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Auto Insurance

Understanding how Auto insurance works and the questions to ask when you are getting a quote are very important. The following is a list of a few questions. Just click the question to view the answer.

Auto Insurance Basics:

  • What is auto insurance?

    Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

    Auto insurance provides property, liability and medical coverage:

    • Property coverage pays for damage to or theft of your car.
    • Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
    • Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

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  • What is in a basic auto policy?

    Your auto policy may include six coverages. Each coverage is priced separately.

    • Bodily Injury Liability
      This coverage applies to injuries you, the designated driver or policyholder cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.
    • Medical Payments or Personal Injury Protection (PIP)
      This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
    • Property Damage Liability
      This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
    • Collision
      This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.
    • Comprehensive
      This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
    • Uninsured and Underinsured Motorist Coverage
      This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.

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  • Can I drive legally without insurance?
  • What if I lease a car?

    If you lease a car, you still need to buy your own auto insurance policy. The auto dealer or bank that is financing the car will require you to buy collision and comprehensive coverage. You'll need to buy these coverages in addition to the others that may be mandatory in your state, such as auto liability insurance.

    • Collision covers the damage to the car from an accident with another automobile or object.
    • Comprehensive covers a loss that is caused by something other than a collision with another car or object, such as a fire or theft or collision with a deer.

    The leasing company may also require "gap" insurance. This refers to the fact that if you have an accident and your leased car is damaged beyond repair or "totaled," there's likely to be a difference between the amount that you still owe the auto dealer and the check you'll get from your insurance company. That's because the insurance company's check is based on the car's actual cash value which takes into account depreciation. The difference between the two amounts is known as the "gap." Check with your auto dealer when leasing your car. You may also buy gap insurance if you have an auto loan.

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  • Do I need insurance to rent a car?

    When renting a car, you need insurance. If you have adequate insurance on your own car, including collision and comprehensive, this may be enough.

    Before you rent a car:

    1. Contact Your Insurance Company
      Find out how much coverage you have on your own car. In most cases, the coverage and deductibles you have on your personal auto policy would apply to a rental car, providing it's used for pleasure and not business. If you don't have comprehensive and collision coverage on your own car, you will not be covered if your rental car is stolen or if it is damaged in an accident.
    2. Call Your Credit Card Company
      Find out what insurance your card provides. Levels of coverage vary.

    If you don't have auto insurance, you will need to buy coverage at the car rental counter.

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  • What's the difference between cancellation and non-renewal?

    There is a big difference between when an insurance company cancels a policy and when it chooses not to renew it. Insurance companies cannot cancel a policy that has been in force for more than 60 days except:

    • If you fail to pay the premium.
    • You have committed fraud or made serious misrepresentations on your application.
    • Your driver's license has been revoked or suspended.

    Non-renewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days notice and explain the reason for non-renewal before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company’s consumer affairs division. If you don't get an explanation, call your state insurance department.

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Safety Tips:

  • Air Bag Safety

    Air bags save thousands of lives each year, according to The National Highway Traffic Safety Administration (NHTSA). In frontal crashes, air bags reduce deaths among drivers by about 30% and among passengers by 27%

    Air bags, however, can be dangerous. If small children sit unbelted in the front seat, they can be catapulted into the path of a deploying air bag, which inflates with great force. This risk also applies to small adults, who must sit close to the steering wheel to reach the pedals, pregnant women and the elderly. Infants in rear-facing safety seats on the passenger side can be severely injured because their heads are in the direct path of an inflating air bag. If your airbag is stolen or it deploys, you will be reimbursed under the comprehensive portion of your auto insurance policy. (If your air bag deploys, you have to get a new one.)

    Preventing air bag injuries:

    Drivers should have all children sit in the backseat wearing a safety belt. Infants should be placed in rear-facing car seats and put in the backseat. Small adults should move the seat back so that their breastbone is at least 10 inches from the air bag cover.

