(Almost) Everything You Need to Know About Car Insurance
By Pekin Insurance · Feb 24, 2020 ·4 min read
The bumper cars won’t move. Neither does the giant Ferris wheel. All the rides are shut down, and you regret spending money at this lame amusement park.
When you pay for things, you expect them to work. That’s the way it goes with car insurance. But how should your car insurance payment go to work for you?
We’re glad you asked! We collected all the car insurance questions we could think of and answered them right here in this blog.
Car Insurance Shouldn’t Be a Roller Coaster
Your pulse pounds as you twist, turn, and twirl upside down at impossible speeds. The ride should stop at some point. Otherwise, you'll live in a constant state of dizziness.
You don’t want your auto coverage to have peaks and valleys. You need to know what you’re getting and when you’ll get it.
Let’s start with the basics.
How Much Car Insurance Do I Need?
Your state sets legal minimums for the amount of car insurance you need. This includes coverage for bodily injury and property damage, which kicks in when you’re legally responsible for an accident.
The following stats show why you should consider protection above state minimums:
- The average new vehicle costs $36,843. A low property damage limit probably won’t pay for another driver’s totaled, new vehicle if you’re at fault in an accident.
- The National Highway Traffic Safety Administration (NHTSA) estimates that the average auto fatality costs an average of $1.4 million over a lifetime.
- The NHTSA says a critical injury from a car accident costs an average of $1 million over a lifetime.
- Prices for medical services have increased 12% since 2012.
You pay for damages with your own money when you don’t have enough coverage.
Can I Use My Personal Car for a Business?
Yes, but you should talk to your insurance agent first.
A normal personal auto policy won’t cover your vehicle if it’s used for business purposes like:
- Ridesharing for Uber and Lyft
- Plowing snow
- Hauling heavy tools or equipment
- Towing trailers
- Delivering goods or services
You might need commercial auto insurance.
What Is Comprehensive Coverage?
Comprehensive coverage doesn’t pay for every kind of damage under the sun.
Instead, it offers protection against things you can’t control, like:
- Falling objects (tree limbs)
- Glass damage
- Animal-related accidents
What Is Umbrella Coverage?
An umbrella policy is designed to give you extra bodily injury and property damage coverage.
Medical bills, vehicle repairs, and legal fees add up quickly, especially when you can be sued for mental pain and suffering if you cause an accident.
An umbrella policy makes a lot of sense when you have a teen driver. According to the Centers for Disease Control and Prevention (CDC), teenagers are more likely to get in crashes than any other age group.
Is My New Vehicle Covered if I Can’t Contact My Agent?
It’s a Saturday. You just bought a new SUV at a car dealership.
You call your insurance agent, but the office is closed.
Don’t panic! Most insurance companies extend coverage to newly purchased vehicles for up to four days. In this situation, you should contact your agent on Monday.
Does My Policy Cover My Kids While They’re Away at College and Home for the Summer?
Students in your household are insured when they’re away at college and when they come home. They’re also covered for their own personal liability when they have permission to drive someone else's vehicle.
Auto Rates Are a Fair Game
You wander onto the midway, with its blinding, blinking lights and blaring music. You want to win a prize, so you step up to a basketball game.
You pay to play, and a buzzer sounds. The hoop lurches forward and back as you go to work.
Your shot travels up in a perfect arc, but the ball bounces out at every attempt.
The game ends, and you think, “The ball is bigger than the rim. That was a waste of money.”
When you see your car insurance rates increase, you might have similar thoughts. You should know why the prices for your coverage go up like any other product or service.
Here are the justifiable reasons why car insurance rates go up:
- More cars on the road leading to more accidents
- Rising maintenance and repair costs
- Distracted driving
- Catastrophic weather
- The number of uninsured drivers in a region
More Cars = More Accidents = Higher Costs
The number of registered vehicles has increased every year since 2010. This has led to more accidents.
As we already mentioned, the cost of medical services has risen by 12% since 2012. Vehicle repair costs have reached an all-time high, too.
Cars come equipped with parking assist, lane departure warnings, and more. This technology adds safety and convenience, but it comes at a price. Average maintenance and repair costs rose nearly 9% from 2018 to 2019.
Studies show the human brain is terrible at multitasking. You put yourself at risk when you drive and text, call, or eat.
Unfortunately, distracted driving led to 2,628 fatal crashes in 2018.
Extreme weather such as floods, hurricanes, and tornadoes could lead to higher car insurance rates for customers in affected regions.
The National Centers for Environmental Information (NCEI) offers eye-opening numbers for disasters that happened in the U.S. in 2019:
- 14 catastrophic weather and climate events exceeded more than $1 billion in losses each.
- It was the fifth consecutive year that saw 10 $1 billion weather and climate disasters.
The Number of Uninsured Drivers in Your Area
Your auto rates could increase if you live in an area with a high concentration of uninsured drivers. According to the Insurance Journal, the percentage of uninsured motorists varies by state, with Florida having the highest uninsured rate at 26.7%.
How to Keep Your Rates Lower
Take these steps to keep your rates lower:
- Ask your insurance agent about coverage discounts.
- Give up your lead foot. Drivers get better rates if they don’t have speeding tickets.
- Ask for a higher deductible. Keep in mind, this will increase how much you pay for each claim.
- Before you buy your next vehicle, see how much it costs to insure it.
What Discounts Do You Have?
Pekin Insurance offers auto discounts for:
- Insuring multiple cars.
- Bundling auto and home coverage.
- Making recurring EFT payments.
- Paying your premium on an annual or semi-annual basis.
- Being a good student (under age 25 with a GPA of 3.0 or better).
Go here to learn all about our auto discounts.
What Happens When the Ride Breaks Down?
Who likes getting stuck? No one. When the ride breaks down, you want to get off of it and move on.
You have the same feeling when your car quits or gets a flat tire. Pekin Insurance offers 24/7 Roadside Rescue for situations like this.
When your car gives you tough love, Roadside Rescue offers:
- Tire changes
- Fuel delivery
- Lockout services
- Battery jump starts
- And more
Roadside Rescue is available to everyone who has a personal auto policy with us, and it’s automatically included if you have comprehensive coverage. It’ll help you keep your day moving along.
Figuring out your car insurance shouldn't be a roller coaster or carnival game. Your local, licensed Pekin Insurance agent will help you get the auto coverage you deserve!