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Teens & Insurance
Common Questions About Insurance
There's a lot to know about insurance. Understanding how insurance
works can help you better appreciate the value of insurance and
its impacts on your life. Here are some common questions people
have about insurance. If you have a question that's not addressed
here, please send us your
question. We're happy to help.
Frequently Asked Questions
- What is insurance?
Insurance is a way of spreading financial risks among large
numbers of people. You pay a fee to an insurance company for
the right to share in funds set aside to pay your costs in certain
pre-defined circumstances.
- Do I have to buy auto insurance?
Most states require you to carry a minimum amount of liability
coverage. Many states have "no-fault" auto insurance
systems; in other states, coverage for medical costs for you
and your passengers is optional. Coverage for damage to your
car is optional.
- How much will my insurance cost?
Prices vary widely. The type of car you drive, your
driving record, your age, your sex, where you live and how much
you drive usually affect the cost. You may also qualify for
various discounts.
- What does my credit have to do with
my driving?
Nothing. But your credit has everything to do with your likelihood
of filing a claim. Credit-based Insurance Scores have proven
to be a very accurate way to predict future claims. Separate
studies conducted for insurance regulators and insurance companies
have shown a very strong, statistical relationship between low
credit scores and frequent claims. An Insurance Score is a numerical
rating based on factors such as timely payment of bills, public
notices, bankruptcies, tax liens and credit inquiries. Some
insurance scoring models also include prior claims history.
For more information about insurance and credit, click
here.
- Can I be added to my parents' Auto
Insurance?
If you drive a family car, you can be added to your parents'
policy. However, the cost of the policy will increase. (Some
companies insure young drivers only on a family policy.) If
you have your own car, your parents' company may sell
you a separate policy but at a different rate than your parents.
New drivers seeking their own insurance frequently are referred
to state-run insurance pools, known as "Assigned Risk Plans,"
where the cost of insurance is higher.
- Do I have to be a certain age to
buy my own insurance?
No. However, you must have a valid driver's license. Also,
in many states you must be 18 before you can own a car without
an adult's name on the auto registration.
- How often do I have to renew my insurance?
Auto insurance policies usually last six months. Some last
one year. You will receive a notice when it's time to renew
your insurance.
- Will my rates go up or will I lose
my insurance if I get into an accident or get a ticket?
If you are not at fault in an accident, your insurance should
not be affected. If you are at fault, get a ticket for a serious
violation (such as drunk driving), or are involved in an expensive
property damage claim (such as crashing into a tree), the company
will consider that when setting the price for your next insurance
policy. Your rates for the current policy won't be affected.
What To Do If You Have An Accident:
First, call for medical help for anyone who may
be injured. Call the police and do not leave the scene of the
accident before they arrive. Get the name, address, phone number,
insurance company and driver's license number of anyone who
was involved.
Get the names, phone numbers and addresses of anyone who witnessed
the accident. Write down the details of the accident. Notify
your insurance agent or company immediately. Get a copy
of the police report. Save copies of everything.
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