    If this is not possible, air bag switches can be installed so that the vehicle owner has the option of turning the bag off or on, depending on the situation. In January 1998, NHTSA allowed auto dealers and repair shops to begin installing air bag cut-off switches. Before the switch can be installed, vehicle owners must complete a four-step process:

    1. Obtain an information Brochure and request form from NHTSA, dealerships or repair shops.
    2. Return the form to NHTSA.
    3. Receive authorization from NHTSA after it reviews the case.
    4. Take the vehicle to the service shop along with the authorization from NHTSA which certifies that the owner has read the brochure and met one of the four eligibility classifications:
      • rear-facing infant seat can be in the front (Necessary if the vehicle has no back-seat)
      • driver's seat cannot be adjusted to keep more than 10 inches between the driver and the steering wheel
      • putting a child 12 or under in the front seat can not be avoided
      • having a medical condition that puts them at risk of injury when an air bag deploys

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  • At the Scene of an Accident

    Knowing what to do if you are involved in an accident can save lives and also make the claims process easier.

    1. Stop your car and find out if anyone is injured.
    2. Call the police or highway patrol. Tell them how many people were hurt and the types of injuries. The police will notify the nearest medical unit.
    3. Cover injured people with a blanket to keep them warm.
    4. Try to protect the accident scene. Take reasonable steps to protect your car from further damage, such as setting up flares, getting the car off the road and calling a tow truck.
    5. Ask the investigating officer where you can obtain a copy of the police report. You will probably need it when you submit your claim to your insurance company.
    6. If necessary, have the car towed to a repair shop. But remember, your insurance company probably will want to have an adjuster inspect it and appraise the damage before you order repair work done.
    7. Make notes. Keep a pad and pencil in your glove compartment. Write down:
      • the names and addresses of all drivers and passengers involved in the accidents
      • license plate numbers
      • make and model of each car
      • drivers's license numbers
      • insurance identifications
      • names and addresses of witnesses
      • names and badge numbers of police officers or other emergency personnel
    8. If you run into an unattended vehicle or object, try to find the owner. If you can't, leave a note containing your name, address and phone number. Record the details of the accident.

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  • Shopping for a Safe Car

    If you’re like most people shopping for a new car, safety ranks high among things you're looking for. Every new car must meet certain federal safety standards, but that doesn’t mean that all cars are equally safe. There are still important safety differences, and some vehicles are safer than others. Many automakers offer safety features beyond the required federal minimums. The following safety features should be considered when purchasing a car:

    1. Crashworthiness: These features reduce the risk of death or serious injury when a crash occurs. You can get a rating of crashworthiness from the Insurance Institute for Highway Safety's website (http://www.highwaysafety.org).
    2. Vehicle structural design: A good structural design has a strong occupant compartment along with front and rear ends of the vehicle designed to buckle to absorb the force of a crash.
    3. Vehicle size and weight: The laws of physics dictate that larger and heavier cars are safer than lighter and smaller ones. Small cars have twice as many occupant deaths each year as large cars.
    4. Restraint systems: Belts, airbags and head restraints all work together with a vehicle's structure to protect people in serious crashes. Lap/shoulder belts hold you in place, reducing the chance you’ll slam into something hard or get ejected from the crashing vehicle.
    5. Anti-lick brakes: When you brake hard with conventional brakes, the wheels may lock and cause skidding and a lack of control. Anti-lock brakes pump brakes automatically many times a second to prevent lockup and allow you to keep control of the car. If you were trained to brake gently on slippery roads or pump your brakes to avoid a skid, you may have to unlearn these habits and use hard, continuous pressure to activate your anti-lock brakes. Anti-lock brakes may help you keep steering control, but they won’t necessarily help you stop more quickly.
    6. Daytime running lights: The ignition switch activates these lights. By increasing the contrast between vehicles and their backgrounds, making the vehicles more visible to oncoming drivers, these lights can prevent daytime accidents.
    7. On the road experience: Other design characteristics can influence injury risk on the road. Some small utility vehicles and pickups are prone to rolling over. "High performance" cars typically have higher-than-average death rates because the drivers are tempted to use excessive speed. Combining a young driver and a high-performance car can be particularly dangerous.

