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FAQ - Automobile

Frequently asked questions with answers

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Auto insurance is a form of protection. An insurance policy is a contract between you, and your insurance carrier. A policy protects you from loss of money or damage in the unfortunate event of an auto accident. A policy can cover damage or theft of your auto. Liability can cover physical injury to people or property. A policy can cover medical bills or help pay for loss of income of a person who becomes disabled or dies.

There may be six forms of coverage in your auto policy. Each form of coverage has an individual charge.

  1. Bodily Injury Liability (BIL) coverage is needed to cover the medical costs of injuries that you cause to other people. BIL also covers the loss of income to someone you injure, and includes the cost of your legal defense in the event you are sued and found guilty in a court of law for an accident which involves injury or death. This coverage will also help you to pay any expense you encounter in a related lawsuit.
  2. Property Damage Liability is a protection for you in the event that you cause damage to someone else's property with your auto. This coverage helps pay for property damage to things such as fences, telephone poles, or any buildings your auto may come in contact with. Property damage liability has an adjustable limit that is decided upon by you when the policy is written.
  3. Collision Coverage helps to pay for any damage caused to your car if it hits another auto or object. A roll-over is also covered under collision. You will be paid for the auto's actual cash value for a repair or replacement; less the chosen deductible.
  4. Medical Payments or Personal Injury Protection (PIP) coverage pays medical expenses to the driver and passengers of the policyholder's car.
  5. Comprehensive coverage pays for any damage caused to your auto excluding a collision with another car or object. This damage can be caused from fire, falling objects such as trees, natural disasters, theft and vandalism. This is also paid out in accordance to the car's actual cash value, less the chosen deductible.
  6. Uninsured and Underinsured Motorist Coverage is used when an underinsured person’s policy does not have enough compensation for medical expenses or damage that may be caused to you, members of your family, or a designated driver involved in an accident. An uninsured motorist is one who has no coverage. Underinsured and uninsured motorist coverage will give you protection in the event you are hit by an underinsured, or an uninsured motorist. The amount paid out is capped by a selected amount chosen by you.

Practically every state requires an auto liability insurance policy. Most states have laws involving financial responsibility. This simply means that in the event you cause an accident, even in a state that does not require liability insurance, you must have funds to pay a claim. Driving without insurance can result in a hefty fine anywhere from $500 to $1000 depending on the state. You may also have your driver's license revoked.

If you lease your vehicle, you still need an auto insurance policy. The company leasing you the vehicle will require that you buy collision and comprehensive coverage to protect their interest in the vehicle. Your leasing company may also require you to purchase "GAP" insurance. GAP insurance pays the difference between the actual cash value of the vehicle and the current outstanding balance on your loan or lease.

This covers the leasing company in the event you have an accident and there is a difference between the amount you owe the leasing company and the amount you will receive from the insurance company.

If you already own an insurance policy covering comprehensive, you may have enough coverage. You should always check with your insurance carrier first regarding any liability. You will need to buy insurance at the car rental counter in the event that the following forms of coverage are available to you:

  • Collision Damage Waiver (CDW) - This is also known as Loss Damage Waiver (LDW). LDW coverage will relieve you of financial responsibility if the rental car is stolen or damaged. Although, this may be voided if you cause an accident due to reckless driving, or poor judgment, such as driving on an unpaved road or one in poor condition. Driving while intoxicated will also void this coverage. Coverage is fairly inexpensive with a daily range between $10-$20.
  • Liability Insurance - The law requires car companies to provide the minimum level of liability insurance needed in that specific state. This minimum amount of liability will not be enough in a serious accident that results in extensive damage or even death. It may not be necessary to purchase Liability Insurance if you have adequate liability coverage on your vehicle or an umbrella policy of your home or auto. Coverage is approximately $7 to $9 a day. A non-owner liability policy is available for purchase if you rent cars often. The cost is approximately $200-$300 a year, which may actually be a substantial savings if you rent frequently and pay the rental company for the extra liability coverage.
  • Personal Accident Insurance - This covers you and your passengers for any medical bills; including use of an ambulance. The cost is about $3 per day, yet it may not be necessary if you are covered by health insurance or have adequate medical coverage under your policy.
  • Personal Effects Coverage - This is coverage for any theft of personal items in your car. Homeowners or renters insurance may cover items stolen from the car. A deductible is taken. It may be necessary to have receipts or other proof of ownership. The cost is about $1.25 per day. The cost of insurance, at the rental counter, will be dependent on the state and type of car you rent.

You must notify your insurance company of any incident, regardless of the extent of the accident. You need to call your insurance agent as soon as possible, regardless of who causes the accident. You need to find out if you are covered for this loss.

You need to ask your agent how to properly make a claim. A "proof of claim" will be required along with a copy of the police report if there was one made out at the accident scene. The form, on which you make your claim, needs to be filled out carefully and have all the information, which your insurer needs. You should have the names and numbers of every person you speak with relating to the accident, as well as copies of any bills you incurred due to the accident.

You should make the following inquiries relating to your policy:

  • Is there a specific time period for filing claims and submitting bills?
  • Is there a limit on the time resolving claim disputes?
  • When submitting additional information, is there a time limit?
  • When will the insurance company contact me?
  • Are repair estimates for the damage to my car necessary?
  • Will I be able to get a rental car when my car is at the repair shop? How much will I be given to cover the rental cost and for how long?

