Insurance tips for you

Where Should I Start When I Buying Auto Insurance?

 

Auto insurance helps protect you and your family from losses resulting from motor vehicle accidents. It is required in US. If you drive without insurance, you are breaking the law!

Whether you are buying a new insurance policy or renewing your current policy, you will make many decisions about what coverage you need and how much you can pay in premium (the amount of money a company charges for insurance coverage). Some things to consider:

Understand Your Needs

Understand Your Options

Familiarize yourself with the words and phrases used in auto policies. Review the different benefits of each coverage option.

Understand Consumer Protections

As a US auto insurance consumer, you have the right to fair and equal treatment, and you
have the right to get the information you need to make informed decisions.

Remember:

You can shop for auto insurance at any time – not just when your policy is up for renewal, and if you find a better price, you can cancel your old policy and seek a refund of your unused premium. (There is no dollar penalty if you cancel your policy.)

You have the right to change your coverages and policy limits at any time, even if you are not near your renewal date. If you select options that save you money, you have a right to a refund of your unused premium within 60 days of the cancellation or notice of cancellation, whichever is later.

Companies and agents must give you three coverage choices, called Insurance Scenarios, when buying a new policy, or upon your request if you are already insured. You must be told how
each choice may affect what you pay and what your benefits would be in the event of an accident.

Whats in a Auto Insurance Policy?

Insurance policies use terms that may be unfamiliar to the average driver. It is useful to understand what these terms mean so you can make better, more informed decisions about your coverage.

Coverages — Your auto insurance policy is divided into different coverages based on the type of claim that will be paid to you or others. (A claim is a request to an insurer for payment or reimbursement of a loss covered by the terms of an insurance policy.) These coverages are:

Personal Injury Protection — Otherwise known as “PIP” this is your medical coverage for injuries you (and others) suffer in an auto accident. PIP pays if you or other persons covered under your policy are injured in an auto accident. It is sometimes called “no-fault” coverage because it pays your own medical expenses no matter who caused the auto accident.

PIP has two parts :

(1) coverage for the cost of treatment you receive from hospitals, doctors and other medical providers and any medical equipment that may be needed to treat your injuries

(2) reimbursement for certain other expenses you may have because you are hurt, such as lost wages and the need to hire someone to take care of your home or family. You may purchase both parts of PIP coverage or medical treatment coverage only, depending upon your needs.

Liability — This coverage pays others for damages from an auto accident that you cause. It also pays for a lawyer to defend you if you are sued for damages that you cause. There are two kinds of liability coverage: Bodily Injury and Property Damage.

Property Damage Liability Coverage — Pays for claims and lawsuits by people whose property is damaged as a result of an auto accident you cause. These coverages can sometimes be purchased as a combined single limit, which offers a maximum limit of protection per accident of
bodily injury and property damage liability combined.

Uninsured Motorist Coverage — Pays you for property damage or bodily injury if you are in an auto accident caused by an uninsured motorist (a driver who does not have the minimum level of insurance required by law). Claims that you would have made against the uninsured driver who
caused the accident are paid by your own policy. Uninsured motorist coverage does not pay benefits to the uninsured driver.

Underinsured Motorist Coverage — Pays you for property damage or bodily injury if you are in an auto accident caused by a driver who is insured, but who has less coverage than your underinsured motorist coverage. When damages are greater than the limits of the other driver’s
policy, the difference is covered by your underinsured motorist coverage.

*Claims paid under uninsured or underinsured motorist coverage exclude the first $500 in damages.

Collision Coverage — Pays for damage to your vehicle as the result of a collision with another car or other object. Collision coverage pays you for damage that you cause to your automobile. You can also make a claim under your own collision coverage for damage to your car from an auto accident you did not cause. This may take less time than making a property damage liability claim against the driver who caused the auto accident. Your insurer then seeks reimbursement from the insurer of the driver who caused the auto accident.

Comprehensive Coverage — Pays for damage to your vehicle that is not a result of a collision,
such as theft of your car, vandalism, flooding, fire or a broken windshield. Comprehensive
coverage also pays if you collide with an animal.

Remember:

Comprehensive (also known as “comp” or “Other Than Collision”) and Collision coverages are not
required by law, but may be required under the terms of an automobile leasing or financing contract.

What are the Types of Auto Insurance Policies?

There are two common types of auto insurance policies in US - they are referred to as Standard and Basic. Both offer options as well.

Standard Policy — The Standard Policy provides a number of different coverage options and the opportunity to buy additional protection. Most US drivers choose this policy.

Things to note if you choose the Standard Policy:

Basic Policy — The Basic Policy usually costs less than a Standard Policy, but provides limited benefits. It is not for everyone, but it does provide enough coverage to meet the minimum insurance requirements of US law. The Basic Policy could be an option for those with few family responsibilities and few assets to protect (including income from a job).

What is the SAIP?

