A new car and new auto insurance go hand in hand. But, purchasing the right insurance and the appropriate amount can be confusing. In order to cut down on the guesswork, here are six frequently asked auto insurance questions from FreeAdvice.com that you need to ask your insurer.
What are the basic types of auto insurance coverage?
The basic types of auto insurance coverages are:
My car is old, and not worth much ? do I need collision coverage?
If you have an older car that is not being financed, you can probably save money on your monthly premium by dropping collision coverage from your car insurance policy. Your agent can tell you how much. The agent can also tell you approximately how much that same coverage would pay if your car was totaled. For an old car, you may find that collision coverage would pay only a nominal amount in the event of a major accident, while eliminating it would mean significant savings.
What is the difference between uninsured and underinsured motorist coverages?
Uninsured motorist coverage will usually reimburse you and anyone in your vehicle for any bodily injury and medical expense or death from an auto accident caused by:
It does not cover property damage.
Underinsured coverage provides bodily injury coverage when the negligent driver has some insurance, but it is insufficient to cover your bills. Underinsured motorist coverage pays the balance -- up to the limit on your policy.
I financed my car through a bank and at that time could not afford comprehensive and collision coverage. The bank secured coverage on my vehicle. Can they do this?
Yes. If you finance or lease a vehicle, the bank or leasing company will expect you to have enough comprehensive and collision insurance coverage to protect their interests. If you did not have such insurance and the vehicle was severely damaged or stolen, the bank or leasing company could look to you for the value of the remaining financing of the car. Since the car has been destroyed or stolen, you might, understandably, feel reluctant to pay for a vehicle you can no longer use. For these reasons, the insurance company will get secure coverages for you if you do not -- and expect you to pay the premiums.
In buying or leasing a new car, how can I be confident I will be able to insure it?
Call your insurance agent and ask. Give your agent all the information and get a quote on the premium. If it looks like there will be a problem getting affordable insurance, you will be happy you found out before you made the purchase.
I?m enlisting in the military after high school. Does my car insurance policy still cover me if I?m stationed in another state?
Yes. However, if you eventually become a permanent resident of that state, you should get a driver's license, registration and insurance from your new state.
For more information about auto insurance visit Military.com?s Insurance Center.
As you probably know, there are a handful of people who write almost exclusively about military families and their money. One of these writers, Rob Aeschbach, is also a Certified Financial Planner™ candidate. I wanted to see what nuggets of wisdom Rob could share, and learn more about how a financial planner can help military […]