Auto Insurance FAQ
What is auto insurance?
Auto insurance is a contract between you and an insurance company. In exchange for your premium payments, the insurance company agrees to pay for specific car-related financial losses during the term of the policy.
Why do I need auto insurance?
Auto insurance provides financial protection against physical damage or bodily injury resulting from traffic collisions. Additionally, it can cover liabilities arising from incidents in a vehicle. In most states, having auto insurance is also a legal requirement.
How is my auto insurance premium calculated?
Your auto insurance premium is calculated based on several factors, including your age, gender, driving history, the type of car you drive, and your location. Insurance companies use statistical analysis to determine the risk associated with these factors.
What is a deductible in auto insurance?
A deductible is the amount you pay out-of-pocket for a loss before your insurance coverage kicks in. Higher deductibles typically mean lower premiums, but also higher out-of-pocket costs in the event of an accident.
What is a coverage limit?
A coverage limit is the maximum amount your insurance company will pay for a covered claim. It varies depending on the specific coverage and policy.
What is comprehensive coverage?
Comprehensive coverage pays for damage to your vehicle caused by events other than collisions, like fire, theft, vandalism, or natural disasters.
What is collision coverage?
Collision coverage pays for damage to your vehicle resulting from a collision with another vehicle or object, or from flipping over.
What does liability coverage mean?
Liability coverage pays for bodily injury and property damage that you cause to others in an accident. It is a legally required coverage in most states.
How does uninsured/underinsured motorist coverage work?
Uninsured/underinsured motorist coverage pays for damages and injuries resulting from an accident caused by a driver who has no insurance or inadequate insurance.
What is personal injury protection (PIP)?
PIP is a coverage that pays for medical expenses and, in many cases, lost wages. It’s also known as “no-fault” coverage because its inherent comprehensiveness pays out claims agnostic of who’s at fault in the incident.
Does auto insurance cover rental cars?
Your personal auto insurance policy may extend coverage to rental cars. However, this can depend on your specific policy and the insurer. Always check with your insurer before declining rental car coverage.
How can I lower my auto insurance premiums?
You can lower your premiums by maintaining a clean driving record, choosing higher deductibles, bundling insurance policies, taking defensive driving courses, or asking about discounts (like good student or safe driver discounts) and comparing quotes from other insurance companies.
Have More Questions?
Understanding insurance can be a daunting task, but remember, you don’t have to figure it all out on your own. We’re here to help. If you have additional questions or if there’s anything else you’re uncertain about, don’t hesitate to ask the Hatch.AI chatbot or call one of our qualified agents. We’re always ready to assist, providing instant responses and clarifications to make your insurance journey smoother.
