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5 questions everyone should ask about car insurance

Friday, September 18, 2020

An individual drives during the day.

Welcome to the wonderful world of automobile insurance! It can be a difficult place to navigate — with so many different policies, add-ons, and questions to as — so if you’re overwhelmed, you’ve found the place to start. Here are the answers to five questions that you have probably already wondered about.

Why do you need automobile insurance?

This one is pretty straightforward: in most states, auto insurance is required to drive. That means that here in South Carolina, it is illegal to drive without car insurance. The biggest exceptions to this rule are Virginia and New Hampshire. If you choose to go without insurance in Virginia, you are required to pay a $500 yearly fee. In New Hampshire, there is no fee but you are required to pay for any property damages and/or bodily harm that you may cause. So even if you aren’t required to get automobile insurance, you could really be helping yourself out in the case of an accident.

What is the main purpose of automobile coverage?

The purpose of auto coverage is that in the event of an accident, whether you or the other party is the cause, you won’t have to worry about paying out-of-pocket to address any damages. Auto insurance covers you, your car, and any others involved in an accident. Without insurance, you would be stuck with the cost of all damages in the event of an accident.

What are the two main categories of automobile coverage?

Bodily liability and property damage liability are the two main types of coverage that you are required to have in most states. Bodily liability covers any medical problems that might occur for either you of the other party during an auto accident where you are at fault. Property damage liability covers any damages that happen to you or another party during an accident where you are at fault. These are the two most basic types of automobile insurance, though, and you should ask your agent the other types to consider.

A couple drives along the thruway.

Which four characteristics affect the cost of automobile insurance?

The main things that affect the cost of car insurance are:

  • Age: younger drivers have higher premiums due to the fact that they are at a higher risk of getting into an accident and costing the insurance provider money. As you get older, you may notice the cost of your premium going down and this is why!
  • Location: this can affect the cost of your premium because of insurance requirements in your state. If your state is like Michigan, which has a law that requires all drivers to carry unlimited Personal Injury Protection (PIP) coverage, your rates will be higher.
  • Driving history: if you have no accidents or tickets on your record, congratulations! You are likely to have a lower premium than people with even just a few speeding tickets.
  • Credit score: this is something that people don’t often think about, but it can play a huge factor in the cost of your premium. Drivers with poor credit tend to file more claims than those with great credit. Those with poor credit are a higher risk to the insurance provider, so their premium will be higher.

Your car insurance may be tax deductible if you are self employed, as those individuals who use their car to travel or transport goods for business can deduct the cost of insurance from their taxes — along with other things like gas, deprecation, and maintenance. There are a few cases where those who are not self employed can deduct their car insurance, including armed forces reservists who are traveling up to 100 miles away from their home, qualified performing artists, and fee-basis state or local government officials. If you aren’t sure about your status, you can ask your insurance agent.

These questions are just a start to the many you might have about car insurance. If you are looking for the right car insurance coverage for you or looking to have your questions answered, you can contact one of our local agents who can help you.