Skip First Level Navigation | Skip All Navigation

Site Map   Search INS

Augusta, Maine -

Insurance Superintendent Mila Kofman highlighted the anniversary of auto insurance being offered in the United States on Friday by announcing the availability of a new auto claims brochure and by reminding consumers about coverage requirements and ways to save money on auto insurance. Travelers became the first insurance company to offer automobile coverage in February, 1897.

“For more than 112 years, auto policies have been written by insurance companies. The anniversary of the first policy being issued provides an opportunity for consumers to learn more about the claims process, to be reminded about coverage requirements and to consider actions that could lower their insurance costs,” Superintendent Kofman commented.

The Bureau of Insurance has produced a new Automobile Insurance brochure titled “Making the Claims Process Easier.” The brochure is available online through the Bureau of Insurance website (www.maine.gov/insurance), or by calling 1-800-300-5000.

The brochure provides detailed information about filing a claim following an accident or other incident causing damage to an automobile. It encourages consumers to contact their insurance company quickly, to provide complete and accurate information, and to keep records of all contacts with insurance company representatives.

The new brochure also highlights issues and topics that may not be well-known to many consumers, including:

The appraisal clause is included in most automobile insurance policies. This offers a dispute resolution process when there is a disagreement between the policyholder and insurance company regarding the amount of loss to a vehicle. In the appraisal process, the policyholder and his or her insurer each choose an appraiser at their own expense. Each appraiser states the vehicle’s actual cash value (ACV) and the necessary repairs. If they cannot agree on the amount of the loss, the parties may then choose an umpire to make a final decision. The parties split the cost of the umpire. The appraisal process provides an alternative, in some cases, to action in the court system.

Payment of medical claims and lost wages following an accident. If medical care is needed because of an accident and it is believed that another driver’s insurance company should pay for treatment, the insurer generally will not pay for ongoing medical expenses until a settlement agreement is reached. This also applies to lost wages.

In addition to announcing the availability of the new brochure, Superintendent Kofman explained that the mandatory auto insurance law protects people from losses that might otherwise be financially devastating, and she noted that Maine ranks among the best states in ensuring that vehicle owners maintain coverage. The Superintendent also outlined strategies for saving money on auto insurance:

• Comparison Shop – premiums can vary significantly from company to company. Be aware, however, an early cancellation fee may apply if a policy is cancelled early. A new policy may also be subject to cancellation during its initial review. Discuss with an insurance agent.
• Consider One Company – discounts are generally applied for having home and auto insured with the same carrier. Auto/Home package policies can result in even greater savings. Multi-vehicle discounts are also applied when more than one vehicle is on the same policy or with the same company.
• Checking Policies for Accuracy - check policy information for accuracy to be sure charges accurately reflect what is being insured. Insurance agents are available to explain policy language and charges.
• Change Driving Habits or Vehicle Use – commuting shorter distances or carpooling may result in lower rates, but only if the insurance agent or company is notified.
• Maintain a good driving record - drivers who are free of at-fault accidents or driving violations are often charged lower rates.
• Reduce Number of New Credit Cards or Loans - most insurance companies use an insurance credit score as a rating variable. As few as two new credit cards in a two-year period may adversely affect homeowners and auto insurance premiums. That new store card to get 15% off today’s purchase may not be such a great deal when insurance policies are renewed. Always keep in mind that credit score can impact insurance rates favorably or unfavorably.
• Consider Insurance Costs When Buying Vehicle - insurance expenses should be considered before purchasing a car. Premiums vary from vehicle to vehicle, depending upon how costly a vehicle is to repair or how well it protects its occupants. Sporty or powerful vehicles often cost more to insure than other vehicles, sometimes significantly more. A more expensive vehicle is also going to have higher insurance costs.
• Review Coverage Options – some consumers reduce or eliminate physical damage coverage on older vehicles, unless required by a lien holder. This can result in substantial savings.

The Bureau of Insurance is part of the Department of Professional and Financial Regulation which encourages sound ethical business practices through regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can reach the Bureau through its web site at (www.maine.gov/insurance; by calling 800-300-5000 in state; or by writing to Bureau of Insurance, 34 State House Station, Augusta ME 04333.

###

Insurance Coverage Required by Law

Maine law requires liability insurance, as well as uninsured motorist coverage and medical payment coverage. To satisfy the financial responsibility law in Maine, a minimum of $50,000 in coverage is required for the injury or death of any one person; $100,000 for one accident resulting in injury 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 an insurance policy. Additionally, there is also a requirement of $2,000 in medical payments coverage. A vehicle cannot be registered in Maine unless proof of this minimum amount of insurance is demonstrated.

Vehicle owners should keep in mind that these minimums may be low for their particular situation and more coverage may be advisable. Motorists should consider whether they wish to protect their assets from additional claims above the minimums, while understanding that increased coverage means somewhat larger premium payments. The extra cost of higher coverage, however, tends to be relatively low.

What is Liability Insurance?

Most auto liability insurance policies contain three major parts: liability insurance for bodily injury; liability insurance for property damage; and uninsured/under-insured motorists coverage.

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.

How to 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 to Obtain More Auto Insurance Information or Purchase Coverage

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.

###

The Bureau of Insurance is part of the Department of Professional and Financial Regulation which encourages sound ethical business practices through high quality, impartial and efficient regulation of insurers, financial institutions, creditors, investment providers, and numerous professions and occupations for the purpose of protecting the citizens of Maine. Consumers can reach the Bureau through its web site at www.maine.gov/insurance; by calling 800-300-5000 in state; or by writing to Bureau of Insurance, 34 State House Station, Augusta ME 04333.

###

Last Updated: October 28, 2009 1:26 PM