3/21/08

Car Insurance Glossary - Terms Like Passive Alarm, Waiver, Gap, Rental Coverage & More

Welcome to our insurance glossary of car insurance terms. If you have any questions about terms that are not included on this page please contact us.

Additional Interest
Anti-Theft Device
Bodily Injury Liability
Car Insurance Coverage
Claim
Collision Coverage
Collision Deductible Waiver
Comprehensive Coverage
Continuous Coverage
Continuously Insured
Credit Rating
Deductible
Declarations Page (Dec Page)
Defensive Driver Course
Depreciation
Drive-Other-Car Endorsement
Earned Premium
Effective Date
Emergency Road Service
Endorsements
Exclusions
Extraordinary Medical
Expiration Date
Extended Non-Owner Liability
Financial Ratings
Financial Responsibility Laws
Full Coverage Car Insurance
Funeral Benefits
Gap Insurance
Garaging Location
Good Student Discount
HEV: Hybrid Electric Vehicle
Hit and Run
Income Loss
Indemnity
Independent Agent
Insurance Premium
Insurance Score
Insured
Judgment
Liability
Liability Coverage
Lien Holder
Limits
Medical Payments Coverage
MVR (Motor Vehicle Record)
No-Fault Insurance
No-Fault State
Non-Passive Alarm
Passive Alarm
Personal Auto Policy (PAP)
Personal Injury Protection
Physical Damage
Pleasure Use
Policy Lapse
Policy Period
Preferred Risk
Premium
Primary Driver
Primary Use
Private Passenger Auto
Property Damage Liability Coverage
Pro-Rata Cancellation
Property Damage Liability Insurance
Rental Car Reimbursement
Secondary Driver
Short Rate Cancellation
Split Limits
SR-22
Stacking
State Minimum
Steering Restraint
Term
Tort
Towing Coverage
Underinsured Motorists Coverage
Uninsured Motorists Coverage
Unsatisfied Judgment Fund
Usage
VIN: Vehicle Identification Number

Additional Interest: A person or other entity (i.e. a corporation) that has an insurable interest in your vehicle, and may be named as such in your insurance policy. For example, when you finance a car through a bank, the bank is considered to have an "additional interest" in the car.

Anti-Theft Device: Any device designed to reduce the chance of a vehicle being stolen, or aid in the recovery of a vehicle if it is stolen. Examples include car alarms, keyless entry, starter disablers, "The Club," etc.

Bodily Injury Liability: Legal liability for causing injury or death to another person.

Car Insurance Coverage: There are many "coverages." Liability, medical payments, uninsured motorists, collision, and comprehensive are the five major types of car insurance coverage.

Claim: The request for reimbursement that you make to the insurance company when you’ve been injured or your car has been damaged.

Collision Coverage: This is the coverage that provides protection for your car in the event of damage by an inanimate object, such as another car, a tree, or the side of a building.

Collision Deductible Waiver: If you have this type of coverage with your car insurance policy, your insurance company will pay your deductible if you are in an accident that is the fault of an uninsured motorist. This is not available in all states or with all policies.

Comprehensive Coverage: This coverage provides protection in the event of damage not caused by a collision (that kind of damage would be covered by your collision coverage). These other kinds of damage can include theft, fire, damage by extreme weather, etc.

Continuous Coverage: The length of time that you have maintained the legally required insurance on your vehicle. Lapses in coverage can result in higher rates.

Continuously Insured: The amount of time that you’ve been insured, without gaps. You can switch companies as many times as you want, but if you’ve let your coverage lapse, you could end up with higher premiums.

Credit Rating: Each individual consumer has a credit file with each of the three major credit bureaus - Equifax, Experian, and TransUnion. Each company uses a formula developed by Fair Issac's & Co. (FICO) to determine the consumer's credit rating. Insurers consider your credit rating when determining your insurance rates, since their own advanced statistical models have determined that consumers with good credit are better insurance risks, and vice versa.

Deductible: This is the amount that you are required to pay towards any damages. Your car insurance will cover any costs above this amount. The size of your deductible can greatly affect your car insurance costs.

Declarations Page (Dec Page): This is a one or two page document that details all the facts about your car insurance, such as your name and address, the vehicles covered, the deductible, the types of coverage, etc.

Defensive Driver Course: Classes offered or approved by the DMV designed to enhance defensive driving skills. Most car insurance companies offer discounts to customers who successfully complete these courses.

Depreciation: Age and wear can cause your car’s value to depreciate, or go down, over time.

Drive-Other-Car Endorsement: An endorsement or "rider" that broadens the definition of "covered auto" to include vehicles owned by others that are operated by the insured.

Earned Premium: The portion of the premium that is "consumed" during a partial policy term. If you terminate your policy early, you are only responsible for the earned premium portion (plus expenses), regardless of what you may have paid.

Effective Date: The date your coverage begins. You can find this on your dec page.

Emergency Road Service: This is optional coverage that provides services like tire changing, lock-out help, gas delivery, or towing.

Endorsements: These are also known as riders. They are changes to your coverage that are made after the effective date, like adding another car or raising your deductible.

Exclusions: Situations that are not covered by your car insurance. Your policy will show your specific exclusions.

Extraordinary Medical: This is optional coverage that protects you above and beyond your standard medical benefit coverage. Usually this would cover you if you were hospitalized long-term or permanently disabled.

Expiration Date: The date and time that your coverage ceases. Normally, the time is 12:01 AM - meaning one minute after midnight.

Extended Non-Owner Liability: An endorsement or "rider" that extends liability coverage for specifically named people operating any non-owned vehicle.

Financial Ratings: This term refers to the credit-worthiness and financial stability of insurance companies. AM Best, Standard & Poor's, and Moody's are the three agencies that assign financial ratings to insurance companies.

Financial Responsibility Laws: Each state requires motorists to be financially able to compensate the victims of bodily or property damage for which they are liable. Liability insurance is the easiest way to meet these requirements, however, those who can afford to do so may opt to post bonds instead.

Full Coverage Car Insurance: This is a confusing term. Many people think that having "full coverage" means that they will be covered no matter what happens to them. In reality, it only means that you have the full legal requirements needed in your state. Depending on your home state, it could be very little coverage in reality.

Funeral Benefits: This is optional coverage. If you were to die in a car-related accident, the insurance company would pay for a portion of your funeral costs.

Gap Insurance: Optional coverage for the difference in the amount owed on a vehicle and its replacement value. For example, if your car's replacement value is $4,000, but you still owe $5,000 on it and it's totaled, your insurance company will only pay you $4,000 (unless you have gap insurance). The company that lent you the money for your car will require an immediate payment of $5,000. Gap insurance makes up this difference.

Garaging Location: It is assumed by car insurance companies that you keep your car at your home address. However, if you primarily keep your car in a different location, make sure your insurance company knows. It can affect your rates.

Good Student Discount: Most insurers provide discounts to high school students who receive good grades. The reasoning behind this discount is that insurers have found that students who are responsible enough to get good grades are generally more responsible drivers, and thus they pose less risk for the insurers.

HEV: Hybrid Electric Vehicle. If you drive an HEV, your rates may differ from those for a standard car. Make sure your car insurance company knows if you drive an HEV.

Hit and Run: An accident caused by someone who flees the scene before police arrive and without leaving insurance information.

