Auto Insurance 101
How much auto insurance do I need?
Most states require you to carry a minimum amount of liability insurance and also provide proof of insurance to register a vehicle or renew your license. In the case of an accident, the minimum liability insurance required by the state may not be enough coverage to pay for the damages that result after an accident. In this case, the driver responsible for the accident may have to pay additional expenses out of pocket. To determine how much auto insurance you need, consider:
- The value of your assets
- How and when you drive
- What you drive
- Who is in the car with you
How much auto insurance does my state require?
To ensure everyone on the road is covered in case of an accident, most states require drivers to carry a minimum amount of liability insurance, or establish financial responsibility in some other way. Drivers must also have the ability to provide proof of insurance to register or renew a driver’s license. This is the case for cars, trucks, motorcycles and commercial vehicles. You may want to consult with your Farmers agent and visit DMV Car Insurance by State to learn about your state’s unique requirements.
How can I compare auto insurance quotes?
Looking for auto insurance quotes can be confusing. When you get an auto insurance quote from Farmers, we will guide you every step of the way to help you choose the amount of insurance that you determine to best fit your needs. Farmers can also compare rates with other top companies in just minutes to see who is offering the best price.
How do insurance companies assess my risk?
Insurance companies assess your risk by using a Risk Assessment Indicator, which is a numerical score based on credit report information. These Risk Assessment Indicators are highly predictive of future claim activities, helping insurance companies charge a rate that is appropriate for the risk of the insured individual.
What can I do to lower my auto insurance costs?
While there are a number of factors that contribute to the cost of your premium, there are some things you can do to help reduce it. The car you drive will greatly affect your premium. To lower your auto insurance costs, you may consider switching automobiles and driving a safer, slightly older or less valuable vehicle. The more your vehicle is worth, the more it can cost to insure it. If you don’t want to change cars, you can modify your vehicle to make it safer or lower-risk by adding anti-theft devices or features like anti-lock brakes. In addition, selecting a higher deductible and ensuring that your coverage doesn’t lapse may help you keep your auto insurance costs down.
If you don’t want to change or modify your car, you can also consider changing your driving habits. Your driving record is one of the most important factors considered when determining your premium. You can also try cutting down on the miles you drive and getting other insurance policies with Farmers to save you money.
How do I find the best auto insurance for me?
Deciding on an auto insurance policy can seem overwhelming. It is important to choose a local agent who can help match you with just the right coverage for you and your vehicle. When getting an auto insurance quote from Farmers, a local Farmers agent will help you every step of the way to choose an auto insurance policy that makes sense for you.
How do I find the lowest auto insurance rate for me?
To find the most affordable auto insurance policy for you, take the time to compare insurance providers to see who can save you the most money while providing you the most value. Many insurance companies combine low rates with discounts to provide lower premiums for young drivers. Farmers even offers a Good Student Discount to qualifying young drivers with good grades. And drivers who have multiple insurance policies with Farmers can save, as well. Talk to your local Farmers agent to see what money-saving tips they have for you when choosing an auto insurance policy.
Why do insurance companies use my prior insurance information?
Some insurance companies may review your history of insurance coverage with previous auto carriers to determine whether you qualify for coverage and others may use it to establish your premium or to determine whether you are eligible for discounts. This information also verifies whether you have had continuous auto liability insurance coverage and your prior liability coverage limits. Prior insurance information is often used to predict the likelihood of future accidents and coverage lapses. For additional information, please contact your Farmers agent.
What kinds of discounts are available for auto insurance?
Farmers offers a variety of discounts, including discounts for selected occupational groups (doctors, RNs, dentists, teachers, police, firefighters, etc.), homeowners, good students, teens with parents who have safe driving records, drivers who own cars with air bags, drivers who own two or more automobiles, and more.
Contact your local Farmers agent for more details.
What discounts are available in my state?
In addition to discounts based on your occupational group, whether you are a homeowner, a good student, own multiple vehicles or own a car with airbags, there is a wide range of auto insurance discounts you may qualify for depending on what state you live in. See our comprehensive list of auto insurance discounts by state – simply select your state to see which discounts you may be eligible for.
Do I receive a discount for my auto insurance with other products?
When you purchase a number of different insurance products, Farmers will offer a discount for multiple policies to help you keep more money in your pocket. Get in touch with a Farmers agent to find out just how much a multi-line discount can save you.
