Auto Insurance 101

Before you get on the phone or start surfing the web, here are some important things to remember when shopping for auto insurance:

1. Know who you’re talking to. Ask the agent you’re speaking with about their qualifications and experience. How long have they been selling insurance, and how long have they been licensed? What types of insurance are they licensed to sell? In all my years as an insurance agent no one ever asked me this, and it just shocks me. I will always ask this question of insurance agents, doctors, attorneys, etc. You want someone who knows what they’re talking about, don’t you? It takes at least a few years to become familiar enough with just about any vocation to be able to understand nuances, and to see the bigger picture of how one decision affects another. Don’t be embarrassed to ask to speak to someone with more experience.

2. Compare apples to apples, as closely as possible. This is probably the most important thing to remember. Spending our time calling around without getting the same quote for the same coverages will not help us make an accurate comparison, so it’s a massive waste of time. Sometimes companies may offer slight variations in the same type of coverage. Company A may offer Car Rental coverage of 80% of the daily rental up to $500 while company B offers $25 a day up to $400. Another example: in Florida insurers are required to waive the deductible for windshield replacement for those who carry Comprehensive coverage. My company extended the deductible waiver to any glass breakage (side windows, mirrors) while other companies did not. Make sure to ask about and note these differences.

3. They’re likely going to check your credit. No matter your feelings on the validity of the actuarial process, most insurers will factor in your credit rating when quoting insurance. People with better credit will get the batter rates, period. Another reason for fiscal responsibility. Be prepared to give your social security number, and try not to take it out on the agent. They don’t make the rules. Also know that while an insurance inquiry doesn’t have the same effect on your credit rating as a credit inquiry, it is still an inquiry. If it didn’t affect your credit rating at all, they would have told us to tell you that it had no effect. They didn’t.

4. Financial strength counts. Their fiscal responsibility counts, not just yours. A good balance sheet not only reassures you that they will be able to make claims, it also suggests that the company is managed well. Personally, I’d only go with a company rated A or better by a rating company such as AM Best.

5. Reputation counts, too. If a company has a bad reputation for either claims or customer service, don’t bother getting a quote. That’s just a headache waiting to happen. That said, no insurance company has only happy insureds. People get angry when their claims don’t get paid, even if the insurer is completely justified in not paying it. That’s another reason it’s so important to know your coverage.

6. Consider the advantages and disadvantages of the different ways you can buy insurance.

Captive Agents - sell policies for (usually) only one company, and usually a major insurer (State Farm, Allstate, etc.)
Local Insurance Brokers - sell policies for many different companies, some larger, some smaller (Progressive (also sells direct), Integon_
Direct Insurers - sell directly to the consumer (Geico, etc.)
Internet Brokers - gather your information and get quotes from several insurers at once, without having to speak to anyone (Insweb, etc.) Some captive agents’ companies and direct insurers also allow you to get quotes online.
Personally, I want an agent. I want someone I can go see if there’s a problem, and someone who can go to bat for me, if need be. Agents want to keep you happy. They only make money if you stay with them and pay the premiums. Often times an agent can get a claim paid, or get a cancellation rescinded. Last month my mother got a cancellation notice from her insurer, as she’d had 2 claims in a year. I called her agent and they were able to call the underwriter and get her another chance. Direct insurers can be great, but it’s hard to create a relationship with them. They are just a voice on the phone. That doesn’t mean you shouldn’t get a quote from them, but it’s something to keep in mind.

I’m going to do an entire article on the pros and cons of each of these, so look for it soon!

7. Know if the insurer is a stock company or a mutual company. Unlike a stock company, a mutual insurance company does not offer shares of stock on public exchanges. Rather, it is operated and maintained for the benefit of its members, or policyowners. All policyowners have the right to vote for the Company’s Board of Directors and to receive a fair share of the dividends declared by the Board each year. In a stock company, by contrast, any dividends are paid first to shareholders, and only after to policyholders. Not a huge deal, but having stockholders sure can affect a company’s policy decisions. And it’s always better to know than not to know.

7. Rates are cyclical. Even assuming nothing changes in your driving or claim record, rates go up and down. That’s because rates are also affected by what all insureds are doing, not just you. Insurance is all about sharing the risk, so if there’s lots of claims in your area you may see a spike in rates. And if they have a good year you may see the savings via rate reductions or dividends. I’ve gotten dividends on my auto policy many times from my mutual insurer.

8. Don’t assume that the big, “preferred” companies will have the more expensive policies. And don’t assume that the smaller ones do. You may be surprised.

9. If they won’t sell you the policy you want, call another agent. Some agents set “agency minimums”, setting a policy that they won’t sell any auto policy that doesn’t have, for example, at least 100/300/100 liability limits. Whether they can/should or cannot/should not do this is a matter for someone else to debate. If you want lower limits than what they’re willing to write, ask if that’s an agency policy or a company policy. Or just call another agent.

10. Two quotes from different agents from the same company for the same coverages with the same deductibles should always be exactly the same. To the penny. If it’s not then something is wrong. Perhaps one person has mis-classified how you use the vehicle, perhaps they rated you in the wrong territory. You need to find out what.

Also, if you have a child that will be driving in the next few years you may want to get some quotes for adding them to the policy when the time comes. Few people are really prepared for the sticker shock of adding a teen driver to the policy. Sure, the rates will change, but it gives you an idea. The more time you have to prepare the better.

Okay, you’re almost ready. Before you begin, make sure you have your Declarations Page (which lists all of your current coverages) in front of you. Also have the quotes for different coverage and deductible options that you may have gotten from your current insurer, and any notes you may have taken while speaking with your agent.

Once you’ve got all the quotes, check out Auto Insurance 101: Part 3 ~ What to Do With The Quotes Now That You Have Them, to be published tomorrow. And good luck!

Automobile Insurance Made Easy

Texas law requires people who drive in Texas to be able to pay for the automobile accidents they cause. Most drivers do this by buying automobile liability insurance. Liability insurance pays to repair or replace the other driver’s car and pays other people’s medical expenses. It does not pay to repair or replace your car or for your injuries. You must have at least the minimum amount of liability coverage required by the state’s financial responsibility law.

The current minimum liability limits are $20,000 for each injured person, up to a total of $40,000 per accident, and $15,000 for property damage per accident. This basic coverage is called “20/40/15” coverage. The minimum limits will increase on April 1, 2008, to $25,000 for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage.

Because of car prices and the high cost of medical care, the minimum amounts might not be enough if you cause an accident. If your liability limits are too low to pay for all of the other driver’s costs, the driver may sue you to collect the difference. To protect yourself financially, consider buying more than the basic limits.

Proof of Financial Responsibility
When you buy an auto policy, your insurance company will send you a proof-of-insurance card. You will need to show proof of insurance when you

are asked for it by a law enforcement officer
have an accident
register your car or renew its registration
obtain or renew your driver’s license
get your car inspected.
There are severe penalties for violating the state’s financial responsibility laws. A first conviction will result in a fine between $175 and $350. Subsequent convictions could result in fines of $350 to $1,000, suspension of your driver’s license, and impoundment of your automobile.

Know Your Rights
Texas has a Consumer Bill of Rights for auto insurance. Your insurance company must send you a copy with your policy. Read it to understand your rights under Texas law.

Auto Insurance Coverages
Automobile insurance pays for damages, injuries, and other losses specifically covered by your policy.

Many insurance companies use the Texas Personal Automobile Policy, a standardized policy form that offers eight types of coverages. Companies may sell alternative policies if the Texas Department of Insurance (TDI) approves them in advance. Read your policy carefully, as coverages can vary by policy and company. Pay special attention to the exclusions section, which lists the things your policy doesn’t cover. The front page of your policy is called the declarations, or “dec,” page. It shows the exact name of your insurance company, your policy number, and the amount of each of your coverages and deductibles.

The following summarizes the eight coverages in the Texas Personal Automobile Policy. Although your coverages and policy terms may differ from these, this summary can help you understand various auto insurance coverages and the way they work.

Liability Coverage (Basic liability coverage meets the state’s financial responsibility requirement.)
Pays: Other people’s expenses for accidents caused by drivers covered by your policy, up to your policy’s dollar limits. These may include the other person’s

medical and funeral costs, lost wages, and compensation for pain and suffering
car repair or replacement costs
auto rental while the other driver’s car is being repaired
punitive damages awarded by a court.
Liability insurance also pays your attorney fees if someone sues you because of the accident and bail up to $250 if you are arrested.

Covers: You and your family members. Other people driving your car with your permission might be covered. You and your family members might be covered when driving someone else’s automobile – including a rental car – but not a car that you don’t own but have regular access to, such as a company car. Family members attending school away from home might be covered, as well as a spouse living elsewhere during a marital separation.

Note: Some policies won’t cover other people, including family members, unless they’re specifically named in the policy. Your policy’s dec page should list the names of all of the people covered by the policy.

