Frequently Asked Insurance Questions

WHAT FACTORS INFLUENCE INSURANCE RATES?

If your current insurance rates seem particularly high (or low), you might want to know why. Indeed, if your rates (or quotes) are high, altering your lifestyle or vehicle choice can have a big effect on the rates you pay. While criteria may vary slightly from carrier to carrier, the major determining factors fall into four basic areas:

You - Your age, gender, marital status, driving record, and record of prior claims play a major role in determining your risk level and therefore the premium you will pay. Traditionally, males under 25 years of age represent the highest risk, while married, middle-aged, mothers represent the lowest.

Where you live - Living in an urban area typically triggers higher rates due to increased incidence of theft and accident claims-both of which are statistically higher in and around cities.

Your vehicle - The type of vehicle you drive greatly affects the rates you pay. Vehicles that have a high frequency of claims (sports cars) or are expensive to repair (luxury cars, SUVs) are prone to higher premiums. However, larger vehicles tend to be safer in collisions, which sometimes offsets costs.

How you use your vehicle - Statistically, the more miles you drive, the greater chance you have of being involved in a crash. High annual mileage will result in higher premiums.

Another way to reduce your premium is to increase the amount you self-insure by increasing the deductible amounts on the property damage coverage for your own vehicle. These deductible amounts on your comprehensive and collision coverages may be limited if you have the vehicle leased or financed, so check your financing contract before raising your deductibles too high.

WHAT ARE THE MAJOR TYPES OF AUTO INSURANCE COVERAGE?

This is intended as a general description of the definitions typically used in a personal auto policy. For specific definitions and coverages, you should always refer to your current policy or the policy that you are considering.

COLLISION The portion of the policy that pays for the damage to your car caused by a crash, regardless of responsibility. If another party is responsible for the damage to your car, the insurance carrier will pursue the other party on your behalf and collect payment for the repairs from the other party's insurance carrier or the party directly. The maximum amount of collision protection is usually limited by the depreciated value of your car (which is not the same as the replacement cost). Collision insurance is usually required by a lending institution if the vehicle is financed or leased. A deductible applies.

COMPREHENSIVE The portion of the policy that pays for damage to the vehicle caused by non-crash events such as theft, vandalism, acts of God, striking an animal, storms, etc. A deductible applies.

MEDICAL This coverage pays the initial medical bills for you, members of your family and passengers in your car. If the cost of medical treatment exceeds the medical coverage limit, non-family passengers in your car can obtain compensation from your liability coverage, but you or your family members would not be covered by your own liability coverage. You or family members could look to other medical insurance for additional coverage. It also covers you and those in your household if you're a passenger in a car involved in a crash, or if you're a pedestrian struck by a car.

LIABILITY This coverage pays for bodily injury or property damage that you become legally responsible for as a result of driving your vehicle. Family members living with you who are listed with the insurance company as drivers on your policy and anyone driving your car with your permission will be covered by the liability coverage for injuries or property damage that you or they become legally responsible for while driving your vehicle. Your liability coverage will not pay for injuries to your own family members in the car, which will be covered by medical coverage described above. Coverage required by the state.

UNINSURED MOTORIST This covers your personal injuries in the event an uninsured motorist hits you. It also covers hit-and-run crashes.

UNDERINSURED MOTORIST This covers your personal injuries caused by another party, when the amount of damage exceeds the other party's liability limits. This coverage will pick up after the other party's liability limit is exhausted.

LOAN / LEASE GAP INSURANCE This coverage provides for the difference between the amount paid under collision or comprehensive coverage to cover a total loss and the amount to pay off the lease or finance contract balance on the vehicle. Many lease or finance contracts include this coverage, but if yours does not you should consider including the coverage on your auto policy. If the payoff amount on the vehicle is more than the payout under your comprehensive or collision coverage and you don't have gap coverage, you will be responsible for the difference. (Availability and limits vary with carriers.)

OTHER OPTIONAL COVERAGEThis can include emergency towing or repairs while on the road and rental car reimbursement when your car is being repaired for damages caused by an accident.

 

 

 

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