Insurance FAQs

Can an insurance company cancel my auto policy?
Policies can be canceled if the consumer fails to pay the premium or if the consumer's license has been suspended or revoked during the term of the policy. Also, if there is a fraud or serious misrepresentation when completing the insurance application, if the consumer is convicted of a crime or if changes are made to the property that increases the risk of loss, a policy may be canceled.

Can other people drive my car and still be covered?
Generally, anyone who has permission to drive your vehicle is covered. All people who regularly use your car should be listed on your policy. You should check with your insurance company for specific details.

Can the company refuse to renew my auto policy for claim frequency?
Yes, even for one claim. The dollar amount of the claim is irrelevant. An insurer must give you 30 days notice and the specific reason for their refusal to renew (e.g., two claims and specify the dates).

Deciding how much coverage to get: What are the guidelines?
It depends on your individual financial situation. You'll need to consider how much you can afford to spend to repair or replace your vehicle after an accident. In addition, you could be responsible for medical expenses, loss of wages, awards for pain and suffering and damage to vehicles or other property. With liability insurance, the higher your limits, the more financial protection you will have against lawsuits. In most states, the minimum liability coverage required by law is not adequate, so you should consider higher limits.

Does the company have to refund my premium if I cancel?
Yes, the company has to refund your premium on the auto policy if you are able to cancel the contract. However, you may receive less than the unearned premium because the company may charge the consumer for processing the cancellation or setting up the original policy.

How can I qualify for discounted rates?
Many insurance companies offer credits for such things as being a non-smoker, a safe driver or a good student. Credits can also be applied on the merits of the vehicle you are insuring such as Passive Restraint, Anti Theft, ABS on all four wheels, etc. These credits when applied can significantly reduce your total premium. Take a moment and discuss these credits with your agent. They are there for you to claim if you or your vehicle qualifies.

How do I get the most car insurance coverage for my dollar?
Usually, more coverage may be obtained efficiently my keeping deductibles high as well as liability limits.

How is my car determined to be a "total loss"?
If the cost of repairing the vehicle, plus its salvage value, equals or exceeds its actual cash value, it is not economically feasible to repair. This situation is commonly referred to as a "total loss".

How will a spouse with a poor driving record affect insurance rates?
Insurance rates will usually be affected if a shared policy is held. Acquiring a second policy and carrying less optional insurance such as collision and comprehensive on the high-risk driver's vehicle may reduce costs.

What are split limits and combined single limits of liability?
Split limits of liability provide for separate coverage limits for property damage and bodily injury. A combined single limit policy has one coverage limit for the total cost of injuries and damage. Split limits of liability are more common.

What is a deductible?
A deductible is the amount of money that you agree to pay before a certain auto insurance policy begins. Deductibles are designed to reduce insurance costs by eliminating small or frivolous claims. The higher the deductible you're willing to pay, the lower the premium you earn. Collision and comprehensive policies usually carry deductibles and at times PIP and medical payments policies do too.

What is actual cash value (ACV) vs. replacement cost coverage?
Your vehicle's value is typically determined by comparing your vehicle's condition to similar vehicles. This may include input from local auto dealers, private parties and/or recent sales. Condition, equipment and mileage differences are also taken into consideration. All auto policies are written for ACV. Because of the generally large availability of used vehicles, auto settlement values are usually determined by similar vehicles available in the market. ACV is based on the cost to replace with a new comparable item, less depreciation based on the age of the lost or damaged item. Replacement cost equals a new item's cost without depreciation.

What is an umbrella policy?
An umbrella policy is additional liability coverage that goes "over" your auto liability limits. An umbrella policy may also increase other coverages, like homeowner's liability or boat liability. Carrying an umbrella policy is recommended for drivers with considerable assets needing protection.

What is bodily injury coverage?
Bodily injury coverage is the part of liability coverage that insures you against the injury you cause to others in an auto accident. It consists of two figures. One limits the cost of injury coverage per person injured and the second limits the total dollar amount of injury coverage (for everyone injured.) This is an important policy to hold.

What is collision coverage?
Collision coverage helps pay for repairs or fair market replacement cost if your car is damaged in an accident caused by you or an authorized driver. This policy is always optional.

What is emergency roadside assistance insurance?
It's an optional policy that covers the cost of towing or immediate roadside repair such as fixing a flat or jump-starting the battery. However, it will not cover the costs of any repairs done at a garage or service station.

