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- Am I required by law to buy
auto liability insurance?
- How often do I have to renew
my auto insurance?
- Does my auto insurance cover
personal items stolen from my vehicle?
- Can I be insured on my parents’
auto insurance policy while I am in college?
- If I loan my vehicle to a friend
who has an accident, is that individual covered?
- Does my insurance cover me if
I drive another individual’s vehicle?
- Does my insurance cover me if I
drive a company vehicle or government-owned vehicle?
- Am I covered if I rent a vehicle?
Do I need to buy the insurance the rental company sells?
- If my vehicle is in an accident and the
insurance company considers it a total loss,
how much will I be reimbursed?
- How do accidents and convictions
affect my rates?
- Since I carry insurance to cover
an auto accident, why do my premiums increase when
I cause the first accident?
- Should I report all auto
accidents to my insurance company?
- What if I drive into another state
where the insurance laws are different?
| 1. |
Am I required by law to buy
auto liability insurance? |
|
Every state has legal requirements for a minimum amount
of financial responsibility in case of an automobile accident. A common way to fulfill
that responsibility is with auto liability insurance. The required minimum amount varies
by state. If you do not purchase adequate limits, you may have to pay out of your personal
assets for damages that you cause. |
| 2. |
How often do I have to renew
my auto insurance? |
|
Policies are generally issued for
6 or 12 months. Your company will send you a renewal notice. |
| 3. |
Does my auto insurance cover
personal items stolen from my vehicle? |
|
Generally not. Theft of most personal
items would be covered under a homeowners or renters policy. |
| 4. |
Can I be insured on my parents’
auto insurance policy while I am in college? |
|
In most cases, yes. Check with your parents’
insurance company for details. Be sure to ask for quotes since your premiums
will most likely change when you change locations.
|
| 5. |
If I loan my vehicle to a friend
who has an accident, is that individual covered? |
|
Under most circumstances, someone
using your vehicle with your permission is covered by your insurance.
If the individual borrows your vehicle with your permission and is
involved in an accident, your insurance would pay just as if you
were the driver. However, in some states, some insurers may limit
coverage in these situations.
|
| 6. |
Does my insurance cover me if
I drive another individual’s vehicle? |
|
Yes, in most cases. Your insurance
will cover you if the insurance on the vehicle is inadequate. The
coverage on the vehicle will be primary and your coverage will be
excess. But there are some exceptions. For example, if a vehicle
is not yours but is available for you to drive regularly, your
insurance will probably not cover you when you drive that vehicle.
Check with your insurance company to be certain. |
| 7. |
Does my insurance cover me if I
drive a company vehicle or government-owned vehicle? |
|
It depends. If the vehicle is available
for your regular use, your insurance will probably not cover you. If the
vehicle is available for you to use only occasionally, your insurance
probably will cover you. You can buy coverage on a regularly-used company
vehicle by buying a Named Non-owned policy or an Extended Non-owned Auto
(ENOA) endorsement to your personal auto policy. Check with your insurance
company to be sure. |
| 8. |
Am I covered if I rent a vehicle?
Do I need to buy the insurance the rental company sells? |
|
It is a good idea to consult
with your insurance company and the rental company before you make
a decision. The answer varies from state to state and the laws
regulating rental car insurance change frequently.
In general, if you rent a vehicle, your own insurance will cover
you in that vehicle just as it would cover you in your own vehicle.
Check with your insurer to be certain. In many cases, your insurance
will not cover you for any amount the rental company may charge for
revenue it loses while the vehicle is out of service (for example,
while collision repairs are being made). Some rental companies also
charge for diminution-in-value and an administrative charge following
an auto accident. These charges are probably not covered by your
personal auto insurance.
For these reasons, you may want to consider buying the extra insurance
offered by the rental company. It waives your responsibility for damage
to the rental car in most circumstances. Unfortunately, this insurance
from a rental company is very expensive — sometimes more than $20 per day.
You should also check with your credit card company. Some provide rental
car coverage as a special benefit.
|
| 9. |
If my vehicle is in an accident and the
insurance company considers it a total loss,
how much will I be reimbursed? |
|
Both collision and comprehensive
coverage usually pay the “actual cash value” of your vehicle, based
on current prices for vehicles of the same make and model year, with
similar mileage and in similar condition. Your deductible will apply.
If there are any unique features that make your vehicle significantly
more valuable than the average vehicle, you should discuss this with
your insurer in advance. You may be required to pay an additional premium.
|
| 10. |
How do accidents and convictions
affect my rates? |
|
Company practices vary in the types of accidents and convictions
that affect your rates, so you should check with your insurer. Most
insurers rely significantly on at-fault accidents and moving violations
in modifying your rates.
|
| 11. |
Since I carry insurance to cover
an auto accident, why do my premiums increase when
I cause the first accident? |
|
Before your accident, you were part of an accident-free group.
After your accident, you became part of a group of individuals who
have recently been involved in an accident. Over time, statistics
show that the accident-free group is much less likely than the second
group to be involved in accidents in the future. Insurance companies
charge each group according to what they predict the group will cost
them in future claims. Your premiums cover a particular policy period.
It does not act as a savings account to pay for future claims. Because
insurance pools risks, the premiums paid for that period must cover the
accidents of all drivers in the pool during that period. However, some
insurers have adopted “first-accident forgiveness.” Check with your insurer.
|
| 12. |
Should I report all auto
accidents to my insurance company? |
|
Yes. If an accident involves another individual (including a passenger
in your vehicle) or another individual’s property, you must report it,
even if you do not file a claim. If you do not report the accident, and
the other individual involved later sues you for injuries or damages, your
insurance company would be at a disadvantage in defending you against the
claim. It might deny you coverage because you did not report the accident.
Lawsuits can result from any accident — no matter how insignificant. To
protect yourself, report all accidents to your insurance company.
|
| 13. |
What if I drive into another state
where the insurance laws are different? |
|
If you drive into another state where the laws require more
insurance than you carry in your own state, your policy will
generally cover you for the minimum requirements of the other
state. Check your policy for verification. However, your
coverage will not be reduced if you drive into a state that
requires lower limits than those you purchased.
|
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