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Things to remember...
  • Auto-renewal is offered by many auto insurance companies
  • It is a way to get coverage immediately and to stay covered without having to remember to pay
  • Make sure you know the renewal dates to avoid misunderstandings or a lapse in policies

When shopping for auto insurance, some people wonder about auto-renewal. In fact, this issue is not unique to the insurance industry.

Auto-renewals are a problem for many different types of businesses.

Consumers sometimes forget that they took out an auto-renewal; then they complain that the company deducted the funds illegally.

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Auto-Renewal Issues
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Some of the problems with auto-renewals include:

  • Forgetting about your agreement – One problem that can occur with an auto-renewal is that you may forget you signed up for it. If you do not keep careful records of when expenses will be deducted, you may find yourself lacking in funds due to the unexpected withdrawal, which causes some customers to be upset with the insurance company and to cancel their policies.
  • Failing to have sufficient funds to cover the withdrawal – Another problem that occurs with automatic renewal is that the amount may be substantial if you renew annually, creating a significant headache for consumers who had forgotten when it was supposed to renew. Again, keeping careful records of when expenses come out is important.
  • Duplicate coverage – When someone drops a previous coverage and then starts a new policy but fails to inform the former insurance company, they may not know you want to cancel in time to keep the auto-renewal from taking place. Thus, in some cases, duplicate coverage can result.
  • Failure to have claims paid due to lapse – If you are caught between a lapsed period due to having insufficient funds, you will not be covered during this period. If you have an accident during the time you were uncovered, the insurance will not pay your claim.

According to confused.com, complaints are often recorded with insurance providers that deal with disgruntled customers who are unhappy with the way an insurer handled an auto-renewal.

But keep in mind that, once you agree to an auto-renewal — whether in real life or online — you have a financial and legal responsibility to fulfill on your end.

Advantages and Discounts for Auto-Renewal
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Remember that insurance companies often provide a discount to consumers who agree to allow their payments to renew automatically. You can sometimes save hundreds of dollars by agreeing to this with certain companies online.

But you have to remember when the deduction is set to occur and remind yourself so that the funds will be available.

Regardless of the number of consumer complaints that are fielded weekly among insurance providers concerning auto-renewal, there is nothing illegal about it.

Like any agreement, you must abide by the contract that you signed.

It’s a Contract

With digital online services so prevalent today, it is sometimes easy to forget that you are signing a legally binding contract when you agree to purchase insurance or to sign an auto-renewal agreement.

Even though it is not done in a traditional manner with pen and paper, your digital signature carries just as much legal and financial jurisdiction as if you signed it with pen and paper.

So there is nothing illegal about this process.

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When It Would Be Illegal

There are only one or two situations in which an auto-renewal would be considered illegal — that is if you did not agree to have the funds deducted at a particular time each month/annually and the company did it anyway.

This instance is often referred to as “slamming,” wherein a salesperson sells you a policy without your permission, assumes a sale you did not agree to, or otherwise thwarts the legal process that you are entitled to through the FTC (Federal Trade Commission).

Another case that might be considered illegal on the part of an insurance company is when they failed to honor your policy or your claim when you paid the premium through auto-renewal.

As long as the funds were available at the time of renewal, a company cannot later argue that you did not have the funds when they deducted your premium.

Otherwise, they would deny coverage falsely, which is considered fraud.

Insurance Regulations
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The insurance industry has very strict regulations regarding the conduct of insurance agents, and they are not allowed to misuse or abuse their position.

If you suspect that you have been a victim of this, you can go to your state insurance website and report the incident. See also the state map link we gave you at the beginning of this article.

Also, you may need legal assistance if you were denied a claim due to an auto-renewal that a company failed to honor.

Remember that most mistakes happen honestly. Most insurance companies realize the importance of honoring claims and policies. They understand the importance of your coverage being intact and will try to work with you should your premium not be paid.

Most consumers also know that they must have the funds available at the time of the deduction and are responsible for making sure the premiums are paid on time.

The best rule of thumb is to communicate both at the beginning of a policy and throughout. Clear communication and understanding of the policy, as well as the payment rules, will avoid unneeded misunderstandings, cancellations, and legal issues.

Remember also that an insurance company cannot just cancel your policy automatically. They must give you a 30-day warning from the time that your payment failed to post to your account until they cancel.

This state law is virtually in every state that requires insurance. Again, check with your state insurance site such as this one for Arizona residents to find out where you stand with the state insurance regulations.

Shop and Compare
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The best line of defense against misunderstandings regarding auto-renewal is to shop around and compare before you buy a policy.

Feel free to ask questions of your insurance companies that you are considering and ask them about auto-renewal.

Find out how often it will renew, how much money you may save using this feature, and the exact date of renewal.

Knowing this information at the front end will save you a lot of headaches later on. Most companies do not require auto-renewal to join, but it makes your coverage start more quickly and may also save you money on your policy.

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Here's what you need to know...
  • If you own a vehicle that you plan on operating, it’s your duty as the legal owner of the vehicle to register it and display your license plates on the vehicle at all times
  • When you don’t have a valid license plate or a temporary placard, you can’t legally operate or park the vehicle on public streets and highways
  • If you recently purchased a vehicle or you’re moving to a new state, it’s your duty to apply for your license plates and tags in your state of residence
  • Some states will ask to see your proof of insurance before you’ll be issued plates and tags but that’s not a requirement everywhere
  • You need to carry the minimum amount of mandatory insurance that’s required in your state even if you’re not required to show proof when you’re submitting your application

When you buy a new vehicle or you’re moving from one state to the next, it’s your responsibility to register the vehicle.