What kind of discounts can I receive with multiple policies?
You can save more money if you have multiple insurance policies with Farmers. For instance, if you’re already purchasing auto insurance, you can get extra protection and save money with motorcycle insurance, home or renters insurance, life insurance, or recreational vehicle insurance. Contact your local Farmers agent today to learn about ways you can save.
Why do car insurance premiums change?
Auto insurance premiums change for the same reasons that the price of other goods and services you buy change.
Insurance companies incur the same costs you do in buying goods and services, and these costs can ultimately affect your insurance premium. Costs affecting the ultimate price of auto insurance include:
- Medical costs to treat injuries
- Auto repair costs
- Costs to adjust claims
- Uninsured drivers (your policy pays when the other driver doesn't have an auto insurance policy if you purchase Uninsured Motorist coverage)
Although insurance companies can't directly control these costs, we regularly monitor them to see how they are affecting the costs of the claims we pay. As they change, auto premiums must be adjusted. These costs can affect your auto insurance premium whether or not you individually have had an accident or claim.
Changes you make to your auto insurance policy or coverage may also change the premiums. Adding or removing a driver, buying a new car, moving to a new location or changing how you use your car may influence the cost of your auto insurance.
Why did my car insurance premium increase?
Most drivers know that tickets and accidents can raise your car insurance premium. But even if you haven’t been in an accident or received a ticket, there are other factors that can still affect the cost of your auto insurance.
Making a change to your policy can have an impact on your auto insurance rate. For instance, adding a driver will likely increase the cost of the policy, especially if the new driver is a teenager. Moving to a new residence may also affect the cost of your policy – depending on the rate of traffic accidents, thefts, and vandalism claims in your geographic area, this can affect your premium either negatively or positively. Your premium may also increase if you’ve recently switched vehicles. The more your vehicle is worth, the more it will cost to insure. However, automobiles with features like anti-lock brakes, airbags, and anti-theft devices may lower your premium.
What can I do to keep my car insurance premiums low?
In order to keep your car insurance premiums low, you could consider driving a safer, slightly older, or less valuable vehicle. If you have a high premium but don’t want to change vehicles, you can also opt for a higher deductible and be sure to keep your policy from lapsing to keep costs down.
The easiest way to keep your rates low without changing vehicles or spending money is to maintain a safe driving record. Avoid moving violations like speeding and reckless driving. Ultimately, remember to drive the speed limit, drive cautiously, and buckle up – this will help you avoid getting ticketed, which will leave a mark on your record that typically lasts three years in most states.
Controlling Insurance Costs
What is Farmers doing to control car insurance costs?
- We have a network of reliable auto repair facilities for the highest quality repairs at competitive prices.
- We vigorously oppose frivolous lawsuits.
- We have an active Anti-Fraud Unit.
- We offer a youth driving safety education program to all parents of young drivers.
- We actively support organizations devoted to auto safety, including funding anti-drunk driving efforts and those dedicated to improving youth driving safety.
- We offer annual policies to keep your rates stable.
What deductible should I choose?
The higher the deductible, the lower the premium – but the more you'll pay out of pocket in case of a claim. The lower the deductible, the higher the premium – but the less you'll pay if you have an insured claim.
Does the kind of car I drive influence my auto insurance rates?
The car you drive can have a substantial impact on your auto insurance premium, especially the amount you pay for your comprehensive and collision coverage. The insurance rates for comprehensive and collision coverage are determined by looking at the type of vehicle loss history – how often it is stolen, and how costly it is to repair or replace after an accident. Your Farmers agent can help you by letting you know which vehicles have better insurance values.
What can I do to control my auto insurance rates?
- Have multiple policies, like your homeowners policy, with your Farmers auto insurance.
- Insure more than one car to qualify for multi-car discounts.
- Insure your boat, motorcycle or RV to earn additional discounts.
- Drive safely, drive less often and maintain a clean driving record.
- Raise your deductible.
- Drive a reliable car with standard safety features like air bags, anti-lock brakes and electronic stability control.
- Check with your Farmers agent to see if you qualify for additional car insurance discounts.
What are the safest cars to drive?
