10 Questions to Ask Before Buying Car Insurance

For starters, you have to purchase any coverage mandated by your state. Most states only require liability insurance, which covers the costs of anyone who's injured or dies as a result of a car crash you caused, plus damage to their vehicle, any property damage and legal fees. But consider these additional types of coverage as well:

The insurance rate you're offered is based on several factors that comprise how much of a "risk" you pose to the company -- that is, how likely it is that you'll be making a claim. The more of a risk you pose, the higher your rate will be. Companies use data such as your age, sex, driving record, criminal record, credit rating and where you live to determine your risk. Are you elderly or a teen (groups known for having a lot of fender benders)? You'll pay more. Gotten a lot of speeding tickets? Ditto. Live in the middle of a high-crime district, where car thefts in particular are rampant? Out of luck again. Shop around to see which insurance company offers you the most favorable rate [source: Cars Direct].

This is a question many people overlook. What happens if your 15-year-old, who's learning to drive, has a crash? Will your insurance pay? What if a friend borrows your car and hits another vehicle? What if you're self-employed and driving your car for work purposes -- say, delivering pizzas, or running to the bank -- are any crashes you cause covered? Every insurer and/or state handles these situations differently, so make sure you know the answer [source: Jones]. While you're on the topic, ask the agent what happens if you borrow someone's car and have an accident, or if you have one in a rental car.

If you're involved in an auto accident and file a claim, you'll most likely need to pay a certain amount of money -- your deductible -- before your insurance company will pay the rest of the bill. Common deductible amounts are $0, $100, $500, $750, $1,000 and $1,500 [source: Car Insurance Rates]. You can lower your premium (your annual or semi-annual insurance payment) by raising your deductible. Carrying a higher deductible in exchange for a lower insurance premium can be a wise move, because you may never get in a car accident. However, just make sure you don't set your deductible so high that if you are in an accident, you can't afford to pay it -- because if you can't pay the deductible, your vehicle won't be repaired.

Pretty much every insurer offers a raft of discounts, but don't assume your agent will automatically give you the ones you qualify for. You often have to inquire about what discounts the company offers, then ask to have the ones you're eligible for applied to your account. Discounts (sometimes called credits) are commonly given for having certain safety features in your car, such as a car alarm or air bags; for having a clean driving record; for having a "good student" (generally a child up to age 23 or 25 who earns at least a B average in school); and for purchasing other types of insurance from the same company, generally homeowners and umbrella insurance. In addition, some companies will give you discounts for things like regularly parking your car in a garage, owning an eco-friendly hybrid vehicle, belonging to a recognized professional organization, and even for graduating from a specific college or university. But again, to get the savings, you have to ask [source: Zeman].

Yes, you can afford car insurance. But it'd be a whole lot easier on your budget if you could pay the premium in monthly installments instead of an annual lump sum. Or maybe quarterly payments are ideal. Quiz your agent on all possible payment options. Most insurers offer at least annual and six-month premium payment options. Those that offer more frequent payment options often tack on a several-dollar surcharge or, conversely, offer discounts to those who pay the entire annual bill at once. Make sure to inquire about your options if you know it will be problematic to pay annually [source: Cars Direct].

The value of a given car is an issue too many people overlook. Always wanted that cherry-red sports car or vintage model? Well, you've got a little extra cash now, so go for it! Or are you reveling in the fact that you snagged such cheap wheels at the salvage yard? Everything is great until your insurance agent informs you that the cost of insuring your fancy hot rod will be double the rate of your stodgy sedan -- and you realize you didn't calculate that into your budget. Or your agent says your junkyard jalopy's origins are unclear, so it's actually uninsurable. Oops. Before you purchase any vehicle, find out its value, then do at least a cursory insurance check to see if you can afford both the car and the insurance [source: Cars Direct]. Maybe that sedan wasn't so stodgy after all ...

Getting into an auto accident is stressful, even if no one is injured. Don't put yourself in a position to be even more stressed out because your accident occurs on a Saturday night, but your insurer doesn't open for business until Monday morning. Plenty of insurance companies now offer 24/7 claim reporting, both by phone (toll-free number) and online, so make sure you select one that does.

Ask, too, if there are any special requirements when filing a claim. In general, you just have to give your name and address, the names and addresses of anyone injured in the accident or who witnessed it, and general information about the nature of the loss or claim. It also helps to have your policy number on hand.

Bet you never considered this one! When a vehicle is damaged, most people assume their insurers will pay for it to be repaired with identical parts that come from their car's particular manufacturer, also known as "original equipment manufacturer" (OEM) parts. That's a risky assumption, though, as the parts used in the repair may instead be "aftermarket" parts, which are car parts made to fit a general type of vehicle, but not specifically for a particular make and model. Aftermarket parts are less expensive, which is why some insurers prefer to use them. And while certain states specify insurers must cover OEM parts, others don't. To further complicate matters, some insurance companies use both kinds of parts. They'll spring for OEM parts when it comes to safety items like air bags, for example, but use aftermarket parts for less-critical items like door handles and fenders.

If an insurer only covers aftermarket parts, it doesn't mean you have to rule them out, especially if their rates are good and they have a solid reputation. Maybe you don't even care. And if you do, you can always opt to pay a little extra to upgrade from aftermarket parts to OEM parts if you find their overall rates attractive. It's just best to know their policy ahead of time [source: Jones, Zeman].

Nowadays, it probably seems like a lot of your business is conducted online or over the phone. But when you're discussing complicated matters like insurance, it can be very helpful to actually meet with an agent and go over things in person. Sometimes, just seeing things written out makes them easier to comprehend. People who meet with their agent in-person often receive better customer service, too, so ask potential agents if they have a physical office where you can meet. When you're there, tell him or her you'd like to receive an annual personal insurance review. A really quality agent will automatically offer this service, but any good agent should be willing to do it upon request. Annual reviews help ensure you're not paying for coverage you no longer need, and that you're always carrying the coverage you do need.