Question-Based Tips for Buying Auto Insurance
Whether this is your first time buying auto insurance or your tenth, it’s perfectly acceptable to have questions. After all, it’s not always a straightforward process.
In this article (and in no particular order), we’ll quickly provide answers to the ten most common questions we receive about buying auto insurance.
1. Does My Auto Policy Cover Other Drivers of My Vehicle?
The short answer? It depends. Specifically, on whether or not the driver of your car has permission—otherwise referred to as ‘permissive use.’
If you give a friend (for example) permission to drive your car and they’re involved in an accident, because insurance follows the vehicle and not the driver, your insurance company would likely pay for the claim. This includes liability, comprehensive, collision, and medical payments coverages.
Keep in mind that your insurance company could count this accident against you and increase your rates accordingly at your next policy renewal. However, if they’re able to subrogate and recoup their costs from your friend’s insurance, this might not be the case.
With these details in mind, theft is an example of non-permissive use that’s generally covered by comprehensive under your auto policy.
2. If the State of Texas Only Requires Minimum Liability Limits, Why Do I Need More Coverage?
Almost every state requires that drivers carry minimum liability limits on their vehicles. In Texas, this minimum limit is 30/60/25: $30K of bodily injury (BI) coverage per person/$60K per accident, and $25K for property damage (PD).
However, the harsh reality is that anything other than a minor fender bender could quickly deplete these limits, especially if the other driver is injured and you’re found at-fault. And if this occurs, you could have to pay thousands (or tens or hundreds of thousands, in some instances) out of your own pockets.
Therefore, it’s a good idea to carry the highest liability limits you can afford is to protect your assets. For this reason, you can quickly determine your ideal auto liability limits by taking a closer look at your net worth.
The great news is that in general, doubling or tripling your liability limits won’t increase your policy premium a lot!
3. What are Telematics Devices, & How Do They Work?
Telematics are small electronics devices that plug into the ODB-II port underneath your car’s dashboard, close to your steering wheel (often it’s in the same area as your fuses).
Inside the ‘black box’ is a SIM card and modem that records data about your driving habits and patterns, including speed, distance, and sharp braking and cornering, and transmits them to the insurance carrier.
After receiving this data, the company will use a proprietary formula to determine a unique insurance rate based on your specific combination of criteria. Together, this is known as Pay How You Drive (PHYD) auto insurance.
In many instances, PHYD policies will also pair with a smartphone app.
4. Is Flood Covered Under My Auto Insurance Policy?
Compared to homeowners insurance, which automatically excludes damage caused by rising water, a flood is covered by the comprehensive portion of an auto policy.
Comprehensive coverage is optional, though, so if you’re worried about a flood, make sure it’s in place by calling IHS Insurance Group today!
5. Is My Car Financed or Leased?
If your car is financed or leased, the lender or financing company will almost certainly require than you carry comprehensive and collision coverage on your insurance policy. Why?
Until your car’s loan is paid in full or your lease expires, these companies own the vehicle you’re driving. And by carrying comprehensive and collision, and listing them as an additional insured on your policy, their financial interests are protected if you’re involved in an accident and total the car.
6. What Type of Car Do I Own, How Is it Used, & How Far Do I Drive?
Here’s how the Verisk website explains it:
“A Symbol is a code used in ISO’s Vehicle Series Rating (VSR) program. The purpose of Vehicle Series Rating is to match premiums for each particular type of car to losses for that type of car.
For each vehicle within a vehicle series (defined by such characteristics as make, model, and body style), ISO assigns a Rating Symbol. ISO provides corresponding Symbol factors that insurers may use in determining premiums for individual policies. A vehicle with a higher Rating Symbol will have a higher premium than a vehicle with a lower Symbol if all other rating variables are the same.”
In layperson’s terms, ISO symbols range between 1 and 26. The higher the number assigned to your vehicle, the more you’ll pay to insure it.
Some of the criteria ISO uses to determine a vehicle’s symbol include the manufacturer’s suggested retail price (MSRP), loss experience for the vehicle’s series, loss experience for the car itself, and predicted future losses.
In addition to the symbol, how you use a vehicle will impact its insurance rates. Personal use will cost less than business use, lower mileage is less expensive than driving more, etc.
7. What Factors Affect My Auto Insurance Rates?
In addition to the car you own and how you use it, here are some more factors that can impact your auto insurance rates:
- Insurance score – Relates to your probability of being involved in an accident, and closely follows credit score.
- Where you live – Factors include local congestion, accidents, crime rates (primarily related to vehicle theft and break-ins), and insurance claims.
- Your gender and age – Younger drivers typically pay more for insurance than older ones, as do females compared to males.
- Accidents and violations – Past activity is a good indicator of future activity, so the more accidents and violations you and other household members have within a specified time (three to five years, usually), the more you’ll pay to insure your vehicles
8. Which Discounts Am I Eligible For?
Each auto carrier offers different discounts that impact auto policy rates in a variety of ways. With this said, some of the most common discounts, regardless of the company, include:
- Account Discount – Having auto and home (and other policies as well) with the same company
- Good Student Discount – A household member who’s enrolled in school or college and maintains a 3.0+ GPA.
- Good Driver – No accidents or violations within three to five years.
- Pay in Full – Paying your premium in advance for the full policy term, versus paying monthly.
- Driver Training – Taking a defensive driver or related training course within the past three years.
9. Should I Add Any Endorsements to My Auto Policy?
Similar to discounts, each carrier offers different auto endorsements. Some of the most common, however, include:
- Towing and Labor (aka Roadside Assistance) – Pays for costs related to towing your vehicle to a repair shop if it’s un-driveable. Other services can include changing a tire, delivering gas, and jumpstarting your battery.
- Rental Reimbursement – Pays for transportation expenses like rental vehicles and public transit fare if your car’s being repaired after a covered accident.
- Guaranteed Asset Protection (GAP) – Covers the difference between what you owe on your car and it’s worth if it’s totaled in an accident.
- Replacement Cost Coverage – Pays the amount it would cost to buy a brand-new replacement vehicle if yours is totaled.
10. How Can I Find Answers to More of My Questions About Buying Auto Insurance?
Combined, the IHS Insurance team has decades of experience with auto insurance, so we almost certainly have answers to all of your questions. After all, we want you to be as informed as possible before handing over your hard-earned money!
Need a FREE Quote? Or do you have questions about what you should ask before buying auto insurance? We have three convenient ways to reach us:
- If you prefer to talk to a licensed agent directly, please call (866) 480 5063.
- If you prefer to fill out a quick form and have an agent get back with you at your convenience, use the GET A FREE QUOTE.
- Lastly, for those that want an immediate quote, please click HERE.
We look forward to speaking with you today!