Income Loss: This is optional coverage that protects you if you are in an accident that leaves you unable to work. Your insurance company can help compensate you for lost wages.

Indemnity: Restoration to the financial place you were prior to the accident. Insurance is designed to make you "whole again," but not to "enrich" you. Thus, it gives you indemnity - making you "whole" again.

Independent Agent: An agent who does not work for just one insurance company. Instead, he or she searches the market for the best place for his/her client's business.

Insurance Premium: Rates charged to an insured, reflecting the insurer's expectations for loss and adding in an element of profit. Premiums are typically paid monthly, but discounts are often offered for paying in advance, either quarterly, semiannually, or yearly.

Insurance Score: Score given to each insurance customer, based on complex statistical models, in order to determine his or her insurance risk. The better your insurance score, the lower car insurance rates you can expect to pay.

Insured: The person/people covered by an insurance contract. Insurance agreements commonly refer to the "insured" or "insureds."

Judgment: A decision by a court of law, typically ordering one party to pay another party a sum of money. Additional legal action is normally required in order to ensure that judgments are enforced. Many judgments go unenforced. When enforced, a the winner of a judgment can potentially garnish the wages and "attach" the bank accounts of the person or entity at fault.

Liability: A legal obligation to perform or not perform certain acts. Most commonly, this refers to monetary sums that must be paid in order to compensate for damages to people and/or property. The term can also be used to assign "responsibility" or "fault."

Liability Coverage: Insurance to cover damages that the insured is ordered to pay as a result of a court's decision holding the insured liable for injuries caused to people and/or property.

Lien Holder: A person or other entity (i.e. a corporation - usually a bank) with a legally securable interest in your vehicle. For example, a lending institution that loans you money for the purchase of your car has a lien on it.

Limits: The maximum amount an insurance company will pay. For example, if your collision coverage limit is $10,000, but your car sustains $15,000 worth of damage, you are liable to pay for the $5,000 worth of damage that goes beyond your insurer's limit.

Medical Payments Coverage: Insurance coverage that pays for damages sustained to the insured and his or her passengers without regard to fault. Also pays for damages suffered by the insured and covered family members for injuries sustained as a pedestrian at the hands of non-exempt vehicles.

MVR (Motor Vehicle Record): Also known as a "DL Printout," your MVR contains information about your driving record - tickets, accidents, convictions, etc.

No-Fault Insurance: Type of insurance in which the insured's own insurance company provides indemnity for damages sustained to the insured's own person and property without regard to fault. The purpose of no-fault insurance is to expedite the insurance claims process and keep cases from clogging the legal system.

No-Fault State: Any state that has at least some form of no-fault insurance as a matter of law. No state has "pure" no-fault insurance, but Michigan comes the closest.

Non-Passive Alarm: Alarm in which action on your part is required in order for it to be activated. Most insurers will offer a discount if your automobile is armed with a non-passive alarm - but a slightly greater discount if it has a passive alarm.

Passive Alarm: Alarm in which your action is not necessary in order for it to be activated. Most insurers will offer discounts for cars armed with passive alarm systems that are even greater than cars with non-passive alarms.

Personal Auto Policy (PAP): Standard car insurance policy contract that includes liability, medical payments, uninsured motorist, and physical damage protection.

Personal Injury Protection: Often called PIP, this insurance applies to no-fault states and covers the basic expenses incurred by the insured or his family in an automobile accident without regard to fault.

Physical Damage: Refers to damage to your vehicle. Such damage is normally covered by either collision or comprehensive insurance.

Pleasure Use: A vehicle that is not typically used for commuting to work or for any business purpose, but rather, primarily for enjoyment.

Policy Lapse: Any period of time in which your car is not insured. Policy lapses result in higher rates.

Policy Period: Time period in which the policy is active. Also referred to as "policy term."

Preferred Risk: Refers to an individual who is considered to present less risk to an insurer than the average motorist.

Premium: An individual's price for car insurance.

Primary Driver: The person who drives the car most frequently. If two or more people drive a car, the primary driver's record is taken into greater account than the secondary or tertiary drivers.

Primary Use: How the covered auto is most commonly used. Insurers typically classify vehicles into one of three categories - commuting (most personal autos), business use (corporate-owned or used by the self-employed for business purposes), or pleasure use.

Private Passenger Auto: A four-wheeled motor vehicle that is subject to registration and used for private (non-business) use. Examples of vehicles that would not be considered private passenger autos include dune buggies, UPS trucks, busses, ATVs, etc.

Property Damage Liability Coverage: Insurance in which the insurer pays for damages to another party's property for which the insured is held liable.

Pro-Rata Cancellation: Termination of a policy before its expiration date. In this case, policyholders are responsible only for the earned premium. Every dollar in excess of the earned premium is considered "unearned," and is to be refunded to the policyholder. Insurance companies may, however, charge small fees for fixed expenses - see "short rate cancellation," below.

Property Damage Liability Insurance: This is insurance coverage for damage caused to other people's property. Damage to one's own property is considered "physical damage" and covered by collision and comprehensive coverages.

Rental Car Reimbursement: A common rider or endorsement in which the insured is reimbursed for the cost of a rental car while his covered auto is unusable.

Secondary Driver: A driver other than the primary driver who also is insured for the particular automobile. The secondary driver's driving record is given less weight in determining the insurance rates that the insured will be charged.

Short Rate Cancellation: This term refers to the non-prorated portion of a policy that is terminated early and must be refunded. Insurance companies are allowed to allocate expenses to the front end of a policyholder's term, and therefore, the daily cost of an insurance policy goes down each day.

Split Limits: This term refers to a set of three numbers dealing with liability insurance. For example, 35/50/10 means $35,000 in bodily injury liability coverage per individual; $50,000 in bodily injury liability coverage per accident; and $10,000 of property damage liability coverage per accident.

SR-22: An official document showing proof of "financial responsibility," most commonly needed by people convicted of certain major traffic violations in order to have their driver's licenses reinstated.

Stacking: Applies to underinsured motorist / uninsured motorist coverage, and allows the insured to multiply the limits of each coverage by the number of cars being insured.

State Minimum: Each state has minimum requirements on the insurance coverages that motorists must carry in order to legally drive on the public roads. These minimums are expressed by three numbers; the first and second referring to bodily injury liability limits per person and per accident, respectively, and the third number referring to the maximum property damage coverage per accident.

Steering Restraint: An anti-theft device that makes it difficult for potential thieves to access your car's ignition system. The most commonly known steering restraint is "The Club." Most insurers offer discounts for cars fitted with steering restraints.

Term: The period of time for which a policy is active.

Tort: A legal wrong, most commonly negligence or acts of omission. Courts provide remedy for torts in the form of suits for damages.

Towing Coverage: Optional insurance coverage that provides payment for towing (but not repairs) if your car breaks down or is disabled as result of an accident.

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Underinsured Motorists Coverage: Insurance that covers damages caused by motorists who meet the state's minimum insurance requirements but still do not have enough coverage to satisfy damages.

Uninsured Motorists Coverage: Insurance that covers damages caused by uninsured or unidentified (hit-and-run) motorists.

Unsatisfied Judgment Fund: Many states have funds that reimburse victims injured in automobile accidents who are unable to collect from the liable party.

Usage: Refers to the purpose for which you use your vehicle. Different rates are established for different usages. Example usages include "pleasure," "commute," and "business."