Who qualifies as a family member?

Generally, a “family member” is anyone living in your home related to you by blood, marriage, or adoption, including your spouse, children, in-laws, adopted children, wards, and foster children.

Medical Payments Coverage
Pays: Medical and funeral bills resulting from accidents, including those in which the other person is a pedestrian or bicyclist.

Covers: You, your family members, and passengers in your car, regardless of who caused the accident.

Personal Injury Protection (PIP) Coverage
Pays: Same as medical payments coverage, plus 80 percent of lost income and the cost of hiring a caregiver for an injured person.

Covers: You, your family members, and passengers in your car, regardless of who caused the accident.

An insurance company must offer you $2,500 in PIP, but you can buy more. If you don’t want PIP, you must reject it in writing.

Uninsured/Underinsured Motorist (UM/UIM) Coverage
Pays: Your expenses from an accident caused by an uninsured motorist or a motorist who did not have enough insurance to cover your bills, up to your policy’s dollar limits. Also pays for accidents caused by a hit-and-run driver if you reported the accident promptly to police.

Bodily injury UM/UIM pays without deductibles for medical bills, lost wages, pain and suffering, disfigurement, and permanent or partial disability.
Property damage UM/UIM pays for auto repairs, a rental car, and damage to items in your car. There is an automatic $250 deductible. This means you must pay the first $250 of the repairs yourself.
Covers: You, your family members, passengers in your car, and others driving your car with your permission.

Insurers must offer UM/UIM coverage. If you don’t want it, you must reject it in writing.

Collision (Damage to Your Car) Coverage
Pays: The cost of repairing or replacing your car after an accident. Payment is limited to your car’s actual cash value, minus your deductible. Actual cash value is the market value of a car like yours without damages.

Comprehensive (Physical Damage Other than Collision) Coverage
Pays: The cost of replacing or repairing your car if it is stolen or damaged by fire, vandalism, hail, or a cause other than collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is stolen. Your policy won’t pay for an auto theft unless you report it to police. Payment is limited to your car’s actual cash value, minus your deductible.

If you still owe money on your car, your lender will require you to have collision and comprehensive coverage.

Towing and Labor Coverage
Pays: Towing charges when your car can’t be driven. Also pays labor charges, such as changing a tire, at the location where your car became immobile.

Rental Reimbursement Coverage
Pays: A set daily amount for a rental car if your car is stolen or is being repaired because of damage covered by your policy.

Coverage for Stereo Equipment

Your policy won’t pay for CDs, tapes, cell phones, citizen band radios, or stereo equipment not permanently installed in your car. However, you can buy endorsements to your policy that provide separate coverage for these items for an additional premium.

Coverage of New or Additional Automobiles

If you buy another car, your policy might automatically cover it with certain limitations. Read your policy to know whether it automatically covers an additional or replacement car.

In general, an additional car usually has the same coverage as the car on your policy with the broadest coverage. For example, if you have two cars – one with liability coverage only and one with liability, collision, and comprehensive coverages – and you buy a third car, the third car will automatically have liability, collision, and comprehensive coverage.
A replacement car usually has the same coverage as the car it replaced. For example, if you trade in an older car that only had liability coverage, the new car will automatically have only liability coverage.
Be sure to tell your insurance company as soon as possible that you have added or replaced a car and which coverages you want. You could lose coverage on an additional or replacement car if you wait longer than the number of days specified in your policy to notify your insurance company.

Coverage for Rental Cars

Auto rental agencies offer collision damage waivers and liability policies. The collision damage waiver is not insurance. It is an agreement that the rental company will waive its right, with certain exceptions, to recover from the renter the cost of damage to the car.

If you have auto insurance, your policy may already cover damage to a rental car. Your coverage limit, however, might be less than the value of a rental car. Read your policy to know what’s covered and the coverage limits. If your coverage limit is too low, consider increasing it. You will pay more in premium, but it might be cheaper than buying additional coverage through the rental agency, especially if you rent cars often. The Texas Automobile Rental Liability Policy provides liability insurance for renters who do not have a personal auto policy.

If you don’t own a car, but borrow or rent cars often, you can buy a non-owner liability policy. A non-owner policy pays for damages and injuries you cause when driving a borrowed or rented car, but it does not pay for your injuries or damage to the car you were driving.

Driving in Other States, Canada, and Mexico
A Texas automobile insurance policy usually meets the financial responsibility requirements of other U.S. states and Canada. Mexico, however, does not recognize U.S. auto liability policies.

Mexico does not require drivers to have automobile liability insurance. Mexican authorities can hold drivers criminally and financially responsible for any auto accidents they cause. If you’re in an accident that results in an injury, police may detain you until they determine who is at fault. You will have to show that you either have insurance recognized by the Mexican government or the financial ability to pay any judgment against you.

Some U.S. companies provide a free endorsement extending your policy’s coverage to infrequent trips of up to 10 days and as far as 25 miles into Mexico. You can buy coverage for longer stays, but it is usually valid only within 25 miles of the border. In addition, these endorsements might not meet Mexican legal requirements. You can buy Mexican liability insurance from Texas agents who specialize in it. Check your phone book for listings of insurance agents who specialize in auto insurance for travel in Mexico. Your local agent also might be able to help you find coverage with a Texas-licensed Mexican company.

You may be able to buy a Mexico “tourist” endorsement for your U.S. policy. This endorsement extends your liability coverage to pay costs exceeding a Mexican liability policy’s limits. It covers trips of any distance and any length of time. Ask your agent which endorsements your insurance company offers.

Auto Insurance for Young Drivers
Young drivers must comply with the state’s financial responsibility laws. Parents can usually add their children to their auto policy to satisfy the financial responsibility requirements. Adding a young driver to a parents’ policy can be expensive, but it’s cheaper than buying a separate auto policy.

Some policies require all drivers to be named on the policy for coverage to apply. Therefore, it’s important that you list all family members on the policy as soon as they reach driving age. If you don’t have all of the drivers in your family listed on your policy and the company learns about them later – because of an accident claim, for instance – the company will bill you for the extra premium you should have paid and could deny your claim and coverage.

If you have children attending school away from home, tell your insurance company. Because companies base rates on where a car is usually located, it might need to adjust your premium. If the school is in another state, check on the financial responsibility laws in that state to make sure you have the appropriate coverages.

Generally, if a teenager is the principal driver of a particular automobile, the company will base the teen’s rate on that car. Otherwise, the company will assign the teenage driver to the car (usually the most expensive) in your household that produces the highest rate.

Removing Your Children from Your Policy
You may want to remove your children from your policy when they no longer live with you. You’ll probably have to prove to the insurance company that your child has moved. You can use documents like a driver’s license, lease agreement, or utility receipts to show that your child has a separate address.

It’s probably not a good idea to remove children from your policy if they are attending school away from home. It’s risky to drop coverage if your teenager might occasionally drive at school or when home on visits. Many insurance companies will require you to keep students on your policy, even if you would like to remove them.

You can sometimes remove a teenage driver from your policy by buying a non-owner policy. This usually isn’t a good idea, however. A non-owner policy only provides liability coverage for someone driving a vehicle that he or she doesn’t own. If your teenager has an accident while driving your car, neither your policy nor the non-owner policy will pay to repair or replace your car. The rates for a non-owner policy will likely cost more than leaving the teen on your policy.

Saving Money on Insurance for Young Drivers
Some insurance companies give a discount for teenagers who complete a Department of Public Safety (DPS)-approved driver education course. Drivers taught by their parents may also be eligible for the discount if the parent used a DPS-approved course. Some companies offer discounts to young drivers who make good grades in school or who belong to certain youth groups. Ask your agent about discounts.

Auto Insurance for ‘High Risk’ Drivers
Insurance companies often check motor vehicle records for your driving history and credit reports for your financial history before writing or renewing your policy. Owning a car built for speed also can label you as high risk.

Many companies use the Comprehensive Loss Underwriting Exchange (CLUE) to learn an applicant’s insurance claims history. If the company based its decision to deny, cancel, or nonrenew you even partly on a CLUE report, you can get a free copy by calling the ChoicePoint Consumer Center or by visiting the ChoicePoint website

Before calling, get the CLUE reference number from the insurance company. Using the reference number will speed the process and ensure that you request the right report.

Insurance Options for High-Risk Drivers
If you’re having trouble finding insurance because you have tickets, accidents, or poor credit, keep shopping. Each company has its own guidelines for deciding whether to insure people. Several major insurer groups write coverage for high-risk drivers through one of their member companies.
If you can’t find a company willing to sell you a policy, you may be able to get basic liability coverage through the Texas Automobile Insurance Plan Association (TAIPA). You qualify for TAIPA coverage only if two insurance companies reject you.
TAIPA only provides the basic liability insurance required by Texas law. It doesn’t provide collision or comprehensive coverage or higher liability limits than the law requires. You can add personal injury protection (the minimum limit is $2,500) and uninsured/underinsured motorist coverage.

