Questions about Auto Insurance

What Is Auto Insurance?

What's In My Auto Policy?

Who Is Covered?

What Is Covered?

What Is The Difference Between Collision And Comprehensive Coverage?

How Can I Lower My Premiums?

Are There Things I Can Do To Lower My Premiums?

I Have An Older Car Whose Current Market Value Is Very Low - Do I Really Need To Purchase Automobile Insurance?

Will My Rates Go Up Because I've Had A Claim?

What Should I Do If I Am In An Accident?

What Is Auto Insurance?

An auto insurance policy is a contract between you and an insurance company. You pay a premium. In exchange, the insurance company promises to pay for specific car-related financial losses, within the selected coverage limits, that you may have during the term of the agreement.

Most states require that you carry automobile liability insurance in certain minimum amounts. If you are at fault in an accident the law requires that you pay the damages sustained by the person who is not at fault. These can include property damage, which is the cost to repair or replace any property that you have damaged. These can also include damages for personal injuries, which include not only the other person's medical expenses and lost wages but also damages for pain and suffering, permanent injury, and loss of enjoyment of life. These damages can come to thousands of dollars even for a minor accident. That's why adequate insurance is essential to your economic health.

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What's In My Auto Policy?

The standard private passenger automobile insurance policy affords up to four types of coverage. These coverages include: Liability Coverage, Medical Payments Coverage, Uninsured Motorist Coverage (Underinsured Motorist Coverage) and Coverage for Damage to Your Auto (Comprehensive and Collision).

Liability coverage protects you from property damage or personal injury claims arising out of the ownership, maintenance or use of a covered automobile. Unless specifically restricted by your policy, you will have coverage while driving any car, pickup, or van so long as you have the owner's permission to use the vehicle. A person who is using your car, pickup, or van with your permission will also be covered. At the time the policy is issued you will choose the limits of liability that you want. The limits that you select are the most that insurance company will pay in the event of a loss.

Medical payments coverage pays for medical expenses that you, or a family member, incur as the result of an automobile accident. It also covers persons who are occupying a covered automobile. At the time the policy is issued you will choose a coverage limit. The limits that you select are the most that will be paid for each person in connection with a single accident.

Even though liability coverage is advisable and often required, there are many irresponsible people who do not buy insurance. If an uninsured motorist causes an accident you will not be able to recover any damages that you sustain. If you purchase uninsured motorist insurance, though, your insurance company will pay you for the property damage and bodily injury caused by an uninsured motorist. It will cover you, any family member, and anyone occupying a covered automobile. The limits for this coverage are usually the same limits that you selected for liability, although you can choose lower limits.

There are also times when a person who causes an accident has liability insurance but your damages exceed the limits of that person's coverage. In some states underinsured motorist coverage is included in your uninsured motorist coverage. In other states, you can purchase underinsured motorist insurance, which covers your excess losses up to the limit set forth in the policy.

If you have comprehensive and collision coverage, the insurance company will pay for damage to a covered automobile regardless of fault. Most banks and finance companies require you to maintain comprehensive and collision coverage on your car if it is financed.

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Who Is Covered?

Liability coverage extends to you, your spouse, and any resident family member for the ownership, maintenance, or use of any car, pickup, or van unless specifically restricted by your policy. Most state laws require that you carry a minimum amount of liability insurance, which pays for injuries or damages you cause to someone else. (We recommend that you carry much more than the minimum - - enough to protect all your assets.)

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What Is Covered?

This part is up to you. Once you've met the legal requirements for liability (and we tell you what these are when you get a quote), you should select other types and amounts of coverage that will tailor your policy to your own needs. Here's what an auto policy can cover, above and beyond your liability:

• Your car -- your automobiles as listed on the policy and any additional vehicles you buy over the next year. (Just make sure you register them with your carrier within 30 days of purchase.)
• Your car against collisions - your car is covered against collisions it may have with any other object, no matter who caused it. (See collision insurance for more detail.)
• Your car against damage from almost anything else - vandalism, theft, broken glass, storms, and falling objects. (See comprehensive insurance for more detail.)
• You, your passengers, and your car against uninsured or underinsured motorists - if you are hit by someone who either does not have insurance, or does not have enough insurance to cover the accident, your loss is covered under your auto policy. (See uninsured, underinsured insurance for more detail.)
• You and your passengers for medical injury payments - reasonable medical (and funeral) expenses incurred as a result of injuries sustained in an accident. (See medical payments insurance for more detail.)