Applying for a vehicle registration through the DMV isn’t just recommended, it’s required. If you fail to register the car and display your license plates on your vehicle where the placard is visible, you can be cited or worse.

No one wants to visit the DMV, but visiting the DMV unprepared is what will leave you making multiple trips to complete a single transaction.

While sitting at the DMV and waiting for your number to be called is on the bottom of the list of things that you’d like to do, you can get in and out if you’re prepared.

Enter your zip code into the FREE tool above to compare car insurance rates from multiple companies!

One step to prepare to submit a complete application is to get auto insurance. Here’s what you need to do:

Step One: Make an Appointment with the DMV

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Most states have changed their inconvenient system to reduce the time it takes to complete typical transactions at the DMV.

If you don’t want to wait for hours in the lobby just waiting to be called to the counter, make an appointment at your local office.

By doing this, you can register a car or even change your license all at a specific time of day.

Step Two: Find Out What Type of Auto Insurance is Required By Law

Motor vehicle liability insurance is mandatory in most states. If you’re in a state where auto insurance is compulsory, it’s your duty to review the minimum auto insurance requirements.

If you carry what’s required by law and you buy your coverage from a carrier licensed in the state, you’ll be in compliance with the insurance law.

While the actual limits that are required vary from state to state, most states require the same mandatory coverage options.

If you’re not familiar with what a basic policy consists of, here’s a list of what you can expect to see on a bare minimum policy:

  • Bodily Injury
  • Property Damage
  • Personal Injury Protection (required in no-fault states)
  • Uninsured Motorist Protection (required in some states)

Step Three: Get Quotes for Coverage

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Now that you have an appointment and you know what type of coverage you must carry, you need to start to get premium quotes.

Quotes are estimates that will help you price shop and choose a value-priced policy from a respected carrier.

Make sure that you compare the cost for different limits of coverage and research each company before you make a final decision.

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Step Four: Bind Your Coverage Before Going to the DMV

Once you have selected a policy, you need to activate the coverage before you go to the DMV. It’s your duty is purchase insurance and then maintain continuous coverage as soon as the car is registered.

If you’re not driving the car to the DMV, you can select the date of your appointment as the effective date.

If you’re driving the car directly to the DMV to get your plates, you need to have insurance for the ride there just in case you crash.

Step Five: Bring Your Proof of Insurance With You

One of the great things about technology is that you can have your proof of insurance emailed to you or printed from the Internet right after you activate your coverage.

Make sure to print the ID cards before you go to the DMV.

It’s not a definite that the DMV agent will ask to see the proof, but having it can prevent delays.

Step Six: Keep Your Auto Insurance Payments Up-to-Date

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When your plates are issued, it’s tempting to let your coverage lapse. The last thing you want to do is violate the law and have your registration suspended.

Insurance companies often electronically report your coverage to the DMV. If the state sees that you have canceled your coverage, your tags will be suspended and you will be fined.

While you do have to visit the DMV to apply for plates, you don’t have to spend hours of your day taking care of business. If you do your homework and you prepare yourself for the process before you go to the site, you can get in and out of the office quickly.

Never go to the DMV without active insurance. If you don’t have coverage, use an online quote comparison tool and compare rates today.

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Here's what you need to know...
  • U.S. car insurance laws differ from international laws
  • Insurance laws on coverage vary from country to country
  • Rental car companies may allow you to purchase insurance when you book the rental
  • Shop and compare companies to see if you can get car rental insurance that will work overseas

When shopping for car insurance, one question you need to ask is whether your car insurance covers you when you are on vacation abroad.

There are different laws and regulations regarding car insurance for car owners, so it’s important to know those differences.

In addition, some car insurance is not valid at all once your cross the border into another country. So, if you travel a lot to other countries or are planning to travel to another country soon, it pays to do your research before purchasing.

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Will American car insurance cover a rental overseas?

Side front view of black car.

The short answer is, “no.” In general, the car insurance that you carry on your car in the U.S. will not work overseas because you are not driving the same car.

Unless you plan to have your car shipped overseas, you will not have your car with you when you land in another country. You will be driving a rental car.

Since the rental car is a different car than the one you normally drive, your current insurance will not do.

Options for Coverage

The solution to making sure you are covered when you are abroad is to either get rental car insurance or vacation insurance for any other expenses you might have on your vacation that you forfeit due to an accident, illness, or other situation.

Here are some differences between the two:

Rental Car Insurance

Rental car insurance covers the rental car you drive while you are visiting abroad. It is brand new insurance that is good only for the time that you rent the car.

While you are driving the rental, you are responsible for any damages incurred.

Sometimes the rental car company will offer insurance in order to protect their investment.

If you choose not to purchase rental car insurance from the rental company, you will need to compare insurance companies to see where you can find car rental insurance.

Should you drive without either type of coverage, you are setting yourself up for disaster if an accident occurs during your trip.

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Vacation Insurance

Vacation insurance — or travel insurance as it is often called — can be very misleading because it sounds like it might cover rental car insurance on one’s vacation.

Vacation insurance, however, is not car insurance. It only covers the loss of items you might lose that are valuable while on vacation.

It can also pay for any expenses that you incurred for your vacation, including accommodations, recreation, or other rentals in the event that your vacation had to be canceled beyond the cancellation date or cut short because of illness or other emergencies.

While vacation insurance is a good thing to consider if you are planning a trip abroad, it in no way provides insurance for your rental car.

Tips on Getting the Best Rental Car Insurance When Traveling Abroad

Winding mountain road against the sun in early morning. Mountain Golija, Serbia.

Here are some good tips on how to get the best rental car insurance when you are abroad.