VIN: Vehicle Identification Number. Each car has a unique VIN, which consists of 17 numbers, and is necessary for receiving insurance coverage.

Car Insurance Glossary - Terms Like Passive Alarm, Waiver, Gap, Rental Coverage & More

Welcome to our insurance glossary of car insurance terms. If you have any questions about terms that are not included on this page please contact us.

Additional Interest
Anti-Theft Device
Bodily Injury Liability
Car Insurance Coverage
Claim
Collision Coverage
Collision Deductible Waiver
Comprehensive Coverage
Continuous Coverage
Continuously Insured
Credit Rating
Deductible
Declarations Page (Dec Page)
Defensive Driver Course
Depreciation
Drive-Other-Car Endorsement
Earned Premium
Effective Date
Emergency Road Service
Endorsements
Exclusions
Extraordinary Medical
Expiration Date
Extended Non-Owner Liability
Financial Ratings
Financial Responsibility Laws
Full Coverage Car Insurance
Funeral Benefits
Gap Insurance
Garaging Location
Good Student Discount
HEV: Hybrid Electric Vehicle
Hit and Run
Income Loss
Indemnity
Independent Agent
Insurance Premium
Insurance Score
Insured
Judgment
Liability
Liability Coverage
Lien Holder
Limits
Medical Payments Coverage
MVR (Motor Vehicle Record)
No-Fault Insurance
No-Fault State
Non-Passive Alarm
Passive Alarm
Personal Auto Policy (PAP)
Personal Injury Protection
Physical Damage
Pleasure Use
Policy Lapse
Policy Period
Preferred Risk
Premium
Primary Driver
Primary Use
Private Passenger Auto
Property Damage Liability Coverage
Pro-Rata Cancellation
Property Damage Liability Insurance
Rental Car Reimbursement
Secondary Driver
Short Rate Cancellation
Split Limits
SR-22
Stacking
State Minimum
Steering Restraint
Term
Tort
Towing Coverage
Underinsured Motorists Coverage
Uninsured Motorists Coverage
Unsatisfied Judgment Fund
Usage
VIN: Vehicle Identification Number

Additional Interest: A person or other entity (i.e. a corporation) that has an insurable interest in your vehicle, and may be named as such in your insurance policy. For example, when you finance a car through a bank, the bank is considered to have an "additional interest" in the car.

Anti-Theft Device: Any device designed to reduce the chance of a vehicle being stolen, or aid in the recovery of a vehicle if it is stolen. Examples include car alarms, keyless entry, starter disablers, "The Club," etc.

Bodily Injury Liability: Legal liability for causing injury or death to another person.

Car Insurance Coverage: There are many "coverages." Liability, medical payments, uninsured motorists, collision, and comprehensive are the five major types of car insurance coverage.

Claim: The request for reimbursement that you make to the insurance company when you’ve been injured or your car has been damaged.

Collision Coverage: This is the coverage that provides protection for your car in the event of damage by an inanimate object, such as another car, a tree, or the side of a building.

Collision Deductible Waiver: If you have this type of coverage with your car insurance policy, your insurance company will pay your deductible if you are in an accident that is the fault of an uninsured motorist. This is not available in all states or with all policies.

Comprehensive Coverage: This coverage provides protection in the event of damage not caused by a collision (that kind of damage would be covered by your collision coverage). These other kinds of damage can include theft, fire, damage by extreme weather, etc.

Continuous Coverage: The length of time that you have maintained the legally required insurance on your vehicle. Lapses in coverage can result in higher rates.

Continuously Insured: The amount of time that you’ve been insured, without gaps. You can switch companies as many times as you want, but if you’ve let your coverage lapse, you could end up with higher premiums.

Credit Rating: Each individual consumer has a credit file with each of the three major credit bureaus - Equifax, Experian, and TransUnion. Each company uses a formula developed by Fair Issac's & Co. (FICO) to determine the consumer's credit rating. Insurers consider your credit rating when determining your insurance rates, since their own advanced statistical models have determined that consumers with good credit are better insurance risks, and vice versa.

Deductible: This is the amount that you are required to pay towards any damages. Your car insurance will cover any costs above this amount. The size of your deductible can greatly affect your car insurance costs.

Declarations Page (Dec Page): This is a one or two page document that details all the facts about your car insurance, such as your name and address, the vehicles covered, the deductible, the types of coverage, etc.

Defensive Driver Course: Classes offered or approved by the DMV designed to enhance defensive driving skills. Most car insurance companies offer discounts to customers who successfully complete these courses.

Depreciation: Age and wear can cause your car’s value to depreciate, or go down, over time.

Drive-Other-Car Endorsement: An endorsement or "rider" that broadens the definition of "covered auto" to include vehicles owned by others that are operated by the insured.

Earned Premium: The portion of the premium that is "consumed" during a partial policy term. If you terminate your policy early, you are only responsible for the earned premium portion (plus expenses), regardless of what you may have paid.

Effective Date: The date your coverage begins. You can find this on your dec page.

Emergency Road Service: This is optional coverage that provides services like tire changing, lock-out help, gas delivery, or towing.

Endorsements: These are also known as riders. They are changes to your coverage that are made after the effective date, like adding another car or raising your deductible.

Exclusions: Situations that are not covered by your car insurance. Your policy will show your specific exclusions.

Extraordinary Medical: This is optional coverage that protects you above and beyond your standard medical benefit coverage. Usually this would cover you if you were hospitalized long-term or permanently disabled.

Expiration Date: The date and time that your coverage ceases. Normally, the time is 12:01 AM - meaning one minute after midnight.

Extended Non-Owner Liability: An endorsement or "rider" that extends liability coverage for specifically named people operating any non-owned vehicle.

Financial Ratings: This term refers to the credit-worthiness and financial stability of insurance companies. AM Best, Standard & Poor's, and Moody's are the three agencies that assign financial ratings to insurance companies.

Financial Responsibility Laws: Each state requires motorists to be financially able to compensate the victims of bodily or property damage for which they are liable. Liability insurance is the easiest way to meet these requirements, however, those who can afford to do so may opt to post bonds instead.

Full Coverage Car Insurance: This is a confusing term. Many people think that having "full coverage" means that they will be covered no matter what happens to them. In reality, it only means that you have the full legal requirements needed in your state. Depending on your home state, it could be very little coverage in reality.

Funeral Benefits: This is optional coverage. If you were to die in a car-related accident, the insurance company would pay for a portion of your funeral costs.

Gap Insurance: Optional coverage for the difference in the amount owed on a vehicle and its replacement value. For example, if your car's replacement value is $4,000, but you still owe $5,000 on it and it's totaled, your insurance company will only pay you $4,000 (unless you have gap insurance). The company that lent you the money for your car will require an immediate payment of $5,000. Gap insurance makes up this difference.

Garaging Location: It is assumed by car insurance companies that you keep your car at your home address. However, if you primarily keep your car in a different location, make sure your insurance company knows. It can affect your rates.

Good Student Discount: Most insurers provide discounts to high school students who receive good grades. The reasoning behind this discount is that insurers have found that students who are responsible enough to get good grades are generally more responsible drivers, and thus they pose less risk for the insurers.

HEV: Hybrid Electric Vehicle. If you drive an HEV, your rates may differ from those for a standard car. Make sure your car insurance company knows if you drive an HEV.

Hit and Run: An accident caused by someone who flees the scene before police arrive and without leaving insurance information.

