Things you should know about auto insurance, that not many people do.Feb 04 '08 Write an essay on this topic.
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The Bottom Line Know the laws of your state. Know exactly what you need. Know exactly what you want. Read the fine print and then find the best price.
The first thing that you should do before getting a quote, that everyone thinks they've done, but very very few people do well at all, is know your respective states insurance laws. I am only going to give a few examples because I am not licenced to sell insurance in all 50 states so I don't know all of their laws. The second thing is READ THE FINE PRINT IN YOUR POLICY. Insurance Discriminates. Yes Auto insurance companies are bias they rate based on several factors like: age, sex, geographic location, profession, the automobile type etc... This means that it's fair and reasonable that a woman in her 30's, driving a 4 door sedan, living in the country, who works as a secretary for a church, would probably have a lower insurance rate than the insurance for a 16 year old male pizza delivery driver, in a large city, in the same state. This is considered in the insurance industry as a standard practice, and it's both fair and legal. PA Residents: Do you really know what the difference between Limited Tort and Full Tort are? Full Tort:The Unrestricted right to sue for financial compensation for both injuries and damages with a fixed dollar value like medical expenses and abstract cost items like pain and suffering. Limited Tort:Restricted right to obtain financial compensation for injuries suffered caused by another driving allowing you to only sue for compensation of a fixed dollar value like medical expenses. AZ, MS, & TX Residents: Did you know that if the insurance company you go through uses a Household rating system** for rating drivers in your state, you might pay MORE to list them as excluded from coverage, than you would to add them as additional drivers? This is because the departments of insurance in these states have required insurance companies to cover other household residents weather they are drivers or not, to be covered under the uninsured / under-insured motorist coverages (UM/UIM) making the insurance companies bill more for excluding drivers. Where as using a household rating system, the average of the drivers may very well be much cheaper than the rate spike for excluding drivers. **The household rating system means that the insurance company calculates risk by averaging the overall risk for all drivers listed. This system is not used by all companies. Requesting your insurance company adopts this rating system, won't work since the way the individual companies can rate coverage is defined by the states department of insurance.** GA, SC, IL, IN, OH, TN, MS, AZ, MO, TX, and any other state that uses an SR22: Do you know what an SR 22 is? Many believe that it's coverage to drive anything you want. It's not, that, would be a bond. An SR22 is a court compliance form submitted from an insurance company to affirm to the courts and BMV that you have the state requirements of insurance. The SR22 doesn't give you any special perks. However, if you're required by your state to carry one, and you don't, then you will not be legal to drive. In that case the provider of the SR22 would have filed an SR26, informing the state that you no longer have insurance. What is an accident? Insurance defines an accident unilaterally being any event that causes any damage through an unintentional act. In a lot of cases, denting a fender can make the same difference in your insurance, as totalling ten cars in one accident! What is an at fault accident? An at fault accident is an accident that is done by the person who is at fault. What is a no fault accident? It's technically the fault of everyone involved. It's also usually a Comprehensive claim. Does my insurance cover me in foreign countries?: Canada and Puerto Rico, Yes. All others including Mexico? No, not unless you have purchased coverage specifically for that country. Does my insurance cover me to drive ANY car? Yes, but for only the limits of liability on the policy if the car is not listed on your policy then the coverage can be denied if it isn't listed on your policy within 30 days of you frequently driving the car. If you want a coverage to allow you to drive anything anytime anywhere without ever declaring a vehicle, I suggest getting bonded. Can I take a policy I had in one state then move to another state and keep the same policy? No. Most insurance companies would deny any claim made if they learned you moved from one state to another without changing you policy to a policy for the new state. Most insurance companies will afford you a grace period to change coverages usually around 30 days. Who should I include as drivers on my policy? Everyone who you know that will drive your car even if it is on an infrequent basis. Also, either list as a driver or exclude anyone in your household that is of the age to be legal to drive. If you don't, it is possible that your insurance company can deny any claim you make if they learn you've had someone driving your car who lives in your house hold but is not listed on your policy. I know, you thought that your coverage would cover anyone to drive your car... Truth is though, if they live in your house and are of legal age to