The Special Automobile Insurance Policy (SAIP) is a new initiative to help make limited auto insurance coverage available to drivers who are eligible for Federal Medicaid with hospitalization. Such drivers can obtain a medical coverage-only policy at a cost of $365 a year.

What are Limits and Deductibles?

In addition to choosing coverage options, you must choose the amount of coverage you want to buy and the amount you are willing to pay out of pocket in the event of an accident.

Limits — The maximum dollar amount the insurer will pay following an auto accident. Limits vary with each coverage within the policy.

Deductibles — Payments you have to make before the insurer pays for a covered loss. For
example, a $750 deductible means that you pay the first $750 of each claim. Deductibles vary
by company and type of coverage. In addition to any savings you may realize from how much
coverage you buy, you can also save money by choosing higher deductibles. The amount you
save by selecting a higher deductible will vary by company.

Bodily Injury and Property Damage Liability Coverage

Limit — Coverages can sometimes be purchased as a combined single limit, which offers a maximum limit of protection per accident.

Personal Injury Protection (PIP)

Deductible Options — If you feel you need a high level of PIP coverage but want to reduce your premium, you can save money by agreeing to pay more out of pocket through a higher deductible if you are injured in an auto accident. Your insurer will pay the medical bills over the deductible amount you choose. However, for the first $5,000 in medical expenses, there is a 20 percent co-payment in addition to your deductible. That means you pay your deductible plus 20 percent of the first $5,000 in medical expenses, and your insurer pays any remaining costs.

Health Care Primary — Cost savings can also be achieved by using your own health insurance as a primary source of coverage in the case of injury related to an auto accident. Before selecting this option, you need to find out if your health insurance will cover auto accident injuries and how much
coverage is provided. Medicare and Medicaid do not offer the Health Care Primary option, but may provide coverage on a secondary basis, such as when the costs of your care exceed the PIP limits in your auto policy.

Personal Injury Protection (PIP) continued

Additional PIP Coverage Options — These are additional PIP benefit options provided under the Standard Policy. You may select various levels of coverage for these benefits, depending upon your needs.

Income Continuation — If you cannot work due to accident-related injuries, this coverage pays lost wages, less Temporary Disability Benefits you may receive if your disability prevents you from working, up to the amount you select.

Essential Services — Pays for necessary services that you normally do yourself, such as cleaning your house, mowing your lawn, shoveling snow or doing laundry, if you are injured in an auto accident.

Death Benefit — In the case of death, family members or estates will receive any benefits not already collected under the income continuation and essential services coverages.

Funeral Expense Benefit — Pays for reasonable funeral expenses up to the limit you select if you die as a result of an auto accident.

Comprehensive and Collision Coverages

Deductible Options — The standard deductible for Comprehensive and Collision coverages is $750. Higher and lower deductibles are available as options. (Remember: Higher deductibles can reduce your premium.)

Named Driver Exclusion — Prevents certain drivers on your policy from being covered by and charged for collision and/or comprehensive coverage on a specific automobile. This can lower your premium, but if the excluded driver operates the automobile for any reason and is involved in an auto accident, you are not insured for collision and/or comprehensive coverage;
which means you could be personally responsible for damage to your own vehicle.

Remember:

This exclusion is only for physical damage coverage; insurers are permitted to rate licensed drivers in your household who are not insured on another policy for other coverages on your policy.

 

Do You Want an Unlimited Right to Sue?

For the Standard Policy, you must make a choice about the rights you will have if you are injured in an automobile accident. The Basic Policy only includes the Limited Right to Sue option.

You have an important decision to make regarding the Right to Sue.

The choice you make affects how much your insurance will cost and what claims will be paid in the event of an accident. The choice you make regarding your right to sue another driver applies to you, your spouse, children and other relatives living with you who are not covered under another automobile insurance policy. The Unlimited Right to Sue and Limited Right to Sue options only cover lawsuits for “pain and suffering” or noneconomic losses. Your medical expenses and
some economic losses for injuries in auto accidents will be paid up to the limits of your PIP coverage and are not affected by the choice you make here.

WARNING:

Insurance companies or their producers or representatives shall not be held liable for your
choice of lawsuit option (Limited Right to Sue or Unlimited Right to Sue) or for your choices
regarding amounts and types of coverage. You cannot sue an insurance company or its
producers or representatives if the Limited Right to Sue option is imposed by law because no
choice was made on the coverage selection form. Insurers and their producers or representatives can lose this limitation on liability for failing to act in accordance with the law.

Remember:

Choosing the Limited Right to Sue option will save you money, but will limit your right to sue the person who caused an auto accident for pain and suffering.

Unlimited Right To Sue — Under the No Limitation on Lawsuit Option, you retain the right to sue the person who caused an auto accident for pain and suffering for any injury.

Limited Right to Sue — By choosing the Limitation on Lawsuit Option, you agree not to sue the person who caused an auto accident for your pain and suffering unless you sustain one of the permanent injuries listed below: (Choosing this option does not affect your ability to sue for economic damages such as medical expenses and lost wages.)