Do you have a teenager living with you that will soon be driving your car? Your insurance agent needs to be notified as soon as your teenager begins to drive, and that will be an additional driver on the policy. Statistics show that due to age and inexperience teenage drivers are involved in more accidents, which will result in an increase in your insurance rates. There could be an increase of as much as 50% if you have a daughter, and as much as 100% if you have a son. Raising liability limits or buying an umbrella liability policy for additional protection is something to consider at this time.

A policy cannot cancel if it has been in effect for more than 60 days unless under these conditions:

  • The policyholder does not pay the premium
  • It is found that the policy holder committed fraud, and/or misrepresentations were made on the application for insurance
  • A revoked or suspended license of the policyholder

You or your insurance company can decide not to renew the policy at the end of its coverage date. Depending on the state you live in, your insurance company is required to give you a certain number of days prior to notice and an explanation for non-renewal before it ends your policy. In the event that you caused an accident, and raised the risk to the company, the premium may rise and you may not have your policy renewed.

A minimum amount of liability insurance is required in most states. The minimum state requirement does not cover most accident costs, therefore more liability insurance is recommended. If you do not have adequate insurance, then you will be legally responsible for bills that are more than your insurance covers.

Collision and comprehensive coverage is used to supplement your liability coverage. Your collision and comprehensive coverage is based upon the market value of your car and how much it would cost to repair it.

You will choose a deductible. A deductible is the amount of money you are responsible for paying out of the pocket before the insurance company reimburses you. A deductible can cost from $500 to $1000. A high deductible results in a lower premium.

An umbrella policy covers over and above normal limits of your standard homeowners or auto policy. An umbrella liability policy will give you protection in the case of a lawsuit, which is not fully covered by your standard homeowners or auto policy. When the limit is reached on your standard policy, your personal umbrella liability coverage will come into effect. An umbrella will also cover libel and slander. Underlying limits must be met in order to purchase this coverage.

A chargeable claim is one that is based on the belief that the claim was primarily your fault. This increase can generally stay on your premium for three years, yet some companies have accident forgiveness programs. If you get an increase in violations on your license, your insurer may decide not to renew your policy. Some people decide not to notify their insurer because the damage seems minor. Yet, the other driver may decide to sue weeks or months later. If you fail to report the accident your insurer may refuse to honor the policy.

The blue book is used to determine the value of autos for insurance purposes. The blue book lists all new and used automobile values. The blue book is published by the National Association of Automobile Dealers (NADA).

Your claim will be handled by an adjuster. The adjuster verifies the loss and determines the cost to repair the car.

Every policyholder has certain rights. States have laws, which help to protect the consumer. An insurance policy is a legal contract between you and your insurer. Your insurance agent or company representative is available to discuss your rights under the policy.

The National Highway Traffic Safety Administration has proven air bags save thousands of lives each year. In a head on crash, an air bag will greatly reduce deaths among drivers and passengers. Yet, small children and infants should never be placed in the front seat whereas a deployed air bag could result in accidental death. Small adults, pregnant women and the elderly also face a high risk of injury. To prevent any injury, the seats should be moved back, and no one under 12 years of age should be in the front seat. Comprehensive coverage will pay for stolen, or deployed air bags. Once an air bag is deployed, it needs to be replaced. Air bags are a safety feature, which helps to decrease your premium.

Many accidents happen on wet and slippery roads during inclement weather. Be sure to check weather conditions prior to venturing out or taking an extended trip. If at all possible, avoid travel if inclement weather is predicted. In the event you are traveling and bad weather hits, it is best to not continue to drive it out. Your life, and the lives of your passengers, cannot be replaced, but you can get to your destination later.

Many drivers over 55 are offered a discount from their insurance company due to the fact that older people are less likely to be aggressive drivers. Elderly drivers should consider taking a defensive driving class, which is designed for seniors. After taking a defensive driving course, many insurance companies will give a discount on your insurance premium.

Road rage is increasing on America's Highways leading to an increase in motor vehicle accidents, as well as deaths. In the event you become a victim of an aggressive driver:

  • It is not wise to challenge them.
  • Do not provoke the aggressive driver.
  • Try to keep your distance from the aggressive driver.
  • It they are overly aggressive and become a threat to other drivers, get their plate number and report them to the police.

Deer are most active in the early morning and evening hours and you should be alert to their presence.

  • Turn your high-beams on to increase your field of vision.
  • Brake and do not swerve your car upon encountering a deer; it could result in a major accident.
  • Use caution in a deer crossing zone.
  • If you come across one deer, always be alert for more because they often travel in groups.
  • If you are involved in a collision with a deer, do not touch the injured animal. You risk injury to yourself. Get your car off the road and phone for help.

Any damage caused by a collision with an animal will be covered under the comprehensive coverage of your auto policy.

To help reduce your risk of being the victim of a carjacking:

  • If you are approached by a carjacker give your car over. Cars can be replaced, you cannot.
  • If possible, drive to the nearest police or fire station.
  • Be alert to scams where you are bumped from behind and you can become a victim of a carjacking. If you do get bumped, head to a secure location and don’t get out of the car.
  • Avoid stopping at an isolated location to use a pay phone, ATM, newspaper, or soda machine. You could become the target of a carjacker.
  • Be alert to suspicious people hanging around your car.
  • Always lock your car.
  • Try to park in a well-lit area where people are around.

To prevent your car from being stolen:

  • Your registration card should be kept in your wallet instead of your glove compartment.
  • Avoid leaving personal property in the car. Leave items in the trunk or covered.
  • Place your car in a garage and lock the garage door.
  • Use a security system or anti theft device.

If your car is stolen:

  • Have the type of car, the model, the color and year, and the plate number available for the police.