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March 2016

Auto Insurance FAQ

Auto Insurance FAQIn some cases, you will call insurance company when your car breaks down in the middle of the road for towing assistance. When the vehicle arrives at the repair shop, insurance policy covers the damage and provides rental car until your car is ready to go again. There are two main purposes of purchasing auto insurance: to comply with the law and protect yourself from the inevitable. In a modern world where thousands of people are on the road every hour and cars are all over the place, involvement in an accident is one of the inevitable occurrences. It does not happen often, but accident does happen.

Do I need to buy auto insurance?

Nearly all states require drivers or anyone who owns and drives a car to purchase auto insurance. An insurance policy is proof of financial responsibility for using the car and driving it on the public road. Even when you do not want to purchase insurance, you need to provide valid proof of financial responsibility in forms of assets to pay claims in case you are at fault in an accident. Liability insurance is a must in every state.

How much do I have to spend for auto insurance?

Every state has a set of rules regarding auto insurance including the minimum amount you need to pay. In most states, liability policy is obligatory. Those policies cover the amount you have to pay if someone else suffers from injury and property damage following an accident in which you are at fault. They do not cover your medical payment and damages to your property. You have the option to prolong the coverage to give financial protection to yourself through various policies such as Collision, Personal Injury Protection, Comprehensive, and Rental Reimbursement.

How does insurance company determine my premium?

There are many factors to consider, but in most cases the insurer looks into the following:

· Driving record

· Types of car

· Crime rate in your neighborhood

· Distance you cover with your car on day to day basis

· Age

· Profession

· Types of coverage you buy

It is not exceptional for a company to consider your current credit rating too. There is a correlation between credit score and the probability of missing premium payment. Most companies offer discounts to reduce the premium, but eligibility requirement varies. One of the most current discounts is for policy bundling, for example, you purchase insurance for your cars and home from the same company.

What if my friend drives my car?

There is no clear line whether or not your auto policy applies if someone else drives your car. The decision regarding this issue depends on the insurer, and the rules vary among companies. Some types of coverage such as Collision and Comprehensive follow the car, meaning the policies apply regardless of who is driving. Other types of coverage follow the person, for example, liability and medical payment. If your friend does not have the necessary policy, you cannot file claims for your friend’s injury.

Why do teen drivers pay more for auto insurance than adults?

Teen drivers pay more expensive for auto insurance because insurance company think they lack experience and tend to commit violations including speeding and other infractions. Parents must educate their teen children about the cost of insurance concerning consumption of alcohol and drugs. Driving under the influence (DUI) of alcohol or drugs is a major violation that affects insurance premium. The insurance company determines the rate or premium by measuring probability and therefore risky behaviors including underage drug use and consumption of alcohol increases insurance rate.

What do I do after a DUI?

Record of a DUI may force insurance company to cancel the policy. After cancellation due to a DUI, auto insurance is hard to come by, but it is available in non-standard market or insurance for high-risk drivers. The premium is more expensive from such market, but necessary to comply with the law.

Does anyone know the way to reduce the premium for teens?

Other factors that affect teen driver’s auto insurance are:

· Grades: good academic performance allows for “good grade” discounts. Some companies offer a discount of up to 25% off premium for students with average B score or higher.

· Car models: high-performance cars are risky. They reach high speed in no time, and that increases the risk of accidents. A more conventional model can help reduce the premium as well.

An insurance agent is a helpful source of information. This is the person to consult about cost, possible violation, eligibility for discounts, and coverage options.

What is the best car for teen drivers regarding insurance?

Parents will not always be there to make sure that their teens will drive safely all the time. There are, however, some ways to help your teenagers drive safe, and of them is to pick the right type of car. Some tips you can use:

· A family sedan is a decent car for teenagers. Such car will not embarrass your teenagers when they are driving to college or friends’ places. The family car tends to offer much safety features and prevent the temptation to drive fast.

· Not old, but not brand new car is a good choice. A slightly older car still meets the requirement for cheap coverage, but it still offers modern safety features such as anti-lock brakes, airbag, restraint system, daytime lights, and probably GPS.

