Frequently Asked Questions for Auto Insurance

Property damage liability covers an accident where you were at fault and caused damage to someone else’s property, up to your policy limit. The most common losses are damage to other vehicles and objects such as fences and traffic signs.

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Bodily injury liability covers you if you are legally responsible for causing injury to the occupants of another car or a pedestrian. The bodily injury liability coverage part of your policy will pay for their medical bills, lost wages, expenses, etc., up to your policy limits. Bodily injury liability will also pay your defense costs against unwarranted legal action.

Yes. Uninsured motorist coverage for bodily injury covers you for injuries that you and your passengers sustain at the hands of an uninsured driver. Uninsured motorist coverage for property damage covers you for damage to your vehicle as a result of an accident with an uninsured driver. It also provides coverage for hit and run accidents where you are the victim.

Yes, but not everyone follows the law. Unfortunately, there are many uninsured drivers. If you were in an accident with someone not carrying insurance, or the victim of a hit-and-run accident, uninsured motorist coverage would pay for any damages up to your policy limit.

Many experts recommend you have as much uninsured motorist coverage as your regular liability, bodily injury, and property damage coverage. Some states have a minimum coverage requirement and other states waive uninsured motorist coverage if you have collision coverage. Regardless of the limit you select, your uninsured motorist coverage cannot exceed your liability coverage.

Underinsured motorist coverage protects you in case of an accident caused by a motorist who does not have enough liability coverage to pay for injuries or damage. The required minimum state limits for this coverage are generally the same as uninsured motorist coverage.

Medical payment coverage pays for medical expenses that you, your family members, or guests in your vehicle incur as a result of injuries caused by an automobile accident. Medical payment coverage pays for a doctor’s care, hospitalization, pharmacy bills, ambulance service and funeral expenses, no matter who is legally responsible for the accident. In addition, medical payment coverage will generally pay your deductible or co-payments due under your health insurance.

Bodily injury liability coverage pays for the medical expenses of pedestrians and occupants of another vehicle if you are responsible for an accident. It would also pay other expenses such as lost income and pain and suffering. Medical payments coverage reimburses you and any passengers in your vehicle for medical expenses that are incurred as a result of an accident, no matter who is responsible for the accident.

Yes. However, the injuries of any passengers would not be covered by your policy. The medical payment portion of the car owner’s policy would cover them.

Yes. While your health insurance might cover you, anyone else injured in an accident in which you were involved wouldn’t be covered by your health insurance (unless they were listed as dependent coverage) and you would need medical payment coverage to cover their medical expenses.

Collision coverage pays for the repair or replacement of your car after an accident, minus your deductible. If your car is totaled in an accident, collision pays for the current market value of your car, minus your deductible. If your car is worth less than $3,000, you may want to skip collision coverage if you can afford to replace your car.

If you leased or financed your car, you will have to buy collision coverage, regardless of the car’s value. Collision can be purchased on its own, without comprehensive coverage, but most insurance companies will not let you purchase comprehensive coverage without collision.

Comprehensive coverage pays for damage done to your vehicle in any situation other than an accident. For example, theft, vandalism, fire and hitting an animal are covered under comprehensive.

If you leased or financed your car, you will have to buy comprehensive coverage. Since the cost of comprehensive coverage accounts for a large portion of your premium, you may want to skip comprehensive coverage if you car is worth less than $3,000 and you can afford to repair or replace the car yourself.

Liability coverage protects you against claims that arise out of an accident in which another person was injured or someone else’s property was damaged. Liability coverage is required in most states. Liability coverage is available in either Combined Single Limit form or Split Limits form.

Combined single limit combines bodily injury and property damage coverage into one single sum. This is the total amount of bodily injury and property damage liability coverage that the insurance company is obligated to pay on your behalf if you are liable for an automobile accident. A policy with a $300,000 combined single limit means that the maximum amount for both bodily injury and property damage that can be paid is $300,000.

This is known as “split limits” coverage. The first number is the maximum amount of coverage the insurance company is obligated to pay on your behalf to any one person who was injured as a result of an automobile accident. The second number is the maximum amount of coverage that the insurance company is obligated to pay on your behalf to all persons who were injured as a result of an automobile accident. The third number shows you the total amount of property damage that the insurance company will pay on your behalf as a result of an automobile accident.

Most automobile insurance offers rental reimbursement coverage to help pay for renting a car if your car is damaged or stolen. Rental reimbursement coverage pays for a car rental, up to a stated limit on your policy, while your auto is being repaired or replaced due to a collision or comprehensive loss.

Most auto insurance offers towing coverage that will pay up to $50 to tow your car to a garage. Towing coverage will also pay for any labor costs resulting from special assistance at the site of the accident. Cost and amounts of coverage vary by insurance company. If you belong to a group such as AAA, or have a new car that offers towing and labor coverage on the warranty, you probably won’t want to purchase this coverage on your auto insurance.

