FAQ for Auto Owner Insurance

Driving a vehicle is a big responsibility. Accidents happen everyday, so it is essential that you carry the auto owner insurance that is required in your state so that you are protected. Here are some commonly asked questions regarding auto owner insurance. For more detailed explanations, you can contact your insurance provider.

• Am I required to have auto insurance on my car in order to drive?

Yes, all fifty states require all drivers to carry liability insurance. Each state has its own minimum liability requirements, but you may choose to carry higher limits to avoid having to pay any additional money out of your pocket. For cars that are still financed, some states will require you to carry collision and comprehensive insurance too.

• What happens if I choose not to purchase auto insurance, but continue to drive?

This is dependent on the state that you live in. Not following the law and maintaining insurance on your car can cause the state to impose fines and penalties to you.

• Is anyone that drives my car covered under my insurance policy?

Yes, most of the time, as long as the person driving has permission to drive the car from the insured person. For insurance companies, the insured is the person whose name is listed as the owner of the policy and their spouse, if applicable.

Make sure to check your policy to see what is covered. All licensed persons living in the same household must be listed as additional drivers on the policy.

• How does my driving record affect the cost of my insurance?

Depending on the insurance company, your premium is a reflection of your driving record from the past three to five years. Upon starting an insurance policy, the insurance company orders your DMV records from any state that you have been licensed in within the last three to five years, including your state of residence. Those that have tickets or accidents are statistically higher at risk for having additional accidents or tickets.

• Why does a bad driving record of someone in your household make it harder to obtain car insurance?

Sometimes an insurance company will not insure you if you have someone in your household that has a bad driving record. Some companies can exclude that person from your policy. Most insurance companies will not write a policy unless everyone in the household meets their requirements.

• What are the minimum requirements for auto insurance?

Each state requires you to have liability insurance, but each state has their own minimum requirements for the limits. When traveling, if you carry the minimum liability insurance in your state, you automatically assume that state's minimum requirements of liability.

• What liability limits are the best?

Insurance agents agree that the state's minimum requirements are too low and recommend liability limits of 100/300/100 for the average driver. Breaking that down means:

100,000 per person for bodily injury

300,000 per accident for bodily injury

100,000 per accident for property damage

The property damage limits are very important. You may want to raise these limits if you live in an area that property damage may exceed $100,000. Property damage includes the other person's vehicle and any other property that may be damaged during an accident.

• Collision and comprehensive: What is the difference?

Collision covers a collision with another car. Comprehensive covers anything else, such as theft or fire. Neither of these are required but can be added to your policy to provide you with additional coverage on a vehicle that you drive regularly. Most states will require you to have collision coverage for a vehicle that is still financed. 

• What happens if my car was totaled, but the insurance did not pay me what I think the car is worth?

Insurance policies pay the actual cash value (ACV) of a totaled vehicle. The ACV is the market value of the car immediately before the accident.

An insurance company must use a reasonable and fair method to determine the value of your vehicle. You may be able to speak to your insurer explaining why you think your car was worth more than what they determined it to be.

• What happens if my car is totaled in an accident, but I owe more on it than the insurance company says it is worth?

The insurance company determines the actual cash value of the car, which may be lower than what you actually owe on the vehicle. Many things can cause this, such as interest rate changes or the condition of the vehicle prior to the accident. In some states, you can purchase guaranteed auto protection (GAP) insurance, which will cover the difference between the ACV and the balance on the loan.

• Does a newly licensed teenager need car insurance?

Yes, the law states that every licensed driver must have insurance. You can either add him/her to your policy or they can get a policy of their own. Adding them to your current policy will save you money, as you will be able to receive a multi-car discount. Insurance rates will be higher on an inexperienced driver.

• Does a teenager with a learner's permit need car insurance?

Yes, as a licensed driver, even with a permit, you are required to carry auto insurance. You can either be covered under your parent's policy or get your own policy.

• Is a rental car included in my policy should I be involved in an accident?

In order to receive a rental car after an accident, you must have added that option on your insurance policy. If you have added that, then you should be able to obtain a rental car for up to 30 days while your car is in the shop. If you are not sure, you can call your insurance company to verify whether or not it is included in your policy.

• What does an insurance company use to decide to cancel a person's policy?

When making the decision on whether or not to keep you as a customer, the insurance company will look at your driving record, claims and credit history. You should have no problems renewing your policy if you have a clean driving record, little to no claims and no bankruptcy.

• What do I do if I receive a bill with a different amount than what I was quoted by an agent?

This misquote could be based on many different reasons, such as your vehicle, your driving record, your age, where you live, how many miles you drive, where you live and the type of coverage that you want. It is important when receiving a quote to give your agent accurate information. This way you will not get any surprises when you receive your actual policy.

• If I get a speeding ticket while visiting another state, will that affect my car insurance premium?

With the age of the Internet, all information is added to the database, so if you receive a ticket in another state, it is entered in the database.

It is best to pay the ticket or you could risk having your driver's license suspended. Failing to pay the ticket in one state is an automatic suspension of your license in your state.

The new database allows all states to communicate with each other more efficiently and seamlessly.

• When driving someone else's car and involved in an accident, whose car insurance is responsible?

This can vary from state to state, but typically the coverage on the vehicle will serve as the primary coverage. 

• How does a DUI affect the cost of my car insurance?

This can vary depending on the state that you live in and also the insurance company that you are insured with.

Most insurance companies are going to raise your premium tremendously if you are convicted of a DUI. Others may cancel your policy. If this is your first offense, your insurance company may not cancel your insurance, just raise the premium. 

• Can my car insurance be in someone else's name?

Yes, as long as you give that person permission to insure you. 

• For a car that is financed, does the car insurance have to be in the person's name that is on the loan?

Yes. Most finance companies require you to maintain full coverage on a vehicle until the loan is paid off. You should list all additional drivers on the policy.