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> Consumer Guide to Personal Auto Insurance
A Consumer ’ s Guide to... Personal Auto Insurance Published By The Maine Bureau Of Insurance John Elias Baldacci
HOW TO USE THIS BROCHURERates are usually updated once
a year but should still give a general idea of the differnt rates charged
by insurers. The narrative portions of this brochure are current. This brochure is meant to be used only as a guide when you shop for auto insurance. We have tried to explain some commonly used insurance words to help you better understand the types of auto insurance you can buy, what you are required to buy by law, and what each type of insurance covers should you have to file a claim. The brochure also includes a premium comparison chart. The premiums in the chart are based on four different examples. Your specific circumstances will probably not match the examples exactly, so you should choose the example that is as close as possible to your situation. Once you pick an example, choose the territory that best describes the location where you keep your vehicle. Most of the premiums include discounts, however, these vary by company. Not all companies offer the same premium discounts, therefore, the premiums listed should only be used to give you a general idea of what you might pay compared to other companies. To receive a personal quote based on your particular situation, you should contact an insurance producer. Important Note: It is a crime to knowingly give false, incomplete, or misleading information to an insurance company for the purpose of defrauding the company. Penalties may include imprisonment, fines, or denial of insurance benefits. Make sure that your application contains accurate information before you sign.
Information you will be asked when you apply for insurance includes the following: 1.) Driving Record
2.) Territory
3.) Gender and Age
4.) Marital Status
5.) Prior Insurance Coverage
6.) Vehicle Use
7.) Make and Model of the Vehicle
8.) Licensed Drivers in Your Household
DISCOUNTSInsurance companies give discounts because they see you as a " better risk. " Find out what discounts are offered by which companies before buying auto insurance. (The last page has a list of some of the discounts offered by the companies shown in the premium comparison chart. However, not all companies offer all of these listed discounts.) The following describes some of the discounts:
When comparing the price of insurance among different companies, compare the total cost after any discounts for which you are eligible.
Insurance Coverage Required by Law Maine law requires that you buy liability insurance, uninsured motorists, and medical payments coverage. To satisfy the financial responsibility law in Maine, you must buy a minimum of $50,000 for the injury to or death of any one person; $100,000 for one accident resulting in injury to or death of more than one person; and $25,000 for property damage. These amounts are usually shown as $50/100/25, or a combined single limit (for bodily injury and property damage liability) of $125,000 on your insurance policy. You cannot register your vehicle unless you show proof that you have this minimum amount of insurance. There is also a mandatory $2,000 medical payments coverage that is required. Keep in mind that these minimum amounts may be low for your situation and you may want to buy more coverage. You should base your decision on your wish to protect your assets from additional claims above the minimum amounts. However, remember that as you raise your coverage, your premiums will also increase. The extra cost of higher coverage tends to be relatively low.
What is Liability Insurance?Most auto liability insurance policies contain three major parts: liability insurance for bodily injury; a.) Bodily injury liability insurance does not protect you or your car directly. If you are the cause of an accident in which other people are injured, this insurance protects you against their claims for damages such as medical expenses, lost wages, and pain and suffering. This insurance coverage will also pay if the accident was caused by a member of your family living with you or a person using your car with your permission. The maximum amount your insurance company pays for any one victim injured in an accident and the amount they must pay for multiple victims is determined by the amount of insurance you buy. The amounts are shown on the Declarations Page (usually the cover page) of your policy. b.) Property damage liability insurance pays for any damage you cause to the property of others, like a crushed fender, broken glass, or a damaged wall or fence. Your insurance will pay for this damage whether you are driving your car or whether it is being driven by another person who has your permission. Again, the minimum limit required by Maine law is $25,000. c.) Uninsured/Underinsured motorists coverage protects you directly. This coverage pays if you are hurt by a hit-and-run driver or a driver who does not have auto insurance. This coverage actually takes the place of the insurance that the other driver should have purchased but didn ’ t. Although liability insurance is required by State law, not all drivers obey the law. This coverage also provides protection if you are injured by a driver who is underinsured Underinsured drivers are those who have insurance but who bought insurance limits lower than the amount you purchased. Consequently, their coverage may not be enough to pay for your injuries. The minimum amount of uninsured motorists coverage that you must buy is $50,000 per person and $100,000 per accident. Uninsured motorists coverage does not protect the other driver and it does not cover damage to your vehicle. As of October 1, 2000 (unless you request lower limits in writing to your producer or company) Maine law requires that you have uninsured motorist coverage equal the amount of liability that you have on your policy unless you specifically elect to buy uninsured motor vehicle coverage with lower limits of liability for bodily injury or death. You must provide a rejection of equal coverage in writing on a form provided by the insurance company before the effective date of the policy. However, if you decide to request a lower limit in writing, the limit cannot go below the minimum required limit of $50,000 per person and $100,000 per accident. What Other Insurance Is Required?Medical payments coverage pays for the medical and funeral expenses for you or others hurt or killed in an accident while