TAIPA coverage costs more than most companies charge. TAIPA policyholders pay additional premiums, called surcharges, for traffic convictions. They also pay higher surcharges than other drivers pay for accidents. TDI rules encourage insurance companies to take policyholders out of TAIPA and insure them at lower rates after a year without tickets or accidents. The rules also require companies to offer cheaper “voluntary” policies to their TAIPA policyholders who have gone three years without tickets or accidents.

To get TAIPA coverage, apply with a licensed insurance agent. Only agents specifically certified by TAIPA may sell TAIPA policies. An agent who quotes you a premium higher than TAIPA’s must tell you about TAIPA if you were previously uninsured and had no more than one accident and one ticket in the previous three years. For more information, call TAIPA

1-800-580-TAIP (8247)
444-4441 in Austin
After an Accident ... What Now?
Move your car, if possible, to avoid blocking traffic and to protect it from further damage.
Call the police if somebody is injured or killed, if you can’t move your car, or if the accident involved a hit-and-run driver. Your uninsured motorist coverage pays for a hit-and-run accident only if you report it to police.
Get the other driver’s name, address, telephone number, license plate number, driver’s license number, and insurance information. Give the other driver the same information about you.
Write down the insurance company name and the policy number exactly as shown on the other driver’s proof-of-insurance card. Insurance companies often have similar names, so make sure you get the correct company name.
Get the names, addresses, and telephone numbers of any witnesses to the accident.
Notify your insurance company as soon as possible. Your company probably has a 1-800 number to report claims. If not, call your agent. The agent or company will advise you about seeing an adjuster and getting repair estimates. Also, give your agent or company the names and addresses of any witnesses and anyone injured.
If you reported your claim by phone, follow up in writing as soon as possible to protect your rights under Texas’ prompt payment of claims laws.
Send the company copies of the accident report and any legal papers you receive about the accident.
Cooperate with the company’s investigation. You might have to submit a proof-of-loss form or have a medical examination.
If the other driver refuses to tell you the name of his or her insurance company, get a copy of the police accident report. The accident report should list the other driver’s name and insurance company. If the police did not investigate the accident, you can report the driver’s refusal to police. This could result in a report identifying the driver’s insurance company. In addition, the Texas Department of Public Safety keeps files of forms – called SR-22s – that show the insurance companies of people convicted of DWI or driving without insurance. Call the DPS Customer Service Bureau

Accidents Caused by Other Drivers
If you were in an accident caused by another driver, the other driver’s insurance company should pay the following costs, up to the policy’s limits:

repair or replacement of your car
car rental while your automobile is being repaired
your medical and hospital bills
wages lost because of an injury
compensation for pain and suffering if anyone is hurt.
If the other driver’s insurance won’t cover all your medical bills, file a claim for the difference against your Personal Injury Protection (PIP) coverage, if you have it. For amounts over that, you can claim against your uninsured/underinsured motorists (UM/UIM) coverage or your health insurance policy.

If the other driver’s policy won’t cover all of your auto repairs, file a claim against your collision or UM/UIM coverage for the difference (minus your deductible) between the damage to your car and what the other driver’s policy will pay.

The other driver’s insurance company may ask you to sign a release to settle your claim and forgo future claims related to the accident. Don’t sign a release until you are satisfied with the total settlement. Get a letter from your doctor estimating the cost and length of your future medical treatment. You might want to consult an attorney before accepting a settlement. Under Texas law, you have two years after an accident to either settle your claim or file a lawsuit.

Texas law prohibits insurance companies from delaying payment of a claim in order to pressure you to sign a release. If you believe an insurance company is delaying payment to pressure you, file a complaint with TDI.

If the other driver denies fault, his or her insurance company may refuse to pay the claim. Independent witnesses could make a difference in getting the company to pay. It’s important to get names, addresses, and telephone numbers of any witnesses to the accident. Make sure the insurance company knows about the witnesses. If the company continues to refuse to pay the claim, you can file a claim against your own insurance or you may have to go to court to resolve the issue.

Before filing a claim with your company, ask your agent or your company’s underwriting department how a claim might affect your rates on renewal. A company cannot refuse to renew your policy solely because you had one accident in a 12-month period that was not your fault. However, if the accident affected your DPS driving record, your company may consider it in determining your rates, whether you made a claim on the accident or not.

Getting Your Car Repaired
Your insurance company will either have an adjuster inspect your car and calculate an estimate for repairs or ask that you provide repair estimates from mechanics and auto body shops. Some companies may give you a list of “preferred” shops, but they cannot require you to use a particular repair shop. On collision and comprehensive claims, your company is obligated to pay only for parts of “like kind and quality” to those that were damaged. Insurance companies will pay for repairs or replacement only up to the car’s actual cash value. Actual cash value is the amount your car would be worth if it weren’t damaged.

If the repair estimates are more than your car is worth, the insurance company will likely “total” your car and pay you its actual cash value rather than pay to fix it. Insurance companies typically use the National Automobile Dealers Association’s Used Car Guide to determine the value of your car. The company’s offer might not recognize your car’s condition, special features, or value on the local market. Be prepared to negotiate with the company to get what you believe is a fair deal. A company might raise its offer if you can show that your car would sell for a higher price in your area. Get written price quotes for a similar automobile from several used car dealers, or look in the classified section of your local newspaper for used car prices.

Sometimes the insurance company may want to total your car, but you’d prefer to have it repaired instead. You can keep your car if you are willing to subtract its salvage value from the insurance settlement. Make sure the cost to repair the car will not exceed the car’s actual cash value. To find out the salvage value, contact local salvage yards for estimates.

If you and your insurance company can’t agree on the amount of your settlement, you can demand an appraisal. Appraisal allows you and the company to hire separate damage appraisers. The two appraisers choose a third appraiser to act as an “umpire.” The appraisers review your claim, and the umpire rules on any disagreements. The appraisal decision is binding as to the amount of the loss. If there is a dispute about what is covered, you can pursue a settlement of the coverage issue after the appraisal. You must pay for your appraiser and half of the umpire’s costs.

Appraisal is available only in disputes between you and your insurance company. It is not available if the other driver was at fault and you disagree with his or her company’s offer.

Getting a Rental Car
If you have more than basic liability coverage or another driver caused your accident, you should be able to get a rental car while yours is in the shop.

If the other driver was to blame, his or her liability insurance will pay for a rental car.
If the accident was a hit-and-run or the other driver was uninsured and at fault, your UM/UIM property damage coverage will pay for a rental car.
If your car was stolen and you have comprehensive insurance, your company will provide a set amount each day, up to your policy’s limit, for a rental car.
If your car is being fixed or replaced for some other reason, your insurance company won’t provide a rental car unless you have rental reimbursement coverage.
Filing a Claim
Once you have filed a claim, Texas law sets deadlines for the insurance company to act.

The company must respond within 15 days after receiving your claim in writing. It will probably ask you to document your loss.
After you submit any requested documentation, the company has 15 business days to accept or reject your claim.
Once the company agrees to pay your claim, it must send your check or draft within five business days.
A company that cannot meet these deadlines must send you a notice explaining why. The company then has 45 days to either approve or reject your claim.

Note: The prompt payment law does not apply if another driver’s insurance company is paying the claim. However, the company is required to act in good faith and to make a prompt and fair settlement.

If the insurance company rejects your claim, it must explain the rejection in writing. If the company contends that your policy doesn’t cover the loss, ask to see the policy language that supports denial of your claim. A court usually will order the company to pay if the language is unclear and the policy could reasonably be read your way.

Getting Help
If you have a problem with your insurance company, first try to resolve the problem yourself. Often disputes are the result of miscommunication. Talk to your agent or a company representative. Texas law requires most companies to have toll-free telephone lines for their policyholders.

If you are unable to resolve the dispute, you can file a complaint with TDI. TDI will notify the company of your complaint, ask for a detailed response, and send you a copy of the company’s response. The insurance specialist assigned to your complaint will send you an explanation of the outcome, usually within 40 days after receiving your complaint.

TDI has limited jurisdiction in some complaints. For instance, we can’t resolve questions of fact or determine liability (who is at fault in an accident). These issues generally must be resolved in court. However, even when our jurisdiction is limited, our involvement may encourage the company to review your issue more thoroughly. In addition, your complaints and inquiries help TDI assist other Texans by identifying potential problems with insurance companies and agents.