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  • Car Breakdown Safety

    If you are in an accident or your car breaks down, safety should be your first concern. Getting out of the car at a busy intersection or on a highway to change a tire or check damage from a fender bender is probably one of the worst things you can do. The Insurance Information Institute (I.I.I.) recommends the following precautions when your car breaks down:

    1. Never get out of the vehicle to make a repair or examine the damage on a busy highway. Get the vehicle to a safe place before getting out. If you've been involved in an accident, motion the other driver to pull up to a safe spot ahead.
    2. If you can’t drive the vehicle, it may be safer to stay in the vehicle and wait for help or use a cell phone to summon help. Standing outside the vehicle in the flow of traffic, under most circumstances, is a bad idea.
    3. Carry flares or triangles to use to mark your location once you get to the side of the road. Marking your vehicle’s location to give other drivers advance warning of your location can be critical. Remember to put on your hazard lights!
    4. In the case of a blowout or a flat tire, move the vehicle to a safer place before attempting a repair—even if it means destroying the wheel getting there. The cost of a tire, rim or wheel is minor compared to endangering your safety.

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  • Cell Phones & Driving

    Drivers who are distracted by talking on a cell phone or dialing numbers while they are driving are causing more and more accidents. Some municipalities have banned using cell phones while driving because it has caused such a major problem.

    If you must talk while you drive, the safest way is to have a hands-free cell phone cradle installed in your car so you can speak while driving with two hands. Even so, remember to stay aware of what is going on around you on the road. It’s easy to get so engrossed in conversation that you miss exits or don’t notice what other drivers are doing. Better yet, wait until you have arrived at your destination or pull over to the side of the road to begin your cell phone conversations.

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  • Child Safety Seats

    If you have children it's important to make sure they are secured properly when you drive with them. They are almost always safer when riding in the back, in a car seat that is appropriate to their age and weight.

    Using a car seat correctly can prevent injuries, but wrong usage is very common. Even a small mistake in how the seat is used can cause serious injury in a crash.

    Tips to ensure you are using a child car seat correctly:

    1. Never put an infant in the front seat of a vehicle with a passenger air bag.
    2. Route harness straps in lower slots at or below shoulder level.
    3. Keep harness straps snug and fasten the clip at armpit level.
    4. Make sure the straps lie flat and are not twisted.
    5. Dress your baby in clothes that allow the straps to go between the legs. Adjust the straps to allow for the thickness of your child’s clothes. Do not use bulky clothes that could increase slack in a crash.
    6. To keep your newborn from slouching, pad the sides of the seat and between the crotch with rolled up up diapers or receiving blankets. If your child’s head flops forward, the seat may not have reclined enough. Tilt the seat back until it is level by wedging firm padding such as a rolled towel, under the front of the base of the seat.
    7. Put the car seat carrying handle down when in the car.
    8. Infants must ride in the back seat facing the rear of the car. This offers the best protection for your infant’s neck.
    9. Recline the rear-facing seat at a 45-degree angle. A firmly rolled up towel under the car seat may help.
    10. All new car seats are now required to come equipped with top tether straps. A tether strap is a belt that is attached to the car seat and bolted to the window ledge or the floor of the car. They give extra protection and keep the car seat from being thrown forward in a crash. Tether kits are also available for most older car seats. Check with the manufacturer to find out how to get a top tether for your seat. Install it according to instructions. The tether strap may help make some seats that are difficult to install fit more tightly.

    Do Not use a car seat that:

    1. Is too old. Look on the label for the date it was made. If made before January 1981, the seat may not meet strict safety standards and its parts are too old to be safe. Some manufacturers recommend using seats for only 6 years.
    2. Was ever in a crash. If so, it may have been weakened and should not be used, even if it looks all right.
    3. Does not have a label with the date of manufacture and model number. Without these, you cannot check on recalls.
    4. Does not come with instructions. You need them to know how to use the car seat. Do not rely on the former owner’s instructions. Get a copy of the manual from the manufacturer.
    5. Has any cracks in the frame of the seat.
    6. Is missing parts. Used seats often come without important parts. Check with the manufacturer to make sure you can get the right parts.

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  • Driving in Bad Weather

    Driving in bad weather is a major cause of accidents. When you are driving, particularly on a long trip, make sure to stay tuned to radio reports about weather conditions. If you hear that an ice storm, hurricane, tornado, flood, hail, or other severe weather is expected on the route you are taking or at your intended destination, change your travel plans. Whatever reason you have for going where you are going cannot be as important as saving your life.

    If you are already in an area that is being hit by bad weather, don’t try to drive your way out of it. Seek shelter for both you and your car and wait for the storm to pass.

