Read our informative California car insurance FAQ

Q: How much insurance coverage do I need?
A: Almost every state in the U.S. requires that you purchase a minimum amount of liability coverage. However, you will probably need much more than the minimum liability insurance to cover the costs of an accident or disaster.

The Insurance Information Institute (I.I.I.) recommends that you have $100,000 of bodily injury protection per person and $300,000 per accident. If your net worth is more than $300,000, consider buying additional liability insurance.
An alternative is to consider purchasing an umbrella or excess liability policy. These policies pay when your underlying coverages are exhausted. Typically, these policies cost between $200 and $300 per year for a million dollars in coverage.
To save money on the cost of auto insurance, you may want to have your homeowners and auto insurance with the same company. Check out the cost of coverage with your current company first. If you have coverage with different companies, it may be easier to buy it from your auto insurance company.

In addition to liability coverage, consider buying collision and comprehensive coverage. You don't decide how much to buy. Your coverage reflects the market value of your car and the cost of repairing it.

Decide on a deductible -- the amount of money you pay on a claim before the insurance company reimburses you. Typically, deductibles are $500 or $1,000; the higher your deductible, the lower your premium.

Q: Am I covered when I borrow a friend's car or allow others to drive my car?
A: Am I covered when I borrow a friend's car or allow others to drive my car?
Most policies cover occasional sharing of cars between friends, although you should check your policy specifically to be sure.
However, keep the car-sharing to a minimum, because if somebody else begins logging a significant fraction of your car's total miles, you need to check with your insurance company. Primary driver variables can play a big role in determining premium prices, and providing false information can undermine the obligation of your insurance company to honor your policy.

As far as coverage for an accident, typically, the insurance policy that covers the car will cover the accident, regardless of the driver. For example, if you injure somebody while driving your friend's car, his policy will probably pay first.
If he has no insurance, however, or if you are saddled with more claims than his policy can pay, your own policy should take up the slack. Again, you should check your policy or ask your company representative to be sure.
If your car is stolen, don't worry. You won't be liable for third-party damages caused by the thief, and your collision and comprehensive coverage will still cover damages to, or the loss of, your car.

Q: Do I need to pay for insurance when I rent a car?
A: Do I need to pay for insurance when I rent a car?
If you have an automobile policy that includes third-party liability, collision, and comprehensive coverage, you generally do not need to purchase separate insurance from the rental car company. Check your policy to be sure, however, especially if you rent frequently.

If you get in an accident, while driving a rental car, your own comprehensive and collision coverage should pay for the damages. You'll still be responsible for paying the deductibles. If you aren't carrying collision and comprehensive insurance, however, you should probably purchase the loss or collision damage waiver offered by the rental car company. Without it, you could end up buying them a new car.

Similarly, your automobile insurance should cover you for third-party damages resulting from your rental. If you have no liability coverage (usually this means that you have no automobile insurance), you should consider the liability coverage offered by the rental car company.
Aside from the loss or collision waiver and general liability coverage, you should avoid purchasing any other insurance offers from the rental car company. Such types of coverage are usually a rip-off.
For example, personal accident insurance is usually just a special-purpose life insurance product, and is hardly ever a good idea. To cover loss of life, buy life insurance. If your possessions are stolen from the rental car, your homeowner's or renter's insurance should cover the loss.

Q: What information do I need to give my insurance agent, when I apply for insurance?
A: What information do I need to give my insurance agent, when I apply for insurance?
First, your agent will ask you general information about your vehicle such as its make and model, roughly how many miles you drive each year, and what kind of liability coverage you will need. The agent will also want to know how many people drive the cars, how old the drivers are, where you live, and driving records of each household member.

Then, the agent will then ask more detailed questions about your cars, such as their Vehicle Identification Numbers (VIN), whether they have passive restraint systems or air bags, anti-lock brakes or anti-theft devices.
If you already have another insurance policy with the company for home or life insurance, you might receive a discount on your auto policy. You should also mention if you or other drivers in your household have completed safe-driving courses and if student drivers in your home are getting good grades -- both of these may qualify you for discounts on your auto policy.

Once the agent has assembled all of the information, a premium will be quoted to you. The premium will depend on all the factors above and on the deductibles you choose.

Q: If I file a claim, will my premium go up?
A: quoted to you. The premium will depend on all the factors above and on the deductibles you choose.
If I file a claim, will my premium go up?
Many people are often reluctant to file a claim with their respective insurance company for fear that their premium will go up drastically.
Although the practices for raising your premium will vary from company to company, an insurer generally will increase your premium by specific percentages for each chargeable claim made against your policy above a specific dollar amount.
A chargeable claim is one the insurer considers primarily your fault. The percentages and ceilings vary from company to company. These increases generally stay on your premium for three years following the claim.

Your company may also decide not to renew your policy if your driving record gets markedly worse or you have several accidents. Different insurers have different rules about what constitutes an unacceptably bad driving record. But some accidents, such as those caused by drunk driving, will probably trigger a non-renewal from most insurance companies.

Despite fears of raised premiums or cancelled policies, you should ALWAYS report an accident, no matter how minor, to your insurance company. By failing to report, you are taking an unnecessary risk.
If the other driver sues you weeks or months later, your failure to report the accident might cause your insurer to refuse to honor the policy. And even if they do honor the policy, the delay will certainly make it harder for the insurer to gather evidence to represent you.