Shopping for Auto Insurance
Rates vary widely among companies, so it pays to shop around. Following are some tips to help you find the best deal for your money:

Decide before shopping what coverages you need.
Consider choosing a higher deductible. Your deductible is the amount you must pay before the insurance company will pay. Higher deductibles will lower your premium, but you’ll have to pay more out of your own pocket if you have a claim.
Get price quotes from several companies. Make sure the quotes are for the same coverages.
When getting a price quote or applying for insurance, answer questions truthfully. Wrong information could result in an incorrect price quote or could lead to a denial or cancellation of coverage.
Ask your agent whether you qualify for any discounts the company might offer.
Consider factors other than price, including a company’s financial rating, complaint index, and license status. The financial rating indicates a company’s financial strength and stability, and the complaint index is an indication of its customer service. Buy only from licensed companies and agents. It is against the law to sell insurance without a license in Texas.
You can learn more about a company, including its license status, complaint history, and financial rating from an independent rating organization, by calling TDI’s Consumer Help Line or by visiting our website

463-6515 in Austin
Insurance on the Installment Plan
Auto insurers in Texas must offer installment plans. Some companies only offer payment plans through premium finance companies, which often charge high interest rates.

You should seek not only low rates but also low-cost financing. Ask who will provide your installment plan. Look for insurance companies that offer their own installment plans. Ask about the down payment, the number of installments, interest or service charges, and the amount of your total monthly payment.

Insurers and premium finance companies must give you terms at least as favorable as these:

For a 12-month policy, a 16.67 percent down payment and 10 equal monthly installments. If the policy is through the Texas Automobile Insurance Plan Association (TAIPA), the down payment is 20 percent.
For a six-month policy, 33.33 percent down, with four equal monthly payments.

Premium Finance Companies
Premium finance companies loan people money to pay their insurance premiums. Sometimes the only installment plan offered is through a premium finance company, which the agent selling your policy might own.

The insurance agent must tell you if your installment plan is with a premium finance company and must give you the premium finance company’s name.

Note: If you buy insurance through TAIPA, an agent who offers a premium finance company loan must give you a disclosure form comparing it with TAIPA’s installment plan. The form will show a side-by-side comparison of the premium finance company’s payment plan and the TAIPA plan. The form will show fees, interest payments, and the amount you will pay for each plan. If you choose the premium finance company, you must sign the form as proof you made your choice after seeing the comparison.

If you enter into a premium finance agreement with a premium finance company, you will pay the down payment to your agent or company. Be sure to get a receipt at the time of payment. The premium finance company pays the balance of your premium directly to the insurance company and then collects the amount financed, plus interest, from you in installments.

Your loan agreement assigns your power of attorney to the premium finance company for payments involving your policy. The premium finance company can cancel your policy if you fall behind in your payments.

If the insurance company cancels your policy for any reason, the premium refund goes to the premium finance company, which uses it to pay off your loan. The premium finance company will refund any remaining money to you. The finance company must send your refund to you within 20 days after receiving it from the insurance company.

A premium finance company must have a license from TDI. You can verify licenses by calling TDI’s Consumer Help Line.

When dealing with a premium finance company, here are some things you should do to protect yourself:

Make sure the agent shows you the cost of your insurance policy and the cost of financing your payment plan separately so you can see exactly what you’re paying for. Don’t enter into a premium finance agreement unless you understand the charges and how the plan works.
Compare the premium finance company’s charges to installment plans offered by insurance companies and to bank or credit card interest rates. It could be cheaper to pay for your policy with a credit card if the credit card has a lower interest rate than the premium finance company.
If you enter into a premium finance agreement, make sure the agreement correctly identifies the financed policy. The agreement should show the policy or binder number, effective date of the policy, and the premium amount.
Be sure you complete all the paperwork and sign and date the agreement before you leave the agent’s office.
Get a copy of the installment agreement. Federal truth-in-lending laws require the lender to give you a copy.
Make your installment payments only by check or money order payable to the company named on your premium finance notice. If you pay cash, demand a receipt.
If you or the insurance company cancels your policy, make sure the premium finance company pays any refund it owes you.
Understanding Rates
Texas law requires insurance rates to be reasonable, adequate, not excessive to the risks for which they apply, and not discriminatory. Auto insurance companies in Texas set their own rates and file them with TDI for review. Companies do not have to receive prior approval before using their rates, but if TDI determines that a company’s filed rates are excessive, it can order the company to make refunds.

Factors that Affect Your Premium
Companies may use a number of criteria to establish your premium. These include:

Your age and, for younger drivers, your marital status. Male drivers under 25 and unmarried women under 21 have the highest rates. Drivers over 50 may get discounts.
Your driving record and claims history. A good driving record can save you money. If you have accidents or tickets on your driving record, you’ll have to pay more for insurance. Companies may add surcharges to your premium for major convictions, some driving violations, and accidents that result in property damage. Some surcharges are mandatory and will apply to your premium for three years.
Where you keep your car. Because drivers in urban areas have more accidents and auto thefts, their rates are typically higher than the rates for drivers in rural areas.
The type of car you drive. Collision and comprehensive rates are highest for luxury, high-performance, and sports cars. Rates may also be higher for cars that damage easily or cost more to repair.
Your car’s primary use. Rates are higher for cars driven to and from work or used for business than for cars driven solely for pleasure.
Your credit score. Companies may consider your credit score when deciding whether to sell you a policy and at what cost. A company cannot refuse to sell you a policy or cancel or nonrenew your policy solely based on your credit.
Whether you drove uninsured in Texas. Companies may charge more if you drove uninsured in Texas for more than 30 days in the 12 months before you applied for insurance. However, a company cannot otherwise charge you more for liability coverage because of your prior lack of coverage.
Companies must file their underwriting guidelines with TDI and update them each time they make a change.

Discounts and Surcharges
Discounts can help you save money on your premium. Discounts vary by company. Following is a list of some of the discounts commonly available in Texas:

defensive driving and driver education courses for young drivers
students with good grades
parent or family whose young driver is away at school without a car
airbags and automatic seatbelts
automatic daytime running lights
antilock brakes
two or more cars on a policy
driver age and annual mileage driven
policy renewal with good claims and driving records.
If you have a poor driving record, you can expect to pay more for your insurance. Companies may add surcharges to your premium – some as high as 60 percent – for the following:

accidents (the more accidents, the higher the surcharge)
moving violations (speeding, etc.)
involuntary manslaughter
driving under the influence
criminally negligent driving
driving without a license or with a suspended license.

Losing Your Insurance
Companies may cancel or nonrenew a policy for a variety of reasons. Cancellation means the company terminates your policy before its expiration date. Nonrenewal means the company refuses to renew your policy when it expires.

A company must explain in writing its reasons for declining, canceling, or not renewing your policy. This explanation must include the incident or risk factor that violated the company’s underwriting guidelines and the insurer’s sources of information.

An insurance company may not cancel an auto policy that has been in effect for more than 60 days unless
you fail to pay your premium
you file a fraudulent claim
your driver’s license or motor vehicle tags are suspended or revoked (this also applies to other drivers who live with you or use your car).
During the first 60 days, a company may cancel a policy for any lawful reason, including a ticket or an accident. If the company cancels your policy because of an accident, it still must pay for covered damages resulting from the accident. The company must send you a written notice at least 10 days before canceling your policy.

If either you or the company cancels your policy, the company must refund any “unearned premium” to you. Unearned premium is the amount you paid in advance that did not actually buy coverage. For example, if you paid a six-month premium of $600 and you cancel your policy after one month, the company owes you $500 in unearned premium, minus any applicable agent or policy fees.

A company cannot refuse to renew your policy unless it has been in effect for at least 12 months. This means a company must renew a six-month policy to give you a full 12 months of coverage. The company must give you 30 days’ notice before not renewing your policy.

In Texas, a company cannot refuse to renew your policy because of

weather-related claims, including damage from hail, floods, tornadoes, high winds, and hurricanes
damage from colliding with animals or birds
damage from gravel and other flying and falling objects (the company can raise your deductible if you have three such claims in 36 months)
towing and labor claims (the company can refuse to renew your towing and labor coverage if you have four such claims in 36 months)
other claims or accidents that cannot reasonably be blamed on you, unless you have more than one of these claims in a 12-month period.
Sometimes an insurer will move you to another company in its company group. If a company moves you to another company, it must give you 30 days’ notice that it will not renew your original policy. If the company fails to give you 30 days’ notice, TDI can require the company to renew your policy for another year in your original company.

If you get a nonrenewal or cancellation notice, start shopping for new insurance immediately. Make sure you keep your liability coverage uninterrupted to satisfy Texas’ financial responsibility laws. If you still owe money on your car, your lender will usually require you to maintain collision and comprehensive coverages without interruption. If you cancel or lose these coverages, your lender will buy single-interest automobile physical damage coverage and add the cost to your loan payment. This coverage is expensive and protects only the lender.

Your Rights against Unfair Discrimination
An insurance company cannot deny, refuse to renew, limit, or charge more for coverage because of your race, color, religion, or national origin.

