the right direction.
How expensive is auto insurance?
Generally, auto insurance policies are issued for six-month or one-year periods and can usually be renewed. Each of the coverages mentioned above (property, liability, medical) are typically priced individually, allowing drivers the option to customize their coverage levels to meet their needs and budget. Think of it like insurance a la carte!3
A basic policy that meets state minimum requirements will typically be less expensive than a full-coverage policy. Buyer beware though, basic coverage may protect the other driver’s damages in case of an accident but may not cover your own. There are other ways to modify the price of your insurance, like choosing a high or low deductible.
What is the difference between a premium and a deductible?
Your premium is the amount of money you purchase your auto insurance policy for, which can vary greatly from person to person. You can either choose to pay this money up front or in monthly installments. Sometimes, purchasing a one-year policy instead of a 6-month plan can be beneficial if you have some extra funds and don’t want to be bothered paying a monthly bill.
If you get into an accident, your deductible is the amount of money you’re responsible for paying toward an insured loss. When you file a claim, the deductible amount is subtracted (or deducted) from the claims payout.4
How can I save money on auto insurance?
For example, if your policy states a $1,000 deductible and you experience an insured loss worth $15,000, you would receive a claims check for $14,000.5 Adjusting your deductible amount could also impact the dollar amount of your premium. If you can afford to pay a higher out-of-pocket deductible in case of an accident, it could lower your premium and in turn, help you save on your insurance.
How are auto insurance rates calculated?
Insurers determine auto insurance rates using multiple variables, like your age, driving history and type of car you drive. Not all insurance companies use the same variables to determine rates and rating criteria may be different in certain states. Most states even use credit scores to help calculate rates, although this practice has been banned in states like California and Hawaii.5
Who is Answer Financial?
If you’re not satisfied with your current rate or auto insurance company, the insurance experts at Answer Financial can help you find a rate and company you are happy with. It only takes about 10 minutes to compare auto insurance quotes online or over the phone with one of our licensed agents.
We work with more than 30, top-rated insurance companies to match you with the right insurance carrier for your needs, regardless of your driving background. We can also help you compare homeowners or renters insurance and may even be able to help you save by bundling your coverages. Plus, our customers save an average of $479 a year on insurance,* which is probably why 95% of our reviewers say they’d recommend us!**
July 23, 2020
- 1."What is Auto Liability Insurance?,” Allstate, https://www.allstate.com/tr/car-insurance/liability-car-insurance-cover.aspx
- 2."What is Uninsured Motorist Coverage?,,” Allstate, https://www.allstate.com/tr/car-insurance/uninsured-motorist-coverage.aspx
- 3."What is auto insurance?” Insurance Information Institute, https://www.iii.org/article/what-auto-insurance
- 4."Understanding your insurance deductibles,” Insurance Information Institute, https://www.iii.org/article/understanding-your-insurance-deductibles
- 5."Credit-Based Insurance Scores: How An Insurance Company Can Use Your Credit To Determine Your Premium,” National Association of Insurance Commissioners, https://www.naic.org/documents/consumer_alert_credit_based_insurance_scores.htm
- *Results of a national survey of new Answer Financial customers reporting insurance savings in 2018.
- ** https://www.answerfinancial.com/AboutUs/RatingsReviews/AFI