  • Book your rental in advance of your trip This will allow you to compare prices of different insurance companies ahead of time so you won’t be rushed to research the best deal once there.
  • Take advantage of added coverage Consider whether or not you would like to add roadside assistance options, replacement parts coverage, and other items to your policy.
  • Read through your current auto insurance policy Check your current policy to see if there is an option for international coverage or rental car coverage. Then ask your agent to compare policies to see which offers the best deal when you plan to travel abroad.
  • Track your purchases Use a credit card when reserving your rental car so that there will be a way to track the rental car purchase. Check the regulations of international insurance and travel and compare with what your company offers when you are shopping for coverage.

Finding the Right Coverage

The first step in getting car insurance when traveling abroad is to shop and compare. But you have to know what you are looking for.

The best idea is to see if any of the policies you are considering have rental car insurance for international travel. Some do carry car insurance that you can add to your current policy or as an extra ‘rider’ that you purchase.

If you do determine that the policy you are considering does not cover that, you may want to shop further. It is important to make sure you are covered from accident, theft, or damage when traveling abroad.

Remember, the car you are driving in such circumstances is not your own. So your normal car insurance may not work. But you are still liable for damages if you are in an accident.

The court system and police reporting may be different abroad than in the U.S. as well. So keep all of these things in mind and shop for car insurance before booking your vacation.

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Here's what you need to know...
  • Car insurance saves you from legal actions and loss
  • The coverage also provides peace of mind when you are driving
  • Auto insurance protects your property and makes it easier to replace or repair damages

Car insurance, or proof of financial responsibility, is required in every state in the U.S.

There are major reasons why most states require car insurance. In order for you to understand just how vital auto insurance coverage is, read the article below.

Then, enter your zip code above for car insurance quotes from top companies in your area!

Advantages of Car Insurance

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The advantages of having auto insurance far outweigh the disadvantages when you think about the potential loss of property due to an accident.

Here are some of the advantages of having car insurance:

  • It reduces the number of lawsuits By carrying insurance, you protected from accidents, regardless of whether they are considered your fault
  • It gives you peace of mind If you do not have insurance, you would have to use your own money to get your car fixed after an accident
  • It ensures reliable transportation Many insurance policies offer additional car rental insurance as an option

It’s the Law

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Carrying the state minimums on auto insurance is the law.

If you are in an accident and were carrying no liability and personal injury insurance, you could be looking at court fines in addition to civil liabilities if someone is injured or killed.

In some cases, failing to have insurance and then being involved in a serious accident could result in felony charges being brought against you, especially if DUI is involved or any sort of reckless or distracted driving.

Most of this will depend on the extent of injuries. A negligent homicide charge is the most serious and is considered third-degree murder.

You are required to have proof of insurance in your car at all times.

If you are stopped by a police officer during a routine traffic check without being able to provide insurance coverage papers, you could be fined anywhere from $400 to $1000.

Check the regulations for your particular state to find out how that applies to you.

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What to Look for When Comparing Policies

When you are shopping for car insurance, there are some important aspects that you should look for to ensure that you get what you need.

Many auto insurance carriers have all of these, but some have none or only some of them, so you should consider carefully before purchasing:

  • Uninsured Motorist Coverage This type of coverage is designed to cover anything the driver does not carry with his insurance if they are ruled at fault in an accident
  • Underinsured Motorist Coverage Underinsured motorist coverage is intended to cover damages or injuries that you receive from a motorist who does not have adequate coverage
  • Accidental death rider  Some insurance providers allow for an extra accidental death benefit in the event of an accident in which you or others in your car are killed
  • Medical Expenses Coverage This type of coverage covers any medical expenses and loss incurred due to the accident in which you are involved
  • Motorcycle coverage If you ride a motorcycle, it would be wise to purchase motorcycle coverage as well. Remember that auto insurance itself does not cover motorcycle accidents
  • Car rental Car rental insurance covers the cost of car rentals that you use while your vehicle is being repaired

These are a few of the options that you will encounter when shopping for car insurance.

Whether or not you select these extra options and riders is totally up to you.

You will just have to consider whether your risk is significant enough to justify the cost you would spend on monthly premiums when you choose any or all of these options.

The Ultimate Question

When shopping for car insurance, the ultimate question you need to be able to answer is how much coverage you actually need.

Start with the state minimum requirement for auto insurance, and then consider whether adding more coverage to your policy would be a good choice.

You always have to balance this with how much insurance you can actually afford. If you take on more insurance premiums than you can afford, you may end up dropping all of it.

Stick to the highest amount of coverage you can comfortably afford and compare rates among similar carriers.

Be sure to ask plenty of questions on anything you do not fully understand.

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Here's what you need to know...
  • Car insurance companies can drop for you for different reasons
  • DUI’s, traffic violations, and high-risk behavior can create this situation
  • Failure to pay premiums is cause for non-renewal or cancellation

Sometimes things are beyond our control. Decisions are made by companies sometimes that affect our lives in a big way, even if we do not feel it was justified.

You may be hit by a driver. You may have a medical emergency, which causes you to make several late payments. Or you may have a new teenage driver who has a lead foot and several tickets to show for it.

Many of these unexpected scenarios could cause your insurance company to cancel your policy.

Start comparison shopping now to make sure you have the right coverage at the right price. Enter your zip code in our FREE tool to get started!

Reasons Your Car Insurance Company Might Drop You

AdobeStock_3404582-1600x1600Why might your car insurance company drop you from your coverage? Here are a few reasons this could happen.

Keep in mind that this list is not exclusive, but these are the most common reasons this might happen.

