Everyone has car insurance coverage on his or her vehicles. After all, it's the law, right? But how much do you really understand what your car insurance does, how it works, and the things that can impact the amount you pay on your premiums? Here's a look at some of the commonly asked questions about auto insurance.
1. If I file a claim will my insurance get more expensive? Car insurance companies expect everyone to make mistakes every now and then. So, you should not see an increase in your rates for the first fender bender you have. If you have another wreck, you may start to see the increase because you will be considered less of a safe driver in the eyes of the car insurance company.
2. What are deductibles? Deductibles are the amount you will have to pay before the insurance company will pay for a claim. If you have a deducible for $250 on your car insurance policy and a wreck leads to $750 in damages you will have to pay the initial $250 before the car insurance company will kick in and pay the remaining $500.
3. Will my car insurance company cancel my policy because I am in wreck? Usually the answer to this is no. A wreck may mean you see an increase in rates, but often that is the extent of the response from the insurance company. The exceptions to this rule are if you were doing something illegal when you got into the wreck (such as being under the influence), or have a number of traffic infractions piling up. Once you start filing multiple claims or have a bad traffic history you may be cancelled because you are seen as a dangerous driver.
4. What does bodily injury coverage do? Bodily injury protection coverage is a plan that will protect you if someone is injured in a wreck and tries to sue you for damages.
5. What does no fault mean? No fault is a distinction many states have when it comes to what auto insurance companies have to cover. If you are in a no fault state is means no matter who is responsible for a wreck you will each have to rely on your own insurance company to pay for your damages. This means you will need to make sure you have adequate coverage to pay what you may need in a wreck.
6. What's Personal Injury Protection? If you happen to be in a wreck and people are injured either in your car or the other vehicle, a personal injury protection car insurance policy will pay for the medical, hospital and even funeral expenses for those injured or killed.
Steve Sikes is an MBA and writes articles on insurance and other financial products. To read other educational articles on insurance at the InsuredItAll Learning Center or to get free insurance quotes for auto, home, health, life or long term care insurance, you will want to visit http://www.InsuredItAll.com