Answers to the Most Common Car Insurance Questions

Car insurance is a web of complexities. There is a mountain of policy documentation, different types of insurance policies, and so much terminology which can lead to a myriad of questions. In order to maintain one of your prized possessions, it is important to understand how your policy works as it acts as a financial backstop. Obtaining answers can assist in getting peace of mind in knowing that in the event of an accident, you will have proper coverage, and it can help you make informed choices about the insurance coverage to obtain.

The purpose of this article is to provide answers to some of the most frequently asked questions about car insurance. We will cover the purpose of car insurance, the different types of coverage insurance companies offer, how insurance companies will determine your premium, and what you need to do after an accident. This article will make understanding car insurance easier. 

What is car insurance and why do I need it?

Car insurance is an agreement between you and an insurance company. In exchange of regular payments, called a premium, the insurance company will cover certain types of financial losses to car related expenses that you will incur in the term of the policy.

Almost every state mandates that drivers carry liability insurance. Though this car insurance in Qatar is legally required, and the requirements will be different in Dubai, it also provides necessary protection. An accident that you cause can lead to medical bills, and property damage that add up to hundreds of thousands of dollars. Without insurance, all of your personal assets are at risk.  

What are the types?  

Car insurance policy is a package of different policies. Liability insurance is the cheapest and legally required. It is the base of every policy.  

Bodily Injury Liability (BI): Pays for medical and pain and suffering costs of other accident victims for crashes you are at fault for.  

Property Damage Liability (PD): Pays to repair property you damage which is commonly the other driver’s vehicle.  

Vehicle Coverages  

These coverages protect your own vehicle and are required for a loan or lease. Otherwise, you can choose coverage options.

Collision: Pays to repair your vehicle after an accident with another vehicle or an object (like a pole or fence), regardless of fault.

Comprehensive: Pays for damage to your vehicle from non-collision events such as theft, vandalism, or a fire, as well as hail, or an animal strike.

Personal Coverage

These coverages help pay for the expenses you and your passengers may incur.

Medical Payments (MedPay) or Personal Injury Protection (PIP): Covers medical expenses for you and your passengers after an accident, regardless of fault. PIP is often more extensive and is required in “no-fault” states, as it also covers lost wages.

Uninsured/Underinsured Motorist (UM/UIM): Protects you if you are struck by a driver who does not carry any insurance or is inadequately insured to cover your medical expenses.

How much car insurance do I actually need?

The short answer is enough to protect your financial assets. Although your state may have minimum liability requirements, these are often quite low and arbitrary and do not adequately cover the expenses from a serious accident.

A good guideline is selecting liability limits that equal or surpass your net worth. This limits the possibility of your assets being at risk in a lawsuit. For collision and comprehensive coverages, the answer is dependent on the situation of your car as well as your situation. If your car is older and has a lower value, paying for that coverage would be a waste of money. On the other hand, if you have a loan, your lender will require that coverage. 

How do insurance companies figure out what rates will be assigned to consumers? 

It is a numerical analysis to measure your risk, i.e., the probability that you will file a claim. The more risk you carry, the more premium you will be charged. Some of the bigger risk factors include:

Driving Record: If you have had past instances of accidents, speeding, or DUIs then your insurance will be more expensive. On the contrary, if you have a clean history, then you have the greatest advantage for lower insurance rates. 

Age and Experience: If you are a younger and more inexperienced driver then you statistically are more likely to be in an accident and as a result, will have to pay a more expensive rate for your insurance.

Location: If you own or are planning to buy a car in an urban area, you will pay more for your insurance. In comparison to rural areas, urban areas are more crowded, have more traffic, and as a result, more accidents, and vandalism to cars. In rural areas there are lower rates and traffic is not as crowded.

VEHICLE TYPE: Your car's make and model are essential. Insuring pricey or athletic performers or cars that are stolen all too often costs more. It costs less to insure cars that rate more safely.

ANNUAL MILEAGE: More miles always means more potential for an accident, thus netting higher premiums.

CREDIT SCORE: Insurers, with the exception of a very small number of states, use an insurance-based credit score. Insurance companies are willing to charge less when a credit history shows less paper work with more insurance.

COVERAGE CHOICES: Your coverage limit and what additional coverage you choose directly determines your rate. More insurance and higher limits nets a higher premium.

WHAT IS A DEDUCTIBLE AND HOW DOES IT WORK?

Deductibles are the costs you must cover before the insurance company starts to pay for your claim. For your vehicle, coverage that triggers a deductible (and for which you pay out a claim) is typically collision and comprehensive. Liability, which is coverage for other people and their cars when you are at fault, does not work with a deductible.