– Failed to pay your premium

Sometimes we get swamped with bills that we can’t pay or get behind on other responsibilities. Sometimes it’s just an oversight on our part.

Whatever the reason, if you fail to pay your insurance premium, the company will drop you from your coverage.

They are required to warn you about this before they do it.

If you receive an email or letter stating that your coverage is about to be dropped, you can quickly get reinstated to avoid having the policy canceled.

– Collected too many points on your driving record

Insurance companies base your insurance premiums on the number of points that you accrue on your driving record. These points come from your driving behaviors and include many factors.

– Failed to provide adequate information on your application or false information

Providing false information on an insurance application is a felony and is considered insurance fraud.

You should always be honest when you fill out insurance forms, but you are only held responsible for what you know to be true.

You will not be held liable for statements that you did not understand. But insurance companies can still drop you if the information you provided is incomplete, inaccurate, or false.

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Other Reasons for Cancelation

Below are some other reasons your car insurance company might drop your coverage.

For this reason, it is important to always drive responsibly, so that you will avoid some of the situations that can create this problem with your auto insurance.

  • Reckless driving
  • DUI’s
  • Moving traffic violations

This list is not exclusive, but it covers a majority of reasons as to why your insurance company might drop you.

What to Do When Your Car Insurance Provider Drops Your Coverage

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When your car insurance provider drops your coverage, they are required to send you an explanation before terminating your coverage.

By law, they are required to give you a 30-day notice before ending your policy so that you have a chance to find replacement coverage in time.

You can find more consumer information at the above link to learn more about your rights as an insurance consumer.

What do I do next?

When your insurance company drops you, you have a few options. First, you can appeal the decision to the insurance company and try to rectify the problem that caused them to drop you from your policy.

For example, if the reason was due to incomplete information or unpaid premiums, you can often repair this situation by simply paying any back premiums due and paying the first premium in advance.

If the company requires more information or the information you initially provided was inaccurate, simply tell them that you made a mistake and gave them the new information they need.

As long as they believe you are honest, they will likely reinstate you.

If you are starting over with a new company, it is relatively easy to implement a new policy right away. Simply compare and shop the various options and contact the provider of your choice to get a free quote.

You can join an indemnity company. If the decision to drop you was due to recent traffic accidents, DUI’s, or reckless driving, it may be a bit harder to get reinstated.

Some insurance companies simply do not want to take the risk of a high-risk driver. However, you can ask any provider you talk to about joining their indemnity company.

Indemnity Company Options

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Most major car insurance providers have an alternate company that they pull funds from to cover high-risk drivers. You may be considered high risk if you:

Again, this list is not exclusive, but it covers many situations where you might be considered high-risk.

So, if you fit into any or all of these categories and that is the reason your previous company dropped you, you could ask if you qualify for the indemnity version.

Keep in mind these policies tend to have different stipulations or maximum benefits and higher in premiums than the basic insurance policies, so read the fine print.

But this cost is understandable because the higher the risk to the insurance company, the more you must pay in premiums.

When shopping for auto insurance, compare and check the finer points of the policies as you shop and ask questions to determine what your coverage entails.

With a little time and research effort on your part, you will be able to replace your current insurance if your provider is threatening to drop you.

Make sure though that you get another car insurance policy in place before the previous provider drops you so that there are no gaps in coverage.

Browse the insurance companies and see which ones fit your needs then contact an agent to learn more about what you can do to protect yourself and your car when your insurance provider gives you a cancellation notice.

Remember, it’s not worth the risk to drive without insurance.

Make sure you have the right coverage at the right costs. Enter your zip code into our FREE comparison tool to get started!

Here's what you need to know...
  • Liability auto insurance is mandatory in most states
  • If you own a vehicle and you don’t purchase auto insurance, you’re violating the law when you license your vehicle and when you drive that vehicle on public roads
  • The penalties for driving without insurance vary by state. Some of the common penalties include: fines, suspension of license, suspension of registration, vehicle impoundment and jail time
  • If you’re involved in an accident and you don’t have insurance, a judge could order that your wages be garnished to pay for damages
  • Having an insurance lapse on your record or an infraction can affect your future insurance rates
The average consumer spends around $841 per year on their auto insurance coverage. If you’re spending several hundred dollars per year on insurance benefits that you don’t want to use, justifying the expense can be difficult.

Since most states have created mandatory auto insurance legislation, you don’t necessarily have a choice when it comes to whether or not to take on the expense.

If you’re tempted to let go of your auto insurance to save money, think again. The consequences for driving without insurance can be very major.

From the legal repercussions to the economic repercussions, getting caught without auto insurance can be financially devastating. Here are some of the potential blowbacks for driving without valid coverage.

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Is auto insurance really mandatory?

AdobeStock_75682303-1600x1600Insurance is not usually a product that’s legally required. Home insurance, renters insurance, life insurance, and disability insurance are all things you can choose to own.

Auto insurance is an exception to the rule. In a majority of states, you must have auto insurance or proof of financial responsibility to drive.

Car insurance is mandatory because it protects third-parties.

Since the state can’t monitor your finances and your ability to pay for damages that you cause, the only way to ensure consumer protection is to require car insurance on all registered cars.

Are there any states where it’s legal to drive without insurance?

Not all states have mandatory insurance laws. In some states, you can legally drive without insurance if you can furnish acceptable proof of financial responsibility.

It might include a certificate of self-insurance, deposit, or a surety bond filed with the Department of Motor Vehicles.

Only two states allow drivers to drive without auto insurance or other proof of financial responsibility — New Hampshire and Virginia.

If you’d like to drive without insurance in either of these states, you must pay an uninsured motorist vehicle fee.