Income Loss: This is optional coverage that protects you if you are in an accident that leaves you unable to work. Your insurance company can help compensate you for lost wages.

Indemnity: Restoration to the financial place you were prior to the accident. Insurance is designed to make you "whole again," but not to "enrich" you. Thus, it gives you indemnity - making you "whole" again.

Independent Agent: An agent who does not work for just one insurance company. Instead, he or she searches the market for the best place for his/her client's business.

Insurance Premium: Rates charged to an insured, reflecting the insurer's expectations for loss and adding in an element of profit. Premiums are typically paid monthly, but discounts are often offered for paying in advance, either quarterly, semiannually, or yearly.

Insurance Score: Score given to each insurance customer, based on complex statistical models, in order to determine his or her insurance risk. The better your insurance score, the lower car insurance rates you can expect to pay.

Insured: The person/people covered by an insurance contract. Insurance agreements commonly refer to the "insured" or "insureds."

Judgment: A decision by a court of law, typically ordering one party to pay another party a sum of money. Additional legal action is normally required in order to ensure that judgments are enforced. Many judgments go unenforced. When enforced, a the winner of a judgment can potentially garnish the wages and "attach" the bank accounts of the person or entity at fault.

Liability: A legal obligation to perform or not perform certain acts. Most commonly, this refers to monetary sums that must be paid in order to compensate for damages to people and/or property. The term can also be used to assign "responsibility" or "fault."

Liability Coverage: Insurance to cover damages that the insured is ordered to pay as a result of a court's decision holding the insured liable for injuries caused to people and/or property.

Lien Holder: A person or other entity (i.e. a corporation - usually a bank) with a legally securable interest in your vehicle. For example, a lending institution that loans you money for the purchase of your car has a lien on it.

Limits: The maximum amount an insurance company will pay. For example, if your collision coverage limit is $10,000, but your car sustains $15,000 worth of damage, you are liable to pay for the $5,000 worth of damage that goes beyond your insurer's limit.

Medical Payments Coverage: Insurance coverage that pays for damages sustained to the insured and his or her passengers without regard to fault. Also pays for damages suffered by the insured and covered family members for injuries sustained as a pedestrian at the hands of non-exempt vehicles.

MVR (Motor Vehicle Record): Also known as a "DL Printout," your MVR contains information about your driving record - tickets, accidents, convictions, etc.

No-Fault Insurance: Type of insurance in which the insured's own insurance company provides indemnity for damages sustained to the insured's own person and property without regard to fault. The purpose of no-fault insurance is to expedite the insurance claims process and keep cases from clogging the legal system.

No-Fault State: Any state that has at least some form of no-fault insurance as a matter of law. No state has "pure" no-fault insurance, but Michigan comes the closest.

Non-Passive Alarm: Alarm in which action on your part is required in order for it to be activated. Most insurers will offer a discount if your automobile is armed with a non-passive alarm - but a slightly greater discount if it has a passive alarm.

Passive Alarm: Alarm in which your action is not necessary in order for it to be activated. Most insurers will offer discounts for cars armed with passive alarm systems that are even greater than cars with non-passive alarms.

Personal Auto Policy (PAP): Standard car insurance policy contract that includes liability, medical payments, uninsured motorist, and physical damage protection.

Personal Injury Protection: Often called PIP, this insurance applies to no-fault states and covers the basic expenses incurred by the insured or his family in an automobile accident without regard to fault.

Physical Damage: Refers to damage to your vehicle. Such damage is normally covered by either collision or comprehensive insurance.

Pleasure Use: A vehicle that is not typically used for commuting to work or for any business purpose, but rather, primarily for enjoyment.

Policy Lapse: Any period of time in which your car is not insured. Policy lapses result in higher rates.

Policy Period: Time period in which the policy is active. Also referred to as "policy term."

Preferred Risk: Refers to an individual who is considered to present less risk to an insurer than the average motorist.

Premium: An individual's price for car insurance.

Primary Driver: The person who drives the car most frequently. If two or more people drive a car, the primary driver's record is taken into greater account than the secondary or tertiary drivers.

Primary Use: How the covered auto is most commonly used. Insurers typically classify vehicles into one of three categories - commuting (most personal autos), business use (corporate-owned or used by the self-employed for business purposes), or pleasure use.

Private Passenger Auto: A four-wheeled motor vehicle that is subject to registration and used for private (non-business) use. Examples of vehicles that would not be considered private passenger autos include dune buggies, UPS trucks, busses, ATVs, etc.

Property Damage Liability Coverage: Insurance in which the insurer pays for damages to another party's property for which the insured is held liable.

Pro-Rata Cancellation: Termination of a policy before its expiration date. In this case, policyholders are responsible only for the earned premium. Every dollar in excess of the earned premium is considered "unearned," and is to be refunded to the policyholder. Insurance companies may, however, charge small fees for fixed expenses - see "short rate cancellation," below.

Property Damage Liability Insurance: This is insurance coverage for damage caused to other people's property. Damage to one's own property is considered "physical damage" and covered by collision and comprehensive coverages.

Rental Car Reimbursement: A common rider or endorsement in which the insured is reimbursed for the cost of a rental car while his covered auto is unusable.

Secondary Driver: A driver other than the primary driver who also is insured for the particular automobile. The secondary driver's driving record is given less weight in determining the insurance rates that the insured will be charged.

Short Rate Cancellation: This term refers to the non-prorated portion of a policy that is terminated early and must be refunded. Insurance companies are allowed to allocate expenses to the front end of a policyholder's term, and therefore, the daily cost of an insurance policy goes down each day.

Split Limits: This term refers to a set of three numbers dealing with liability insurance. For example, 35/50/10 means $35,000 in bodily injury liability coverage per individual; $50,000 in bodily injury liability coverage per accident; and $10,000 of property damage liability coverage per accident.

SR-22: An official document showing proof of "financial responsibility," most commonly needed by people convicted of certain major traffic violations in order to have their driver's licenses reinstated.

Stacking: Applies to underinsured motorist / uninsured motorist coverage, and allows the insured to multiply the limits of each coverage by the number of cars being insured.

State Minimum: Each state has minimum requirements on the insurance coverages that motorists must carry in order to legally drive on the public roads. These minimums are expressed by three numbers; the first and second referring to bodily injury liability limits per person and per accident, respectively, and the third number referring to the maximum property damage coverage per accident.

Steering Restraint: An anti-theft device that makes it difficult for potential thieves to access your car's ignition system. The most commonly known steering restraint is "The Club." Most insurers offer discounts for cars fitted with steering restraints.

Term: The period of time for which a policy is active.

Tort: A legal wrong, most commonly negligence or acts of omission. Courts provide remedy for torts in the form of suits for damages.

Towing Coverage: Optional insurance coverage that provides payment for towing (but not repairs) if your car breaks down or is disabled as result of an accident.

Return to top

Underinsured Motorists Coverage: Insurance that covers damages caused by motorists who meet the state's minimum insurance requirements but still do not have enough coverage to satisfy damages.

Uninsured Motorists Coverage: Insurance that covers damages caused by uninsured or unidentified (hit-and-run) motorists.

Unsatisfied Judgment Fund: Many states have funds that reimburse victims injured in automobile accidents who are unable to collect from the liable party.

Usage: Refers to the purpose for which you use your vehicle. Different rates are established for different usages. Example usages include "pleasure," "commute," and "business."

