5 Questions to Ask Before Purchasing Car Insurance

  • What types of insurance does my state require?
  • Are other drivers covered under my insurance policy?
  • What are my risk factors?
  • Do I have a deductible?
  • Are there ways I can save money on my policy?

If you ever get into a car accident, the type of insurance you have can have a big impact on your health and finances — which is why it’s important to ask the right questions before purchasing a car insurance policy. After all, not all policies are created equal. When you know what you’re getting, you can drive confidently knowing that you and your car are protected.

What types of insurance does my state require?

The first question you should ask before buying car insurance regards state minimums. Every state has the right to set its own insurance requirements and minimum coverage amounts. Usually, you’ll need liability insurance, which protects you in case of a lawsuit. Most states also require comprehensive and collision coverage, which helps you replace or fix your car. Then, there’s uninsured motorist insurance, which protects you in case you’re in an accident with a driver that doesn’t have insurance. In some states, including Michigan, you also need no-fault insurance, which protects you whether or not you’re the cause of an accident.

Are other drivers covered under my insurance policy?

Do you have children? Do you lend your car to other people? If so, one of the most important questions to ask before buying car insurance is if your policy covers other people that drive your car. This is also important if you drive your car for work, as some policies only cover personal usage. These rules can change dramatically between insurance providers and also between states, so it’s a good idea to be prepared. If your policy doesn’t cover other drivers, you could be responsible for the costs if they get into an accident in your car. If you need to have other people driving your car, you can ask your insurance agent to amend your policy so that they’re covered.

What are my risk factors?

When you apply for an insurance policy, the provider takes a look at your history. Then, they assess your risk — in other words, they figure out how likely you are to make a claim and cost them money. This assessment is based on factors such as past moving violations, age, gender, and even your credit score. Where you live can also have an impact. The higher your risk, the more expensive your policy is. If you ask this question before purchasing car insurance and find that you have a high risk assessment? It might be worthwhile to get quotes from other companies with more lenient policies.

Do I have a deductible?

Most car insurance policies come with a deductible, which is the amount of money you pay before your insurance policy kicks in. If you have a $500 deductible but your repairs come to $3500, you’ll only pay $500; the provider covers the rest. That deductible comes out of your pocket, so it’s important to know how much you’re responsible for in case of an accident. If you’re driving an older car, make sure that your deductible isn’t higher than the value of your vehicle.

Are there ways I can save money on my policy?

Depending on your car, your financing, and the state you live in, car insurance can be expensive. To help — and to entice you to sign on with their company — many insurance providers offer you discounts. One of the easiest discounts involves payment. Usually, if you pay for the entire policy up front, you can save a significant amount of money. You may also qualify for a discounted price if your car has an alarm system, if you have health insurance, or if you have a short commute. According to MarketWatch, you can also ask for discounts if you have a low annual mileage or if you own your home.

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In many states, car insurance can be a big part of your monthly budget. When you know what questions to ask before purchasing car insurance, you can find the policy that’s best for your wallet and your health.