You’re still obligated to pay for damages that you cause.

What are the legal consequences for driving without insurance?

Getting caught without insurance can be a major headache. Not only do you have to worry about fulfilling the mandatory court appearance requirement, but you also have to worry about how expensive the fines are for being an uninsured motorist and getting cited.

The penalties for driving uninsured vary by state, but here are some of the most common ones:

  • Fines between $100 and $2000 for a conviction (fees get higher for multiple offenses)
  • Court fees and other administrative costs
  • Suspension of your driver’s license for a specified period
  • Suspension of registration
  • Mandatory community service
  • Time in jail (typically up to six months)
  • Reinstate fees and an SR-22 requirement for up to three years

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Can you be assessed penalties without being pulled over by law enforcement?

If you think that being a safe driver can help you avoid penalties, think again. In most states, it doesn’t take a citation to get fined or penalized for being uninsured.

That’s because many states have invested in electronic verification systems that check the status of your insurance real-time.

Electronic verification and random verification systems are in place to check to see if cars are insured even when the driver isn’t stopped.

By requiring insurers to prove that a car has insurance, the state is better able to keep up with uninsured drivers. It helps the state collect money and helps keep the rate of uninsured drivers down.

What happens if you don’t have insurance when it is verified?

Dollarphotoclub_103413467 (1)-1600x1600Every state has its own verification process in place. In states with more advanced systems, insurance coverage is being verified and reported 24 hours a day, seven days a week.

These types of systems check the status of your insurance by using your VIN and by requiring licensed insurance companies to report when a policy is started or canceled.

If there’s a report that a policy has canceled, the state will request that you submit proof of insurance for the days that the lapse has been reported. If you can’t do this, then you’ll be ordered to pay a fine.

You will also be asked to present proof of new insurance. If you’re unable to do this, your registration will be suspended.

Do you pay more for auto insurance when you’ve been an uninsured motorist?

Insurance companies don’t like to do business with risky drivers. Doing business with a risky driver means that the insurance company will more than likely have to pay a claim while they are insuring the risk.

That’s why companies charge people with high-risk records more money.

If you’ve been convicted of driving without insurance, you could easily fit into the high-risk category.

The company cannot know if you’ve made a claim in the past because you’ve had a lapse in coverage. So, if you have a lapse expect to pay more for your insurance in the future.

Loss of Discounts

Not only will you be a higher risk, but you’ll also lose large discounts for failing to maintain coverage.

Most companies offer both loyalty discounts and prior insurance discounts to people who’ve been with the same carrier for years. These discounts drive rates down significantly.

If you want to price auto insurance rates, use an online comparison tool and see how much you’ll pay for full coverage or basic policy.

Be sure to be honest with your answers to get the most accurate quotes. Once you find the right policy, you won’t have to worry about the penalties or other consequences for being uninsured.

Enter your zip code in our FREE tool to start comparison shopping today!

Things to Remember...
  • A standard Personal Auto Policy is sold in either a 6-month or a 12-month term
  • Auto insurance policyholders are free to cancel their auto insurance policies at any time and for any reason
  • If you pay your premiums in advance and cancel your policy mid-term, you’re eligible to receive a refund for the unearned premiums
  • It’s common for auto insurance companies to subtract a short-rate fee from your refund for the administrative costs associated with a client canceling their policy early
  • Some states don’t allow insurance companies to charge an early cancellation fee. In this states, you’ll receive a pro-rated refund for all of your unearned premiums

You can never really predict how long you’ll need insurance on a vehicle. You may buy insurance with the intentions of keeping your policy for the entire year just to find out that you’re moving out-of-state months later. Since it’s your choice to enter into a contract with an auto insurance carrier, it’s your choice to decide when to end that contract.

All licensed insurance companies must give you the option to end your contract at any time, but that doesn’t mean that early terminations don’t come at a cost. If you cancel your policy before the term expires, there’s a good chance you’ll be charged a cancellation fee.

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Your Right to Cancel Your Policy

AdobeStock_58145823-1600x1600An auto insurance policy is a binding contract between you and an insurance carrier. Under the terms of the contract, you agree to pay your premiums and fulfill certain obligations so that the insurance company will provide you with the coverage that’s listed on your declarations page. If you don’t pay, you don’t have coverage.

The terms and conditions written into your contract lay out your duties as an insured. They also explain your rights as a policyholder. One of the rights that you have as a party in the contract is that you can cancel your policy at any time. The insurer isn’t given that same right because it could put a consumer in a dangerous place without protection.

When can your insurance company cancel your policy?

If an insurance company had permission to cancel your policy for any reason, it’d be common for carriers to cancel coverage immediately after a claim or a moving violation. Fortunately for you as a consumer, you have rights that protect you from losing coverage at any time during your term.

The only time a company can cancel a policy without notice is when the policy is still in the underwriting phase. The company has between thirty and sixty days to underwrite your application and to decide if they want to take on the risk. If they discover something on your record, they can change their mind during this time.

If you lied on the documents or you’ve been convicted of fraud, your policy will be rescinded.

Policyholders who are guilty of fraud or material misrepresentation aren’t protected from mid-term cancellations. Here are the reasons your policy can be canceled after the sixty-day cooling off period:

  • You don’t pay your insurance premiums on time
  • Material misrepresentation
  • Material change in risk assumed that increases the possibility of hazard
  • Substantial breach of duties written in the contract

What is an insurance term?

An insurance term is the period on your declarations page or insurance ID cards where your coverage is effective. As long as you pay your premiums and don’t change the risk present on the policy, your premiums will remain the same. When a policy cancels effective the expiration it’s called a flat cancellation.

