1. What are the different types of auto coverage?
2. What's that collision damage waiver that car rental companies
want you to buy?
Do I need really need it when I rent a car?
3. Does my auto insurance cover other people who drive my car?
4. On my insurance policy, what do those three numbers divided
by slashes mean?
5. Why do insurance companies use Insurance Bureau Scores?
6. How can I improve my score?
7. How can I keep the cost of my auto insurance as low as possible?
Liability Insurance: This coverage protects the owner against losses from legal liability arising from bodily injury or property damage caused by an automobile accident. The coverage can be a single limit, ($100,000 for each accident), or split limits such as $50,000 / $100,000 / $25,000 (per person/per accident for bodily injury/property damage).
This provision pays medical because of bodily injury. The coverage is generally in increments of $1,000 to $5,000 up to $10,000 per person per accident.
This section of the auto policy is designed to cover physical damage to the insured auto. Collision covers, as the name implies, collision losses. Comprehensive (also known as "other than collision") covers losses from non-collision incidents, such as theft, fire or storm damage. Losses for physical damage are generally based on the cost to repair or replace the damaged or stolen vehicle.
Even though many states have enacted "financial responsibility" laws, not all automobile owners comply. Uninsured motorist coverage pays for injuries sustained in an accident with an uninsured (or a hit-and-run driver). Underinsured motorist insurance covers the difference between actual losses sustained, and what an insured can collect from an at-fault driver, up to policy limits.
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PIP provides coverage for bodily injury sustained by the insured or any family member. Coverage has a $10,000 limit and is mandatory in the state of Florida - additional limits are available. Also provides funeral expenses up to $5,000.
The collision damage waiver, which is a type of insurance that the rental car company tries to sell, releases you from financial responsibility should you damage their vehicle while renting it. If you have already have insurance on your own car (including collision and comprehensive coverage), and rent a car for pleasure only (e.g., when on vacation), you don't need to buy the collision damage waiver from the rental company.
Renting a car for business purposes, however, is usually a bit different, and you should check with your insurance agent first.
Yes. Liability, collision, and comprehensive insurance follow your car. In addition, if the person who borrows your car is insured, his or her policy also will be available to cover the cost of damages and injuries should there be an accident. Keep in mind that when you borrow someone else's car your liability coverage follows you but your comprehensive and collision do not.
Each of these numbers means thousands of dollars in liability coverage. For example, the numbers 100/300/100 actually mean $100,000/$300,000/$100,000.
The first number is for bodily injury coverage per person; the second number is for bodily injury coverage per accident; and the third number is for property damage coverage per accident. Thus, in the above example, your coverage:
$100,000 in bodily injury coverage per person.
$300,000 in bodily injury coverage per accident.
$100,000 in property damage coverage per accident.
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Insurance companies use scores to help them issue new and renewal insurance policies. Insurance Bureau Scores provide an objective, accurate and consistent tool that insurers use with other applicant information to better anticipate claims, while streamlining the decision process so they can issue policies more efficiently. By better anticipating claims, insurers can better control risk, enabling them to offer insurance coverage to more consumers at a fairer cost.
An Insurance Bureau Score is a snapshot of your insurance risk picture based on information in your credit report that reflects your credit payment patterns over time, with more emphasis on recent information.
Pay bills on time. Delinquent payments and collections can have a major negative impact on a score.
Keep balances low on unsecured revolving debt like credit cards. High outstanding debt can affect a score.
Apply for and open new credit accounts only as needed.
You can increase your score over time by using credit responsibly. It's also a good idea to periodically obtain a copy of your credit reports from three major credit bureaus to check for any inaccuracies.
As with most everything else, you can shop around to find low cost auto insurance. But finding low cost auto insurance is no guarantee that you are getting the coverage you really need. There are many factors that go into determining the right coverage - and price - for your individual situation. While it can pay to shop around on your own, your shopping should also include the input and advice of an insurance agent.
In addition, there are a number of things that you can do that will enable you to get the right coverage at a lower cost.
Maintain a good driving record. As pointed out earlier, maintaining a good driving record signifies that you are less of a risk than those who have a poor driving record. Your driving record is a significant factor. Simple infractions, such as a speeding ticket, can raise your rates for several years.
The deductible is the amount of out-of-pocket expense you must pay before your insurance kicks in. For some people, the difference between $250 and $500 (common deductible amounts) is relatively insignificant, so by taking the higher deductible, premiums are lower.
Many insurance companies offer discounts for such things as air bags, anti-lock brakes, alarm systems, multiple vehicles, auto and home insurance from the same company, etc. An independent agent makes it his or her business to know the ions available from a variety of companies.
If your auto insurance is cancelled because you failed to pay your premiums, it could be difficult finding another company to insure you. Nonpayment of premiums is regarded as a failure to assume financial responsibility, which would make you a poor risk. Remember, if you can afford to own a car, you must insure it.
If your car is older and relatively low in value, you might want to drop collision and comprehensive insurance. But before doing so, get the advice of an insurance agent to see if that's a wise choice.
Situations and circumstances sometimes change and may require adjustments to your insurance coverage. There's nothing to be gained by paying more than necessary.
Insurance agents and brokers, insurance counselors, financial planners, and other trained financial advisors can help provide answers to detailed questions about a particular policy. These professionals are also helpful in selecting the right policy and the appropriate amount of coverage.
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