· Vehicles with additional performance features are bad. Features like a turbo or bigger engine encourage teen drivers to drive faster than normal (speeding).

How Insurance Companies Determine the Worth of Your Car

Car insurance is important; not only to protect you from unforeseen events but to also reimburse you if your car gets stolen or damaged. Car insurance can also pay for other people’s hospital bills, repair their cars and get roadside assistance.

There are several types of car insurance such as liability insurance, collision insurance, comprehensive insurance, uninsured motorist protection, personal injury protection, no-fault insurance and gap insurance. To determine how much car insurance you need, it is important to first find out what your state requires. In almost every state a car owner must carry liability insurance. Liability insurance is a must because it covers bodily injury coverage and property damage coverage.

Car insurance, for many, is confusing and complicated; however, there are certain steps that will make this process easier to understand. First, decide how much coverage you need. Find out what your state requires you to have. The next step is to review your current insurance policy. Look carefully at the policy and write down how much coverage you have and how much you are paying. Look at how much you are paying both monthly and yearly.

The next step is to review your driving record. If you have been given any speeding tickets, find out how long they have been on your record. If those ticket or tickets will soon be disappearing, go ahead and get some quotes. If those tickets are still there, wait until they disappear. Then, begin to get some quotes. This will take time; however, to speed up the process, check out online quotes. If you do this online, all you have to do is type in your information and start building a list of companies for quotes you can compare. Keep in mind; you may not always get instant quotes. Some companies may choose to email you their quotes.

Continue to gather quotes and information on insurance companies. Keep a running list of their monthly and annual rates for coverage, their 1-800 telephone number and their payment policies. As you continue your research, check out any discounts that they offer. Most insurance companies offer discounts for good driving, a car’s safety and security equipment and certain occupations. Be sure to also check the insurance company’s track record. This can be done by reviewing their consumer satisfaction surveys, checking their financial background and talking with family and friends who have dealt with the insurance company. The last steps are reviewing your policy before you sign and cancelling your old policy.


Car Insurance Quotes Understanding Policies, Conditions and Buzzwords

To get the best value from car insurance quotes, it is important to understand the various terminologies included in your insurance policy. A thorough understanding of these conditions and catchwords will ensure that you are not caught off-guard in the event of a claim. It is important to remember that the point of car insurance is to offer a safety net in times of crises to ensure that you don’t need to dip into your savings account to replace or repair a vehicle.

In order for this safety net to work efficiently, it is important to recognize the various limitations, conditions and terms. Not only will this understanding offer you peace of mind, it will also ensure that you are educated on your insurance company’s various legal and practical procedures.

When it comes to car insurance quotes, most of us can feel a little overwhelmed by the many terms, conditions and buzzwords that appear in our insurance policies.

Few of us understand the jargon of the insurance industry and often find ourselves agreeing to terms that we do not fully understand in the hope of obtaining reliable and efficient vehicle insurance.

I compiled a list of 9 commonly used terms which will arm you with all the necessary information to assist in making a sound decision before singing on the dotted line.

1. Policy Schedule or Coversheet – When it comes to taking out reliable car insurance, you will be required to enter into a contract. This contract can be entered into via telephone, online or, in some cases, in writing, but by law your insurer is obliged to confirm the conclusion of the contract in writing within 30 days. This confirmation is in the form of a policy schedule (Coversheet) summarising all of the specific information of your insurance policy.

2. Claim – You submit/report a Claim to your insurance company when you have suffered a loss or damage to an insured item and you need your insurer to get you back into the same financial position you were in prior to the loss. The merits of your Claim will be validated – and based on the terms and conditions of the policy, the Claim will be accepted or denied (rejected) by the insurance company.

3. Excess – An excess is an agreed amount of money that the policyholder is liable to pay in the event of an insurance claim being settled. For example, if the excess on your car is $300 and the damages amount to $5000 your insurance company will pay the remaining $4700 once you have paid your excess to the repairer. Insurance companies charge an excess to assist clients in managing their risks by not claiming for minor incidents – as well as to ensure that customers do not submit minor or fraudulent claims. If the claimed amount is less than the excess, there would be no claim.