Reasons a Policyholder Will Cancel Their Policy Early

You don’t always have control over the situations that present themselves in life. Some of these situations might eliminate the need for auto coverage.

There are more reasons why you might cancel your policy before your term is up for expiration. Here are some of the most common reasons:

  • You sell your vehicle and don’t plan on buying a new one
  • Your car is totaled, and you don’t plan on replacing it
  • Your car breaks down, and you don’t need a replacement
  • You lose your license or plan on surrendering it voluntarily
  • You transfer ownership to a family member and don’t need insurance in your name
  • You move out-of-state and need insurance from a new provider
  • You want to buy insurance from a new carrier to save money
  • You combine insurance with a new spouse

Do all insurance companies charge a fee?

Worried-couple_homepage_imageIt’s obviously in the insurance companies interest for you to keep your policy for the entire term. If you cancel your policy mid-term, the company can’t project how much they’ll make by the end of the year after premiums, claims expenses, and administration costs. For this reason, some states allow carriers to charge an early termination fee.

While cancellation fees are allowed in some states, not all companies charge them, which is why you need to ask your agent directly before you buy insurance if you plan on switching carriers early. As long as you’re equipped with the knowledge early on, you can plan ahead before you purchase a policy.

What is the difference between a short-rate cancellation and a pro-rate cancellation?

When you cancel your policy, you’re entitled to receive your unearned premiums after the cancellation is processed. The company will either process a short-rate cancellation or a pro-rate cancellation. The final refund will be mailed to your seven to fourteen days after the carrier receives your cancellation request.

A prorate cancellation is one where you receive all of the premiums you’ve paid in advance.

No fee is subtracted from the refund. A short-rate cancellation is one where a fee is deducted from your refund. This fee depends on your state and the carrier. Some short-rate fees are fixed, and others are a percentage of the unused premiums.

If you’re not happy with your current premiums, you can shop around and look for a more affordable policy. Check with your current carrier before you start shopping to see if you’ll be charged a fee.

If it still makes sense to switch carriers after the fee is charged, use an online rate comparison tool and see where you can save money.

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Here's what you need to know...
  • Non-owner auto insurance can cover damages to a rental vehicle
  • Liability insurance that pays for employees using personal vehicles
  • Non-owner policies are a special type of commercial liability insurance offered to business owners

Most people are familiar with basic auto insurance policies, such as those that cover their personal vehicles.

However, you need to realize that there are many forms of specialized liability insurance designed to protect drivers in very specific situations.

Non-owned auto insurance is one such policy. By understanding what this policy is, you can decide whether you need it to protect your assets.

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What is Non-Owner Auto Insurance

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Depending on context, non-owner auto insurance might refer to several things:

  • A policy that covers a borrowed vehicle
  • Insurance that pays for damage to a rental vehicle
  • Liability insurance that pays for employees using personal vehicles

Before purchasing a non-owner auto insurance policy, you’ll need to be sure of exactly what you’re looking for.

Although the term might be used by laypeople to mean any of the above, non-owner auto policies officially refer only to the last point. The other situations are covered by different types of policies.

In the case of rented and borrowed vehicles driven for personal use, your personal auto insurance policy should cover any damages.

Damage caused to a vehicle that is owned by the business is covered by that company’s commercial auto policy rather than any other type of commercial liability insurance.

The guide below should help to clarify the purpose of non-owner auto insurance, including what it covers and who might need to purchase it.

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How Does Non-Owner Auto Insurance Work

Non-owner policies are a special type of commercial liability insurance offered to business owners.

The purpose of this policy is to protect the business from liability suits arising from the use of non-owned vehicles for business purposes.

The most common application of this is when an employee must use his or her own vehicle for the business.

For example, a pizza delivery driver uses his own vehicle to deliver pizzas to customers. If he gets into an accident during his shift, his personal insurance company may not fully cover the loss.

At that point, the employer could be held liable for the accident. Non-owner auto insurance is designed to pay for this type of liability case.

This type of insurance is important because personal auto policies do not always cover accidents that occur when a vehicle is being used for business purposes.

There are other situations when a company may be held liable for accidents occurring in non-owned vehicles:

  • Taxi services where the drivers own their individual taxis
  • Companies that lease or rent vehicles that are used for business
  • Businesses that require employees to use their personal vehicles to transport clients or pick up materials
  • Companies that send their employees on business trips in rental cars

In any situation where a business mandates that a driver use a vehicle that’s not owned by the company for business purposes, non-owner auto insurance becomes necessary.

Who Needs Non-Owner Auto Insurance

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Although many businesses could benefit from carrying non-owner auto policies, many do not realize that they need to do so.

If you are a business owner, it’s a good idea to assess your business needs and determine whether your company carries enough commercial liability insurance.

If the business is a delivery or taxi service that requires drivers to use their own vehicles, this type of policy is a necessity.

By determining whether their vehicles carry an appropriate level of insurance, you can decide how much liability insurance is necessary.

Other businesses that may need non-owner auto insurance include any companies that rely on rented or leased autos for any business purposes.

If the vehicle is not owned by the company, the company’s other commercial auto policies will probably not cover it. Therefore, a non-owner auto policy is needed.

Bear in mind that situations can occur outside of these scenarios that may make such a policy very useful. For example, imagine that you send an employee to run a simple work-related errand in his own vehicle during work hours.

If he’s involved in an accident during that errand, his insurance company may still deny the claim on the grounds that it was work-related.

Because of this, it’s usually better to be safe than sorry and purchase more liability insurance than you expect to use.