riding in or driving your car. Claims against this coverage include all reasonable hospital, surgical, chiropractor, X-ray, dental, professional nursing, prosthetic, and funeral expenses. It will also cover you or members of your family if you are hit by a car when you are walking or if you are riding in another car. This coverage will pay for your medical and funeral expenses even if you cause the accident. Usually, only expenses incurred within a specified period of time after the accident are included. Medical payments coverage is also required by Maine law. Effective January 1, 2008, you must have at least $2,000 in medical payments coverage on your policy. The coverages previously discussed are the basic coverages required by law. However, when you buy auto insurance you will have to decide if there are other insurance coverages that you would like to add to your policy. Another way to have higher limits of liability inexpensively is to purchase a personal umbrella policy. An umbrella policy provides broad liability protection over and above your auto policy ’ s liability limits. It will also cover some exposure to losses that are not covered by your auto or homeowner ’ s policies. What About Coverage for Damage to My Vehicle?In addition to the basic liability coverages described previously, the other most common coverages are collision and comprehensive. COLLISION COVERAGE pays for physical damage to your car when your car collides with an object, like a tree or another car. Collision insurance may be required by your bank or credit union if you have a loan. Also, if you are leasing a car, the person who leases the car to you may also require it. If you have an older car worth less than $2,000, you may not want to buy collision coverage, because you are likely to pay more money in premium than you would ever receive because of a claim. Auto insurance policies only require the company to cover the cost of repairs or value of the car, not to replace your vehicle. When an accident involves an older car, the cost of fixing the car can quickly exceed the worth of the car. If that happens, insurers will " total " the car and pay you what the car was worth instead of fixing it. COMPREHENSIVE COVERAGE pays for damage to your car from almost all other causes (other than collision) including fire, severe weather, vandalism, floods, and theft. Comprehensive coverage also covers broken glass, such as windshield damage. However, remember that comprehensive is not required by law. If you buy collision or comprehensive coverage, you can save money by agreeing to the highest deductible you can afford to pay in case of an accident. A deductible is the amount of money you agree to pay as part of a claim before the insurer is obligated to pay the rest of the claim. For example, if you carry collision coverage with a $200 deductible and you have a $500 loss, you must pay $200 and the insurance company would have to pay the remaining $300. Deductibles reduce your premiums because you agree to pay a set amount of your claim that your insurer would otherwise have to pay. Insurance companies offer deductibles because they reduce the number of small claims which are expensive for them to handle. If you buy a new car with a loan, the financial institution that loaned you the money may require you to buy comprehensive and collision coverage. This is because they want to make sure your car is worth something if they have to repossess it.
WHAT IS LOAN/LEASE COVERAGE?If you bought your car with only a small down payment or with no money down and you financed a large part of the cost, you may owe more money than the car is worth. This is because auto collision and comprehensive payments are based on actual cash value which is based on the cost to replace your vehicle less an amount for depreciation depending on the age of the car. If you have an accident with your car, the actual cash value of the car may be less than the amount owed to the bank or lender. Loan/lease coverage (sometimes called gap coverage) pays the difference between the actual cash value of the car and the remaining balance you owe on the loan.
CD Players, Tape Players, Radios and other audio or visual electronic equipment, tapes, records, discs and other media that is not necessary to the operation of the vehicle is generally excluded under collision and other than collision coverage. However, most insurers offer coverage for this equipment for an additional premium. If you have a stereo, speakers, telephone and other devices installed in your car, you may want to buy this extra coverage. Rental Reimbursement Coverage This coverage usually pays $15 to $20 a day to rent a car for a specific number of days while your car is being repaired. The premium is different from insurer to insurer. Towing and Labor Coverage This coverage pays the cost of towing your car to the repair shop subject to the limit amount in your policy. Premium for this coverage can run as low as $5 to $10 a year. However, if you are a member of an auto club (like AAA), you probably already have this service and may not want to duplicate your coverage. You will not be able to collect under both.
HOW DO I SHOP FOR INSURANCE?The key to comparison shopping is to know what insurance coverage you need before you start. Once you know what you want, you can find out how much the coverage will cost from different companies. Comparison shopping takes time but it will save you money. The only way you can make sure you are not paying too much is to shop around. Find out what different companies charge for the same products and services. Where Can I Get Information? Information is available to consumers from a number of impartial sources. These sources include public libraries, consumer groups, consumer publications, and the Internet. Because the insurance industry, like many other industries, has developed many words not commonly used by the average person, you may need to find a good glossary or dictionary of insurance terms from your public library. The Property/Casualty Division of the Maine Bureau of Insurance (in state: 800-300-5000) can also help you with any questions or problems you may have about your auto insurance. Check the newspaper and yellow pages of the telephone book for companies and producers in your area. Also, ask your neighbors, relatives, and friends for recommendations on insurance companies and producers. Ask them about their experience with price and service. Ask them what kind of claim service they have received from the companies they recommend.
