Car Insurance FAQs

Q: What exactly is an umbrella policy and what is it used for?
A:
An umbrella policy is an additional policy that often comes on top of your auto insurance policy and sometimes on top of your homeowner’s insurance policy also. What this policy actually does is provide you with some extra liability coverage and this can be anywhere from one million dollars up as far as five million dollars. With an umbrella policy you will have an additional yearly premium of between $200 and $300. An umbrella policy is a bit like a safety net in that it covers you when the liability on your regular auto insurance policy doesn’t. Everyone knows that car accidents can be extremely costly, the bills you receive might not be covered completely with your insurance, and that is where an umbrella policy comes in. It really gives you additional peace of mind and the extra coverage when you need it most.

Q: What is the difference between comprehensive insurance and collision insurance?
A:
Comprehensive insurance cover will cover your vehicle for any damage that occurs. This includes road accidents, fire damage, damage caused by hail, and even damage caused by falling trees. These events are known as “acts of God” and are included in a comprehensive policy. Collision insurance on the other hand only covers your vehicle if it is involved in an accident. When you are financing a vehicle it is normally a requirement of most lending institutions and banks that you purchase both the comprehensive and collision insurances. A certain amount of collision insurance is required by each state. This amount varies by state so be sure to check on this.

Q: My child has a drivers permit, do they need to be added to my insurance policy?
A:
The answer to this question will depend on the state you are living in and your individual insurance company. Some states such as Indiana, Maryland, West Virginia, Illinois, North Carolina, Ohio, and Virginia will allow insurance companies to insist that teenagers who possess a driver’s permit be added to your policy. The majority of states do however allow teenagers with driving permits to drive one they are accompanied by an insured driver. Once accompanied by an insured driver they are covered under the insured driver’s policy. When the teenager receives their license though, they must take out their own insurance to be covered.

Q: Will any out-of-state tickets I have received show up on my insurance and raise my policy rates?
A:
This will all depend on which state you are living in. States that are part of the driver’s license agreement DLA will share your DMV records with other member states. If the state you live in and the state in which you received your tickets are part of the DLA, then yes all of your ticket information will be passed on. If this happens then your insurance company will have access to your DMV records. This will mean that your insurance premium will be higher depending on the number of tickets you have received.

Q: Do I need to purchase gap insurance for my new car?
A:
Gap insurance is an insurance that covers total loss of your vehicle and when purchasing or leasing a new car this can be very helpful. With gap insurance if anything happens to your vehicle you will be given the difference between the actual cash value of the vehicle and your outstanding vehicle loan. What this means, is that if your vehicle is totaled and you still owe $25,000, but your insurance company is only agreeing to pay $20,000, your gap insurance policy will cover the difference in this case giving you the additional $5,000 you need to clear your vehicle loan.