Consumers Guide to Auto Insurance

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InsuranceInsuranceAutoAutoConsumer’s Guide toLOUISIANADEPARTMENTOF INSURANCEJames J. Donelon, Commissioner of Insurance
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Some of us spend up to a quarter of our income each year oninsurance. Yet many do not take the same care when buying insurancethat we take with buying the cars we are insuring. Many of us tend tojudge insurance by the cost of the premium, calling five or six produc-ers (agents) and picking the cheapest policy.We would never dream of calling an automobile dealership, ask-ing for the price of the cheapest car, and then choosing the car sightunseen just because it cost the least. The same should be true for ourauto insurance.No matter how low the premium might be, an inexpensive policydoes you absolutely no good if the insurance company cannot coveryour claim when your car has been involved in an accident.Whatever your insurance needs, you should choose a companythat is financially sound, has a history of providing good service, andcharges a fair rate. This guide will help you find the auto insurancecompany that is right for you.A message fromCommissioner of InsuranceJames J. DonelonThis public document is published at a total cost of $1,758.16. Fivethousand copies of this public document were published in this sixthprinting at a cost of $1,750. The total cost of all printings of thisdocument including reprints is $11,192.78. This document was pub-lished by Consolidated Graphics, 10848 Airline Hwy., Baton Rouge,LA 70806 to inform consumers of their auto insurance options un-der special exception by the Division of Administration. This mate-rial was printed in accordance with standards for printing by stateagencies established pursuant to R.S. 43:31. Printing of this mate-rial was purchased in accordance with the provisions of Title 43 ofthe Louisiana Revised Statutes.Department of Insurance2006
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What’s InsideWhat do I do first? __________________________ 2Insurance buying tipsFrom our consumer hotline __________________ 3What insurance do I have to buy? _____________ 4Liability coverageWhat about other coverages? _________________ 4Medical payments coverageUninsured motorist coverageUninsured motorist property coverageTowing and labor coverageCollision coverageComprehensive coverageLouisiana Automobile Insurance PlanRental reimbursementWhat if I don’t have proper coverage? _________ 7Does my coverage fit my needs? ______________ 8What factors affect my premium? _____________ 8What kinds of discounts can I get? ____________ 9What if I am involved in an accident? _________10Cancellation and nonrenewal _________________10Automobile insurance worksheets _____________12
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Louisiana Department of InsuranceWhat do I do first?Shop around for the policy that is right for you.Do not buy the first policy you hear about.Get quotes from several companies before you sign anapplication and pay a premium.Be aware of insurance scam artists and unauthorizedinsurance operations.Buy only from authorized insurance companies andproducers. Unauthorized insurance operations are illegal andtheir policyholders are unprotected if the company goesbroke.If you would like to check on a company, call theLouisiana Department of Insurance. See page 11 for all ofthe information you need to contact us. We can answermany of your questions including the following:Am I buying from a legitimate company?Ask about a company’s or producer’s licensestatus.Will the company be around to pay myclaims? Ask for the company’s financialletter grade from at least one nationwiderating firm.inding auto insurance that meets yourneeds does not have to be difficult.F2
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Consumer’s Guide to Auto InsuranceWill my teenager becovered when he goes tocollege out of state? Ifyour teenager is not takingpermanent residence inthat state, most companieswill not require you to makeany changes to your policy.Is there another way to shop around for auto in-surance other than calling every company in the phonebook? You can start by getting your free copy of the“Auto Rate Comparison Guide,” published by the Depart-ment of Insurance. It compares auto rates among the state’stop insurers. However, you may find that a company notincluded can best provide the coverage you need.If I let my friend drive my car and she has an acci-dent, will she be covered? As long as your friend has theowner’s permission to drive the car, she is covered underthe owner’s policy. The exception would be a person whohad been excluded from coverage under that policy.Does the company treat policyholders fairly? Ask abouta company’s and a producer’s complaint history and com-pare it with others.From our consumer hotline:3
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Louisiana Department of InsuranceUnder Louisiana law, you must carry liability cover-age on any automobile you own. This coverage pays forproperty damages or personal injury for which you may belegally responsible, up to your policy’s dollar limits. In Loui-siana, each vehicle is required to have 10/20/10 liabilitylimits. Those limits provide payments of $10,000 for bodilyinjury to one person, $20,000 for bodily injury to morethan one person in a single accident, and $10,000 coveragefor damage to someone else’s vehicle or other property.Liability insurance covers bodily injury or prop-erty damage caused by you, your family members, and oth-ers driving your vehicle with your permission. You and yourfamily members are also covered when driving anotherperson’s automobile including rental private passenger ve-hicles. Company cars and other non-owned cars regularlyavailable to you are not covered.Medical payments coverage pays for medical ex-penses for a designated period of time following the acci-dent, up to your policy’s dollar limits and it includes funeralexpenses. Payments are made regardless of who is to blamefor the accident. Medical payments covers you, your familymembers and other passengers in your car.What insurance do I have to buy?What about other coverages?4