When you shop for car insurance, premium quotations are useful to compare different companies ’ products. When you ask for price quotations, make sure that you give the same information to each producer or company to get a fair comparison. To give you a quote, the producer or company will usually request the following information:
To use the premium comparison chart, you must choose one of the three examples on the insert that most closely fits your vehicle, the drivers in your household, and the family ’ s driving experience. Insurance companies look at many things when they set the price you pay for insurance. Your premium is affected by your age; where you live; how much you drive; your credit score; the age, make, and model of your car; whether you ’ re married; your driving record; and your car ’ s safety features. A company may also request your credit history to decide whether to issue a policy or they may use the credit history to determine the premium they will charge. However, if an insurer makes an unfavorable underwriting decision based on your credit history, they must tell you how you can request a copy of your credit report. When you receive your report, it is important to make sure that it is correct. Correct any mistakes that you find on the report. For more information on how insurers use your credit score, see the Bureau's brochure on this subject at Credit Scoring Don ’ t forget to look at other factors besides the price. Quality of service the company gives, its claims process, policy provisions, and coverage limits are all important considerations. Other Factors That May Affect Your Premium Surcharges are used to distribute the cost of automobile insurance among policyholders as fairly as possible. For example, a driver with a clear driving record pays the lowest possible rates while a surcharge may be added to the premium of a driver who is at-fault in an accident or who is convicted of a traffic violation. The amount of the surcharge is a percentage of your renewal premium. The surcharge is not a flat fee and is not designed to recover money that was paid out for any of your prior claims. Surcharges are usually applied for three policy renewal periods. Canceling your Policy in the Middle of the Policy Term A short rate cancellation may apply when you buy a new policy from another company at mid-term because the new policy has a lower price. In most cases, your insurance company will keep 10% of the unearned premium when you request cancellation in the middle of the policy period. This charge covers the expenses the company incurs when they issue a policy. Once the cancellation of the old policy has been processed and the short-rate cancellation charge is applied, the new policy may no longer be a " bargain. " Companies generally allow exceptions to the short-rate cancellation if you no longer own the vehicle. Billing Procedures and Fees Rather than paying the whole premium at the beginning of the policy period, some companies offer you the option of paying the policy premium in semi-annual, quarterly, or monthly installments. If you decide to pay the premium in installments, an installment fee may be applied. This fee covers the additional expense of sending you multiple bills and processing multiple payments. Fees for Insufficient Funds Companies may be allowed to charge a fee when checks are not honored by your bank or credit union. Mid-term Changes in the Policy Changes you make to your policy near a billing date will generally not show in the next bill. The amount shown as due should be paid; any adjustments will be made with the following bill. There is no grace period for paying property and casualty insurance
premiums. If you do not make payments when they are due, your
policy can be cancelled for nonpayment of premium. Premium Comparison
Chart
EXAMPLE 1
* Range of premiums represent territories different from those listed.
Please check with individual companies for specific areas and
rates. EXAMPLE 2
* Range of premiums represent territories different from those listed.
Please check with individual companies for specific areas and
rates. EXAMPLE 3
* Range of premiums represent territories different from those listed.
Please check with individual companies for specific areas and
rates.
EXAMPLE 4
* Range of premiums represent territories different from those listed.
Please check with individual companies for specific areas and
rates. The following are some of the discounts offered by the listed companies. The companies were asked to rate the examples giving discounts based on the limited information listed in the example. Some companies may have more discounts in their rates than others because they may have made more assumptions about the drivers. This chart is meant to be used only as a guide to give you a general idea about rates. Please note: not every company offers all the discounts listed:
Please also note that the companies that list a range of premiums for a territory have territories that are slightly different from other companies. This could also affect your actual premium. Be sure that you are comparing prices for the same geographic areas. What Should I Do If I have An Auto Accident? Write down the names, addresses and license numbers of anyone involved
in the accident. Write down the names and addresses of anyone who may have seen the accident. This can prevent inconsistencies about how the accident actually happened. Immediately contact your insurance company or insurance agent to report your claim. Most companies provide claims service 24 hours a day. You have the responsibility to comply with specific duties in the section
called Conditions in your auto policy. Failing to comply with the specific
terms and conditions listed in your policy could lead to denial of coverage.
Please make sure that you know what your responsibilities are if you
are involved in an accident. Auto Brochure Published by: The Maine Bureau of Insurance 800-300-5000 (in state) Other brochures and additional consumer information is also available on our web site The Bureau of Insurance, within the Department of Professional and Financial Regulation, regulates the insurance industry for solvency and consumer protection. It does so through its examining and licensing procedures of insurance companies, by licensing producers, by reviewing rates and coverage forms, conducting audits, and by sponsoring programs that enhance awareness of and compliance with State laws. The Bureau has statutory authority to enforce the State's laws and rules pertaining to insurance, and it initiates investigations and holds hearings concerning possible infractions of them. Mila Kofman The Bureau of Insurance Printed Under Appropriation No. 014 02A 3041 012 December 2005
Last Updated: July 16, 2008 |
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