Buying Non-Owner Auto Insurance

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Fortunately, this type of specialized commercial auto insurance tends to be fairly inexpensive, and you can generally get a good deal on it by comparison shopping between multiple companies.

Obtaining quotes from a number of insurers enables you to pick the best possible price and prevent your company from paying more than it needs to for liability coverage.

The best way to compare auto insurance companies is to submit a quote request online.

This will put you in contact with multiple insurers and give you an instant idea of how much the policy might cost.

From there, you can follow up with the insurers with the best price to obtain the coverage that you need.

Even if you already have some commercial liability coverage from your current insurer, it’s possible and sometimes preferable to carry different liability policies with different insurers.

Be sure to use the FREE tool located at the bottom of the page to compare auto insurance easily! Enter your zip code below to get started!

Things to Remember...
  • The American Auto Insurance is an online company that serves people living in Chicago and Illinois
  • The number of accidents you’ve had negatively affect your insurance premiums
  • Driving internationally is not the same as driving in the USA

One of the better independent insurance agents serving people in the Chicago area and the State of Illinois is an online agent, American Auto Insurance. They have a website that can give you fast quotes and advice on auto insurance.

They are efficient and professional with live staff to advise you upon questions that you might have about insurance. A glossary of insurance terms is included on their website to allow you to understand exactly the purchases you are making.

Online payment, claims, changes of automobiles, driver changes, and renewals are available.

Check out the FREE comparison tool above to find and compare auto insurance quotes. Simply enter your zip code above now!

Getting an Auto Insurance Quotation

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When purchasing automobile insurance, you have many options both online and in person. Online price quotes are easier to obtain and allow you to make comparisons easily.

These quotations also allow you to compare insurance companies and their standing within the same price ranges.

All you have to do is enter the information about you, the people who drive your cars, and the details of your automobiles or trucks, and you’ll have the basis for an online price comparison.

However, if you have circumstances that can affect the cost of your automobile insurance such as:

  • You’re new to purchasing automobile insurance in the U.S.
  • A recent immigrant to the United States
  • Have a number of tickets or accidents
  • Need an SR-22 (financial responsibility) filing with the State
  • Have an International Driver’s license
  • High-Risk driver
  • Use your vehicle commercially

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What is an Independent Agent?

Independent agents, in the United States, represent a number of insurance companies and can obtain price quotations from each of those companies to help you make an informed decision about car insurance.

Typically, these agents will give you advice about the amounts and types of insurance required by law in your state and help you determine the adequacy of these limits and coverage for your life and circumstances.

An advantage of the independent agency system is that they are dedicated to your insurance needs and are flexible enough to allow changes that are in the customer’s best interest.

SR-22 (Financial Responsibility)

AdobeStock_69399163-1600x1600Sometimes, due to accidents or suspension of a license, the state will require an SR-22 or Financial Responsibility filing to be made in order to renew or obtain your driving license. This filing assures the state that you will have automobile liability insurance in force until a certain term expires.

Usually, this filing needs to be made immediately, and American Auto Insurance can arrange to have an SR-22 filing made within a day.

The insurance company will not notify the Department of Motor Vehicles if the insurance lapses or is not paid.

In that case, you will receive a notice indicating that your driving privileges have been revoked until you acquire insurance again. Motor Vehicle Departments send notifications to your last address on your license, they don’t worry about it getting to you.

International Drivers Licenses

Persons temporarily in the United States may use their International Drivers License validly, but insurance is still necessary.

Consult with American Auto Insurance for the details of this requirement and registration with the Department of Motor Vehicles.

The reason these departments are concerned about international drivers licenses results from the various laws about driving from the United States to other countries. Laws vary depending on which country you are in, so take the time to educate yourself before getting behind the wheel.

The Fine Print

adobestock_70731415-1600x1600American Auto Insurance will explain the necessary aspects of car insurance in further detail, but here are some of the things you need to be aware of about car insurance.

  • Liability insurance – insurance for your property damage and bodily injury responsibilities in an accident — is required by all states
  • Physical damage insurance – insurance to cover your property — is optional but helpful if you have a limited income, necessary if you have a loan on the car. Physical damage coverage can provide coverage against theft, vandalism, weather damage, animal damage, as well as collision
  • Uninsured motorists insuranceprotects you from paying for medical costs if you are injured by someone without insurance because not everyone is law-abiding

In order to get an insurance quote, have the following information in hand:

  • Full names of all drivers and their dates of birth
  • Drivers license numbers
  • Description – year, model, and make of cars to be insured and their VIN numbers
  • Driving records

You will be pleased with the ease of using the website for American Auto Insurance not only for quotes but also for comparison of insurance prices and services.

The agency is highly respected in Illinois and has locations throughout the Chicago area. They can provide insurance throughout Illinois. Go online to see for yourself and consult with one of their friendly customer services representatives.

If you’re ready to start comparing car insurance quotes, simply enter your zip code in the box below!

Things to Remember...
  • If you’re involved in an accident, you need to report it to your insurance company
  • Attending to injuries and getting your car off the road and out of the way of oncoming traffic are top priorities
  • Each state has its own laws regarding when an accident report must be filed

The process of filing an auto insurance claim may seem daunting, but it can be more easily comprehended if you remember three questions that will help you successfully file one.

These questions are “have I followed the necessary steps after the accident, with which company should I file the claim, and how do I get my car repaired?”

Each insurance company has its own procedures for filing a claim. These include your options for going aout it, the availability of its claim department, and what exact information the company requires.

Your claim may go through easier if you keep the three questions in mind as you’re about to begin the filing process.

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Ask Yourself if You Followed the Necessary Steps after the Accident

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Before you even get to the claim stage of the game, there are several steps to take immediately following an accident, according to the Oregon Department of insurance.