To be covered on an auto insurance policy, the cell phone has to be factory-installed and considered part of the vehicle. If it is not a factory-installed phone, then you will need separate coverage to insure it.

Many insurers offer a special equipment option for non-factory installed items such as special wheels, paint, stereo system, cellular phone, or CB radio.

These items are not covered on a standard automobile policy. However, you can purchase special equipment coverage that will cover these items.

You can usually insure any number of cars and drivers. Insurance companies usually offer a multi-car discount when you insure more than one vehicle.

A standard auto insurance policy is still needed when leasing a vehicle. The main difference between leasing and owning is that the leased automobile is owned by the leasing company instead of the individual, who merely has the right to use it and the obligation to make sure it is insured. Most leasing companies will insist that they be named on and approve the insurance policy. The auto insurance policy will protect the individual who leased the car and the leasing company owning the car. When renting a vehicle make sure to verify with your existing insurance company that you are covered in this circumstance. If this is not the case, rental companies do offer insurance policies for the vehicles they provide.

Cars that are owned and registered to you should be listed on your policy in order to be covered. If you buy or lease a new car, it will be covered on your current policy for a limited period of time, generally between a seven and 30 days. After that, you must be sure to add the new vehicle to your policy or it will not be covered.

That depends on the car you’re renting, the type of policy you have, and on your insurance company. Under what is called a “family policy,” your liability coverage (bodily injury and property damage) and, if you have it, your physical damage coverage (comprehensive and collision) will cover any damages to a rental car, even if you rent it for pleasure or vacation. Under a “personal policy,” only your liability coverage will extend to a rental car, and then only if the rental car is needed to temporarily replace your car because of a breakdown, repair, servicing, loss or destruction. You should read your policy or check with your agent to confirm whether or not your insurance protects you when you’re driving a rental car.

Each insurance company sets its own standards for good driver discounts. In general, you are usually considered a good driver if you have not had more than two moving violations or accidents in the past three years and you must not have been cited for drunk driving, driving under the influence, or violations of the Penal code that include manslaughter or gross negligence in an accident in the past seven years.

This kind of discount is usually limited to teenage drivers. Since teenage drivers lack experience, they usually get more tickets and have more accidents. Taking a certified driver’s training course can help reduce their auto insurance rates. However, even adults can qualify as long as you take a course from a certified licensed instructor. You may need to provide some sort of certificate or written proof in order to obtain the discount.

Statistics show that students who do well in school tend to have better driving records. Therefore, companies are willing to give “Good Student” discounts to students with a “B” or better grade point average. You may need to provide some sort of certificate or written proof in order to obtain the discount.

Some insurance companies offer a “Distant Student” discount if your son or daughter attends school more than 100 miles from home and does not take a vehicle with them. You may need to provide some sort of certificate or written proof in order to obtain the discount.

Yes. Some insurance companies offer a discount on your premium if you take an accident prevention course. However, you may need to have a certificate of proof in order to get the discount.

If your car has this feature, your owner’s manual will give you the information you need. In many newer model cars, an anti-lock braking system (ABS) is standard equipment.

Most insurance companies offer discounts for the following anti-theft devices:

Alarm Only. An alarm system that can be heard at least 300 feet away for at least three minutes.
Active Disabling. An alarm system that includes a manually activated turn-off feature that disconnects the ignition or battery should someone try to steal your car.
Passive Disabling. An alarm that automatically engages a device which disables the ignition, battery or other vehicle feature that a thief would need in order to steal your car.
Even though some devices, such as a steering wheel lock, do not provide a premium discount, it is still useful to have one in order to safeguard your car from theft.

Some insurance companies offer discounts for shoulder restraints and seat belts in order to receive a discount on your premium. They also offer an additional credit or discount for air bags.

No. Most states have laws that require you to put children under four in approved child seats. If you do not, you could receive a moving violation.

Generally, if you have had more than two moving violations or two accidents in the past three to five years, your driving record is considered to be poor. Some Standard or Preferred insurance companies only cover drivers with good driving records. However, you can still purchase insurance through either a “non-standard” or “assigned risk” insurance companies. You will have to pay a higher rate than a standard or preferred driver.

People with good driving records get the best rates. If a family member living with you has a bad driving record and does not have his or her own insurance policy, then he or she may increase your insurance premiums.

Some insurance companies will allow drivers to be excluded from your insurance policy. The rules covering such exclusions are normally governed by state statute. However, you should be aware that, if you exclude a driver from your policy, and he or she gets into an accident while driving your insured vehicle, your insurance policy will not provide you with coverage for any damages sustained as a result of this accident.

The insurance carrier may look into the reason your policy was cancelled or declined before deciding whether or not to offer you coverage. The decision as to whether or not to grant coverage is based on your individual circumstances.