Even the safest cars are dangerous if not driven safely. However, discounts are available for drivers who drive cars with air bags, anti-lock brakes, and electronic stability control. Additionally, your Farmers agent can help you by letting you know which vehicles are better insurance values.
How does the kind of car I drive affect my insurance rate?
The kind of car you drive can impact your car insurance rate, especially if you have comprehensive and collision coverage. Rates are based on the type of vehicle loss history – how often it’s stolen, and how expensive it is to repair or replace after a theft or accident.
Additional factors that can contribute to your car insurance premium:
- Engine size
- Body type
- Safety and security features
- Crash-test ratings
Every car and driver is unique, and while certain standards can apply to car insurance premiums – like cars with fewer safety features or car alarm systems typically costing more to insure, and cars with sophisticated safety features and good crash-test ratings usually being more affordable – there are a variety of exceptions.
The best way to determine how the kind of car you drive can affect your insurance rate is to talk with a Farmers agent to help you determine the right insurance coverage for you and your car.
What does "full coverage" mean?
The term full coverage generally means that the insurance policy has both liability coverage and coverage for damage to your vehicle. The term full coverage does not mean that "everything" is covered no matter what happens. Your auto insurance Policy Declaration page lists the coverage you have selected. A Farmers agent can help you select auto insurance coverage that fits your needs and budget.
Am I covered if I drive someone else's vehicle?
Generally speaking, the insurance goes with the car. For example, if you have an accident while driving someone else's car, the owner's insurance would apply toward damages first. Your auto insurance would generally apply in the event the owner of the vehicle had no auto insurance or did not have enough auto insurance to pay the damages. For specific information and guidance on your coverage in this situation, contact your local Farmers agent.
If I rent a car, am I covered?
Car rental companies charge daily fees for "CDW" coverage (which means their insurance will pay for all damages covered in your rental agreement). Rental car coverage under a private passenger policy varies state by state. Check your policy or contact your local Farmers agent.
Will my policy be cancelled if I have an accident?
Generally, being in an accident will not cause your policy to be canceled. However, after the facts of the situation are reviewed, you may be required to pay a higher premium for your policy upon renewal. Your personal Farmers agent will help you understand the potential increases if an accident does occur.
Are there special coverage options for new cars?
Farmers offers the New Car Pledge ®, a guarantee for newly purchased vehicles. We'll replace it with a new one of the same make and model, at full market value without depreciation, as long as the car has less than 24,000 miles and is a maximum of two model years old. Additionally, if your new car is repairable, only original equipment manufacturer parts will be used when available.
Do I need special coverage if I add features to my car?
With both comprehensive and collision coverage from Farmers, any special features you’ve added to your vehicle – like custom body work, rims or tires – are covered up to $1,000.
If you’ve added more than $1,000 of value to your car in after-market features, you can choose an additional endorsement to cover damage or theft of those items for up to $50,000. Check with your Farmers agent to find out how much would be right for you.
Do I need special coverage if I install new stereo or audio equipment?
If you’ve added optional stereo equipment to your vehicle that is not permanently installed in the same location as the factory-installed stereo, subwoofers or additional speakers, for example, you’ll want to consider adding an endorsement to your policy to fully cover these items in the event of theft or damage. Your Farmers agent will be able to help you determine the kind of endorsement that would work best for your specific equipment.
Collectible Auto Insurance FAQs
Does Farmers offer insurance for collectible autos or antique cars?
Yes, you can get a quote and purchase collectible auto insurance through your Farmers agent.
Are there discounts available for collectible auto insurance coverage?
Yes, Farmers offers a multi-vehicle discount when you insure more than one collectible auto. Policy discounts vary by state.
Insurance Risk Indicators
Questions you may have about insurance risk indicators.
When it comes to insurance, we know you want quality coverage from a solid, dependable company. You want the peace of mind that comes with knowing that, in the event you need us, we'll be there to help you get your life back to where it belongs quickly, compassionately and with as little hassle as possible. And you feel, rightfully so, that if you are a good risk, you should be rewarded with lower insurance costs. We understand that you want all of the above at the best price possible. At Farmers, we are always looking for new ways to keep the cost of insurance affordable. To do this, we use a tool called the Risk Assessment Indicator.
What is a Farmers Risk Assessment Indicator?