drive, and you don't list them to drive then they ARE NOT covered. and in some states it's material misrepresentation to not add someone who is licensed, and can cause all of your claims to be denied if they insurance company learns that they are living with you. Some states have very strict rules as to who you can exclude from coverage, and some states insist that if they can drive then they must be listed, if they live with you. Now, to the coverages... LIABILITY (a.k.a. PL/PD or Personal Liability & Property Damage):This coverage is the base of all auto insurance coverages, and is the amount that the insurance policy will pay for damage that you cause, and appears in a 3 sets of number format. Example: 100/300/50 This means that the policy would cover up to $100,000 for bodily injury damage per person in an accident(anything over $100,000 for that individual as a result of that accident would come out of the pocket of the insured), $300,000 coverage for bodily injury MAX per accident, doesn't matter how many claims for $100,000 there were, only the first $300,000 would be paid out (anything over that comes out of the named insureds pocket), and $50,000 for property damage per accident(anything over $50,000 is out of the pocket for the named insured). Uninsured Motorist Bodily Injury Coverage a.k.a. UM: This coverage does nothing to help uninsured motorists at all. Quite the opposite. It insures you against having them hit you and you having to wait for them to work three jobs to pay you back. instead your company covers you looses and damages for bodily injuries to the limits stated in the policy if the damage is caused by an uninsured motorist, and then the company goes after the uninsured motorist to get their money back. Some states make this coverage mandatory. Uninsured Motorist Property Damage Coverage a.k.a. UMPD: This coverage does nothing to help uninsured motorists at all. Quite the opposite. It insures you against having them hit you and you having to wait for them to work three jobs to pay you back. instead your company covers you looses and damages for property damage to the limits stated in the policy if the damage is caused by an uninsured motorist, and then the company goes after the uninsured motorist to get their money back. This coverage is not available in all states. Under-Insured Motorist Bodily Injury coverage a.k.a. UIM: This Coverage is covers you against being hit by someone who doesn't have as much insurance as you. In most states it works like liability in the regard that it pays you back from the difference of the at fault persons insurance to the max payout amounts for bodily injury in you policy using the 100/300/50 model this would mean that if I were hit by someone with 25/50/25 coverage then it would pay my bodily injury back to the difference between my 100 and their 25 (a potential $75,000 payout in this case). It should be noted that in some states there are variants that are much different than my example. In IN, for example the payout in UIM is up to the max payout of the liability coverage. so in the 100/300/50 model, the payout would be $300,000 PER PERSON. This coverage is not available in all states. Some states also offer Under-insured motorist property damage or UIMPD which is the same concept applied to property damage. Comprehensive a.k.a. Comp: This coverage pays out to the max value of the ACTUAL CASH VALUE less the stated deductible, of the car for theft, fire, vandalism, flooding, and no fault accidents like hitting a deer, or a tree falling on your car. Damages exceeding the actual cash value will result in the insurance company calling the automobile totaled***, and paying out to the insured the actual cash value for the car. Collision: This coverage pays for ACTUAL CASH VALUE less the stated deductible, for damages caused from you hitting something. Damages exceeding the actual cash value will result in the insurance company calling the automobile totaled***, and paying out to the insured the actual cash value for the car. Comp & Collision are not often offered for automobiles over 15 years old because the deductible would often be higher than the actual cash value of the car. ***When an insurance company Totals your car and you collect payment, you no longer own the car. They do. the act of totaling a car is the insurance company buying your car out from under you to free you from it's burden.*** Medical Payments a.k.a Excess Medical Expense: in most states it starts somewhere around $1000 to $5000 and basically is coverage designed to pay for you and your passengers bodily injury in an accident, and in some cases will pay out for any injury while occupying the car regardless the cause (usually designed to pay AFTER your medical insurance runs out). This cover is only is subject to some variations, an example being: In KY instead of offering this coverage the state requires a mandatory Personal Injury Protection or PIP to be offered in its place to cover the bodily injury for you and your passengers in an accident up to $10,000 you can offset the cost of this coverage by adding up to a $1000 deductible to it, TX Gives you the choice of either a PIP or Medical Expense, and PA make Medical Expense or as it's called there " Medical Benefits " Mandatory from $5,000 & up. A lot of states will allow this coverage to be optional.  |
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