Automobile Insurance faq’s
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| Automobile Insurance FAQ’s
Q: I’m in the process of purchasing an automobile, what should I keep in mind when securing an auto insurance policy? A: There are several factors you should keep in mind when purchasing an automobile insurance policy. First, you need to decide how much liability coverage you want to carry. This amount differs from person to person, and the state you reside in will require you to carry at least a designated minimal amount. Feel free to talk to your agent if you need assistance in determining what coverage amount would best suit you. Next, you need to determine what optional coverages you want included in your policy. For instance, do you want to carry physical damage coverage for you vehicle (collision and/or comprehensive coverage) or is the market value of your vehicle too low to warrant this coverage. Do you want to carry uninsured/underinsured motorists coverage (highly recommended)? Do you want to carry medical expense coverage? Would you like towing and labor coverage or rental reimbursement coverage? There is also an additional coverage called lease/loan gap coverage. Once you have decided what coverages you want included in your policy you need to opt for either using an insurance agent to assist you or going directly through an insurance company that sells policies over the phone or through the mail. Q: What factors can affect the premium of my automobile insurance policy? A: There are several aspects that can affect the premium of an automobile insurance policy – some that are within your control and some that are beyond your control. The number of years driving experience you have, your driving record (moving violations, accidents, DUIs, suspensions, etc.), the type of vehicle you drive, where the vehicle is garaged, the purpose the vehicle serves, and how many miles annually you put on the vehicle can all affect how much auto insurance premium you may have to pay. Further considerations to take into account that can affect the cost of your auto insurance policy can be your marital status (discounts for married individuals), if you are in school full-time and if you maintain a 3.0 or better GPA (differs from company to company), if you belong to any of the group discounts offered (differs from company to company but includes such occupations as teachers, scientists, engineers, etc.), and if you have any other policies with the company. Q: What are some practical things I can do to lower the premium of my auto insurance? A: First and foremost you want to make sure that you shop your insurance around with different insurance carriers. Insurance quotes from a variety of insurance carriers for identical coverages can vary in price drastically. Make sure if you have your insurance through an agent that they have you placed with their most competitive insurance carrier. Reviewing the insurance carrier’s policy of discounts is very important so you can be sure that you are receiving all the proper discounts that you qualify for. Attaching discounts to the policy can always decrease the premium. Lastly, if you carry physical damage coverage (comprehensive and collision coverage) on your policy, increasing the deductible you maintain for your vehicle(s) will also decrease your premium. Generally, the more risk you assume, the less risk you assign to the insurance company, which is charging according to how much risk it is insuring against. A deductible is the initial out of pocket expense that you, the insured, assume before the insurance company will pay out for a loss. Therefore, the higher the deductible you choose the less risk the insurance company has, which lowers the premium. Q: My state requires that I carry a minimum of 15/30/5 for insurance coverages, what does this mean? A: A minimum liability limit of 15/30/5 refers to $15,000 bodily injury liability per person, $30,000 per accident, and $5,000 property damage. Insurance requirements vary from state to state. Q: If the state I live in has minimum requirements, why would I want to purchase more insurance then what the state law requires? A: If you are found to be liable for an amount greater then the coverage limits of your policy, you must pay the difference out of pocket. If you don’t have enough money then the other party can go after your home, financial assets, and even have your future wages garnished. It is important when purchasing an auto insurance policy to make sure you purchase enough coverage to cover your assets. The last thing you want to have to do is liquidate all your assets to pay the other party when all you needed to do was purchase higher liability limits on your auto insurance policy. Q: What are the coverages included in a standard personal auto insurance policy? A: The following is a list of the basic coverages and some additional coverages offered in the standard auto insurance policy: Bodily Injury Liability – Coverage that pays for medical expenses, legal expenses, and judgments against you when you or your vehicle is involved in an accident that causes the injury or death of another individual. Property Damage Liability – Coverage that pays for damages to the property of others caused by your or your vehicle. Underinsured/Uninsured Motorists – Coverage that pays for the costs associated with damage or injury caused to you by an underinsured, uninsured, or hit-and-run driver. Uninsured Motorists Property Damage/Collision Deductible Waiver – You would need to have uninsured/underinsured motorists coverage for one of these coverages to apply. Only one of these coverages applies – if you have physical damage coverage then you would have the collision deductible waiver, and if you do not have physical damage coverage then you would have the uninsured motorists property damage coverage. If you get into an accident with another individual that does not have insurance and they are at fault and you have physical damage coverage on your vehicle then the insurance company will waive the collision deductible. If, however, you don’t have physical damage coverage on your vehicle then there is a stipulated maximum amount of coverage (usually around $3,500, but differs from company to company) that the insurance company will pay you with the uninsured motorists property damage coverage. Medical Payments – Covers the initial medical bills of you and your passengers after an auto accident, regardless of who is at fault. Collision – Covers the damage to your vehicle resulting from a collision, regardless of who is responsible. With collision coverage there is usually a deductible to be paid by the insured based on what amount they chose when they purchased the policy. A Collision Deductible Waiver can also be purchased to waive the collision deductible for no fault accidents. Comprehensive – Covers