Auto Insurance FAQ

Auto insurance is a vital part of a motorist's life, providing a financial safety net against accidents, thefts, vandalism, and other mishaps. Although it is one of the most heavily advertised services in the marketplace today, surprisingly few individuals are well informed about the details contained in their coverage policy. Motorists need to be aware of the latest trends in car insurance and the specifics of their policies to help save money and adequately insure their vehicles.

What is the Minimum Coverage for an Auto Insurance Policy?

All auto insurance policies require some form of liability coverage, the basic foundation of any coverage plan. Liability coverage helps at-fault drivers pay for both bodily injury and property damages they cause to another driver in an accident. Although plans vary by state and insurance company, one of the most common liability plans currently offered is 50/100/50 coverage. In this plan, an insurance company will cover up to $50,000 in bodily injury liability per person, $100,000 in bodily injury per incident, and $50,000 in property damage per incident. The average annual cost of liability coverage for the 50/100/50 plan ranges from around $500 per year with USAA to about $1150 for Met Life.

What Other Auto Insurance Coverages are Available?

Apart from standard liability coverage, there are five other coverage options available for motorists. Uninsured and underinsured coverage helps pay for medical bills and vehicle damage when these expenses exceed the limits of an at-fault driver's insurance coverages or their ability to pay. Comprehensive coverage helps cover the cost of damages arising from certain events such as theft, fire, vandalism, or hitting an animal. Collision coverage helps pay for damages to a vehicle suffered by an at-fault driver, and also covers vehicle damages arising from collisions with objects such as fences or telephone poles. Medical payments coverage helps pay for different medical costs such as ETM and ambulance fees, hospital and doctor visits, surgeries, x-rays, and professional nursing services. Finally, personal injury protection helps cover different expenses arising from injuries such as lost wages or childcare expenses.

Is Auto Insurance Mandatory for all US Residents?

Auto insurance is administered on the state level and is currently a requirement in 48 out of 50 states. While liability coverage is the standard coverage required by most states, other types of coverage may also be required depending on the state. Only New Hampshire and Virginia currently do not require motorists to carry auto insurance. New Hampshire car owners determined to be at fault in an accident are still responsible for liability coverage, up to $50,000 for personal injury and $25,000 for property damages. Uninsured Virginia motorists are required to pay an annual fee of $500 and are also responsible for liability and property damages if they are deemed to be at fault in an accident.

What Factors Determine Auto Insurance Rates?

Many different factors including age, driving record, location, gender, insurance history, and annual mileage significantly affect auto insurance rates. Other factors include marital status, vehicle type, vehicle ownership status, and credit score. It is important to note that 6 different states prohibit insurance companies from factoring gender into formulating a car insurance rate.

What Types of Discounts are Available for Auto Insurance Premiums?

All auto insurance companies provide multiple discounts for their coverage plans. Common discounts involve rate reductions for safe driving, low mileage, and continuous coverage. Other discounts include lower rates for having multiple cars on a policy, bundling different types of insurance, and opting for paperless statements. Finally, some insurance companies offer lower rates for certain professions such as military personnel, police officers, teachers, and firefighters.