Your Auto Insurance Questions Answered

8 November 2021 by Elijah Steward

If you own or drive a vehicle, you need auto insurance. It is the best way to protect yourself against massive financial issues if you get into an accident. If you would like to know more about auto insurance, check out these four top questions.

1. What Are the Types of Auto Insurance?

There are many types of auto insurance policies, but some of the most common include liability, collision, and comprehensive. Liability insurance covers the cost of damage and injuries sustained by the other driver in an accident you caused; it does not cover your damages and injuries. In most states, you are legally required to have liability insurance to drive.

Collision coverage does cover damage to your vehicle, and comprehensive insurance covers additional risks like vandalism. If you do want medical coverage for yourself, you'll need to add a medical payment policy. Personal injury protection insurance is an umbrella insurance that can also help in the event of auto accidents.

Depending on your policy, you may also want to add other features, such as rental coverage. If you have a classic or luxury car, you may need special insurance. Typical auto insurance may not provide enough coverage for luxury cars, and classic cars have special considerations that require unique policies.

2. Is Car Insurance Different for Used Cars?

When getting your insurance policy, you will need to include the year of your vehicle, and older, less valuable cars tend to be cheaper to insure than expensive new cars. However, regardless of used or new, auto insurance is typically the same.

The problem arises with depreciation. New cars depreciate fast, so you can easily owe more on the car loan than what the car is actually worth. If the car gets totaled, your insurance will pay based on the current value of the car, which may not be enough to repay the loan.

This isn't a common problem with used vehicles because the vehicle already experienced major depreciation before you bought it. Therefore, the amount of the loan and the value of the car are more comparable than with a new vehicle.

As a result, if you purchase a new vehicle, you should consider gap insurance too. Gap insurance helps close the gap between the value of the car and the total amount you owe. The best part of gap insurance is that if you don't use it, you get it back when you sell the car.

3. What Happens If You Get in an Accident Without Insurance?

If you get into an accident without insurance, expect to pay. If you caused the accident, you'll be responsible for all the costs related to the other drivers' damages, and since you don't have insurance, you'll have to pay for it all out of your own pocket. If you didn't cause the accident, some states may limit your settlement.

In addition, you may have to pay special penalties for driving without insurance, and your license may be suspended for a time. In addition, you may be required to get SR-22 auto insurance. This type of insurance requires a form to be submitted to the DMV to prove you have auto insurance.

4. What Doesn't Auto Insurance Cover?

Even if you have a comprehensive policy, insurance doesn't cover everything. Depending on your policy, other people may not be allowed to drive your vehicle, and you likely don't have any coverage for ridesharing. Naturally, regular repairs are not typically included in insurance.

Auto insurance is legally required, but it is also a helpful tool to protect your finances in the event of an accident. If you are unhappy with your auto insurance policy, or if you need to sign up for your first policy, contact an auto insurance agent in your area today.

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