VIN: Vehicle Identification Number. Each car has a unique VIN, which consists of 17 numbers, and is necessary for receiving insurance coverage.

how much does it cost for adolescents.....

Most companies do give major price breaks after you turn 21 and then again after you turn 25 or get married.
If you would like to start a quote and compare 5 different rates from 5 companies, simple go to our quote system and fill in your information.

Answered by James on Tuesday, April 24, 2007 12:18 pm
When you say "adolescents", do you mean someone under the age of 16? State laws are very different about the age requirements for driving a vehicle with or without parental supervision.

With that said, based on your states laws, the insurance companies are going to set the rates for your child based on several factors including whether or not you will be traveling with the child at all times, the type of vehicle involved, etc....

10 Easiest Cars to Get Insured

The first thing an insurance company looks at when offering you a quote is your driving history. Have a spotless one, and you’ll definitely get a better rate than a guy who has a glovebox full of tickets.

The insurance companies also considers the sort of car you drive, including its sticker price, the cost to repair the vehicle, replacement value, safety features, and how well it will withstand an accident. The lower the cost of claims for a vehicle, the lower the rates, and therefore the easier it is to get insured.

Here is a list of the top ten least expensive vehicles to insure, that have a sticker price of less than $50k, according to the Highway Loss Data Institute (HLDI):
1. Oldsmobile Silhouette
2. Pontiac Montana
3. Saturn L Series Wagon
4. Chrysler PT Cruiser
5. Saturn L Series Sedan
6. Chevrolet Venture
7. Chevrolet Astro
8. Saturn Vue
9. Jeep Wrangler
10. Oldsmobile Bravada

The HLDI also lists vehicles that are the least expensive based theft, injury and collision claims. The least expensive theft claim models are:
1. Buick LeSabre
2. Mercury Grand Marquis
3. Buick Century and Saab 9-5 four-door (tie)
4. Buick Park Avenue and Pontiac Montana (tie)


The least expensive injury claim models are:
1. GMC Yukon XL 1500 two-wheel drive
2. GMC Yukon two-wheel drive
3. Chevrolet Tahoe two-wheel drive
4. GMC Yukon XL 1500 four-wheel drive
5. GMC Sierra 2500 four-wheel drive

The least expensive collision claim models are:
1. GMC Yukon two-wheel drive
2. GMC Yukon XL 1500 two-wheel drive
3. Chevrolet Tahoe two-wheel drive
4. Ford Excursion two-wheel drive
5. Ford Escape two-wheel drive 10 hardest cars to get insured

As a rule of thumb, the larger cars and trucks are usually the easiest and cheapest to insure, as long as they do not do heavy damage to other vehicles in an accident. If you total another person’s vehicle, your rates will definitely increase.

The cost to insure a specific make and model will fluctuate as time passes. Especially if it is brand new model to hit the market. Insurance carriers will examine how the vehicle performs in crash tests, as well as the average payout on accident claims. Insurance companies also look at how durable or dependable the vehicle is, based on basic maintenance and repair costs

History of Car Insurance - Everything You Need To Know

Car insurance is the most widely purchased type of insurance coverage. Nearly anywhere you go in the world automobile drivers are required to possess car insurance. Car insurance is applicable to all types of automobiles and their drivers. It covers physical damage caused to your vehicle and any other vehicles you might come in contact with.

Car insurance also offers liability protection. What this means is if you have an accident and another person is injured, your car insurance policy will cover a portion of their medical expenses. Liability car insurance can also offer protection against property damage.

The concept of car insurance can be traced back to the ancient Chinese. When the new colonies had been settled the Chinese oftentimes sent cargo ships filled with supplies across the Atlantic Ocean. These cargo ships were usually owned by a group of investors.

Occasionally, cargo ship owners would lose a ship due to sinking or piracy. In order to protect their ships and cargo, these investors took out insurance polices on the ship. Now known as marine insurance, this type of policy is still an effective way to protect ships and the cargo they carry.

Car insurance is a spin-off of marine insurance. It was developed after policymakers decided that operating a motor vehicle on public property was a privilege. It was ordered that motorists must purchase car insurance to protect innocent third parties against injury or property damage.

The first car insurance policy that offered liability coverage was written by an English company in 1895. The first liability car insurance policy written in the United States took place in 1898 and was written for Dr. Truman J. Martin.


The first mandatory car insurance law went into effect in Massachusetts in 1927. However, car insurance polices actually came into play much earlier. In fact, car insurance policies can be traced back one hundred years prior to the introduction of the motor vehicle in the United States in 1908.

Today, every state in the United States has adopted a mandatory car insurance requirement. Although car insurance obligations vary widely from state to state, all require a minimum of liability coverage to protect innocent victims from harm. Unfortunately, not all vehicle owners adhere to the laws of their state.

One of the best resources for locating information about car insurance is through the Department of Motor Vehicles website. There you can locate the various car insurance agencies, as well as learn about the requirements of your state.

It’s important to be familiar with the car insurance requirements of your state because if you do not carry the appropriate coverage and are involved in an accident, you could end up serving time in jail.

In addition, if you do not carry the appropriate car insurance coverage and are involved in an accident that causes bodily harm to another person, you could lose everything you own — including your home.

Car insurance is not a luxury, it is a necessity. It can save you thousands, perhaps even hundreds of thousands of dollars, should you ever be involved in a car accident. Most insurance companies offer monthly payment plans, making it easier on your budget.

Car insurance premiums are based on many factors including your age, sex, driving record, credit history, and the type of vehicle you drive. If you have multiple speeding tickets, or have been involved in multiple accidents, you will pay a much higher premium.

Ultimate Guide to Cheap Car Insurance

If you own a car, truck, or other vehicle you are required by law to carry some type of insurance coverage. At a minimum, you are required to carry liability coverage that will cover expenses related to personal injury or property damage. In other words, if you cause an accident and someone is injured or property is damaged, you are responsible for paying for damages.

An insurance policy guarantees payment of a certain amount to cover these expenses should an accident occur. The rates you pay for your car insurance policy are based upon many factors including: age, sex, driving history, credit history, and year, make and model of the vehicle being insured. Other cost factors are determined by the amount of coverage you want.

Comprehensive is the most expensive type of insurance coverage. This type of insurance can offer protection to you, your family, and your car. It covers other things that can happen to your car such as fire, vandalism, or acts of Mother Nature such as hail damage.

Liability is the cheapest car insurance; however, if you do not own your car outright, you cannot purchase liability insurance alone. Lenders require you to have comprehensive insurance covering the vehicle until the note is paid in full.

Liability insurance offers protection to people in other cars when you are at fault for an accident. Typically, liability insurance will cover medical expenses and car repairs, up to a certain dollar amount. In most cases, liability insurance covers you in any vehicle that you drive, whether it belongs to you or someone else.

It used to be that Americans had few choices when it came to car insurance. There were a few major players and they basically had the same rates. Today, there are hundreds of insurance companies eager to obtain your business. The best part is they are offering cheap car insurance rates.

The following tips can help you obtain the cheapest car insurance rates, while making certain you adhere to your state’s minimum insurance requirements.