A company also cannot deny, refuse to renew, limit, or charge more for coverage because of your age, gender, marital status, geographic location, disability, or partial disability unless the refusal, limitation, or higher rate is “based on sound underwriting or actuarial principles.” This means the company would have to show valid evidence that you present a greater risk for a loss than other people it is willing to insure. A company cannot nonrenew your policy because someone in your family has reached driving age.

In addition, a company cannot discriminate between individuals of the same rate or risk class in its rates, policy terms, benefits, or in any other manner unless the refusal, limitation, or higher rate is “based on sound actuarial principles.”

You may sue insurance companies for unfair discrimination, including denial of insurance. You must file the suit in a Travis County district court. However, if the court finds the suit groundless, in bad faith, or brought for the purpose of harassment, the court could order you to pay the insurance company’s legal expenses.

For More Information or Assistance
For answers to general insurance questions or for information on filing an insurance-related complaint, call the Consumer Help Line between 8 a.m. and 5 p.m., Central time, Monday-Friday, or visit our website

463-6515 in Austin
For printed copies of consumer publications, call the 24-hour Publications Order Line

1-800-599-SHOP (7467)
305-7211 in Austin
Help us prevent insurance fraud. To report suspected fraud, call our toll-free Fraud Hot Line

To report suspected arson or suspicious activity involving fires, call the State Fire Marshal’s 24-hour Arson Hot Line

1-877-4FIRE45 (434-7345)

Most popular Car insurance questions and answers from FAQs:

