What is the difference between a state with at-fault automobile insurance and a state with no-fault?
While there are differences between states themselves, automobile insurance requirements generally fall under two categories. In an at-fault (also known as a tort) state, the party determined to be at fault is charged the entirety of the bill, both for their own damage and for the damage of the other vehicle. This contrasts with a no-fault state, where each insurance policy pays for their own insured party’s damage. This does not preclude pursuit of damages above a certain level or for extraordinary damages such as permanent disability or death, but the recovery of damages is greatly restricted.
How is my automobile insurance premium determined?
Automobile insurance premiums are determined by a number of factors. First and foremost is your driving record. Obviously, the fewer accidents a person has the greater the chance that their premiums will be lower. Beyond that, the car insurance company will look at the driver’s age, credit history, and average miles driven per year are all taken into consideration when setting the premium. Some plans will offer a discount on the premium if you take a longer term.
What is the difference between an automobile deductible and the premiums?
In automobile insurance, like in any other type of insurance, there are two major costs. The premium is the amount you pay monthly in exchange for the insurance company assuming the risk that you would normally bear. The deductible, on the other hand, is the amount you pay upfront. For instance, if you have a $200 premium with a $1000 deductible and get into a wreck that costs you $1,000 to fix, you would be responsible for the entirety, even if you were not at fault. However, on the next repair the automotive insurance would kick in for the rest.
While case and content have to be considered, the rule of thumb in automobile insurance is that the higher the premium the lower the deductible and vice versa. So given the example above a policy with a premium of $100, for instance, might have a deductible of $2,000. A better way of describing it is the exchange between a lower, known risk and a higher unknown risk. If one goes up then the other goes down and vice versa.
What is a Lapse in Automobile Insurance Coverage?
A lapse in coverage is a period of time during which your vehicle was not insured by any automobile insurance company. If you have had a lapse in coverage, you will be forced to pay more for your auto insurance. You can avoid a lapse in coverage by making your premium payments on time each time that they are due and by returning all necessary paperwork to the insurer when requested. Avoid a lapse in coverage when switching to a new automobile insurance company by having the date of your existing policy’s cancellation coincide with the beginning date of your new policy. If you have a lapse in coverage, it will be harder for you to find an affordable insurer.
How does my driving record affect the premiums charged by my automobile insurance carrier?
Your driving record is very instrumental in determining how much you will pay for automobile insurance. Insurance companies place a lot of stock in whether you are a risk on the road and how that risk translates into potential money lost for them. Your driving record for the previous three to five years is examined and scrutinized by insurance companies when they write a policy for you, using an exact formula that is specific to their regulations and guidelines. The auto insurance company also looks at the likelihood that drivers with your type of driving record have of being in an accident. For instance, the statistics show that drivers that have been involved in accidents or who have been ticketed for speeding or disregarding a traffic control device are more likely than drivers with good driving records to be involved in an automobile accident.
My vehicle was totaled during an accident. Why did my automotive insurance policy not pay an amount that is equal to replacing my vehicle?
When a vehicle is “totaled” during an accident, drivers who have the appropriate coverage will either have their vehicles repaired to working order or, in the event that the cost of repair would exceed the value of the vehicle, a check for the vehicle’s value is issued to the insured. In a nutshell, if you are driving a 1995 Honda that is “totaled out” during an accident and the cost of the repairs to the vehicle are $4,000 – and the Honda values at $2,300, the insurance company will not pay to fix the vehicle, but they will pay the value of the vehicle – in this case, $2,300.
Why would an automobile insurance company choose to cancel a policy?
There are a number of reasons that an automobile insurance company may elect to cancel a particular insured’s policy. When reviewing a policy to determine if it will be renewed or not, the insurance company will look at past claims, driving record during the policy period, and the credit history of the insured. Frequent claims, tickets and accidents, and bad credit (especially bankruptcy) can affect the ability of an individual to be offered a renewal. An insurance company looks at risky behavior, like driving while under the influence of drugs or alcohol as a really good reason to not insure a particular driver.
