What determines my automobile insurance premium?

These are the most common factors that may determine your insurance rate/premium.

• Your age
• Gender
• Marital status
• Where you reside
• How much you drive
• The typed of vehicle you drive
• Driving record
• Your credit history

Check out more related articles:
“How does my driving record affect my insurance premium?”

How do I know if my policy is covered by a legitimate automobile insurance agent or company?

Most states have a department of consumer affairs to educate, warn, and update consumers about regulations, recalls, scams, or allow consumers to file a complaint against misrepresentation by an individual or a company.

One example is the State of Massachusetts Department of Consumer Affairs. This state agency provides an online verification tool. You can check to see if your automobile insurance agent is properly licensed by the state where he/she is providing insurance services. In this example, Massachusetts resident can verify insurance agents in their own state. In most of the states’ consumer affair websites you will find the license verification tool by searching under “Insurance”, “License”, or “Find an insurance agent”.

What documents or information will I be asked to present to an automobile insurance company if I want coverage for my car?

A valid state drivers license, social security number, vehicle summary (vehicle VIN number, make, model, and mileage), and vehicle lease and finance company information.

I am leasing a car, what kind of automobile insurance coverage should I get?

Beside the usual comprehensive, collision, liability coverage, you may also be required to carry gap insurance. The idea behind gap insurance is to act as an extra safety net for you and give you a piece of mind.

For example, if you lease a car with the value of the car at $20,000 and after 3 months an unforeseen event occurs, whether an accident or natural disaster that reduced your new car to disrepair (totaled). Your automobile insurance company may only cover what they believe is the value of the car at $16,000. Unfortunately, the finance lending company you have a contract with may still want to recoup the total loss value of the car at $20,000. The gap in payment is $4000, the amount that you are responsible for, and that is where gap insurance comes in to alleviate the extra cost.

Do I really need the most comprehensive automobile insurance coverage and what does it really cover?

No, you are not required to have the most comprehensive automobile insurance coverage plan. The whole purpose of comprehensive coverage is to ensure that you are alleviated from significant financial loss in the event of damages to your vehicle from an accident, natural disaster, or if your vehicle has been stolen. Also remember, comprehensive automobile insurance coverage may also cover towing cost and/or mechanical problems experienced on the road.

If you are concern about being able to afford specific automobile insurance plans, you may want to consider adjusting the deductible to a level that is affordable to you. The deductible is the part of your insurance policy that you are responsible for paying. Typically, for a comprehensive automobile insurance the higher cost of deductible can mean lower cost of insurance premiums. It is a trade-off, the total annual cost of your automobile coverage can be lowered by selecting a higher deductible. Consumers should be reminded that to compare this saving with what you can pay in the form of out of pocket expenses (Absorbing the cost without financial reimbursement from your insurance company.)

While driving in the car capital of the world, California, one should remember, California state law which reads: In order to legally drive on the streets of California, you must either purchase a type of insurance called “liability insurance” or deposit a bond with the Department of Motor Vehicles.

I’m low on cash, so what is the minimum amount of insurance coverage I can have and still drive legally?

First, ask your insurance agent for all the possible discount you are qualified for, that is, if you have a clean driving record you should ask and reap the benefits of your driving history.

Next, if you are not able to burden the cost of high automobile insurance premiums, for the short term, there is a minimum coverage available in the form of liability insurance. It may also be required by your state to have all drivers to possess the minimum liability insurance.

You would need to check your local state DMV for the minimum required insurance coverage for your vehicle, or ask an automobile insurance agent to see what the most cost-saving automobile insurance plan for you. Requirement varies from state to state but one thing is certain, in most states, drivers are required to have some form of liability insurance.

Here are cases of states mandating specific amount of liability insurance coverage for drivers. In California, the minimum liability insurance requirements for private passenger vehicles:

• $15,000 for injury/death to one person
• $30,000 for injury/death to more than one person
• $5,000 for damage to property

Liability insurance compensates a person other than the policy holder for personal injury or property damage (comprehensive or collision insurance does not meet vehicle financial responsibility requirements)

In 2008, the Texas state legislature approving a bill that require Texas drivers to have automobile liability insurance coverage with the minimum liability limits to

• $25,000 per injured person
• $50,000 for everyone injured in an accident
• $25,000 for property damage, the 25/50/25 rule

In New York, the state’s Department of Motor Vehicles takes a more direct approach, issuing a stern warning for individual who drive without automobile insurance: “No insurance means No plates”. In addition, you must keep the liability coverage on your motor vehicle for as long as you own and operate your vehicle.

What happens if I am driving without automobile insurance and get pulled over by a police officer?

The penalties for driving without automobile insurance depends on the state where reside. In state like Texas, once you are pulled over by a police officer, you will be asked for your license and proof of insurance. Texas now provides their officer with onboard computer applications which is able to transmit and verify insurance information instantly. Drivers in Texas should expect heavy fines for driving without automobile insurance.

California residents and commuters should be aware that if you drive a privately owned vehicle or any other motor vehicle without liability insurance or a bond; a police officer may request evidence of liability insurance or a bond at the time of a traffic stop. If you do not have evidence of liability insurance or a bond during a traffic stop, the fines can be from several hundreds of dollars to an amount that exceeds $1,000. If you get into an accident and do not have liability insurance or a bond, you will lose your driver’s license for one year. If you cause the accident and do not have liability insurance or a bond, you may have to pay the injured person yourself and these costs may be substantial.

In the State of New York, your driver license and vehicle registration will be revoked for at least one year if the DMV receives information that you were involved in a traffic crash while driving a motor vehicle not covered by liability insurance. Your license and registration will also be revoked for at least one year if someone else driving your uninsured vehicle is involved in a traffic crash and is convicted of operating without insurance. The traffic court fine could be as much as $1,500 for driving without insurance or allowing someone else to drive your uninsured vehicle. You will have to pay the DMV an additional civil penalty of $750 to get your license back after revocation.

Protect yourself out there on the road and get automobile insurance, you’ll be glad you did.

If you want to learn more about the requirements for automobile insurance coverage in your state, below is a link that will refer you to official website of the Department of Motor Vehicles for all 50 states. http://www.dmvnv.com/50_state_dmv_list.html.