How long do tickets and accidents affect your insurance in Ohio?
According to the Ohio's Bureau of Motor Vehicles, there is no section of the Ohio Revised Code (ORC) that states convictions ever come off of a person's driving record. Your OH auto insurance premium can go up if you cause an accident or have a moving violation. The company can raise ("surcharge") your premium if you are at fault in an accident or if you get several traffic tickets. But, you should not be surcharged for a minor moving violation or a single accident that was not your fault according to the Ohio Insurance Department of Insurance. Premiums cannot change until your next renewal date either according to the DOI. Different companies have different rules. Many do not consider incidents that are more than three years old, but some auto insurers will look back as far as five years in Ohio. If it has been over 3 or 5 years since your last ticket or moving violation conviction it does not necessarily mean that your insurance company will automatically lower your premium. The Ohio Insurance Department of Insurance notes that periodically you should ask your insurer to review your premium to make sure you are getting the best rate possible. Also, as your driving record improves, it may be time to start shopping for a better deal.
What is the minimum car insurance coverage allowed in the state of Ohio?
What we mean is coverage on injuries and damage to the other driver. The Ohio State law requires motor vehicle financial responsibility in the minimum amount of $12,500 for bodily injury or death to one individual in any one accident, $25,000 for bodily injury for two or more individuals in any one accident and $7,500 for injury to the property of others in any one accident. This financial responsibility (FR) law is not a compulsory automobile insurance thus no motorist is forced to buy auto liability insurance. The law does require drivers to be insured or have other arrangements to pay or injuries and damages they cause in the event of a crash. FR must be maintained and should be proven to the OH Bureau of Motor Vehicles in one of several ways. For more information you can go to Ohioinsurance.org. If you are searching for Ohio insurance look no further for an OH affordable car insurance quote.
How can I find out how many points I have on my PA license and how long does it take for them to be removed?
You may request a three-year or ten-year copy of your driver's history by using Pennsylvania"s Driver and Vehicle Services Online Services by completing a 'Request for Driver Information' form and submitting it to PennDOT. Certified histories are only available by completing this driving record request form (Form DL-503). The form contains detailed instructions and lists fees for different types of driving records. By receiving a copy of your driving history from PennDOT you will be able to see how many points you have accumulated on your record so far. The Driver and Vehicle Services portion of the Pennsylvania Department of Transportation (PennDOT) maintains a driving record for every licensed driver in Pennsylvania. Points are added to the driving record (associated with your driver's license) when the driver is found guilty of certain driving (moving) violations. PennDOT allow points to be removed from your driving record for safe driving. You can get 3 points removed from your driving history for every 12 consecutive months (from the date of the last violation) you go without a violation, which results in points, license suspension or revocation.Once a driving record is reduced to zero and remains at zero points for 12 consecutive months, any further accumulation of points is treated as the first accumulation of points.
I live in Ontario, Canada and got a traffic ticket in Oregon for 18 mph over with $145 fine. Will that affect my points and insurance? Should I pay for the fine?
According to the information we were able to gather, all provinces in Canada have a reciprocal agreement with Ontario regarding moving violations. Ontario also has agreement with 41 states, including Michigan. See the bottom of this answer for a list of all the states Ontario supposedly has some type of reciprocal agreement with. If the Oregon speeding ticket is placed on your Ontario, Canada driving record, than your insurance company could see if the next time they pull your MVR and thus your rates may be affected. The following states in the U.S. have a reciprocal agreement with Ontario: Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming. We would always advise for a driver to comply with a moving violation by either paying the fine, fighting it in court or another legal remedy. Without taking care of a ticket that is received out of state or even out of country there is the chance that the state that issued the citation will come after you and affect your license. Plus if you have a failure to appear on your record in Oregon it could affect your driving privileges if you travel there again, plus if you do pay the find after the court date the fine and court fees are likely to be higher than if you paid on time.The Ministry of Transportation (MOT) for Ontario may be able to give you more information on the reciprocal agreements they have with various states and how a ticket in Oregon could affect your license in Ontario.
I live in Texas and my car was totaled and it was not my fault. Is there a way to keep my car and get the most money the insurance will give me to fix my car?
And could I sue to make up for the difference. If you want to keep your car then normally you would request this of the insurance company and if they allow you to do so then the salvage value of the vehicle is taken out of the settlement (for the car's actual cash value) you would receive for the vehicle. When you take a settlement for the car's ACV then you usually cannot sue the driver for additional monies. According to the Texas Department of Insurance (TDI) consumer for auto insurance, an insurance company will pay for repairs or replacement only up to the car's actual cash value. Actual cash value is the amount that your car would have sold for before the accident The car insurance consumer guide speaks about the issue you are having by noting that sometimes the insurance company may want to total your car, but you would prefer to have it repaired instead. You normally can keep your car if you are willing to subtract its salvage value from the insurance settlement. First make sure the cost to repair the car will not exceed the car's actual cash value. To find out the salvage value, contact local salvage yards for estimatesIf your insurance company totals your car but you cannot reach an agreement on the amount to be paid, you can demand an appraisal. Appraisal allows you and the company to hire separate damage appraisers. The two appraisers choose a third appraiser to act as an umpire. The appraisers then review your claim, and the umpire rules on any disagreements. The appraisal decision is binding, but only as to the amount of the loss.
What is an SR-22 form?
SR-22 insurance varies state to state. The basic definition of an SR-22 form is available on our Insurance Terms page. SR-22 isn't a type of insurance, but rather proof that you have certain types of insurance (based upon the financial responsbility laws of your state). Simply, it is a form which must be filed by the insurance company to the state (Department of Motor Vehicles) stating that auto liability insurance is in effect for a particular individual.Typically it is required when insurance is provided to an individual who was in an accident or was convicted of a traffic offense and was unable to show financial responsibility OR if a judge has ordered an SR22 for other reasons (in some states).
I just got a speeding ticket. How much will it affect my auto insurance premium?
If it was your first ticket, you might not see any change in your rates. Some states have laws governing when and why auto insurers can change policyholders' premiums; often, insurers are not allowed to raise your rates after just one speeding ticket or other citation. Different companies have different practices when it comes to raising premiums. Some companies will consider the severity of your violation and raise your rates accordingly; others will raise rates a specific amount per violation. Because there are too many factors to simply say it will be $50 more a year, here is a real example: The average New York auto insurance policy costs $1313 a year. If you have a clean driving record then most New York companies offer a discount. That discount is typically a 25% savings ($328). So, using these averages a driver with a clean driving record is paying $985 a year for car insurance.One speeding ticket would remove that discount and increase the base rate by 2%. That is a $354 increase a year, or $1062 over 3 years (companies usually surcharge for 3 years).
What happens when my car is totaled in an accident?
When your car is totaled, the insurance company has an obligation to "make you whole," as that is defined in the policy. Most policies value your vehicle using Actual Cash Value. "Actual Cash Value" means replacement value less depreciation. This essentially means you have to be left in approximately the same financial position (with respect to the item insured - not in respect to any liens or leases that hold title to your car) you were in before the accident.If you have physical damage coverage (comprehensive and collision) the insurance company will typically write you a check for the actual cash value of the vehicle, minus any deductible on your policy. If you are "upside down" on your loan or the cash value is less than your current loan amount ("Upside down" means owing more on a car than it's worth.) then you should consider GAP insurance. In this situation, if you don't have GAP insurance then you would be responsible toward your loan for the remaining balance. The terms of that payment are set through you loan contract.
I just received a speeding ticket out of state from the state which issued my license. My home state DMV does not record out-of-state tickets, and the points or incident do not appear on my driving record. Is there any way that my insurance company will still find out about this, and will my rates increase?
It is always possible that your state may learn about this incident. If they do and if it was your first ticket, you might not see any change in your rates. Most states have reciprocal arrangements and provide ticket information to the driver's home state. Some states are members of the driver"s license agreement (DLA) which means they share information between their motor vehicle departments. Members of this agreement have different rules to what they transfer over and if points are accessed, etc. Some states have laws governing when and why auto insurers can change policyholders' premiums; often, insurers are not allowed to raise your rates after just one speeding ticket or other citation. Different companies have different practices when it comes to raising premiums. Some companies will consider the severity of your violation and raise your rates accordingly; others will raise rates a specific amount per violation.Get car insurance quotes here to determine how this could affect your premiums.
What is an auto insurance policy?
An insurance policy is a legally binding contract between an insurance company and the person who buys the policy, commonly called the "insured" or the "policyholder." In exchange for payment of a specified sum of money, called the "premium," the insurance company agrees to pay for certain types of loss or damage as specified by the contract. When a loss occurs which meets all of the requirements described by the terms of an insurance policy, the loss is said to be "covered" by that policy.
What is an "insurable interest"?
A person has an "insurable interest" in something when loss or damage to it would cause that person to suffer a financial loss or certain other kinds of losses. For example, if the house you own is damaged by fire, the value of your house has been reduced, and whether you pay to have the house rebuilt or sell it at a reduced price, you have suffered a financial loss resulting from the fire. By contrast, if your neighbor's house, which you do not own, is damaged by fire, you may feel sympathy for your neighbor and you may be emotionally upset, but you have not suffered a financial loss from the fire. You have an insurable interest in your own house, but in this example you do not have an insurable interest in your neighbor's house. A basic requirement for all types of insurance is the person who buys a policy must have an insurable interest in the subject of the insurance. You have an insurable interest in any property you own or which is in your possession.For purposes of life insurance, everyone is considered to have an insurable interest in their own lives as well as the lives of their spouses and dependents. For property and casualty insurance, the insurable interest must exist both at the time the insurance is purchased and at the time a loss occurs. For life insurance, the insurable interest only needs to exist at the time the policy is purchased.
How does an insurance policy "protect" me?
Insurance policies offer protection against economic loss, that is, loss or damage which can be measured in purely financial terms and compensated by money. For example, an insurance policy can pay for the cost to repair or replace a damaged automobile or to rebuild a building damaged by fire, for the cost of medical treatment for an injury or illness or for the lost income of a person who dies or is unable to work. The purpose is to place the injured party, as nearly as possible, in the same financial position as if the loss had not occurred.It is important to understand this limitation of insurance, since there are many types of losses which can not be compensated by money. For example, insurance can not replace a life or take away the emotional injury or pain which often accompanies an accident or serious illness or compensate for loss of the "sentimental" value of an item of property. When you buy homeowners property insurance, for example, you are insuring only the economic value of the home, i.e., the cost to repair or rebuild it.
Are there any government agencies that regulate how insurance companies operate?
Insurance companies in the United States are regulated primarily by the individual states. There is no federal regulatory agency that oversees insurance companies. The name of the insurance regulatory agency typically is "Department of Insurance", "Division of Insurance," "Insurance Bureau" or something similar. This agency is headed by a state government official usually called the "Commissioner of Insurance", "Director of Insurance", or a similar title. The Commissioner of Insurance is an elected official in some states and in other states is appointed by the Governor. A primary function of each state's Department of Insurance is to assure that insurance companies operating in the state are financially sound, so that the company will have the financial ability to meet its obligations to pay claims. Insurance companies are required to meet certain financial requirements and are required to demonstrate periodically (at least annually) to a state's Department of Insurance that they continue to meet or exceed the minimum financial requirements in order to continue to conduct business in the state. The Department of Insurance can take various actions against an insurance company that fails to conduct its business in a financially sound manner, including action to cause the company to cease operation in the state.Most states have laws regulating the conduct of insurance business to ensure fairness in the way companies deal with applicants for insurance and policyholders. One of the functions of a Department of Insurance is to enforce these so-called "unfair trade practices" and "unfair claims practices" laws by investigating complaints by consumers and taking action, when appropriate, to get companies to stop conduct that violates the laws and impose penalties for violations. Other duties of a Department of Insurance include reviewing and approving the policy forms used by insurance companies and approving rates charged for various types of insurance to assure compliance with state laws that regulate insurance rates.