As an illustration, suppose your deductible is $500 and your vehicle is damaged by a covered event that costs $3,000 to repair. You would pay the deductible, meaning that $500 would come out of your pocket and your insurer would then pay the remaining $2,500. If $500 is more than you would like to pay as an out-of-pocket expense, you could choose a $1,000 deductible, however, keep in mind that you will have to pay all of that amount before insurance pays anything.

What process should I follow of a motor vehicle collision?  

Correct actions can keep you out of trouble and help you deal with the insurance company more easily when things are done right.

Stop and Check for Injuries. When possible, park your vehicle in a safe spot. First, make sure that you are all right, and then check on the people in the other vehicle and their passengers.  

Reach out to authorities. If someone is injured, you have to call the police immediately and tell them that there is an accident. You will also want to have a police report done, as they are very helpful when you go to process your claim.  

Sharing Details. You should also get the other driver’s name and street address as well as their phone number, driver’s license number, and insurance company name and policy number, along with the street address. Don’t leave out witnesses; it is also a good idea to get their name and contact information.

Photographing the entire scene: Capture the entire accident scence and document the condition of all vehicles involved and their license plates. Take photos of the accident scene from different angles. Make sure you capture all relevant road signs.

Do not take the blame: Be sure to be polite to all parties, however, you should not apologize or take the blame for the accident. Stick to reporting the facts when you're conversing with the other driver and police. They will be able to assign blame later.

Notify your insurance: Talk to your insurance provider within the earliest timeframe possible and report the accident to start the claims process.

Starting the insurance claims process: Is there a process for this?

Starting a claim is easier than a lot of people estimate it will be. Most insurance companies provide a couple different options for people to start the process, be it over the phone, on their site, or even on a mobile application.

Prompting the insurance provider: Report this incident to your insurance provider as soon as possible after it occurs. Make sure you have your policy number and all incident details on hand.

Let the insurance provider do their work: Be sure to hand over all the information you obtained from the scene to your insurance provider, especially your police report number, pictures, and details on the other driver.Cooperate With the Adjuster: Your insurance company assigns a claims adjuster, who will examine the details of the accident, damage to your car, and decide how much the insurance company will pay according to the settlement offer and coverage in your insurance policy.

Have Your Vehicle Fixed: Your insurance provider will have a list of repair shops that you can use, but you can use one that is not on the list. The adjuster will examine the repair estimate and determine if and when repairs can take place. You will pay the deductible to the repair shop, and the insurance company will cover the rest of the repairs.

Will my insurance rates go up after an accident?

The rates likely will go up, and if you are at fault in the accident, it is likely to go up significantly. An at-fault accident will signal to your insurance provider that you are a higher risk and your premium is likely to go up and the changed rates will probably be on record for 3 to 5 years. However, some insurance providers will offer this at-fault accident to be 'forgiven' if the driver is a long-term driver and is considered a safe driver. If an accident is not your fault, your rates generally should not go up. Some insurance providers will increase rates if you have multiple non-fault claims.

What are some ways in which I can mitigate the costs associated with my vehicle insurance?

Even though some factors are completely out of the consumer’s hands when it comes to rating factors, there are willingly many factors that are more in line with the consumer’s control when it comes to factors that go into the consumer’s premiums.

Check Numerous Providers: One of the best ways to obtain savings with your vehicle insurance is by going to 3 to 5 different providers to obtain pricing before deciding on purchasing a new vehicle insurance policy, or renewing an existing coverage. Each of the providers have the capability to offer the same coverage, but have the flexibility to offer different pricing.

Availability of Discounts: Customers should actively seek out agents to inquire of any possible vehicle insurance discounts pertaining to the customers own coverage. Typically the discounts can fall within certain categories, especially pertaining to bundling of coverages, as well as pertaining to the driver’s own status and behavior, for example low mileage driving and the driving of the vehicle which is equipped with certain safety features.

Deductibles: Another factor that is more in the control of the consumer, which can also have an impact on reduces premiums, relates to the consumer having a well funded emergency account, as well as having the collision and comprehensive policies having an increased deductible.

Good Credit: Insurance providers lend more favorable premiums to their clients who exhibit a higher range of control over their credit status. Such factors directly relate to how the consumer manages their credit over certain time periods. 

Safe Driving: Staying out of accidents that can be classified as hitting another vehicle is also a factor that can also be out of the consumer’s own control.

Review Insurance: More expensive policies can often stem from having multiple policies which are not reviewed frequently to ensure the consumer is not over-insured.

Meta Information\n\nMeta Title: Most Asked Questions Regarding Auto Insurance\n\nMeta Description: Understand the basics of questions that involve auto insurance policies and their coverages, the premiums, the processes of filing a claim, and the ways to save on a policy price.