1. Shop around. Conduct research via the Internet or by phone. Nearly every car insurance agent will provide you with a free quote. It’s a good idea to shop around for competitive rates on your current vehicle. If you’re thinking of buying a new vehicle, obtain quotes for the car you are interested in purchasing. Nothing stings more than to buy a car, only to discover you now have a $400 a month insurance premium. Know your insurance costs before you buy a car, and plan your budget accordingly.


2. Keep a clean record. Both your driving history and credit history are determining factors in the amount of your insurance premium. If you want to have cheap car insurance rates, keep your foot off the gas, obey traffic laws, and pay your bills in a timely fashion.

3. Bundle your insurance. Many car insurance companies offer other types of insurance such as homeowner’s and life. If you buy all your insurance coverage from them, chances are you will receive a significant discount on your premiums.

4. Increase your deductible. One of the biggest mistakes car owners make is to purchase a policy with a low deductible. By increasing your deductible to $1500, you can save up to 20 percent off your monthly premiums. A smart thing to do is to place $1500 in an interest-bearing savings account. The money can draw interest and you will have peace of mind knowing the deductible money is sitting in the bank should you ever need it.

5. Buy online. You can save up to 10 percent or more by purchasing car insurance online. Many insurance companies offer a discount to individuals who set-up automatic payments. This can be done by entering a credit card number or bank account. Each month the agreed upon amount will automatically be deducted from your checking account or charged to your credit card.

6. Buy a more economical car. Insurance rates are partially based on the type of car you drive. If the vehicle has low safety ratings, high theft rates, or high incidence of vandalism, you will pay a higher premium. It’s a good idea to research car ratings prior to purchasing one. Look for cars with high safety ratings and low maintenance costs.

The Top Ten Hardest Cars to get Insured

While your driving history is the number one factor in an insurance company determining your premium, the sort of car you drive also plays a role. Insurance companies take into account the sticker price, the cost to repair the vehicle, replacement value, safety features, and how well it will withstand an accident. The higher the cost of claims for a vehicle, the higher the rates, and therefore the harder it is to get insured.

Basically, luxury cars, sports cars, four-wheel drive trucks, and other performance vehicles are the most expensive to insure. Not only do these cars have high claim rates for collisions, theft, and injury, but the companies consider their drivers to be more apt to speed and therefore a higher risk factor.

Here is a list of the top ten most expensive vehicles to insure, that have a sticker price of less than $50k, according to the Highway Loss Data Institute (HLDI):
1. Lexus IS 300
2. Land Rover Discovery Series II
3. Audi S4
4. Jaguar X-Type
5. Mercedes SLK Class
6. Lexus GS 430
7. Land Rover Freelander
8. Mitsubishi Montero
9. BMW X5
10. Toyota 4Runner


The HLDI also lists vehicles that are the most expensive based theft, injury and collision claims. The most expensive theft claim models are:
1. Acura Integra two-door
2. Acura Integra four-door
3. Jeep Wrangler
4. Jeep Cherokee four-door
5. Honda Prelude two-door

The most expensive injury claim models are:
1. Suzuki Esteem four-door
2. Mitsubishi Mirage four-door
3. Kia Rio four-door
4. Mitsubishi Mirage two-door
5. Kia Sephia four-door

The most expensive collision claim models are:
1. Lexus IS 300
2. Hyundai Tiburon two-door
3. Kia Spectra four-door
4. Suzuki Esteem four-door
5. Mitsubishi Mirage four-door and Audi A6 Avant Quattro station wagon (tie)

The cost to insure a specific make and model will fluctuate as time passes. Especially if it is brand new model to hit the market. Insurance carriers will examine how the vehicle performs in crash tests, as well as the average payout on accident claims.

Insurance companies also look at how durable or dependable the vehicle is, based on basic maintenance and repair costs. But, get a DUI or be a reckless driver and even that 1993 Geo is going to be hard to get insured

How Do Collision Claims Affect Your Car Insurance?

Chances are that your car is one of the most valuable assets you own. Car insurance offers protection of your investment in case of accident, vandalism or theft. In addition, it is a requirement of lending institutions and car leasing companies. You must have full-coverage on the vehicle in order to obtain financing.

As the driver of a vehicle, you become responsible for the safety of the passengers in your vehicle; other driver’s whom you share the road with; pedestrians; and other people’s property. If you are involved in an accident, collision car insurance helps cover the costs associated with injury or damage.

If you are involved in an accident, you should contact your insurance agent immediately to begin the claim process. Your insurance agent will contact a Claims Adjuster who will assess the damage caused to your vehicle and work with you to resolve any issues, including who is at fault.

It’s important to note there are two kinds of deductibles: comprehensive and collision. Comprehensive covers damage caused to your vehicle by vandalism, hit-and-run, hitting an animal, or acts of Nature such as hail damage.

Collision covers damage caused to your vehicle due to a collision with another car while on the road. Comprehensive claims do not affect your insurance premiums, but collision claims do.

There are many factors involved when it comes to determining how your car insurance premiums will be affected due to a collision. If the accident is not your fault and your insurance company is able to reclaim its losses from the at-fault driver’s insurance company, there may be no change in your premium.


If the accident is your fault, your insurance premiums are likely to increase by as much as 20 percent. This will depend on the extent of the damage and if there were injuries involved. If you are the cause of an eight car pile-up with multiple injuries, chances are good your car insurance will be cancelled when it comes time for renewal. However, if you are involved in a small fender bender with less than $2,000 in damage, you may only experience a slight increase of 3 percent or less.

Most insurance companies will forgive one collision claim. However, if you file multiple claims your premiums will increase, or your policy may end up being cancelled. Even if you are not at fault, insurance companies frown upon policyholders who are frequently involved in auto accidents.

If your insurance carrier cancels your policy due to a collision claim, you have the right to file an appeal through the Insurance Department. Be prepared to spend up to a year fighting for your rights. This is not to say you cannot win, but you must possess patience and perseverance when going up against the insurance industry giants.

If your car is valued at less than $2000, you might want to consider not filing a collision claim. This is particularly true if you have a deductible of $1500. Just because you are involved in an accident does not mean that you are required to file a claim with your insurance company.

If the damage to your vehicle is minimal, weigh the pros and cons to determine if it is worth filing the claim. Consult with your insurance company and inquire how the collision claim will affect your car insurance premium. If it will result in a premium increase over an extended period of time, do the math and see how it works out. You may discover that it is better to repair the car out-of-pocket as opposed to filing a claim

Full Coverage vs. Liability Only - The Car Insurance Dilemma

At the opposite ends of the car insurance spectrum are full coverage and liability only. In reality, there are many steps in between these polar opposites and there are even multiple levels of full coverage and liability only. However, car insurance can best be understood by first fully comprehending the differences between these two extremes.

Liability Only Car Insurance
Car insurance is regulated at the state level, and therefore, each state has its own guidelines concerning the minimum car insurance coverages that are required. One thing that is for certain, though, is that all states have laws regarding the minimum amount of liability coverage you must have in order to legally drive your vehicle. But what is liability coverage? It is insurance that covers damage you cause to other people (outside of your car) and their property.

State minimums are expressed in three parts. For example, Colorado's legal minimums are 25/50/15. The first number refers to the maximum amount your insurance company will pay for injuries sustained by a single individual, per accident; the second number refers to the maximum amount your insurer will pay for all injuries in a single accident; and the third number is the maximum amount your insurer will pay for property damage, per accident. So for Colorado, this translates into $25,000 of bodily injury coverage per victim; $50,000 of bodily injury coverage per accident; and $15,000 of property damage coverage per accident.