Q: What are the coverages?
A: Bodily injury liability coverage pays for bodily injury or death resulting from an accident for which you are at fault and provides you with a legal defense.

Property damage liability provides you with protection if your car accidentally damages another's property, and it also provides you with a legal defense.

Medical payments, no-fault, or personal injury coverage usually pays the medical expenses of the driver and passengers in your car incurred as a result of a covered accident regardless of fault. In some states, compensation for lost wages may be included.

Uninsured motorist coverage pays for your injuries and, in some circumstances, certain property damage caused by an uninsured or a hit-and-run driver. In some cases, underinsured motorist coverage is also included. This is for cases in which the at-fault driver has insufficient insurance.

Comprehensive physical damage coverage pays for damage to your car from theft, vandalism, flood, fire, or other covered perils.

Collision coverage pays for damage to your car when it hits or is hit by another car or object.
In addition to these basic coverages, specialized coverages like

Q: What is Collision Insurance?
A: It is insurance that reimburses you when your car is damaged. The damage can be the result of a collision with another car or with an object, such as a tree or a brick wall. The damage can also be the result of overturning your car. Your reimbursement for the damage covers the amount of money it takes to repair or replace your vehicle, minus any deductible you agree to pay.

Q: How are rates determined?
A: The answers to the questions on your application are reviewed to determine your risk level. In insurance, customers are classified into groups according to the likelihood of risk and the projected costs of paying for resulting claims. Those with lower risk levels pay less than those with higher risk levels.

Q: What makes some rates lower than other companies' rates?
A: Costs are sometimes lower — and therefore your premiums are lower — because insurance rates are marketed to you and serve you directly. In addition, efficient operations control costs.

Q: Do rates ever go down?
A: Yes! Rates can go down if your driving record improves or if costs decrease for providing insurance for different groups. Recently, rate decreases have struck many states.

Q: How much will my rates go up when my son/daughter begins to drive?
A: They will go up, but the amount will vary.
Insurers set rates to cover expected costs of insuring particular groups of drivers. Typically, the costs for ensuring teenagers are higher than for other driving segments. Teenagers, particularly males, have a higher propensity to have traffic accidents, and therefore rates must be proportionate to the risk involved. Teenagers represent 10 percent of the U.S. population but 14 percent of all motor vehicle deaths.

Q: Will rates go up or my policy be non-renewed or canceled if I get a ticket or have an accident or claim?
A: The majority of policyholders are not surcharged for convictions. Others are charged for some convictions. Convictions, accidents, and claims are underwriting concerns, and in some instances may cause a movement to a higher-priced company

Q: Why don't my rates go down as my cars get older
A: Even though cars age, replacement cost, repair cost, and hospital and rehabilitative expenses consistently rise. Thus claim costs are much higher today than even five years ago. Some policyholders who have older cars and have paid off their loans may choose to control their rates by removing the comprehensive and collision coverage on those cars or raising their deductibles.

Q: How good is your driving record?
A: One of the most common reasons for high rates is a history of speeding tickets or accidents. The number of tickets or accidents that you have had in the past 3-5 years will be documented in your driving record. Typically, convictions (such as failing to report an accident, speeding, seat belt infraction, illegal turn, failing to yield, and so on) will stay on your record for 3 years, and accidents (for which you are at fault) will stay for 5 years.

Q: What kind of car do you have?
A: Different types and models of vehicles have differing risk characteristics. The more costly and popular your automobile, the more you'll pay for insurance. Why? Expensive cars cost more to repair or replace, and so collision and comprehensive insurance costs more. You can also lower your costs if your car is equipped with safety and anti-theft features. See our Discount section for more info.

Q: What do you use your car for? How often do you drive it?
A: Different people use their cars for different purposes. Some people drive to work, while others drive only for pleasure. Obviously, the more often you use your car, the more you increase your chances of having an accident, so the more the insurance company will charge in premiums. In addition, if you use your car for business you will be charged extra.

Q: Where do you live?
A: You will be charged a higher premium if you live in an urban area, such as Los Angeles, rather than in small rural town in west Texas. Through research, insurance companies have found that your car is at a higher risk of vandalism, theft and collision if you live in an urban area. Your costs may also rise if you park your car on a dark street rather than in a secure garage.

Q: How much insurance do you have?
A: Different products are available in the insurance market at different prices. You must choose whether to buy the minimum or increase the limit, or whether to purchase any of the optional coverage. Both decisions will impact your premium. The deductibles you select are also reflected in your premium. The higher the deductibles, the more risk you bear, and the lower your insurance bills.

Q: How old are you?
A: While companies are no longer allowed to rate a driver on sex or marital status, age or length of driving experience still affects the cost of auto insurance. Young drivers will pay more than those considered to be adults. Different companies set different ages at which drivers are considered adults.

Q: Have you continuously held auto insurance, without any major gaps?
A: Insurance companies are wary of individuals with gaps in their automobile insurance coverage. Your insurer will generally accept a lapse in coverage if you inform them in advance.

Q: Who's driving?
A: The more drivers you insure, the more expensive your premium is likely to be. To cut costs, name the drivers you want to insure rather than opting for an 'any driver' policy.
Older drivers pay less than younger ones, though premiums often start to rise again once you're over 70. And young women often pay less than young men. Your premiums will also be higher if you've got a bad claims record or past convictions.
Where you live also affects your premiums. In general, if you live in an urban area, you're likely to pay more than if you live in the country.