Insurance Basics: Everything You Need to Know

4 Important Things To Know About Auto Insurance

There is no denying that auto insurance is a little complicated. However, if you own a vehicle, you need to carry insurance. Here are four important things that you should understand about it.

#1: An Expensive Vehicle Isn't Always More Expensive to Insure

First, many people wrongly assumed that an expensive vehicle will be expensive to insure. However, this is not always accurate. An expensive car may have more safety features, which helps lower your auto insurance rates. An expensive vehicle may also have better claim readings for things such as accidents and theft.

Don't assume that a cheap car will cost you less to insure. When shopping for a new car, call your insurance agent with the VIN, and they will be able to let you know how much that vehicle will cost to insure.

#2: Personal Auto Insurance Isn't for Business Usage

With the advent of side hustles, more people are using their vehicles for work. If you want to take a side gig that involves you using your car, you need to get an endorsement on your policy for business driving purposes.

If you get into an accident while engaging in business with a personal auto insurance policy, your accident is not going to be covered, and your claim will be denied. If you start a side gig that requires you to use your vehicle, talk to your insurance company and make sure you are covered.

#3: Auto Insurance Follows Your Vehicle

Next, it is important to understand that, in general, your auto insurance follows your car. What that means is that if you let someone else drive your vehicle, your vehicle is still covered by your insurance policy.

For example, if you're not feeling well and you let someone else drive you home, and they get into an accident, your insurance policy will cover the accident. However, that also means that if someone else gets into an accident in your vehicle, your insurance rates are the ones that are going to increase.

#4: Letting Your Insurance Lapse Can Be Costly

It is essential to keep continuous coverage on your vehicle. If you let your coverage lapse when you need auto insurance again, you will quickly discover that your offered rates will be much higher than your previous rates. Insurance companies consider it riskier to provide insurance to someone who has had a lapse in coverage.

It is best to check your assumptions and research how your auto insurance actually works. It is important never to let your insurance coverage lapse. In general, your auto insurance follows your vehicle. Keep in mind that personal auto insurance doesn't allow for business usage. If you have other questions about your auto insurance rates, ask your auto insurance agent for clarification.