Answers To Frequently Asked Car Insurance Questions

By Joe R. Maldonado

Here are two of the more common car insurance questions answered:

‘What is taxable as far as car insurance?’

In general, any claim settlements made against your car insurance will not be taxable. However, you could receive payments for things like repairing or replacing your car, medical expenses or replacement services such as housekeeping or child care. These payments would be designed to give you compensation and restore you to the place where you were before the accident occurred. You cannot deduct the loss of your income though, because your insurance company will have already compensated you for this.

You may sometimes have to report a settlement as income, and this will be taxable. You should do this if you received anything above the amount needed to repair the damage. You would just report the excess. This is also true for settlements involving bodily injury and rehabilitation.

Always remain compliant with the IRS. Report what you receive, even when it isn’t taxable. Just make sure you report it as income.

Go ahead and get some help from a professional. You may have a unique situation that requires looking at. There may be different rules which apply to your situation.

Here is another one of the most commonly asked car insurance questions:

‘Does my credit rating affect the cost of my car insurance?’

The way in which you handle your bills does actually affect your car insurance premiums.

If you miss a few payments on your credit cards or any other bills your credit score will suffer. This can raise your insurance premiums by as much as 50%! Upon application, your credit gets evaluated by the insurance agency. They will use the information that they find to determine the rate of your insurance premium.

The whole idea here is that they hold a general belief that a person who is responsible with their money will also be a responsible driver. Insurance companies have had experience enough to know that this generally turns out to be the truth.

Many times those who hold an above average credit rating will also be the same people that install anti-theft devices on their cars as well as cautiously follow the rules of the road. These are also the people who will be the most likely to put on their seatbelts before hitting the road.

If you have a bad credit rating, you will be viewed as high risk. This does not just apply to the rules of the road. The insurance agencies also view you as someone who may end up filing an unnecessary claim or trying to quote a claim that is above your actual loss. This is why you have got to be meticulous when it comes to your credit score. Car insurance is not the only area of your life that this will affect. Be careful when it comes to making late payments on anything, and avoid bankruptcy and foreclosure at all costs.

These are just a couple of the frequently asked car insurance questions, and you can find the answers to many more of them with a simple online search.

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