Why do I need automobile insurance?
Your automobile is a valuable asset which could be very expensive to repair or replace if is damaged. Part of what auto insurance does is to pay for the repair or replacement of a vehicle which is damaged either as a result of your driving or from other causes not related to driving, such as theft or storm damage. Without insurance, many people would be unable to replace vehicles that are stolen or become severely damaged. Auto insurance also covers your legal liability which could arise if you injure another person or damage another person's property with your vehicle. Depending on the extent of the damage or injury caused, the potential amount for which you could become liable is far in excess of the value of your automobile, perhaps in the hundreds of thousands of dollars or more. Auto liability insurance pays the damage for which you become liable, up to the dollar amount of liability coverage that you purchased. Without auto liability insurance, all of your personal assets could be at risk.If you are sued based on operation of your vehicle, auto insurance also pays for the cost of your defense. Defending a lawsuit in court can be very expensive, even if ultimately you are found not to be legally responsible for any damages.
Are there any limitations on what an insurance company can charge for insurance?
For each type of policy, insurance companies have a range of premium levels that may be charged based on various factors that are considered at the time an application is submitted. For example, the premium for an auto insurance policy will vary depending on the applicant's driving habits, such as number of miles driven and whether the auto is used for business, the age and model of the vehicle, and whether the applicant has recently been convicted of a traffic violation. The premium for a life insurance policy will vary depending on the applicant's age and health condition. Rating factors must be reasonably related to the risk being insured, and state law often limits the specific rating factors that may be considered for certain types of insurance.The rates and rating factors for most types of insurance must be filed with the insurance regulatory agency for each state where the insurance is to be sold. In some states and for some types of insurance, the rates must get regulatory approval before they can be used.
What should I know about auto insurance?
Some people think of it in terms of "us versus them." Some of us have lives and property worth protecting and believe that there are people who have nothing, will never amount to anything and will take advantage of us anytime they can. Those of us who care purchase insurance for what we have to protect and keep it. In our modern society, the orderly transfer of risk between the members of our society is accomplished through insurance. In exchange for a known loss (payment of an insurance premium), the risk of a large catastrophic loss (payment of thousands of dollars for damage to property) is transferred to the insurance company through the insurance policy. In auto insurance, there is first party coverage and third party coverage. First party coverage covers you and your property (such as medical expenses, damage to your vehicle and the insurance company's duty to defend you in the event that you are sued as the result of your operation of a vehicle, etc.). Third party coverage is for your responsibility to pay for injury caused to other people, whether in your vehicle, or another vehicle involved in the accident. The coverage (and its exclusions) is set forth in your insurance policy. In exchange for the payment of a premium, the insurance company promises to provide compensation in the event of certain occurrences. You can speak to an insurance representative to find our more about the options available to you, and their costs.. Before purchasing auto insurance, it is a good idea to shop around and buy the coverage that best suits your needs at the most reasonable price. You may wish to consider factors such as customer service, claims paying ability, claims payment record, general reputation and independent rating organization's ranking. In determining what Liability Limits you should purchase, you need to consider the amount of exposure that you have. As a general rule, the more property and wealth you own, the greater your exposure is, and the greater the need for protection against claims from third parties. Often, liability limits are set as a combination of numbers, such as 15/30, which means coverage of loss of up to $15,000 per person and up to $30,000 for all injuries which occur in a single accident. Many states require a minimum amount of third party liability insurance be purchased before a you may drive a vehicle on public roads. This is referred to as the minimum liability limit. Often the minimum liability limit is inadequate to protect all of your property and wealth. Increased limits, such as 100/300 or 300/500 are very common and can be purchased at modest addition cost to you.Your vehicle itself can be covered in several different ways. Comprehensive coverage provides coverage for loss to your vehicle due to certain proximate causes (such as fire, theft, vandalism, and acts of nature). Collision covers damage to your vehicle in the event that it collides with another vehicle of object, often regardless of who is at fault in the event of an accident. Both comprehensive and collision coverage may be subject to a deductible, that is, damage to the vehicle must exceed the deductible amount before the insurance company will pay you for a covered loss. Deductibles for this coverage are available is various amounts, generally the greater the deductible, the lower the premium for the coverage.
Are there any options for resolving a dispute with my insurance company other than suing the company in court?
Arbitration?Some insurance policies contain a provision allowing or requiring arbitration of certain disputes between the insurance company and the insured, and this may include disputes regarding certain types of claims. "Arbitration" is a procedure for resolving disputes by use of neutral, private individuals ('arbitrators") as an alternative to a lawsuit, and it often is a cheaper and faster method of resolving contract disputes as compared with a court proceeding. This procedure usually is not available unless specifically stated in the policy or unless the insurance company and policyholder mutually agree to submit their dispute to arbitration. See also our section on Arbitration.
Lawsuit for breach of contract
An insurance policy is a contract between the insurer and the insured. If the insurance company fails or refuses to pay a claim which should be paid under the terms of the policy, it is in breach of the contract, and the insured can pursue all available legal remedies for the breach. This usually involves filing a lawsuit against the insurance company. If successful, the insured will be able to recover its damages, which at least will equal the amount the insurer should have paid under the terms of the policy. Depending on state law and the circumstances of a specific case, damages may also include other expenses that were incurred because of the breach as well as costs of the lawsuit.
Lawsuit for "bad faith"
All insurance policies contain an implied obligation applicable to the insurance company of "good faith and fair dealing" towards its insured. When a claim is presented, this implied obligation means that an insurance company can not simply look for reasons not to pay. Instead, the company must make a thorough investigation of the claim, must consider all reasons and circumstances that might support the claim, and must give as much consideration to the financial interest of the insured as it gives to its own financial interest.If an insurance company refuses to pay a claim that should be paid or offers to settle a claim for less than it knows the claim is worth or denies a claim without adequate investigation, this could give rise to a so-called "bad faith" claim against the insurance company, i.e., a claim that the company has breached its implied obligation of good faith and fair dealing. If the company is found to have acted in bad faith in its handling of a claim, the insured is entitled to all damages resulting from that action, including certain types of damages that would not be available just for breach of contract. In cases of extreme or outrageous misconduct by an insurance company, the insured also may be entitled to receive punitive damages.
Complaint to department of insurance
The insurance regulatory agencies of most states (usually called the "Department of Insurance" or similar name) have established procedures whereby consumers who believe they have been subjected to unfair claims handling can file a complaint against the offending insurance company. The complaint will be investigated to determine if the company acted properly and in a manner consistent with the state's insurance laws, including the "Unfair Claims Practices" laws. In some cases, the investigation may cause an insurance company to reevaluate its handling and disposition of a claim. If a company is found to be in violation of the law, this process also may result in a fine or other penalty being imposed on the company by the Department of Insurance.
Can an insurance company cancel my policy for any reason it chooses?
Once a policy is issued, the insurance company except for reasons specifically stated in the policy can not cancel it, and state laws usually limit what a company can include in the "cancellation" provisions of its policies. Typically, policies will be subject to cancellation only for failure to make required premium payments or for some type of serious misrepresentation or fraud by the policyholder.Most property and liability policies are issued for a stated policy "term", such as six months or one year. The limitation on cancellation mentioned above applies only during the policy term. Insurance companies usually can decide to discontinue or "non-renew" these policies at the end of the term for any reason except a reason that would be prohibited by law (also, in a few states an insurance company may not refuse to renew certain types of personal insurance). In most states, an insurance company must give the policyholder a written notice at least 30 days prior to the end of the policy term if it intends to non-renew a personal auto or homeowner's policy.
If I miss a premium payment and get a cancellation notice, is there anything I can do to be able to keep the policy?
For property and liability insurance, a cancellation notice usually must be sent to the policyholder several days prior to the effective date of cancellation. The notice period will be stated in the policy, and for personal auto, homeowners and sometimes other types of insurance, state law usually requires at least 10 days advance written notice. If you make your payment before the cancellation date, you will be able to retain your coverage. For life, health and other disability insurance, state law often requires insurers to allow a "grace period" of as much as 30 days after a premium payment is due before coverage can be terminated. If payment is not made within the grace period, however, these types of coverage usually will terminate retroactively to the date the premium payment was due without any further cancellation notice from the company.If your coverage terminates or is canceled because you missed a premium payment, some insurance companies may agree to "reinstate" your coverage if you make all past due payments and you certify that you are not aware of any losses that have occurred since the cancellation date. Reinstatement is discretionary by the insurance company. The law usually does not require that policies be reinstated once they have been legally canceled.
Can I cancel my policy at any time and will there be a penalty?
As a general rule, a policyholder may elect to cancel an insurance policy at any time by giving notice to the insurance company. In some cases you may be required to return the original policy or sign a "policy release", and of course you will be responsible for any premium earned through the date of cancellation. Sometimes there are financial penalties for early cancellation by the policyholder. Most property and liability policies require what is called a "short rate" penalty when a policyholder requests cancellation, which means that the company retains a disproportionate amount of the premium. For example, if you have a one year policy and you request cancellation after six months, the "short rate" penalty would allow the company to retain more than one-half of the annual premium. Also, many types of life insurance policies and annuities impose "surrender charges" if they are canceled before they have been in effect a certain number of years. A policy must clearly describe any applicable cancellation penalties or surrender charges. Once a policy is issued, the insurance company except for reasons specifically stated in the policy can not cancel it, and state laws usually limit what a company can include in the "cancellation" provisions of its policies. Typically, policies will be subject to cancellation only for failure to make required premium payments or for some type of serious misrepresentation or fraud by the policyholder.Most property and liability policies are issued for a stated policy "term", such as six months or one year. The limitation on cancellation mentioned above applies only during the policy term. Insurance companies usually can decide to discontinue or "non-renew" these policies at the end of the term for any reason except a reason that would be prohibited by law (also, in a few states an insurance company may not refuse to renew certain types of personal insurance). In most states, an insurance company must give the policyholder a written notice at least 30 days prior to the end of the policy term if it intends to non-renew a personal auto or homeowner's policy.
If I own a car, do I have to buy insurance?
Most states require auto insurance. Technically, you prove your financial ability to pay a specified level of damages when registering a vehicle or renewing license plates. The only way for most people to satisfy this requirement is to have car insurancefor the minimum amount of coverage.If you have a car loan or if you lease your vehicle, the loan company or leasing company will also require that you have insurance. You name the company as a "loss payee" on your policy. If the vehicle is damaged, any insurance payment will go to the company, and it uses the money to either to repair the vehicle or pay off the loan balance.