Keep in mind that these are the state minimums - it may be wise to carry coverage in excess of them. Keeping with the Colorado example, if you were in an accident that caused $100,000 in bodily injury damages to another motorist, your insurance would only cover the first $25,000. For the other $75,000 the injured motorist could come after you! This may or may not apply in so-called "no-fault" states, of which there are 12.


Full Coverage Car Insurance
What is known as "full coverage" is actually two forms of coverage on top of liability - comprehensive coverage and collision coverage. A motorist can elect to have comprehensive coverage without collision, but not collision without comprehensive. A car insurance policy with liability and comprehensive coverage would be something in between the legal minimum and "full coverage."

Comprehensive coverage is sometimes referred to as "other-than-collision" coverage, or OTC. Obviously, it covers damages to your vehicle that arise from something other than a collision. Examples include theft, fire, weather damage, etc., but the insurance companies confuse the issue by including accidents with animals as part of comprehensive coverage, rather than collision. The logic behind this is that comprehensive is designed to cover things that are less likely to be your fault.

Collision coverage is an optional add-on to comprehensive - although it isn't optional if you still owe money on your car! Finance companies require borrowers to carry full car insurance coverage on their vehicles.

Getting Something for Your Money - That's the Name of the Game
Too many people look at insurance as an annoying expense. In reality, it is an investment - a financial product - and it should be viewed as such. Whether you want liability only, full coverage, or something in between, you need to make sure you are not paying more than you have to for the coverage you need. The best way to ensure you're getting a good value is by comparison shopping online. In many cases, customers are able to save money while simultaneously increasing their coverage

I Just Got My First Ticket. Will My Car Insurance Go Up?

Everybody makes mistakes. But, when it comes to driving a motor vehicle, mistakes that result in a ticket can cost you big time.

It’s important to realize that driving is not a right, it is a privilege. If you abuse the privilege, chances are you will end up with a suspended driver’s license. You’ll also end up with a lot of fines and attorney fees. In fact, some traffic infractions will land you in jail, such as drinking under the influence of drugs or alcohol or leaving the scene of an accident you were involved in.

Although each state has their own set of driving rules, most of the 50 states utilize the Department of Motor Vehicles (DMV) point system. It’s easy to find out the point system utilized in your home state. Simply visit the DMV website at www.dmv.org.

Typically one or two tickets for minor violations won’t land you in too much hot water. Depending on the violation, it may not even affect your car insurance. Things like rolling through a stop sign or expired license plates generally will not raise your insurance rates.

However, if the traffic ticket you received is due to reckless driving or leaving the scene of an accident, your car insurance might be cancelled or the premium could increase substantially.

If your state utilizes the DMV point system, it’s important to realize that points remain on your driver’s license for three years. If you incur too many violation points within a certain period of time, your car insurance rates will increase. Worse yet, you could end up losing your license altogether.

Many of the common traffic violations have a point value assigned to them. Every time you receive a ticket, the points are deducted from your license. Generally, if you accrue 12 points within 12 months, your license will be suspended for 30 days. If you accrue 18 points within 18 months, your license will be suspended for 90 days. And, 24 points within 36 months will cause you to have your license suspended for one full year.

If you receive a ticket for leaving the scene of an accident with damage, or a speeding violation that results in an accident, six points will be deducted from your license. Typically, these types of violations will result in a car insurance premium increase.

If you receive a ticket for reckless driving, running a red light, exceeding the speed limit by 16 mph or more, or attempt to pass a school bus that has stopped; four points will be deducted from your license. Typically, these types of violations will result in a car insurance premium increase as well.


If you receive a ticket for exceeding the speed limit by 15 mph or less, violating child restraint regulations, or driving with an open container; three points will be deducted from your license.

Again, these will vary depending on the state in which you reside, but this generalization should help give you an idea of how the DMV point system works.

You can’t escape having violations reported to the DMV. However, there are a few things you can do to clean your driving record up.

If you receive a traffic ticket that results in points against your license, you might be able to attend a driver improvement course. Many states offer this course online and taking it can provide multiple benefits.

Typically, these classes take four hours to complete. However, if a judge orders you to enroll in a course, you may be required to participate in a course that lasts for eight hours.

By taking the driver improvement course, you will be eligible to receive a fine reduction, which might be as much as 18 percent. Additionally, no points will be deducted from your license, nor will your car insurance rates increase. This applies only if there was no accident associated with your traffic ticket.

Obviously, it’s best to observe and obey all traffic laws and avoid getting a ticket in the first place. However, if you do obtain a ticket, by all means visit the DMV website and educate yourself about the options available

I Was in an Accident That Wasn’t My Fault. Will My Car Insurance Go Up?

You’re sitting at a stop light. You look in your rear view mirror and see a car speeding toward you. There’s no place to go, as there are cars beside you and in front of you. The car is approaching faster and faster, until WHAM! it runs into the back of your car.

The impact pushes your car forward, causing you to strike the truck in front of you. This leads to a chain reaction and four vehicles are involved. Two people are obviously injured. Altogether, eight people are affected.

While your first thought might not be, “I was in an accident that wasn’t my fault. Will my car insurance go up?” chances are the thought will creep up eventually. Nobody wants to pay higher insurance rates, particularly if they did not cause an accident.

Generally, if you are involved in an accident that wasn’t your fault your car insurance premiums should remain the same. However, if you file several claims chances are your car insurance rates will go up.

If you are involved in any car accident, it’s important to obtain certain information from all involved parties. This is particularly true if there is substantial damage or any type of injury. It is against the law to leave the scene of an accident you are involved in — whether it is your fault or not. Even if the other driver leaves the scene, stay put and call the police. This type of accident will be reported as a hit-and-run.

It’s important to document every detail of the accident. Whenever possible locate witnesses who are willing to speak to your insurance company on your behalf. At the very least, make certain they provide their statement to the police, as the police report can be used to verify your not-at-fault claim.

When it comes to auto accidents, a great deal of finger pointing goes on. Everyone wants it to appear as if they were not at fault because they know their car insurance premiums will go up. Worse yet, their policy might be canceled.


File a claim with your insurance company as soon as possible. Many insurance companies allow you to file a claim at their website 24/7. This is exceptionally convenient for those who do not have a local agent, or when traveling out of town.

It’s a good idea to visit the website of your car insurance company and learn about their claims procedures. Regardless of whether the accident is your fault or not, your insurance company will handle the claim process as your personal advocate.

If you’re involved in an accident that wasn’t your fault, chances are the other driver’s insurance company will contact you to obtain our statement. Use caution when speaking with the other company. They are doing everything they can to not pay the claim and are known for using tactics to trip you up.

If you are injured in a car accident that wasn’t your fault, it’s advised to seek legal counsel prior to speaking with the other driver’s insurance company. Many attorneys who specialized in personal injury cases offer their services based on a contingency fee. This means you do not have to pay any money to them unless they win the case.

Insurance companies prefer to insure safe drivers. If you are involved in multiple accidents, they may begin to view you as a reckless driver. If that label is placed upon you, you’re looking at a premium increase of up to 100 percent.

Drive safely, obey traffic rules, and keep your distance from other vehicles on the road

I Just Got My First Ticket. Will My Car Insurance Go Up?

Everybody makes mistakes. But, when it comes to driving a motor vehicle, mistakes that result in a ticket can cost you big time.