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  • Elderly Drivers

    People 55 years or older are less likely to drive aggressively or too fast. That’s the reason that most insurance companies offer discounts to drivers over 55.

    Still, older drivers are likelier to have impaired hearing and slower reflexes, or to be using prescription drugs that might impair their reaction time. Older drivers’ eyesight deteriorates, so they need more light to see, are more sensitive to glare and have a narrower peripheral field of vision. So if you are having problems driving at night or in difficult conditions, use common sense and try to avoid driving when it is dangerous. If you drive when you are not physically able to do so safely, your insurance company may not renew your coverage. You may also want to take a defensive driving class designed for seniors. Inform your insurer that you have taken the class and you may be eligible for a discount on your insurance premium.

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  • Road Rage

    Increasingly crowded highways and traffic backups cause many drivers to lose control and become extremely aggressive.

    If you encounter an aggressive driver:

    1. Don't Challenge them.
    2. Stay as far away as possible.

    You may want to take down their license plate number and report their behavior to police so they won’t hurt themselves or someone else.

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  • Avoiding Deer / Car Collisions

    The explosion in the deer population has lead to the increase in deer/car collisions. Losses due to deer and car encounters will only increase as the deer population continues to grow and urban habitats encroach upon rural environments.

    Defensive driving tips to avoid hitting deer:

    • Be vigilant in early morning and evening hours, the most active time for deer.
    • Use your high-beam headlights.
    • Slow down and blow your horn with one long blast to frighten the deer away.
    • Brake firmly when you notice a deer in or near your path. Do not swerve. It can confuse the deer as to where to run. It can also cause you to lose control and hit a tree or another car.
    • Be alert and drive with caution when you are moving through a deer crossing zone.
    • Always wear your seat belt. Most people injured in car/deer crashes were not wearing their seat belt.
    • Look for other deer after one has crossed the road. Deer seldom run alone.

    If your vehicle strikes a deer, do not touch the animal. The frightened animal, in attempting to move, could hurt you or itself. The best procedure is to get your car off the road, if possible, and call the police.

    Contact your insurance agent or company representative to report any damage to your car. Collision with an animal is covered under the comprehensive portion of your auto insurance policy.

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  • Preventing Carjacking / Theft

    To minimize the danger of being carjacked:

    • Think of saving your life first. Only then, think of your car and what's in it.
    • If another car bumps your car, stay inside with the windows shut and the door locked and drive to the nearest police or fire station.
    • Don’t stop at isolated pay phones, cash machines or newspaper machines where you could become a carjacking victim.
    • Stay alert to people lurking near or moving toward your parked car.
    • Always keep the windows of your car shut and doors locked, whether you’re in or out of your car.
    • Park only in well-lighted areas.

    To prevent your car from being stolen:

    • Keep your registration card in your wallet instead of your glove compartment.
    • If you have to leave personal property in your car, leave it in the trunk.
    • Keep your car in a garage and lock the garage door.
    • Use a security device like a steering wheel lock or a gear shift column lock.

    If your car was stolen, have the following information to give to the police:

    • Year, make, model and color of the car
    • Approximate time the car was stolen
    • Description of anyone you may have seen loitering around your car before it was stolen
    • Names of any witnesses

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  • Teenagers & Safe Cars

    If your teenager has just gotten a driver's license, it may be hard to imagine handing over the keys to your brand new car, but that may be the smartest vehicle to choose.

    While getting a driver's license is an exciting rite-of- passage for teens, it can be enough to make a parent frantic. The Insurance Institute for Highway Safety (IIHS) and the Insurance Information Institute (I.I.I.) say there's something worried parents can do to protect their teens -- choose a safe vehicle.

    • Avoid vehicles that encourage reckless driving.
    • Don't let your teen drive an unstable vehicle.
    • Pick a vehicle that offers good crash protection.
    • Don't let your teen drive a small vehicle.
    • Avoid older cars. Newer cars are better designed for crash protection.

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Additional Questions? Send us a personalized question.

Educator Resources would like to thank the Insurance Information Institute for providing a "Frequently Asked Questions (FAQ) section" for individuals to learn more about homeowners insurance. Additional information can be found on their site at www.iii.org