Auto

State law requires you to have auto liability insurance, and if you still owe money on your car, your lender requires that you also carry collision and comprehensive coverage. Auto insurance pays for damages, injuries, and other losses specifically covered by your policy. Read your policy carefully to know exactly what it covers. 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 page. It contains useful information such as the exact name of your insurance company, your policy number, and the amount of each of your coverage’s and deductibles.

If you drive, you must show that you can pay for accidents you cause. Most drivers do this by buying auto liability insurance. State law requires a minimum coverage. However, basic coverage might not be enough if you are held liable for an accident. You should consider buying more than the basic limits. When you buy an auto policy, your insurance company will send you a proof-of-insurance card. You will have 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.

State law provides severe penalties for violating the state’s financial responsibility laws.

State law requires you to have basic liability coverage. The other coverage’s are optional, but if you still owe money on your car, your lender will require you to have collision and comprehensive coverage. The following describes the eight types of coverage available.

1. Liability Coverage

Pays: Other people’s expenses for accidents caused by drivers covered under your policy, up to your policy’s dollar limits. These may include the other person’s

1. • medical and funeral costs, lost wages, and compensation for pain and suffering
   • car repair or replacement costs
   • auto rental while their car is being repaired
   • punitive damages awarded by a court.

Covers: You, your family members, and other people driving your car with your permission, even if they don’t have their own liability insurance and are not named on your policy. You and your family members also are 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.

2. Medical Payments Coverage

Pays: Medical and funeral bills arising from accidents, including those in which the victim was a pedestrian or a bicyclist. Covers: You, your family members, and passengers in your car, regardless of who caused the accident.

3. Personal Injury Protection (PIP) Coverage

Pays: Same as medical payments coverage, plus a percentage 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.

4. Uninsured/Underinsured Motorist (UM/UIM) Coverage

Pays: Your expenses from an accident caused by an uninsured motorist or if the other driver 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 the police.

1. • 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 carried in your car.

Covers: You, your family members, passengers in your car, and others driving your car with your permission. Insurers must offer UM/UIM coverage, but you can reject it in writing.

5. Collision (Damage to Your Car) Coverage

Pays: The cost of repairing or replacing your car after an accident, regardless of who was driving or who was at fault. 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 before it was damaged.

6. 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 another 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 the police. Payment is limited to your car’s actual cash value, minus your deductible.

7. 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 place where your car broke down.

8. 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.

Your policy automatically 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. However, drivers can be held criminally and financially responsible for any auto accidents they cause. If you’re in an accident that results in an injury, police in Mexico 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. You can buy Mexican liability insurance from agents who specialize in it. 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 valid only within 25 miles of the border. Telephone books in border towns list insurance agents that specialize in car insurance for travel in Mexico. Your agent also might be able to help you find coverage with a Mexican company. You also may be able to buy a limited Mexico "tourist" endorsement that extends your liability coverage to pay expenses exceeding those covered by a Mexican liability policy. This endorsement covers trips of any distance and any length of time. Ask your agent which endorsements your insurance company offers.

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

• Decide before shopping what coverage’s you need.
• Consider choosing a higher deductible. Your deductible is the amount you must pay yourself before the insurance company will pay. Higher deductibles will lower your premium, but remember that you’ll have to pay more out of your own pocket if you have a claim.
• Because rates vary, ask several companies and agents for price quotes. Make sure the quotes you get are for the same coverage’s.
• When getting a price quote or applying for insurance, answer questions truthfully. Wrong information could cause you to get an incorrect price quote or could lead to a denial or cancellation of coverage.

Consider factors other than price - including a company’s financial rating and its complaint index. Financial ratings indicate a company’s financial strength and stability, while its complaint index indicates a company’s customer service record. Buy only from licensed companies and agents.

• Ask your agent whether you qualify for any discounts the company may offer.

State law requires rates for insurance offered to be reasonable, adequate, not excessive to the risks for which they apply, and not unfairly discriminatory. Auto insurance companies set their own rates and then file them for review. Companies do not have to receive prior approval before putting their rates into effect, but if it is determined that a company’s filed rates are excessive, the company can be ordered to make refunds to consumers who were overcharged.

Companies may use a number of criteria to establish your individual 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 likely be placed in a nonstandard company, which charges higher rates. In addition, companies can add penalties - called surcharges - to your premium for major driving offenses and accidents resulting in property damage of $1,000 or more. Surcharges are mandatory for rate-regulated companies and stay on your premium for three years.
• The county where you keep your car. Because urban counties have more accidents and auto thefts, their rates tend to be higher than those of 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 than others.
• How you use your car. Rates are higher for cars driven to and from work or used for business.
• Your credit score. Companies may consider your credit score when deciding whether to sell you a policy and what to charge you. However, a company cannot refuse to sell you a policy or cancel or nonrenew your policy solely on the basis of your credit.

• Whether you drove uninsured. Companies can charge more if you drove uninsured for more than 30 days in the 12 months before you applied for insurance. However, a company cannot otherwise charge you a higher rate for liability coverage because of your prior lack of coverage.

Companies must file their underwriting guidelines and update them each time they make a change.

Discounts can help you save money on your premium. Following is a list of some of the discounts commonly available:

• defensive driving and driver education courses for young drivers
• airbags and other passive restraints
• two or more cars on a policy
• your age and annual mileage driven
• policy renewal with a good claims and driving record
• anti-lock brakes
• a parent or family whose young driver is away at school without a car
• cars with automatic daytime running lights
• students with good grades.

If you have a poor driving record, you can expect to pay more for your insurance. Companies may add surcharges to your premium 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.

• Move your car, if possible, to avoid blocking traffic and to protect it from further loss or damage.

• Call the police if somebody is injured or killed, if a vehicle can’t be moved, 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 the accident to the 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.
• Record the insurance company name and the policy number exactly as shown on the other driver’s proof-of-insurance card. Similar company names can cause confusion, so make sure you write down 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. Some agents have authority to settle small claims. 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 injured persons.
• If you reported your claim by phone, be sure to follow up in writing as soon as possible to protect your rights under the States’ 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 and undergo a medical examination.

If the other driver refuses to tell you his or her insurance company, get a copy of the police accident report. The accident report will 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 the police.

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.

Once you have filed a claim, State law sets these deadlines for the insurance company to act:

• The company must respond within 15 days after receiving your claim in writing. It probably will 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.

Unfortunately, insuring young drivers is usually expensive. Some young drivers may qualify for discounts, however. If you are under 18, you must complete a driver training course approved by the state to obtain a driver’s license. Many insurance companies give a driver training credit for teen-teenagers who complete driver education. Parent-taught drivers are eligible for the discount if the parent used a state-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 any discounts for young drivers.