What is a "financial responsibility" law?
A "financial responsibility" law requires you to prove your financial ability to pay for damages at the time you are involved in an accident or are convicted of a traffic violation. This type of law does not require that you have insurance or other proof of financial responsibility at the time of vehicle registration. However, failure to demonstrate the required level of financial responsibility at the time of an accident or traffic violation can result in suspension of your driver's license or revocation of your vehicle registration. Under these laws, the requirement to demonstrate financial responsibility is not based on fault. All parties involved in an accident must show the necessary proof or face the penalties imposed by the law. Maintaining an automobile insurance policy is the most common way to comply with a financial responsibility law.
Are there legal limitations on insurance company business practices?
State insurance laws impose many requirements and limitations on the way insurance companies conduct their marketing, underwriting (determining which policyholders or risks to accept or reject for coverage) and rate making activities. In some instances, these laws also limit an insurance company's ability to cancel or discontinue coverage once a policy has been issued. In general, there are many restrictions and limitations applicable to personal or "consumer" insurance, such as personal auto, homeowners and individual or small group health insurance. There usually are fewer restrictions applicable to business and commercial insurance. The specific requirements and limitations often vary a great deal from state to state.
What happens when there is a claim?
Payment of claims is the reason that insurance exists, yet policyholders often perceive that insurance companies resist paying legitimate claims make the claims process unduly difficult. Both insurance companies and policyholders have contractual obligations which must be understood and performed to ensure the timely and satisfactory resolution of claims.
If I am sued, does my insurance company defend me in court?
When you buy liability insurance, part of the insurance company's obligation is to provide a defense for you if you are sued. The insurance company will do this by hiring and paying for an experienced attorney to represent you in court. Even though the insurance company selects the lawyer and must approve the payment of all legal fees and other expenses of the lawsuit, the lawyer represents you.
Can an insurance company refuse to sell me insurance for any reason it chooses?
It is illegal to refuse to sell insurance to someone because of the person's race, color, sex, religion, national origin or ancestry. In many states this list of "prohibited classifications" also may include (subject to various limits to change rates, marital status, age, occupation, language, sexual orientation, physical or mental impairment, or the geographic location where a person lives. Beyond the prohibited classifications, insurance underwriting decisions generally must be based on reasons that are related in some way to the risk to be insured. In most states an individual has a legal right to be informed of the reasons for any refusal to issue an insurance policy.
What is a "reservation of rights" letter?
If you are sued, the legal complaint filed against you may state several different claims, some of which may be covered by your liability insurance policy and some of which may not be covered. The insurance company is obligated to provide a defense for you if any of the claims could be covered, but the company may not be obligated to pay the damages for certain types of claims. A "Reservation of Rights" letter from your insurer is a notice that even though the company is proceeding to handle your claim, depending on what happens, certain losses might not be covered by the terms of the policy. By such a letter, the company preserves or "reserves" its right to deny coverage at a later date based on the terms of the policy.Liability policies, for instance, typically do not provide coverage for damages which you cause intentionally. If you injure someone under circumstances where the injury could have been accidental or could have been intentional, the legal complaint might allege both that your action was "negligent" and that your action was "intentional." In court, the party suing you will have to prove it was one or the other. In such a case, your insurance company may write a letter saying it will provide you a defense but it will not pay damages if the court finds you caused the injury intentionally. This is an example of a "Reservation of Rights" letter.
Lawsuit for breach of contract
An insurance policy is a contract between the insurer and the insured. If the insurance company fails or refuses to pay a claim which should be paid under the terms of the policy, it is in breach of the contract, and the insured can pursue all available legal remedies for the breach. This usually involves filing a lawsuit against the insurance company. If successful, the insured will be able to recover its damages, which at least will equal the amount the insurer should have paid under the terms of the policy. Depending on state law and the circumstances of a specific case, damages may also include other expenses that were incurred because of the breach as well as costs of the lawsuit.
What happens if I'm sued for causing a car accident and I don't have insurance?
You need to personally arrange for the defense of any lawsuits against you. This usually involves hiring an experienced car accident attorney, who can advise and defend you in court. You will have to pay the attorney's fees and other court related costs, even if you ultimately are found not to be legally responsible for the accident.If you are found to be liable for damages, a judgment will be entered against you by the court for a specific sum of money. If the injuries are severe or the damage extreme, the judgment could be a very large sum of money, potentially hundreds of thousands of dollars. If you fail to pay or are unable to pay the full amount of the judgment, the winning party may sue to collect from you. If you don't have car insurance, now is the time to protect yourself and buy an auto insurance policy.
When may an insurance company cancel my auto insurance during the term of my policy?
An insurance company may cancel a new policy any time within the first 60 days and are not required to provide you with a reason for the cancellation. A cancellation is also permitted during the terms of the policy if the premium is not paid when it is due, discovery of fraud or material misrepresentation made by you or your representative in obtaining your insurance, or by your pursuit of a fraudulent claim under your policy, or significant changes in insuring characteristics. For the situations discussed above, no cancellation is effective until at least 10 days after the insurance company mails or delivers to you a written notice of cancellation.
When may an insurance company nonrenew my auto insurance policy?
Nonrenewal refers to the termination of a policy at the expiration date. If an insurance company decides it does not want to renew your policy, it must mail or deliver to you a nonrenewal notice at least 60 days before the policy's expiration date.
Does my auto insurance policy have a grace period?
Unlike health insurance policies, auto insurance policies, do not have a required grace period. The premium is due, at the insurance company, on the date identified on the premium notice. If the premium is not received by that date the policy automatically terminates.
Can credit history be used as a reason to nonrenew or refusal to renew my car insurance?
Insurers may use credit information as one of the criteria they consider when underwriting personal lines insurance. However, it is the position of the Wisconsin Insurance Commissioner's Office that insurers should not use credit information, whether they use credit reports or credit scoring mechanisms, as the sole reason to refuse an application, cancel a new insurance policy in its first 60 days of coverage, or nonrenew an existing policy.
What affects the price of auto insurance?
When determining the rate for an auto insurance policy, insurers separate drivers into categories called classifications. Drivers are classified based on a number of different characteristics including, but not limited to, age and gender, marital status, where the vehicle is garaged, driving record, make and model of vehicle, prior insurance coverage and annual miles driven. History has shown that drivers with certain characteristics, such as a poor driving record, have a greater chance of being involved in an accident, and the drivers in those classifications must pay higher rates. While some of the classification criteria (such as age and sex) are out of your control, others, such as driving record and type of vehicle driven, are within your control.
Can the driving/accident records of my child and/or spouse have an impact on my ability to buy auto insurance?
Yes, the driving record of any licensed driver in the household will affect the decision of the insurance company to insure your vehicle(s). It can cause you to be turned down for insurance coverage or to pay higher insurance premiums.
Is there a way I can reduce my premiums?
Every auto insurer has its own package of special discounts to attract particular types of customers. Most insurance companies provide discounts for at least some of the following: accident-free drivers discount; a package discount for insuring your home and auto with the same company; multiple auto discount; good student discount; nonsmokers discount; and passive restraint discount (for vehicles with air bags or automatic seat belts). You may also consider higher deductibles for your comprehensive and collision coverages.
Can I require the insurance company to replace my car?
The personal auto policy is not a replacement policy. Coverage for your car is based on actual cash value. The actual cash value (ACV) of your car is based on the value of your car at the time of the accident, taking into account its current market value. Therefore, the insurance company's obligation is to repair the car based upon its actual cash value not its replacement cost.
What is meant by aftermarket parts?
Auto repair shops may use aftermarket and/or used parts when repairing or replacing a damaged part (i.e., bumpers, bumper covers, and associated bumper parts, etc.). Aftermarket parts are produced by companies other than the original equipment manufacturers (known as OEM parts).Auto insurance contracts do not generally specify what parts will be used. You may request that aftermarket parts not be used to repair your vehicle, but you are responsible for any repair costs that exceed the final claim settlement negotiated with the insurance company.
The other driver's insurance company wants me to sign a release on my injury claim. How long can I delay this?
Sign the release when you are satisfied with your total settlement. Get a letter from your doctor estimating the cost and length of your future medical treatment. You may, of course, consult an attorney before accepting a settlement. You have three years after the accident, under Wisconsin law, to either settle your claim or file a lawsuit.
What does comprehensive coverage provide?
Comprehensive (also called other than collision) coverage pays for damage to your vehicle resulting from fire, vandalism, water, hail, glass breakage, wind, falling objects, civic commotion, or hitting a bird or an animal. Damage from striking a deer is a relatively frequent accident in Wisconsin. It is important to know that most policies cover hitting an animal under comprehensive, not collision, insurance.Comprehensive coverage also pays if your vehicle or parts of it, such as a battery or tires, are stolen. Flood damage to your car is also covered if your auto insurance policy includes comprehensive coverage. If you carry collision without comprehensive, you are not covered for flood damage.
How is the deductible for comprehensive or collision coverage applied?
Deductibles for comprehensive or collision coverage are applied for each occurrence. A deductible is the dollar amount that you have to pay toward the loss before the insurance company begins to make payments on the loss. For example if you suffered a comprehensive loss (a deer hit) and that same day suffered a collision loss (a rock hit your windshield), your policy allows the insurer to apply two different deductibles. Many companies will waive the deductible for the windshield occurrence if you can repair it rather than replace it.
If I have my car financed, do I need to purchase auto insurance?
If you do finance the car, the financial institution (lender) will require that you have car insurance. The terms of your loan will most likely require you to provide comprehensive and collision insurance. This is because the lender considers your vehicle collateral for the loan. If your policy lapses, the bank will force coverage (obtain a policy) and add it to your loan. Forced coverage provides protection to the bank, not you, for their interest in the car and nothing else. The cost of this insurance is much higher than you would pay if you bought your own policy through a standard carrier.
Auto Insurance Coverage - How much coverage should I buy?
Given the cost of medical car, and the state of our legal system, I think it makes sense to up your coverage. The minimum is pretty much a joke, and won't cover anyone's serious injuries. Let alone if they sue you for pain and suffering. Besides, if they win a judgement, they can attach your wages, and prevent you from ever buying a home. You should do this anyway, because it's the right thing to do. Besides, the person you may end up covering may be a friend or relative riding in your car as a passenger. Don't let the asset calculation deter you. I've had at least 100/300 liability ever since I could afford it. Last year I bumped it up to the max, which I believe was 300/600.
The company wants to repair my car with non-factory parts. Can they do this?
Yes. The parts used do not necessarily have to be original equipment manufacturer (OEM) parts, but should be of like kind and quality as the parts being replaced. Ask your company about what guarantees will be given on these parts. Florida law requires the parts to be of same fit, quality and performance.
The company is refusing to pay for a CB radio that was stolen from my automobile. Can they do this?
Most companies exclude electronic equipment, such as CB radios, cellular telephones, compact disc changers, etc., unless they are factory- installed. You should review your policy and its exclusions to determine if your CB is covered. If CB radios are excluded and it was not specifically endorsed onto your policy, then there would be no coverage.
Can a company refuse to renew your policy based on the number of accidents made in the last three years?
An insurance company may non-renew your policy if you have more than one at-fault accident. If you have three or more accidents, regardless of who is at fault, the company may non-renew your policy.Please note, a company may non-renew for claims activity, regardless of accidents.

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.