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What Is the Difference Between Collision and Comprehensive Coverage?

Collision is defined as losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage.

Comprehensive provides coverage for most other direct physical damage losses you could incur. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage.

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How Can I Lower My Premiums?

Are There Things I Can Do to Lower My Premiums?

There are a number of factors that affect the cost of your automobile insurance - some of which you can control and some of which are beyond your control. Don't worry about those factors that you cannot control (i.e. age and sex) -- let's focus on those that you can.

The first thing to think consider is your needs. What do you really need in your car insurance? The answer to this question will drive several factors - limits, deductibles, coverage selections, etc.

The next step is to review your current policy (if you do not understand your current policy, call us to review it). Have your needs changed? Situations change over time and the decisions you made and circumstances that existed a year ago may not exist for this policy period.

Other things to consider:

• Type of car - The type and age of your car are two critical factors. If you have a choice, choose carefully. Newer model years and top line cars will cost more to insure. Also, popular cars drive your premiums up, due to theft and vandalism rates.
• Your driving record - There is no surer way to keep the cost of insurance down than to be a careful driver because each time you get a ticket or have an accident, your insurance premium increases. However, if that advice is a little late (i.e. your driving record has blemishes), it is usually worth your time and money to contest a ticket and also to attend driver training courses.
• Take a driving course - There are several courses, depending on your age that will help lower your insurance premiums. If you are still in high school, take a drivers education course. Many insurance companies offer a discount for these courses. Also, in certain states (usually for older drivers) there are accident prevention or defensive driving courses. The National Safety Council will have information on locations and availability.
• Pay your bills on time - Each time your policy lapses (i.e. you don't pay your bills), there are fees that are added to the original premium amount to reinstate your policy. It's a far better thing to pay your bills on time than to pay the fees (and premium) later.
• Where you live - Areas that have higher traffic volume are usually more expensive to insure. If you are in the market to buy a new home, this may be something to consider.
• Higher deductibles lower premiums - most policies have a standard $200 or $250 deductible on Comprehensive and Collision. Today's higher priced vehicles are more expensive to repair, thus higher deductibles (or the portion you pay) bring greater savings. Be sure you can afford the increased deductible before purchasing the coverage.
• Multi-car discounts - Combining two or more cars on the same policy can reduce your premium by up to 25%.
• Carefully consider you coverage -- Many people still carry full coverage on vehicles with little or no book value. For example, your car is worth $600 and you pay $180 per year for Comprehensive and Collision Coverage with a $500 deductible. The car is a total loss in an accident. You would receive $100 after the $500 deductible, but paid $180 for full coverage, so you lose $80

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I have an older car whose current market value is very low - do I really need to purchase automobile insurance?

Most states have enacted compulsory insurance laws that require drivers to have at least some automobile liability insurance. These laws were enacted to ensure that victims of automobile accidents receive compensation when their losses are caused by the actions of another individual who was negligent.

Except for the minimum liability coverages that you may be required to purchase, many people with older cars decide not to purchase any of the physical damage coverages (comprehensive and collision). It is often the case that the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually just "total" the car and give you a check for the car's market value less the deductible.

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Will My Rates Go Up Because I've Had A Claim?

Actuaries and statisticians who have studied the claiming behavior of people involved in accidents have long known that people who have either had an accident or received a ticket recently are more likely to have another accident in the next couple of years than people whose recent driving record has been incident free.

Insurance companies use this information not to punish people who have had an accident, but to charge them the premium that most accurately reflects their likelihood of having an accident. People who are more likely to have accidents should reasonably be expected to pay higher premiums.

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What Should I Do If I Am In An Accident?

The duties you need to perform after you have an accident are prescribed both by state law and by the terms of your contract. Obviously, the first thing you should do is make sure everyone is all right and call an ambulance if one is needed.

Second, for most accidents the police should be notified.

Third, you should give the other driver(s) involved in the accident your name, address, telephone number, and the name of your insurance company and/or your insurance agent. You also need to get this same information from the other driver(s).

Fourth, at the first opportunity, you should contact either our agency or insurance company to notify them that you have been involved in an accident.

Finally, there are a number of conditions in the insurance contract that you must satisfy in order to receive compensation from your insurer. For example, you need to cooperate with your insurer during any investigation undertaken during the claims settlement process. Failure to complete any of these actions can, and sometimes does, result in non-payment by your insurance company for losses that otherwise would have been covered.

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