Answers to specific auto insurance questions.

Answers to specific auto insurance questions.

Automobile Insurance Q&A:

Question:
I am 22 and looking to purchase car insurance for the first time. I have a few questions regarding auto insurance premiums. Is there a difference between a six month premium and an annual premium? For example, if I’m quoted $800 for a six month premium, do I pay $800 every six months? For an annual premium do I pay a certain amount each month for a year? Do insurance companies offer nine month premiums? Please explain. Thanks.

Answer:
Regardless of which policy you choose, you will probably be required to make a monthly payment. Insurance companies may offer six month and/or annual policies. Your greatest advantage with the annual policy is that the company cannot raise your premium until you renew. This could be to your disadvantage, however. For example, you might have a blemish on your driving record that is falling off in five months. With an annual policy, your premium and discounts (if you have any) will be locked in for a year. So, if you are involved in an accident, the insurance company must wait until you renew the policy before they increase the premium. Some companies offer the option of making nine payments on an annual policy. By dividing the twelve month premium by nine, you pay that amount for the first nine months, then do not pay anything for the remaining three.

Question:
I was in a car accident a few weeks ago in my friend’s SUV and need some advice. While I was driving my friend’s car, it was hit by another driver that didn’t have auto insurance. My friend has only liability insurance and I have full coverage for my car. Will my insurance cover my friend’s car?

Answer:
Assuming your friend is insured in a state that offers uninsured motorist liability coverage and s/he purchased that coverage, there will not be a need for you to shell out any money. Most companies have a deductible for this coverage, but this should be lower than most insured’s collision deductible.

If your friend happens to live in a state where this coverage is not offered, it would need to be filed as a collision lost and be subject to a collision deductible and since he does not have collision he would be stuck with the cost of repairing his vehicle or suing the other driver.

Question:
If my sister drives my car and is in an accident that is her fault, whose insurance would cover the accident? Mine or hers?

Answer:
Your car insurance would cover the incident.  It is important to remember when selecting liability limits and other coverage that while you may not always be the one driving the car you will be responsible for what happens with it.

Question:
Like many policies, my car has full insurance coverage. If I rent a car, will my insurance protect the rental car as well?

Answer:
Typically, yes. Your normal car insurance coverage will extend to your rental car. You do need to be aware, however, that most insurance policies will not cover the rental fees for the days the vehicles was being repaired – should you be involved in an accident.

Question:
Why does the premium drop when you add home insurance to an auto insurance policy?

Answer:
It’s a package discount which is an incentive to write more than one line of business.

Insurance companies do that because experience shows if you have one policy with one company, and another with a different company, you are more likely to move your business at some point in the future. The discount benefits not only you but the insurance company as well.

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