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8 Things You Should Know About Auto Insurance
Dealing with the ins and outs of auto insurance can be as tricky and confusing as trying to untie the Gordian knot. Although we can't help you with the knotty Gordian problem, the following recommendations could help you figure out some of the more complicated points of auto insurance.
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In respect to car insurance what is an assessable policy?
If you have an assessable policy, you can be charged (assessed) an additional amount if your insurance company has a bad year full of expensive accidents. Most policies written today are non-assessable.
Is it true that auto insurance rates have been falling across the U.S. In the last couple of years?
Yes. After many years of rate increases, the cost of car insurance fell slightly, by 0.3%, in 1998, and another reduction is expected for 1999. The total reduction was estimated to be 2 or 3% after dividends on policies issued by mutual companies are considered -- like market leader State Farm. California, with 10% of the drivers, had a 5.7% reduction in cost last year. This decline came after reductions in each of the three previous years. High premium states like New York, Florida and Massachusetts are also seeing declines. Even New Jersey -- the state with the highest insurance costs -- is expected to get a 15% cut in 1999 because of a state mandate.
My state has a comparative negligence law. How does that work? Who decides how much I was at fault?
The fault for an accident is not always placed squarely on one participant; one party is not necessarily held totally at fault and the other totally blameless. After determining the percentage of fault by each party, the compensation by the insurance company is adjusted accordingly.
Allocation of fault is made by negotiation between the insurance company and the claimant. There are state-by-state variations in how comparative negligence works, but the two main versions are:
1. Pure Comparative Negligence (or the 100% Type), where the claimant can collect for damages up to the amount of their damages minus the percentage of the damage that was their fault (for example, if the damage was $10,000 and the claimant was 20% at fault they would get $10,000-$2,000 or $8,000)
2. The more widely used Modified Comparative Negligence (or the 50% Type or 49% Type), which allows the claimant to collect from the other party's insurance carrier only if he or she is determined to be at fault less than a certain percentage (usually 50% or 49%).
I live in a state where I can elect either no-fault coverage or traditional tort coverage?
It depends on how you feel about potentially being unable to sue for pain and suffering damage if you are in an accident (no-fault). Some no-fault states, however, have low thresholds for suing, so, in those states, you may be able to reduce your premiums somewhat without giving up the ability to sue in most accidents.
Some states have a financial responsibility law?
States that do not require you to have insurance require a demonstration of financial responsibility, which could include demonstration that you have sufficient assets to settle any judgments against you that may arise out of an accident. After an accident, you may be required to post a bond if you do not have insurance.
Auto insurance is a contract with an insurance company that can protect you against severe financial loss if you are ever in an auto accident. Varying types of coverage act as a ?bumper? against various accident-related expenses, like liability, medical costs, damage to vehicles, and property damage.
Does car insurance remove the worry of a lawsuit?
Though it helps, having car insurance does not stop anyone from suing you. It does provide the assurance that, if you are sued as the result of an automobile accident, the financial and legal resources of the insurance company will assist you in defending against the suit and paying any resulting damages.
Who is covered by my personal auto policy?
You and the family members, friends and associates that you let borrow your car are all covered by your personal auto policy. Explicit permission is not required each time they borrow your car. They are covered as long as they have a reasonable belief that you would have permitted the loan.
If your state requires you to have auto insurance in order to drive, you may be faced with a dilemma if insurance companies won't accept you. Most states, therefore, have some sort of assigned risk plan to assure that you can get coverage. The cost of insurance under the assigned risk plan may be high, but the plan must accept you.
Is automobile insurance available for everyone?
Yes. Since most states require auto insurance of all drivers, the states have assigned risk plans to assure coverage if you are unable to find an insurance company willing to accept you. The exact type of plan varies from state to state, but assigned risk policies are usually relatively expensive. Why? Because a bad driving record makes you a bad risk for any insurer - even if they must accept you.
Most states have laws in the books that require basic auto insurance coverage for every driver. A few states ask only that you demonstrate "financial responsibility."
What happens to me if I drive without auto insurance?
If you are involved in an auto accident or stopped by a police officer and found to be driving without car insurance or proof of financial responsibility, you will be subject to penalties specific to the laws of your state. For violation of the financial responsibility law, those penalties could include a fine or loss of driving privileges. If you are uninsured and in an accident that involves property damage or injuries to people, you will be required to pay out of-pocket for any damages assessed by a court.
What is the relationship between risk and auto insurance?
The major difference between auto insurance risk and the risk associated with life insurance is that, while you can only die once, you can have many auto accident claims. And the details can be far more varied, with losses for things like liability, medical payments and physical damage.
Your demand letter should provide the claims adjuster with the information required to evaluate your claim. There must be a clear presentation of the facts and an accurate statement of the liability (who was at fault) supported by whatever evidence is available, such as witnesses' statements and a police report. Specific information about the injury and the expenses incurred as a result of the accident are vital to convince the adjuster that the claim has the value you believe it has.
8 Things You Should Know About Auto Insurance
Dealing with the ins and outs of auto insurance can be as tricky and confusing as trying to untie the Gordian knot. Although we can't help you with the knotty Gordian problem, the following recommendations could help you figure out some of the more complicated points of auto insurance.
Continue reading "8 Things You Should Know About Auto Insurance" »
In respect to car insurance what is an assessable policy?
If you have an assessable policy, you can be charged (assessed) an additional amount if your insurance company has a bad year full of expensive accidents. Most policies written today are non-assessable.