It’s important to realize that driving is not a right, it is a privilege. If you abuse the privilege, chances are you will end up with a suspended driver’s license. You’ll also end up with a lot of fines and attorney fees. In fact, some traffic infractions will land you in jail, such as drinking under the influence of drugs or alcohol or leaving the scene of an accident you were involved in.

Although each state has their own set of driving rules, most of the 50 states utilize the Department of Motor Vehicles (DMV) point system. It’s easy to find out the point system utilized in your home state. Simply visit the DMV website at www.dmv.org.

Typically one or two tickets for minor violations won’t land you in too much hot water. Depending on the violation, it may not even affect your car insurance. Things like rolling through a stop sign or expired license plates generally will not raise your insurance rates.

However, if the traffic ticket you received is due to reckless driving or leaving the scene of an accident, your car insurance might be cancelled or the premium could increase substantially.

If your state utilizes the DMV point system, it’s important to realize that points remain on your driver’s license for three years. If you incur too many violation points within a certain period of time, your car insurance rates will increase. Worse yet, you could end up losing your license altogether.

Many of the common traffic violations have a point value assigned to them. Every time you receive a ticket, the points are deducted from your license. Generally, if you accrue 12 points within 12 months, your license will be suspended for 30 days. If you accrue 18 points within 18 months, your license will be suspended for 90 days. And, 24 points within 36 months will cause you to have your license suspended for one full year.

If you receive a ticket for leaving the scene of an accident with damage, or a speeding violation that results in an accident, six points will be deducted from your license. Typically, these types of violations will result in a car insurance premium increase.

If you receive a ticket for reckless driving, running a red light, exceeding the speed limit by 16 mph or more, or attempt to pass a school bus that has stopped; four points will be deducted from your license. Typically, these types of violations will result in a car insurance premium increase as well.


If you receive a ticket for exceeding the speed limit by 15 mph or less, violating child restraint regulations, or driving with an open container; three points will be deducted from your license.

Again, these will vary depending on the state in which you reside, but this generalization should help give you an idea of how the DMV point system works.

You can’t escape having violations reported to the DMV. However, there are a few things you can do to clean your driving record up.

If you receive a traffic ticket that results in points against your license, you might be able to attend a driver improvement course. Many states offer this course online and taking it can provide multiple benefits.

Typically, these classes take four hours to complete. However, if a judge orders you to enroll in a course, you may be required to participate in a course that lasts for eight hours.

By taking the driver improvement course, you will be eligible to receive a fine reduction, which might be as much as 18 percent. Additionally, no points will be deducted from your license, nor will your car insurance rates increase. This applies only if there was no accident associated with your traffic ticket.

Obviously, it’s best to observe and obey all traffic laws and avoid getting a ticket in the first place. However, if you do obtain a ticket, by all means visit the DMV website and educate yourself about the options available

Expect Car Insurance Rates to Drop at Age 25 - Lower Cost to Insure

Sixteen, 18, and 21 - all milestone birthdays. But alas, once you turn 22 you may feel as though you won’t reach another age-based turning point until your retirement at 65. Surprisingly enough, when it comes to car insurance, your 25th birthday is among the most important milestones of your life.

Insurance Agencies - The Ultimate Profilers

If you’re a person age 18-24 and you’ve ever tried to rent a car, you know that there is something special about your 25th birthday. What’s the big deal? Well, the reason that car rental rates are so much lower for people age 25 and over is that this is the age, statistically speaking, when drivers become much safer.

Insurance companies use every piece of available data to develop profiles of drivers. Where you live, what you do for a living, your age, your gender, the make and model of your vehicle, your credit history, and a multitude of other factors are compared against the profile of the perfect driver to determine how much of a risk you are to the insurance company. The more risk that you’ll get in an accident, file a claim, or cause someone else to file a claim against you, the more expensive your insurance premiums will be.

But Hey, I Turned 25 And My Rates Never Went Down!

Since drivers 25 and over are responsible for far fewer accidents and claims, most people see their insurance premiums drop when they turn 25. However, there are other factors to consider. For example, did you move? Did you switch vehicles? Have you been in an accident or filed a claim recently? These and other factors can prevent your rates from going down, even when you hit the ripe old age of 25.


A few other factors that cause insurance premiums to go up over time are inflation and health care. Inflation is the devaluation of money - you’ve heard your grandparents tell you about how a bottle of Coke was five cents back in their day; that’s inflation at play. Currently, inflation is running at about 3 percent per year, so all other things being equal, you could expect car insurance rates to go up by about that much.

But all other things aren’t equal. Since auto insurance pays for the medical care and hospitalization of people injured in car accidents, car insurance rates are somewhat tied to health insurance rates, and health care cost increases have been greatly outpacing inflation for decades. This means that auto insurance rates are bound to go up quite a bit more than the average product or service each year, though fortunately, not nearly as much as health insurance.

What To Do If You Feel That You’re Paying Too Much

If you’ve turned 25, have a clean driving record, and haven’t made any major changes regarding what or where you drive, then you probably deserve a discount on your auto insurance. If you haven’t received one, don’t be afraid to shop around for the best deal. Compare the prices and plans offered by several car insurance agents and companies, and find one that meets all of your needs. A good agent will ensure that you’re neither under-insured, nor over-insured, and will help you find a plan with premiums that you can afford

Premiums Increase After At Fault and No Fault Accident

You were sitting at a red light and someone rear-ended you. It wasn’t your fault, so why the heck did your insurance premiums go up? Chances are you’re insurance company is penalizing you for an accident or traffic violation that may have happened months or years ago.

If you have a spotless driving record, it is highly unlikely that your premiums will increase after an accident that wasn’t your fault. However, if you have just one related traffic violation, or fender bender prior to this no-fault accident, then you will probably see an increase in your rates. The length of time varies from company to company. So, if you were an accident that was your fault two or three years before this no-fault accident, the insurance company might consider you “accident-prone” and increase your rates. The length of time between accidents varies from company to company.

Keep in mind that “fault” is determined by the authorities. You may feel that you were not at fault in an accident, or that the other driver was a maniac. But, the authorities make that decision, and the party that is ticketed during the incident is considered to be at fault.


Insurance companies base their premiums on risk-factor. So, even if someone rear-ends you at a stoplight when you were minding your own business, if you’ve had a speeding ticket or other violation prior to this accident, you might be deemed an at-risk driver. Each insurance company has different policies and standards, but they look at your overall propensity towards accidents.

Some companies will forgive past accidents after a certain period of time has passed. This can be as little as two years, or as much as five years, but again, it varies from company to company. If you go without a speeding ticket or other traffic violation for many years, chances are that you premium will decrease.

The number of accidents you are in directly affects your premium. You could be in six no-fault accidents, and your company would still raise your rates. They feel that even though the authorities determined these accidents not to be your fault, that you must have something wrong with your driving to be having so many crashes. Are you cursed, or just accident-prone? Insurance fraud also plays a small factor in this equation. Many people “stage” accidents to reap settlements from insurance companies. A high number of no-fault accidents might raise a red-flag with an insurance company.

If you have any concerns about an increase in premiums, contact your insurance agent to discuss the problem. If you are unsatisfied with the response, you can file a complaint with state agencies to investigate the problem. But remember, if you have had several accidents in the past, this is likely the reason for your increase in rates