You put your car in gear and rev the engine. Sweet freedom. You wave to your neighbors. They wave back. Perfection. As you glide toward the horizon, your next thought is, “If only I had an auto insurance quiz to keep this drive upbeat!” Your wish — our command.
Take the quiz below to test your driving coverage expertise. (Pull over before you do!) The answers and explanations are at the end. Good luck.
1. What is the primary purpose of auto insurance?
A) To provide financial protection for damage to your car
B) To cover your financial liability in an accident
C) To pay for your car’s maintenance
D) All of the above
2. What does “comprehensive auto insurance” cover?
A) Collision damage, like crashing into another vehicle or stationary object
B) Noncollision damage, like theft, vandalism, natural disasters, falling objects and animal strikes
C) Combined damage for your home and auto
D) All of the above
3. What does it mean when you have a $500 deductible on your auto insurance policy?
A) You pay $500 for the entire insurance policy.
B) You pay $500 out of pocket before your insurance company pays for a claim.
C) The insurance company deducts $500 from your policy due to your driving record.
D) The insurance company agrees to pay $500 for damages to your car.
4. Your friend drives you home from the hospital after you have a medical procedure. You get in an accident on the way home. Your auto insurance covers your friend since they were driving your car.
True or false?
5. What is uninsured/underinsured motorist (UM/UIM) coverage?
A) Coverage that protects against drivers without adequate insurance
B) Mandatory insurance required by every state
C) Coverage that pays for routine car maintenance
D) Insurance for rental cars
6. In some states, pet seat belts are required for pets traveling in the car.
True or false?
7. Which of the following factors impacts your auto insurance premium?
A) Your age
B) Your driving record
C) Your car’s make, model and year
D) All of the above
8. Which does auto liability insurance cover?
A) Your car repair costs after an accident
B) Noncollision damage to your vehicle, like theft, vandalism and weather disasters
C) Injuries to you and your passengers
D) Damage to others from an accident you caused
9. Each state makes separate laws and regulations regarding insurance within their state, including auto insurance.
True or false?
10. If you lease or finance your car, your lender will require you to get comprehensive and collision insurance, in addition to state-mandated liability coverage.
True or false?
11. Personal injury protection (PIP) and medical payments (MedPay) are types of insurance that cover injuries for you and your passengers after a car accident.
True or false?
12. Guaranteed asset protection (GAP) insurance covers the difference between what you owe on your vehicle and its actual worth.
True or false?
13. What is an auto insurance premium?
A) The amount you pay for your entire insurance policy.
B) The amount you pay before your insurance pays a claim.
C) The amount the insurance company pays for a claim.
D) The amount your insurance company pays you after an accident.
14. An auto insurance policy covers mechanical breakdowns and maintenance.
True or false?
15. Your friend tells you they have full coverage on their car. What does that mean?
A) They have liability coverage
B) They have collision coverage
C) They have comprehensive coverage
D) All of the above
16. What are these numbers on an auto liability policy: $25,000/$50,000/$15,000?
A) The algorithm they use to calculate your accident
B) The maximum your insurance will pay after an accident
C) Your deductible options
D) The estimated value of your car as it depreciates over time
1. B. The primary purpose of auto insurance is to pay for damages if you cause a car accident. For example, if you wreck another driver’s car and damage a city lamp post, you’re responsible for repairing the car and the lamp post. That’s why states require you to have minimum insurance coverage to drive.
2. B. Comprehensive auto insurance covers damage to your car for noncollision incidents. For example, if your car is parked on the street and a tree limb falls on it, that’s covered by comprehensive auto. You’ll also turn to comprehensive coverage if someone steals your car, or you hit a deer while driving.
3. B. The “deductible” is the amount you must pay before your insurance company will pay a claim. For example, say you get into a car accident. Your insurance company agrees to pay for the repairs. Your deductible is $500. The repairs cost $4,500. You pay $500; the insurance company pays $4,000. You can increase your deductible to reduce your overall insurance costs, but make sure you can afford it.
4. True. Your insurance policy covers your car. If someone else drives it with your permission and has an accident, your insurance will likely cover the damages. But there are some exceptions and policies differ. Before you lend your car to anyone, call your insurance agent to verify who is covered and under what circumstances. For example, if your friend was driving without a license, it could negate your coverage.
5. A. UM/UIM protects you against drivers who don’t have insurance or don’t have enough insurance. Some states require the coverage; others don’t. According to the Insurance Research Council, one in seven drivers was uninsured in 2022. You can fall back on your UM/UIM coverage if you’re a hit-and-run victim. State minimum insurance isn’t adequate coverage for most serious accidents. Your UM/UIM will step in after another driver’s insurance is exhausted.
