Frequently Asked Questions about Auto Insurance
Find answers here to frequently asked questions about auto insurance..
What is GAP insurance?
GAP insurance is offered by auto makers and car dealerships usually as a provision to cover the difference between collision insurance and what you owe on your car loan in the unfortunate event that your car is totaled.
After an auto accident in which your car is destroyed, many people make the mistake of assuming that their insurance will simply pay off any loan balance remaining and that will be the end of it. That assumption is a mistake. What the insurance company will pay, is what your car is worth, not what you owe on it, and most people are actually upside down in their auto payments, meaning they owe more than their car is worth. So if your car is worth $6,000 and you owe $9,000 on the loan still, after your car is totaled in an accident, the insurance company pays the lender $6,000 and not a penny more. That other $3,000 is your responsibility. This is where GAP insurance comes in - to cover any difference. Additionally, online loans can reduce the amount you owe due to lower financing rates.
What is umbrella insurance?
An umbrella insurance policy is great protection for homeowners and drivers against the eventuality of a serious accident that creates expenses greater than what your auto insurance or homeowner's insurance policy will cover. Umbrella insurance policies offer $1,000,000 or more in coverage for a very low monthly premium. The reason why the price is so low is because umbrella insurance policies only kick in to pay if your auto or homeowner's insurance policy limits are exceeded, which is a relatively rare event.
How much insurance should I get?
That depends on how you drive and what you stand to lose. Generally homeowners have more to lose if they cause an accident that is serious and brings about seriously expensive damages or medical expenses. The wealthy are at risk too. Up to a certain point, increasing your auto insurance limits is a great idea if you stand to lose much in a personal liability lawsuit. Beyond that point, an umbrella policy is the best and most economical way to protect yourself.
What if I have a poor driving record?
There are high risk pool insurance companies that will offer you coverage. The price will be higher, of course, but most states have programs that will allow people who cannot get insurance privately to join and receive the state-mandated minimal levels.
Can my insurance be cancelled?
Yes. Any insurance company can cancel your insurance policy for a variety of reasons such as determining that you committed fraud (lying) to obtain your policy, having too many tickets or too many accidents, and of course, for non-payment as well.
Do I need to change my insurance if I'm driving through other states?
No. Though the state may have different laws for insurance minimums, if you are a visitor to the state (and not a regular driver by any means), your insurance coverage, as long as it meets your home state's minimal levels will be sufficient.