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Consumer’s Guide to Auto InsuranceUninsured/Underinsured motorist coveragepays benefits to you if your car is hit by a driver who hasno insurance or too little insurance to pay for the full amountof your injuries. Any bodily injury you or an occupant ofyour vehicle suffers due to an accident caused by anotherdriver is covered under this policy. Hit-and-run drivers maybe classified as uninsured motorists if there is a disinter-ested witness to the accident.You may choose to purchase uninsured motoristeconomic-only coverage. This coverage is the same asuninsured motorist coverage except that it covers only theactual costs of injuries to you and the occupants of yourvehicle. Pain and suffering are not included under this cov-erage.Uninsured/Underinsured motorist propertydamage coverage provides for repairs to your vehicle ifyou are in an accident with an uninsured driver. A $250deductible applies under this coverage, and your recoveryis limited to $10,000 or the actual cash value of the vehicle,whichever is less. If your policy includes collision insurance,this coverage is not available.Towing and labor coverage pays for towing costsand labor costs when your car is disabled. Most automobilepolicies limit this coverage to $25 per tow, and some com-panies will not write towing and labor coverage for oldercars.5
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Louisiana Department of InsuranceComprehensive coverage pays for specified dam-ages to your automobile, such as those resulting from fall-ing objects, fire, explosion, vandalism, theft or additionalnamed causes other than collision, subject to any exclu-sions or limitations specified by your policy. The deduct-ible, the amount you must pay out of your pocket for aclaim, can range from $0 to $250.Collision coverage pays for damage to your carthat results from an accident. You can collect under yourown collision coverage, whether or not you were at fault.Collision coverage is always sold with a deductible.Many people drop their collision and comprehen-sive coverage when their cars are about five years old,because they may be worth only a few thousand dollars. Ifyou borrow money to buy your car, the bank or otherlender may require you to carry comprehensive and colli-sion insurance until the vehicle is paid for.The Louisiana Automobile Insur-ance Plan allows companies to write autoliability insurance for persons who havebeen turned down when they tried to getcoverage through the regular channels. Thisassures the availability of insurance to ev-eryone licensed to drive in this state.Rental reimbursement provides coverage for arental car for you if your car is damaged by a covered haz-ard or accident.6
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Consumer’s Guide to Auto InsuranceLouisiana law requires that all registered owners ofan automobile carry liability insurance. Uninsured motor-ists are subject to penalties such as fines, limited recoveryof damages, and impoundment of the uninsured vehicle.Motorists who fail to provide proof of insurancecan have their vehicles immediately impounded or havetheir license plates removed and a yellow sticker affixed tothe back windshield of the vehicle. The motorist is thengiven three days to provide proof of insurance to the Of-fice of Motor Vehicles. After three days, if the motorist isstopped again, the officer can impound his or her vehicleuntil proof of insurance is given and all towing and rein-statement fees are paid. The fines range from $75 to $100on the first conviction, $100 to $250 on the second con-viction and up to $700 on each conviction after that.The law known as “NoPay, No Play” prohibits unin-sured motorists from collectingthe first $10,000 in propertydamages and the first $10,000in personal injuries regardless ofwho causes the accident. This law also includes a provisionthat may allow you to waive your right to make a legalclaim for pain and suffering if you buy economic-only un-insured motorist coverage.What if I don’t have proper coverage?7
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Louisiana Department of InsuranceDon’t hesitate to ask questions about what your policycovers. Start by asking your producer what “full coverage”means, and take it from there.If your car is older and paid for, you may decide not tocarry collision and maybe even comprehensive coverage.Look at the cost of your annual premium compared toyour car’s “Blue Book” value, minus your deductible.If you belong to an automobile club, you may alreadyhave towing and labor coverage. Check to be sure.You may not need medical payments coverage for your-self if you have health insurance. However, medical cover-age will also pay for injuries to your passengers.Your age. Generally, single male drivers under 25 andfemale drivers under 21 have much higher insurance coststhan other drivers.Where you live. Urban areas have a higher incidenceof accidents and auto thefts than rural areas, so urban ratestend to be higher.Type of car. Luxury, sports and high-performance carshave the highest comprehensive and collision rates.What factors affect my premium?Does my coverage fit my needs?8