What is gap insurance?
Gap insurance is an optional policy insuring the driver of a new car for the difference between the car's financed value and its fair market value. Should the car be "totaled" during the first few years after purchase, the owner will be covered for the amount still owed on the car, rather than it's market value, which is often much lower. Because it covers only the difference (the gap) in value, this is a relatively inexpensive policy.

What is liability coverage?
Liability coverage insures you against the cost of injury and damage you cause to another in an automobile accident. It's made up of two policies, bodily injury liability and property damage liability. Auto liability insurance is required in virtually every state.

What is medical payments coverage?
This policy pays the medical bills of the covered driver, family members and passengers when injured in an accident, regardless of who was at fault. This coverage is not required by all states.

What is no fault insurance?
No fault insurance covers the injury-related expenses of the policy holder in the event of an accident, regardless of who was at fault.

What is personal injury protection (PIP)?
Personal Injury Protection is similar to medical payments coverage in that it normally covers a broader range of events, including lost wages, medical bills, loss of services, etc. It is required in most no-fault states (see next definition).

What is property damage coverage?
Property damage coverage is the part of liability coverage that insures you against the cost of damage to another's property caused by you in an automobile accident. "Property" includes other cars, fences, houses, telephone poles, etc.

What is rental car reimbursement coverage?
It is an optional coverage that helps pay the cost of renting a car while your auto is being repaired for a covered event. Typically, you will need to carry collision and comprehensive to qualify. Your premium is decided by the amount of the "reimbursement" you want per day.

What is SR-22 insurance?
High-risk drivers may be required to file a SR-22 (actually a form) with the state before the purchase of auto insurance. This requires the provider to notify the state should the policy be terminated or canceled. DUIs, multiple speeding tickets and driving without insurance or a valid license are all reasons a SR-22 may need to be filed. The requirement usually lasts for three years after the initial event.

What is underinsured motorist coverage?
Underinsured motorist coverage pays for injuries and damage caused to the policy holder by a driver with inadequate insurance. It usually pays the difference between the at-fault driver's liability limit and the holder's policy limit. There are separate limits for property damage and bodily injury liability. This coverage is sometimes combined with uninsured motorist coverage under one policy and may be required in some states.

What is uninsured motorist coverage?
This policy covers the cost of injury or damage caused by another driver who is not insured. It covers the policy holder, authorized drivers and any passengers. It typically consists of separate limits for bodily injury and property damage. When you pay for this, you are not paying someone else's insurance. Instead, you are paying to cover your own expenses if you are injured in an accident caused by someone who does not have insurance. This policy is not required in all states.

When can my auto insurance rates increase?
Your rates may increase when you renew your policy, apply for a new one, change drivers or vehicles or are involved in an accident or traffic violation such as a speeding ticket. Furthermore, when your state allows a rate increase, insurance carriers are likely raise premiums as well.

When do auto insurance companies check driving records?
Typically, driving records are reviewed when a new insurance policy is applied for, an existing policy is renewed and/or when a new vehicle or driver is added to the coverage.

Why do insurance rates vary so much?
Auto insurance rates can vary widely, even hundreds of dollars, primarily because every auto insurance provider has varying claims experience and costs of doing business. Auto insurance is priced to cover the costs of accidents that may happen in the future and because of this, information about past claims experience is regularly used. Each insurance provider has had different claims experiences with their respective consumers; hence the rates charged customers by different companies vary as such. Furthermore, each insurance provider's cost of doing business is different, resulting in varying insurance rates.

Will adding a teenage driver to my insurance policy raise the cost?
Teenagers fall into the age group that statistically drives the most dangerously resulting in higher policy costs. Even one ticket or fender-bender can send your car insurance rates up drastically. Usually it is possible to earn a reduction in these costs if the teenager is a good student or drives an older model vehicle. A teenage driver on your auto insurance policy is always going to mean a higher premium. Still there are a few ways to cut costs. Take advantage of good student teenager driver courses to lower car insurance rates as well.

Will my auto insurance policy cover me if I rent a car?
Typically speaking, you will have the same level of coverage on the rental car as you do on your standard policy. (Check your policy for details.) Paying for the rental car with a credit card will usually offer even more protection. However, be aware, that in the event of an accident, the rental company may charge additional administrative, loss of income, and replacement cost fees that your standard policy does not cover. However, most policies will not cover what is referred to as downtime. This is the loss of income a rental company may incur while the rental vehicle is in for repairs or in the process of being replaced. This is a matter in which you need to decide whether the 'premium' the rental company charges for this coverage is worth the risk of not securing.