Attending to injuries and getting your car off the road and out of the way of oncoming traffic are top priorities, according to the California Department of Motor Vehicles, but you should still have claim filing in the back of your mind.

The reason thoughts of filing a claim appear to be daunting is due to the often copious amounts of information insurance companies may require to even begin processing a claim.

Exchanging information with the other driver is generally a must.

The required information typically consists of the following:

  • Person’s name
  • Phone number
  • Address
  • Insurance company
  • Insurance company’s phone number

Offer the same information about yourself and your insurance company to the other driver.

If people in the surrounding area witnessed the accident, request their information. You don’t need the same details you needed from the other driver, but their name and phone number can come in handy.

Having a way to reach them may be useful if authorities or the insurance companies have questions about their version of the accident.

The Accident Report

Filing an accident report is another helpful step. Each state has its own laws regarding when an accident report must be filed. In Oregon, for example, you must report an accident that results in death or injury.

You must also file a report if the crash caused more than $1,500 worth of damages to your vehicle, any other vehicles, or any property.

If a vehicle is towed from the scene, a report must be filed.

The deadline for filing a report is  72 hours following the accident.

Even if the accident only caused minor damages and you are not required to file a report as per state law, you may do well to file one anyway.

This ensures your accident is on the record should your insurance company or the other person’s insurance company need additional proof or information.

You can usually file an accident report in several ways. Instructions and report forms are typically available at your state’s motor vehicle office or website or from the sheriff or police department.

Some states may allow you to file the claims online.

Telling your insurance company is another must if you intend to file a claim.

Contacting the company as soon as possible allows an insurance adjuster to be assigned to your case.

The adjuster will help determine who was at fault for the accident and record other information the insurance company needs.

Another overall step that can be a world of help is making sure you fully understand your insurance policy. This way you will know what is covered, what is not covered and any deductible you may have to meet before insurance coverage goes into effect.

If do not fully understand any part of your policy or have additional questions, calling your insurance company or your agent can help.

Decide Where to File the Claim

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Another question you need to answer in the event of an accident is where you intend to file the claim.

Depending on the circumstances, you can file the claim either with your own insurance company or the other person’s insurance company.

You may file a claim with your own company regardless of who was at fault for the accident.

However, you may file a claim with the other person’s insurance company if you were not at fault.

Filing with your own insurance company is known as a first-party claim while filing with the other person’s company is referred to as a third-party claim.

When you are not at fault, you may reap certain advantages from filing with the other person’s insurance company instead of your own.

For starters, you will not be subject to the deductibles set up in your policy, or any deductibles at all.

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Filing a Third-Party Claim

Filing with the other person’s insurance company also keeps your own claim record clean. This can reduce the risk of an insurance rate increase and help ensure your claim history contains as few claims as possible.

Claim history is one of the factors that may affect your overall driving record and insurance rates going forward, even if you change to another insurance company.

Possible drawbacks of filing a third-party claim include moves the other insurance company can make. The company may offer a settlement you do not feel is adequate.

If this is the case, do not agree to the settlement.

Most insurance companies will ask you to sign an agreement known as a release for damages. If you are not happy with the company’s offer, do not sign it.

Sometimes you may be able to settle one part of the agreement and not another, the Illinois Department of Insurance points out.

You may know the extent and amount of damage done to your car, for instance, but may still be receiving medical care for bodily injury.

In this case, you may be able to agree to the property damage portion of the claim but not the bodily injury portion.

The insurance company can pay you for the property damage portion even if you still have not agreed upon reimbursement for your injuries.

Another scenario is the other driver not having enough insurance coverage to cover the damages. He or she may not have any car insurance at all.

In this case, your own car insurance’s uninsured or underinsured coverage would typically kick in. The company may also say its client was not at fault and not offer a settlement at all.

The At-Fault Decision

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It’s not up to you to decide who was at fault for the accident. That responsibility goes to the aforementioned insurance adjustor.

Even if you are found not to be at fault for an accident, there is no guarantee a third-party claim will pay out 100 percent of the amount.

A percentage of the payout may particularly be a factor in states like Illinois that have a comparative negligence law.

This law states that both parties may be at fault for an accident, the Illinois DOI says.

The fault is usually broken down into percentages and the other insurance company is only required to cover your damages if you are less than 50 percent at fault.

In the case of comparative negligence, the other car insurance company may also reduce the amount it’s willing to pay you to match the percentage of fault carried by its client.

For instance, if you were found to be 30 percent at fault for the accident, the other company may agree to only pay out 70 percent of the claim. The 70 percent would cover its client’s percentage of fault for the crash.

Regardless of the determination, insurance companies are generally required to contact you within a certain amount of time following a claim. The time limit in Illinois is 21 days.

Ask What You Must Do to Get Your Car Repaired

How to go about getting your car repaired is another necessary question while filing a claim.

Car insurance companies do not automatically go for the actual cash value, or ACV, or your vehicle when determining how much to pay for repairs, according to the Wisconsin Office of the Commissioner of Insurance.

Companies instead look the value of your car at the time you suffered the loss. They also usually require you send them one or more written estimate for repair costs.

This allows the company to compare the costs to its own estimate and determine the cheapest repairs available.

Some companies allow you to select any repair shops you choose while others may urge you to use a specific shop.

Insurance companies will only pay the set limit they determine for repairs; you are responsible for the balance.

You are also responsible for meeting any deductible before the company covers repairs.

Because each car insurance company has its own set of guidelines for car repair, it is vital to review the company policy and follow its specific steps. The company may otherwise refuse to cover the repairs unless you follow protocol.

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