the damage to your vehicle that does not result from a collision such as theft, vandalism, fire, hail, natural disasters, hitting an animal, etc. With comprehensive coverage there is usually a deductible to be paid by the insured based on what amount they chose when they purchased the policy. Q: What is the difference between comprehensive physical damage coverage and collision physical damage coverage? A: Both comprehensive and collision coverages relate specifically to the vehicle being physical damaged rather than the liability portion of the policy. Comprehensive and collision coverages are not necessarily required on an auto policy and are considered optional when purchasing a policy. The only time comprehensive and collision coverages may be required is if you are financing or leasing a vehicle and the lien holder or additional insured requires such coverages. Collision is defined as losses you incur when your vehicle collides with another vehicle or object. For instance, if you are involved in an accident and your vehicle collides with another vehicle, damages to your vehicle will be paid under the collision coverage. Comprehensive covers all other direct physical damage other than collision such as fire, theft, vandalism, etc. Make sure you understand the difference between the two coverages when you are purchasing an auto insurance policy so you can obtain the proper and appropriate deductibles, which can and are often different from one another. Q: What is the difference between cancellation and non-renewal of an auto insurance policy? A: When your policy is non-renewed it means that the insurance company does not want to offer you another policy at the end of your current policy period. It is possible that the company is not offering you continued coverage because you don’t meet their underwriting criteria any longer – maybe you lost your driving privileges, maybe you have received too many traffic violations, or maybe you have been involved in too many accidents within the last three to five years. Should this happen to you it is quite possible that you will be able to secure coverage with a different insurance carrier; however, the new carrier will probably charge you a higher premium due to the fact that you are a higher risk. The cancellation of a policy can occur at the request of the insured or the insurance company. An insurance company can cancel your policy for a number of reasons such as non-payment of premium or maybe you have misrepresented the necessary information to underwrite the policy. An insured can request their policy to be cancelled if they no longer need the policy or are changing carriers. Remember, many applications ask if you have ever been cancelled, declined, or refused similar coverage for any reason. Answering yes to this question could limit the available options of insurance carriers you have to choose from. Q: I was just involved in an accident, what should I do? A: Your responsibilities and duties after you have an accident are stipulated both by state law and your insurance contract. Be sure you check with both. First and foremost you want to make sure that you and everyone else in your vehicle and the other vehicle are all right and call an ambulance if necessary. Second, be sure to call the police. Now whether they come or not may differ from city to city depending on their procedures. Third, you want to exchange the necessary information with the other parties involved in the accident such as name, address, telephone number, insurance carriers, policy number, persons involved, and vehicle information. After you have done this you’ll want to contact your insurance agent or insurance company as soon as possible to report the accident. Once your insurance company has been notified you will be contacted by a claims adjuster to acquire a statement from you concerning the details of the accident, and they will also begin to provide you with advise and the necessary procedures for getting your vehicle repaired. Q: What does it mean when a car is totaled? A: After an accident or theft recovery, if the insurance company decides your car is totaled, it means the cost to repair your vehicle exceeds the value of the vehicle. Q: What happens if my car is stolen? A: If your vehicle has been stolen, be prepared to go through a waiting period. Most insurance companies require that there be a waiting period to see if the police can recover the vehicle, which could be as long as 30 days (Huntington Beach has better than a 95% recovery rate). If your vehicle has not been recovered after the waiting period then the insurance company will settle with you on the actual cash value of the vehicle. If, however, the vehicle is recovered, the insurance company will want to see some repair estimates before proceeding. Q: I currently have an auto insurance policy, will that policy cover me if I drive my car into Mexico? A: There are several important factors to keep in mind when leaving the United States and driving your vehicle into Mexico. Mexico does not recognize insurance from the United States. So, when driving into Mexico you want to make sure you have either already purchased Mexican insurance or stop at the border and purchase insurance to cover you while you are there. If you are stopped by the Mexican police and do not have Mexican insurance you are at their mercy and will be subjected to their laws and regulations. Keep in mind that your United States insurance policy will cover your vehicle if you have physical damage coverage on your vehicle if an incident occurs while you are in Mexico (but usually only a stipulated distance over the United States/Mexican border – ie. 50 miles); however, you would need to get your vehicle over the border and back into the United States before they can process any restitution to you. Q: If I lend my vehicle to a friend, is that covered under my auto insurance policy? A: As long as you give permission to another individual to drive your vehicle and they are not already specifically excluded then it is covered under your policy. Keep in mind that they must have a valid driver’s license and not be under any restrictions to drive a vehicle. Your insurance policy is primary and their insurance would be secondary, if any additional coverage were needed. Also, each company differs from the next on the amount of coverage they would provide for the driver. Your policy covers you and your vehicle to the policy limits; however, it depends on the rules and regulations of the company you are with as to whether they cover the driver of your vehicle to your policy limits or to the state minimum limit requirements. Be sure to check with your company as to their rules for permissive drivers not listed as a driver on your policy. Download 18.99 Kb. Share with your friends:
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