6. True. Some states require pet seat belts or harness restraints when you drive with your pets. You could get a ticket for distracted driving or jeopardize your auto coverage. The insurance company could deny your claim if you’re at fault for an accident with an unrestrained pet in the car. Check your state’s pet seat belt laws.
7. D. Your age, driving record and car type affect how much your insurance costs. Insurance companies use data from years of statistics to determine the likelihood you’ll get into an accident. They use your car’s information to determine how much it will cost to repair or replace it after an incident.
In some states, insurance companies can use your insurance-based credit score and zip code to determine your premium. Check your state laws to learn what information is legal to collect for an insurance quote.
8. D. Liability coverage pays for damages to other people’s property and medical bills due to an accident. Some states are at-fault states. Accident investigations determine who’s at fault or liable for the accident. Each state has laws on how fault is determined and who should pay based on the level of fault. Even no-fault states determine who’s at fault for the accident and require the at-fault driver to pay for property damage. That’s why auto liability coverage is necessary. However, no-fault states don’t use fault to determine who’s responsible for medical bills. Each driver carries enough insurance to pay for their injuries.
9. True. Every state has its own laws about auto insurance. That’s why they have different minimum auto insurance coverage requirements. Each has a department of insurance that the state government runs. This government office makes sure insurance agencies follow state laws. Consumers can file complaints with the state government.
The department also vets each insurance company before they can sell insurance in the state. The vetting process includes assessing financial health, business practices and adherence to state laws. Passing the vetting process means an insurance company is an “admitted carrier,” allowing them to legally sell insurance in that state. It also means the insurance department will pay client claims if the admitted carrier goes bankrupt.
10. True. The financing company that loaned you the money to buy or lease your car has an interest in your vehicle. They might not get their money back if you stop paying the loan because your car was stolen or totaled. That’s why lenders usually require you to obtain protection against noncollision damage (hail, theft, vandalism, animal strike, etc.) and collision damage (driving accidents, rollovers, collision with buildings, etc.).
If you own your car outright, these insurance coverages are optional. However, liability auto insurance is legally required to drive in every state except New Hampshire. Even so, New Hampshire has laws that hold you financially responsible for accidents you cause, so many residents choose to buy insurance.
11. True. PIP and MedPay cover medical costs for you and your passengers after an accident. PIP offers more coverage for things like lost wages and caregiver expenses. MedPay only pays medical costs. Some no-fault states, like Florida, require drivers to have PIP coverage. Whether you can buy PIP or MedPay depends on where you live.
12. True. GAP insurance pays the difference between what you owe on your auto loan and your vehicle’s actual cash value (ACV). Let’s say you purchase a new car. A year later, someone steals it. Because your car loses the most value in the first year you own it, you owe more than its current value. Since you bought GAP insurance, your insurance company pays the difference.
You can purchase GAP insurance anytime, not just when you buy the car. You’ll need collision and comprehensive coverage on your vehicle to get GAP insurance. You can cancel GAP coverage anytime. Keep track of your car’s value. When you owe less than your car’s worth, cancel the coverage since there won’t be a coverage gap anymore.
13. A. The premium is the amount you pay for the insurance policy. Auto policy coverage renews every six or 12 months. You’ll get a new policy and updated insurance cards. Your premium may go up or down based on things like inflation, car theft or weather disasters in your area. Your driving record and credit score can also impact your rates. You can ask your agent to review your auto coverage anytime.
14. False. Regular auto insurance doesn’t pay for mechanical breakdowns or maintenance. Basic auto insurance only pays for personal injuries and your liability for property damage you cause to others. You can add coverages based on your needs and to comply with state laws and lender requirements.
No auto insurance pays for normal maintenance or wear and tear. Auto insurance pays for accidental damage or incidents described in the policy. It might pay for a rental car or roadside assistance if you buy these extra coverages. You can find your coverage limits on the front pages of your auto policy. This is called the declarations, or “dec” page. Call your insurance agency if you need help understanding your policy.
15. D. Full coverage usually means all three major auto coverages: liability, collision and comprehensive insurance. Your friend has coverage for:
- Damage and injuries they cause to others
- Damage to their car from collisions with other vehicles or stationary objects
- Damage to their car from noncollisions like falling objects, weather disasters, theft, vandalism and hitting an animal
16. B. These are the maximum amounts your insurance policy will pay to others after an accident you’ve caused. Here’s the breakdown on $25,000/$50,000/$15,000:
- $25,000 is the maximum your insurance company will pay for bodily injuries (BI) per person.
- $50,000 is the maximum your insurance company will pay for BI per accident.
- $15,000 is the maximum your insurance company will pay for property damage (PD) per accident.
Every state has different minimum auto insurance requirements. You can get more coverage by extending your limits or buying a personal umbrella policy. A personal umbrella extends your liability limits over your home or renters policy and your auto policy.
Got questions? Give your agent a call! They’ll be happy to explain your policy details and go over your coverage with you.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.
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