Don’t worry about small mistakes. On most questions, such as how many miles you drive your car, there is a reasonable margin of error. Further, such details will not greatly impact your premium. However, if your policy lapsed for more than 30 days or if you forget a ticket or an accident, there might be a problem as to whether or not you qualify for a particular insurance company’s auto policy.

This varies by state and insurance company. Generally speaking, a “good record” would be free of accidents or tickets for the last five years. An “OK record” might include one accident or traffic ticket over a period of three to five years. A “bad record” would include two or more at-fault accidents and/or traffic citations over a period of three to five years.

An auto accident is an unintended, unforeseen casualty or mishap that results in injuries to people and/or damage to property.

It is best to report all accidents even if you don’t plan to make a claim in order to protect yourself and your assets. Injuries to people and to cars are not always immediately apparent. By reporting an accident as soon as you can, you’ll protect yourself against any possible claims that could arise down the line. And you never know if another person involved in the accident may decide to file a claim. Most auto insurance policies require that you report an accident within a “reasonable amount of time.” The exact interpretation of that is up to each insurance company. If you do not report an accident within a reasonable amount of time, your insurance company could refuse to pay any claims that came out of that accident. However, if there were no injuries or damages reported, it will not affect your insurance rates.

Generally, your friend’s insurance policy would be the primary source for insurance coverage. If your friend did not have enough coverage, then your insurance would cover the excess, both for bodily injury and property damage.

While it varies from insurance company to insurance company and from state to state, generally, the following factors will determine your insurance rates:

• where you live and where your car is garaged
• the year, make and model of the car
• how you use the vehicle and how many miles you drive a year
• driving records of you and other drivers in your household
• the age of the drivers in your household
• gender and marital status of the drivers
• number of years of driving experience
• any applicable driver and/or vehicle discounts
• the number of vehicles being insured
• your credit score

The value, size, weight and age of your vehicle, and even the cost of replacement parts are considered when determining the price of your insurance. More expensive cars cost more to insure. A model that is attractive to thieves or is expensive to repair will also cost more to insure.

This depends on your insurance company, but, generally speaking, when a husband and wife are separated, they get their own insurance policies and lose their multi-car discount, increasing both policy premiums.

Statistics have shown that when people marry, their driving records improve. That’s why most insurance companies view married people as safer drivers than those who are single and set premium rates accordingly.

Based on actual loss experience, insurance companies use the age of a driver as a primary factor in determining insurance premiums. For example, drivers from 25 to 65 get the best rates. Less experienced “youthful operators” under age 25, and senior citizens over 70 to 75 are generally considered to be higher risks and pay more for their insurance. A higher risk means higher costs. Unmarried men under 25 generally pay the highest premium.

For purposes of determining risk, the more miles you drive every day, the greater the chance that you will get in an accident. Therefore, an insurance company wants to know how many miles you drive in order to assess the risk on your auto insurance policy.

It can. If you drive less than 7,500 miles a year the insurance company may offer a discount.

As part of the determination of premiums, insurance companies use historical statistics on the driving records of men and women. Purely on the basis of statistics, in general, men have more accidents and receive more moving violation citations.

It means that your insurance company will pay for the financial losses from an automobile accident not matter who is at fault. See No-Fault Automobile Insurance.

As a general rule, auto insurance coverage follows the vehicle, not the driver. So if your car is involved in an accident, the car typically receives the full coverage provided by the auto insurance policy, regardless of who is driving.

Auto insurance policies normally provide coverage for your car if it is driven by any of the following people:

• you, the “named insured”
• your spouse, as long as he or she lives in your household
• other family members who are related to you by blood, marriage, or adoption
• a foster child who lives in your household
• a child who is away at college but still considers the address listed on your policy as his or her permanent address
• anyone to whom you lend your car

An insurance company has the right to review the driving record of anyone who applies for an auto insurance policy from that company. The purpose of this initial review is twofold:

1. To determine whether you meet the insurer’s standards of insurability, and
2. To evaluate your risk potential.

Depending upon what state you live in, once you are issued a policy, your insurer could have the right to review your driving record at any time. There are certain times when your insurance company will check your record. These include:

• when you initially apply for coverage
• when you request a change to your policy (increased coverage amounts, etc.)
• when you add a vehicle to your policy, or change the covered vehicle
• when your policy comes up for renewal

While not readily apparent, there is a connection between credit risk and safety risk. Statistics show that drivers with poor credit file more accident claims than drivers with good credit. Insurers reason that someone who is careful with one aspect of their life (money manangement) is also likely to be careful with other aspects of their life (driving habits). Credit information is also needed to determine whether an applicant is likely to pay premiums in a timely fashion.

If you drive at all, it’s a good idea to have automobile insurance. Many insurance companies offer a nonowners policy for people who drive occasionally but don’t own their own car. Nonowners policies typically include liability, medical payments, and uninsured/underinsured motorist coverages. Nonowners policies generally do not include comprehensive, collision, towing reimbursement, or rental reimbursement coverage.

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