I will be living in another state for five months. Do I need to purchase automobile insurance in that state?
Each state has a particular timeframe for how long you have to get insurance on an out-of-state vehicle after you move in, and how long you have to register and license the vehicle. Some automobile insurance companies have their own guidelines about coverage for people in this situation, such as requiring that you must live in the state for ten out of twelve months of the calendar year in order to necessitate the need to insure a car in that state. As a general rule, if you plan to live in a state for six months or longer, purchase coverage in the new state. Otherwise, most policies expire after six months – so you will need to renew your policy anyway.
What is an SR-22?
An SR-22 is a document that is completed by an automobile insurance company that verifies that a person has valid insurance for a particular time period. If you have been court ordered to maintain auto insurance, your insurance company may be asked to fill out this form for you and submit it to your state department of motor vehicles on a monthly basis. This necessitates the purchase of a special SR-22 automobile insurance policy, and not all insurance companies offer these policies. An SR-22 policy will cost more than a traditional policy because of the additional paperwork that the automobile insurer will need to complete at monthly intervals.
What does it mean when an insurance agent binds automotive insurance coverage?
When you purchase automobile insurance over the telephone or online, you are not present in person to sign your insurance application or other documents. Binding coverage simply means that the automobile insurance company has given you a limited and specific time period during which you must sign documentation and return it to the insurer, or make a payment on the coverage being offered. If you fail to return required documents or make the required payments, then the policy will be null and void from the date that you first initiated the process of purchase. A binder, essentially, is simply immediate coverage that is extended, either written or orally.
Whose idea was it to require mandatory automobile insurance anyway?
The first car insurance policy in the U.S. was written in 1898 and covered a doctor while he was driving his new vehicle, and was written on a form that would have ordinarily been used to write a policy for a team of horses! Massachusetts was the first state to require mandatory automobile insurance in 1927, although some folks had been insuring their vehicles for almost three decades by then.
Why are automobile insurance policy premiums different for different drivers?
Each automobile insurance company groups drivers that it insures according to the risk that the driver poses to the company and the potential loss that the driver can cause them. Drivers are usually categorized according to sex (men are more prone to have accidents than women), age (drivers under the age of twenty-five will pay more as they are higher risk in general), and marital status (drivers who are married are less prone to accidents and risk-taking). Next the automobile insurance company looks at factors like your personal driving history, such as how many years you have been driving, how many accidents you have been involved in, and any moving violations you have been charged with. The type of vehicle that you drive will also affect the rate of automomotive insurance that you will pay; insurance companies look at the value of your vehicle, as well as its size, weight, and how old the vehicle is – as well as how much parts for your vehicle cost, in order to determine the cost for insuring the vehicle on the road. Once your “rating” group has been determined, a specific formula goes into determining the average loss and actual loss that is usually experience by your particular group during a period of time. Your geographical location will also determine your insurance costs.
Why does it cost more to insure one car as opposed to another, if two automobiles cost around the same price when purchased new?
The automobile insurance company groups vehicles into categories based on their likelihood to be damaged, stolen, or vandalized. These categorizations are based on research as well as the type of vehicle, size of vehicle, value of the vehicle, and cost of repairs. For example, a station wagon that sells for $20,000 is expected to hold up better during its lifetime than a similarly priced sports sedan – so you will pay less for insuring the station wagon in most instances.
What is no-fault automobile insurance?
Some states have no-fault insurance laws (although the name is deceptive). No-fault insurance does not mean that no one is ever determined to be at fault in the accident. No-fault automobile insurance takes a detour around the traditional procedure of determining fault in an accident before claims can be processed. No-fault insurance is thought to be beneficial because there are no legal proceedings required in order to be recompensed for damages. If you are insured under a no-fault automobile policy and are involved in an accident, you do not have to pursue the other driver. You simply contact your own insurance company and file your claim; this speeds the process along and allows you to immediately take advantage of the coverage provided by your policy for damages to your vehicle, medical expenses as a result of injury, and lost wages.