4. Perils – Perils refer to a variety of risks that can cause damage to your car. These include accidental and intentional damage, theft, hijacking, attempted theft or hijacking, fire or explosion, earthquake, storm, hail, flood or snow and glass damage.

5. Premium – A Premium is the amount of money that is paid upfront on an annual or monthly basis to ensure that your vehicle is covered. Your insurance Premium will increase or decrease depending on a variety of factors, referred to as underwriting criteria.

6. Retail Value – Retail Value is the average current selling price (on a dealer’s floor). If you were to insure your vehicle for its Retail Value, it would be insured for the value closest to the replacement cost. Although it is the more expensive option, it has a large number of benefits if anything had to happen to your car. It is also important to remember that the Retail Value of your vehicle decreases on a monthly basis.

7. Market Value – Market Value is the average between the vehicle’s retail and trade value. It is important to note that although you are paying less for your insurance, you are covered for a substantially lower value.

8. Trade Value – When searching for car insurance options, the most attractive deals are those that seem to be the cheapest. If you choose to insure your car for its Trade Value, it would be valued at the average price that a motor dealer will pay you for the vehicle. Trade Value is the lowest value.

9. Specially Agreed Value – This is applied to unlisted, vintage and collectors’ vehicles, caravans and trailers from an authorised source.

To fully understand the details of your car insurance quote, it is best to read through the documentation supplied by your insurance provider and use these definitions for your reference. Not only will this clarify the complexities of car insurance terminology, it will also ensure that you are up-to-date with that which you are covered for and the parameters thereof.


Auto Settlement or Insurance Claim How to Decide

Bet you that the German mastermind and inventor of the first working car, Karl Benz, never imagined the full extent of where his life-transforming brainchild would take those involved in accidents.

While there are various opinions about who actually thought of auto insurance, there is evidence that it was Herbert Stanley Morrison who was responsible for the federal government to require every driver to have an insurance policy that would protect them from associated liability risk exposure.

Despite the obvious great benefits to owning auto insurance, every driver is aware of the pitfalls to filing too many related accident claims: a subsequent peak in coverage rates!

It is for that very reason that many consider settling on a private arrangement between the drivers involved in a collision. If you are the one at fault in an accident and you have a history of insurance claims that name you as the guilty party, it may be wise to opt for this type of settlement. Before making any decision about it, though, it is wise to review a few particulars.

Disclaimer: Prior to agreeing to any form of private settlement, always exchange insurance information so that if you decide to opt out of the plan, you have the necessary info to share with insurance companies.

When a Settlement Makes Sense

If you are the one who caused the accident:

• Make sure to get a mechanic’s honest estimate for the repair. Will the auto repair cost less or a little more than your insurance deductible? If so, it’s sensible to pay out of the pocket for damages.

• Is the other driver a complete stranger? Can you trust him to be honest in regard to true damage and price evaluation? Only agree to a settlement if you understand you are not being ‘taken for a ride’; that damages on the car are the ones your accident caused and that you are not being asked to pay for extraneous fees.

• Make sure no one has been injured. Remember that medical costs can and often do exceed your cost expectations. In addition, if the other party is unscrupulous, he or she can bill you for a phony health problem, adding thousands of unnecessary dollars to your bill.

If you are the victim of the accident:

• Is the at-fault driver someone you know? If he is stranger, you may be taking a risk in trusting him to make payments on your losses.

• If you have been injured, your medical bills could very well exceed any amount the other driver is willing or can afford to pay.

• Establish that you will be the one selecting the mechanic to do repairs. Do not trust any agreement based on the other driver’s offer to do self-fixing or his repair shop preference.

• Refuse any cash deal settlement before getting a thorough evaluation of true damage.

• Refuse any settlement if the at-fault driver does not respond immediately to your attempts to contact him.