A Farmers Risk Assessment Indicator is a code developed from and based upon credit report information. Depending on the kind of policy, Farmers' underwriters may use this indicator along with motor vehicle records, loss reports and/or other information to rate auto and/or homeowner insurance policies. Risk Assessment Indicators are highly predictive of future claims activities, and the use of indicators allows Farmers to charge customers a rate that is appropriate to the risk insured.
Where do Risk Assessment Indicators come from?
Risk Assessment Indicators are based on information from consumer credit reports from one of three institutions: LexisNexis Consumer Services, Equifax or CSC Credit Services.
Information used may include:
- Length of credit history
- Late payments, collections
What's not included in a Risk Assessment Indicator? (Risk Assessment Indicators do not use the following information...)
- Ethnic group
- Marital Status
- Familial Status
Who at Farmers has access to my credit information?
We believe in your right to privacy. Your agent and members of the agency staff do not have access to your credit file. You can, however, obtain a copy of your credit report from the consumer reporting agency that provided the information used to calculate your Risk Assessment Indicator.
Why does Farmers use Risk Assessment Indicators?
Industry experts have proven that a strong correlation exists between credit history and insurance risk. Because credit history is generally accepted to be a fair and accurate way to predict probability of future loss, Farmers Risk Assessment Indicator uses credit data to determine discount availability for applicants and customers. Please keep in mind that this is only one of several factors used in determining your premium.
Can I improve my RAI and, if so, how?
You can improve your indicator over time by using credit responsibly. A Risk Assessment Indicator is a snapshot of your insurance risk based on information in your credit report. It's a good idea to periodically obtain a copy of your credit report from the major credit bureaus to check for any inaccuracies.
Farmers recommends that if you need assistance with understanding your credit history or advice on using credit responsibly, you should contact a qualified credit counselor. Farmers Agents and employees are not qualified credit counselors.
What if I don't get the best discount as a result of my Indicator?
The Federal Fair Credit Reporting Act (FCRA) requires that we tell you if we take adverse action based upon information contained in your credit report. We will give you the name of the credit bureau that provided the information and advise you of certain rights you have under the FCRA so you can address any errors that might appear on your credit report.
What if the information in my credit report is wrong?
If you find an error in your credit history, you should report the error to the credit bureau. The credit bureau must investigate and respond to your request. Once you are certain that your report has been updated, please contact your Farmers agent. Your agent will re-order a new Risk Assessment Indicator. Farmers will apply any changes to your premium. Make sure the information in your credit report is correct by reviewing your credit report from each credit bureau at least once a year. Call these numbers to order a copy (a fee may be required):
- LexisNexis Consumer Services: (800) 456-6004
- Equifax and CSC Credit Services: (866) 349-5183
How do insurance companies assess risk?
There are a number of factors that contribute to how insurance companies, including Farmers, calculate the risk they’ll assume when offering coverage to a particular individual. Demographic information can impact the premiums you can expect to pay, as well as your driving record and your credit history*.
These and other pieces of data help create a bigger picture that underwriters use to determine how likely it is that you may get into an accident and, as a result, how risky you are to insure. The best way to understand how insurance companies assess risk is to talk to a Farmers agent today about any questions or concerns you may have.
*Where allowed by law.
How do I know if I’m considered a risk for auto insurance?
While certain behaviors, like reckless driving or multiple traffic violations, have more potential to increase your insurance premiums, the method Farmers uses to calculate your risk is based on a comprehensive, proprietary formula.
We compile information from a variety of sources to determine the probability you’ll get into an accident, as well as the level of your individual potential risk. Talking with your Farmers agent is the best way to determine whether you may, or may not, be considered a risk for auto insurance.
What’s the difference between comprehensive and collision coverage?
Q: Question My car is almost 10 years old. I’m not sure if I should still carry both comprehensive and collision insurance. Actually, I’m not even sure what the difference is between them. Can you help me make sense of them?
Answer Also referred to as "physical damage coverage," comprehensive and collision coverage help repair your car after a covered loss. Comprehensive or "comp" coverage generally reimburses you when your car is damaged from theft, vandalism, fire or hitting an animal…or if your vehicle is damaged from weather-related events like hail. Collision coverage provides coverage when damage occurs to your car while moving, parked or struck by another vehicle.
– Theresa Geving, a Farmers Insurance® agent based in Overland Park, Kansas.