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Consumer’s Guide to Auto InsuranceYou are often eligible for adiscount under a “multi-car”plan if you insure two or morecars with the same insurancecompany.Your deductibles. A deductible is your share of thecost of comprehensive or collision coverage. If you optfor a high deductible, your premiums will be lower. Forexample, buying collision coverage with a $500 deductiblewill cost less than the same coverage with a $250 deduct-ible.Your driving record. If you have a good driving record,some companies offer a discount. Tickets and at-fault acci-dents can mean higher premiums.You may get an auto insurance discount if you have lifeor homeowners insurance with the same company.Most Louisiana insurance companies will give discountsto full-time students with a B average or higher. Farmersand senior citizens may also qualify for discounts.Some companies may reduce your liability and collisionpremiums if you take a defensive driving course. Teenag-ers who have taken driver education may get a similar dis-count.What kinds of discounts can I get?9
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Louisiana Department of InsuranceCancellation and NonrenewalCall the police immediately.Make sure you get the other driver’s name, address, tele-phone number, license plate number, driver’s license num-ber and insurance information. Give the other driver thesame information about you.Notify your insurance producer or company.Be sure to obtain a copy of the police report for yourrecords, whether or not you are at fault.You may be entitled to a discount if you have extrasafety features on your vehicle. Examples are anti-lockbrakes, anti-theft devices and air bags.What if I am involved in an accident?When you purchase a new auto insurance policy, theinsurance company may cancel it within 60 days. If it iscancelled for nonpayment of premium during that time,the company must give you a 10-day notice. If it is can-celled for any other reason, such as a traffic violation or anat-fault accident, a 20-day notice is required.A company cannot cancel your auto insurance policyif it has been in effect for more than 60 days or is a renewalunless:10
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Consumer’s Guide to Auto InsuranceYou fail to pay your premium.You file a fraudulent claim.You or a member of your household has a driver’slicense or motor vehicle registration suspended dur-ing the policy period.After the 60-day period, if a company cancels yourpolicy because you fail to pay a premium, it must give you a10-day notice in writing. For any other reason, you must begiven a 30-day notice in writing by certified mail. If yourinsurance company decides not to renew your policy, itmust provide you with notice 20 days prior to the policy’sending date. Your company is required to give you thereason for cancellation or nonrenewal if you request it inwriting.Within 30 days of cancellation, the company mustrefund all unused premiums that did not pay for coverage.How to contact the Louisiana Department of InsuranceToll Free, statewide: 1-800-259-5300E-mail:Baton Rouge: (225)342-0895public@ldi.state.la.usLocation: The Poydras Building1702 N. 3rd StreetWeb site:Mailing Address: P.O. Box 94214www.ldi.state.la.usBaton Rouge, LA 70804-921411
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Louisiana Department of InsuranceSHOPPING FOR AUTO INSURANCE:AUTOMOBILE WORKSHEETUse this worksheet for a place to record information a producer orcompany will need to give you an accurate premium quote.1. VEHICLES TO BE INSURED:Miles to Work2. PRINCIPAL OWNER AND OPERATOR OF VEHICLES:_____________________________________________________________________________________________________________________________________________________________________3. DRIVERS TO BE INSURED ON THE POLICY:4. ACCIDENTS OR MOVING VIOLATIONS OF EACHDRIVER DURING THE PAST THREE YEARS:____________________________________________________________________________________________________________________________________________________________________________________________________________________________5. CHECK DISCOUNTS YOU MAY BE ABLE TO GET:Defensive drivingDriver educationAnti-theft devicesHigh GPA for studentsMake/ModelYearVehicleIdentificationNumberAuto #1Auto #2Auto #3__________________________________________________________________________________________________________________________________________Name_________________________________________________________________License #__________________________________________________________________________Age___________________________________________________________________Sex_______________________________________________________________________________Marital Status________________________________________________________________12
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Consumer’s Guide to Auto InsuranceSHOPPING FOR AUTO INSURANCE:COMPARISON CHARTUse this chart to record coverages you want and the prices quotedby each company you contact.ANNUAL PREMIUMSCompany 1________________Company 2________________Company 3_________________COVERAGE:LIABILITYBodily Injury$_____per person$_____per accidentProperty Damage$_____per accident$____________ $______________ $______________COLLISION$_____Deductible: $_______________ $_______________ $_______________COMPREHENSIVE$_____Deductible: $________________ $_________________ $_________________UNINSURED/UNDERINSURED MOTORISTBodily Injury$_____per person$_____per accident$____________ $_____________$_____________Property Damage$_____per accident$_____________ $_____________$_____________OTHER COVERAGES:_______________________________________________$_____________$______________$_____________$_____________$_____________$_____________$_____________$_____________$_____________TOTALALLCOVERAGES:$_____________ $______________ $______________13

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