When you get behind the wheel, you take a risk. You may attempt to be the best possible driver, but you also have to trust that everyone else on the road is driving well and paying attention, too. Auto insurance provides a safety net when drivers make mistakes. In the event of an accident, you are at risk financially. If the accident is not your fault, and the other driver does not have adequate insurance, you have to pay for all damages to your own car plus pay for any medical bills if you are badly injured. When you are at fault, you are typically liable for damages to the other person’s vehicle as well as the medical costs of injured victims. Additionally, you must cover the repairs to your own vehicle and the costs of legal fees if you are sued. All of your assets are at risk if you are uninsured or underinsured.

In general, an auto insurance follows the car first and the insured second. For instance, if you have a car accident while driving your friend’s car with his or her permission and you are at fault, your friend’s auto insurance is the primary insurance and will cover any liability and damage first, then your auto insurance may pay a portion of the cost. Vice versa, if your friend got into an accident while driving your car with your consent, your insurance will be primary. You are required by most insurance companies to add anyone who lives with you and has access to your car regularly as an insured on your policy. Some insurance companies may have specific limitations on covering people not listed on your policy. You should always read your policy or check with your insurance agent directly. Keep in mind, if someone drives your car with your permission and causes an accident, the accident will stay on your record and may increase your premium.

Car insurance is not an application for credit, so while insurance companies check your credit to determine your responsibility and financial security, they are not extending credit. A credit check for a car insurance quote is called a “soft pull” and it does not affect your credit rating. Credit scores have become very important in recent years as lenders have tightened restrictions. Many families are focused on eliminating debt and getting caught up on payments so they can improve their credit scores and get better rates when getting a mortgage or a car loan. Every time you fill out an application for credit, your credit score can be affected because a good percentage of your score is based on how much total credit you have and the number of accounts you have.

An insurance company may check your driving record when you are looking for a new policy, renewing your existing policy or modifying the policy by adding a new driver or additional vehicle. You may also wonder whether your driving record can prevent you from getting insurance. Your driving record check typically will not prevent you from getting coverage, but it does help the company determine the risk they will take when issuing a policy to you. If you have a record that includes tickets, accidents or points on your license, these factors indicate to the insurance company that there is a higher risk of paying a claim. In order to compensate for that, the company may charge a higher premium than someone with a clean driving record.

Real property and personal property are covered. The value of your real property—your home, garage, shed and other structures-is generally based on the value of the main structure, the house itself. So, if the house were insured for $75,000, other auxiliary structures would be covered for 10% of that, or $7,500 worth of damages. Covered personal property includes the contents of your home and personal belongings used, owned, worn or carried by you or members of your household-basically, everything and the kitchen sink! This coverage is also based on the house coverage, and there are limits on the losses that can be claimed. Higher limits can be purchased for both real and personal property.

Yes. Homeowners insurance is a package of insurance coverage that extends to all your possessions no matter where they are. If you take a round-the-world vacation and lose a valuable item, as long as the loss is by a covered event or peril, the location does not matter, you're covered. The liability component also extends well beyond the boundaries of your home. Should you be found legally at fault for injury or loss to another individual, whether you unfortunately and unintentionally cause a tumble down a San Francisco hill or a fall in an Indiana barn, for example, your homeowners policy likely will cover you. As in the property section of a homeowners policy, there are limits and exclusions to personal liability. Your business activities, for example, are not covered under your homeowners policy. You also are not covered for injuries or damage you deliberately cause. Your policy lists specific exclusions and limits.

No. Your property and the structure (the basement) are covered by your policy, as is your personal liability. However, the tenants' possessions and liability are not covered by your policy. Therefore, they may wish to purchase their own renters insurance. Whether you are a leaser or a renter, you should check with your agent to make sure you have the coverage you need.