Top Questions to Ask Before Buying Insurance for Your Car

Car insurance is one of those financial commitments that is required of all drivers in Michigan. If you want to drive a car legally with a Michigan driver’s license, you need to carry car insurance.

This financial commitment can be quite expensive, though, especially in Michigan, which has the fourth-highest average car insurance premium in the nation. In fact, on an annual basis, the average Michigan driver will pay $2,133 toward car insurance.

Because of this, many drivers shop around for car insurance based on price alone. While price should certainly be one of the deciding factors on which car insurance company you go with, and which car insurance plan you purchase, it shouldn’t be the only factor you consider.

Below is a list of the top questions to ask before buying insurance for your car.

What Are the Minimum Requirements?

Every state has its own minimum requirements when it comes to car insurance. Michigan is considered a No-Fault state for car insurance, meaning that no specific fault is assigned to the drivers involved in a car accident. 

To that end, the state requires all car insurance policies to include four coverages — property damage (PD), residual bodily injury liability (BI), property protection (PPI), and personal injury protection (PI).

Every policy must have:

• $10,000 of PD
• $50,000 in BI per person and $100,000 in BI per accident (with a signed form by the Director of Insurance and Financial Services. Otherwise, $250,000 per person and $500,000 per accident
• $1 million of PPI

Under a new law passed in Michigan in 2020, drivers have five options for PIP coverage, ranging from unlimited coverage at the top end to opting out completely on the low end.

Does the Plan Include Comprehensive and Collision Coverage?

Another thing to figure out is whether your car insurance policy includes comprehensive and collision coverage. If you are financing or leasing your car, the lender most likely will require you to carry these coverages — since you don’t technically own the car you’re driving.

Comprehensive will cover the loss of loses due to any situation that’s not defined as a rollover or collision. Events that this coverage may include are damage or loss sustained as a result of vandalism or theft, windshield and glass damage, and acts of nature such as win, water and fire.

Collision coverage helps to reimburse you after your vehicle sustains damage in an accident with either another object or vehicle. If you don’t have this coverage, you won’t be compensated for damage your car sustains in an accident.

What Affects the Cost of Coverage?

There are a lot of factors that determine the cost of your car insurance, and it’s important that you understand what these factors are. The reason for this is that you could, potentially, lower your costs if you’re able to change some of the factors.

Some of the factors that you most likely won’t be able to change (at least easily and/or immediately) include:

• Your driving history and experience
• Your gender and age
• Your occupation and financial record
• Your marital status 
• Your address where the car is garaged

Some of the factors that you could have direct control over in an immediate and/or easy way include:

• The make, model and age of your car
• The number of miles you drive every year
• The coverage limits you select

The last bullet is the one that will be easiest for you to control. You could pull a lever here and there with coverage to see how you could get a lower rate on your car insurance. But, as mentioned before, make sure to weigh the risks you’re taking by opting for less coverage, and whether it’s worth the savings you’ll get on your monthly premium.

What is the Deductible?

Just about every car insurance policy comes with what’s known as a deductible. That’s the amount of cost that you will share with the car insurance company. This works the exact same way that a deductible on health insurance policies work. 

A deductible is the amount of money that you will be required to pay before the insurance company provides any coverage at all. The amount of coverage above your deductible is what the insurance company will be responsible for.

For example, let’s assume your deductible is $1,000. If the cost of repairs to your car following an accident are $9,000, then you will be responsible for paying $1,000 and your car insurance company will cover the remaining $8,000.

It’s important to understand what your car insurance policy’s deductible is, as it may help you determine whether you’ll use your policy to pay for certain repairs.

For example, if the repair in question is only $1,500, you might decide to pay for all of that out of your pocket rather than getting only $500 from your car insurance company — after you pay the $1,000 deductible. It might not be worth it in this case to go through insurance since that would result in a claim that could increase your monthly premium.

In addition, you should figure out whether your car insurance plan has one single deductible for all coverages, or whether there are separate deductibles for different types of coverage. This will help you best understand all you could be responsible for if you need to use your car insurance.

Work with a Trusted Car Insurance Company

When you’re searching for car insurance in Michigan, it’s important to weigh all the factors before making a final choice, which should include you asking some of the questions above.

Most importantly, though, make sure that you work with a trusted car insurance company in Michigan.

At Signature Insurance, we have been providing car insurance to drivers in Michigan for years now. Our team of experts can educate you on every aspect of car insurance, and guide you through the process of selecting the best policy for your needs.

Contact us today to find out more and to get a free quote.