Insurance Information Institute

OOPS!!

BANG!

YOU take a lot of chances as a driver.



     You may be in an accident or have your car vandalized or

stolen.  Insurance is available to protect you from the potentially

huge costs associated with these risks.



     Replacing just the bumper on a typical American-made car can

cost over $300.  Medical bills resulting from an accident could add

hundreds, or even thousands of dollars more to the bill.



     Insurance companies generally prefer to sell their insurance

to good drivers and may decide not to insure high risk drivers. 

Unfortunately, statistics show that one out of every three young

drivers will have an accident each year.  So, insurers do not think

of new drivers as "good" drivers.  This does not mean that you

cannot get insurance, however.



     There are several things about auto insurance that you should

know BEFORE you shop around...



COMMON QUESTIONS 

ABOUT AUTO INSURANCE



Q. What is insurance? 

A. Insurance is a way of spreading financial risk among large

numbers of people.  You pay a fee to an insurance company for the

right to share in funds set aside to pay your costs in certain pre-

defined circumstances.



Q. Do I have to buy auto insurance?

A. Most states require you to carry a minimum amount of liability

coverage.  Many states have "no-fault" auto insurance systems; in

other states, coverage for medical costs for you and your

passengers is optional.  Coverage for damage to your car is

optional.



Q. How much will my insurance cost?

A. Prices vary widely.  The type of car you drive, your driving

record, your age, your sex, where you live and how much you drive

usually affect cost.  You may qualify for various discounts.



Q. Can I be added on to my parents' auto insurance? 

A. If you drive a family car, you can be added to your parents'

policy.  However, the cost of the policy will increase.  (Some

companies insure young drivers only on a family policy.)  If you

have your own car, your parents' company may sell you a separate

policy but at a different rate that your parents.  New drivers

seeking their own insurance frequently are referred to state-run

insurance pools, known as "assigned risk plans," where the cost of

insurance is higher.



Q. Do I have to be a certain age to buy my own insurance?

A. No.  However, you must have a valid driver's license.  Also, in

many states you must be 18 before you can own a car without an

adult's name on the auto registration.



Q. How often do I have to renew my insurance?

A. Auto insurance policies usually last six months.  Some last one

year.  You will receive a notice when it is time to renew your

insurance.



Q. Will my rates go up or will I lose my insurance if I get into an

accident or get a ticket?  

A. If you are not at fault in an accident, your insurance should

not be affected.  If you are at fault, get a ticket for a serious

violation (such as drunk driving), or are involved in an expensive

property damage claim (such as crashing into a tree), the company

will consider that when setting the price for your next insurance

policy.  Your rates for the current policy won't be affected.





HOW DO YOU BUY AUTO INSURANCE?



1 Shop around.  Many companies sell auto insurance.  Compare prices

-in some states, prices vary by up to 100%.  Ask agents, brokers or

insurance companies for price comparisons.  Some state insurance

departments publish guides showing what different companies charge

in certain situations in various parts of the state.



2 See if you can lower your insurance rates.  Many companies offer

discounts on the price of auto insurance to people who have passed

an approved driver education course or who have a B grade average

or better.  Take proof of driver education and/or good grades with

you when you shop for insurance.  Many companies also offer

discounts if a car has anti-theft devices or air bags.



3 Investigate the types and amounts of coverage you need.  For

example, if your car is not worth much, you may not want to buy

collision coverage.



4 Look for an insurance agent, broker or company representative

that you trust.  Ask friends or relatives, or consult the telephone

book.  Ask questions.



5 Read your policy.  As a contract, an insurance policy creates

several obligations for both you and the insurance company.  For

example, the company must defend you in court if you are sued under

the policy and you must give your insurer complete, accurate and

timely information about any accident or ticket.  Before you sign

anything, go over the policy and any confusing language with your

insurance representative and family.









PHONE NUMBERS FOR STATE INSURANCE DEPARTMENTS:



AL: 334-269-3550   KY: 502-564-6027   OH: 614-644-2658

AK: 907-465-2515   LA: 504-342-5423   OK: 405-521-2686

AZ: 602-912-8400   MA: 617-521-7794   OR: 503-378-4271

AR: 501-686-2900   MD: 410-333-2521   PA: 717-783-0442

CA: 916-445-5544   ME: 207-624-8475   PR: 809-722-8686

CO: 303-894-7499   MI: 517-373-9273   RI: 401-277-2223

CT: 203-297-3802   MN: 612-296-6848   SC: 803-737-6160

DE: 302-739-4251   MS: 601-359-3569   SD: 605-773-3563

DC: 202-727-8000   MO: 314-751-4126   TN: 615-741-2241

FL: 904-922-3101   MT: 406-444-2040   TX: 512-463-6464

GA: 404-656-2056   NE: 402-471-2201   UT: 801-538-3800

GU: 671-477-5106   NV: 702-687-4270   VT: 802-828-3301

HI: 808-586-2790   NH: 603-271-2261   VI: 809-774-2991

IA: 515-281-5705   NJ: 609-292-5363   VA: 804-371-9694

ID: 208-334-4250   NM: 505-827-4601   WA: 360-753-7301

IL: 217-782-4515   NY: 212-602-0429   WV: 304-558-3354

IN: 317-232-2385   NC: 919-733-7349   WI: 608-266-0102

KS: 913-296-7801   ND: 701-328-2440   WY: 307-777-7401





GLOSSARY OF INSURANCE TERMS:



Agent: An insurance salesperson. a) An independent agent does not

work for any insurance company and sells the policies of more than

one insurer; b) an exclusive agent sells the policies of only one

insurance company.



Assigned risk plan (Involuntary insurance market): A state-

supervised insurance plan for people who cannot find insurance. 

Each driver in the plan is assigned to an insurance company.  The

cost of this insurance is higher than in the regular market.



Broker:  An insurance salesperson who deals with agents and

companies to find insurance for customers.



Claim:  A person's request for payment by an insurer for a loss

covered under a policy.  Your claims to your company are "first-

party claims."  Claims made by one person against another person's

company are know as "third-party claims."



Collision coverage:  Optional insurance which pays for damage to

your car caused by collision with another car or object, or by

rolling the car over.  Frequently required if you have a car loan.



Comprehensive physical damage coverage:  Optional insurance which

pays for damage to your auto caused by things other than collision

or rolling the car over, such as fire, theft, vandalism, flood or

hall.  Frequently required if you have a car loan.



Conditions: Part of an insurance policy which states your

obligations and those of your insurance company in order for the

policy to be in effect.



Deductible:  The amount which you agree to pay, per claim or per

accident.  This is subtracted from the total amount paid by your

insurer.  If the claim is $500 and your deductible is $100, you pay

$100 and your insurance company will pay $400.  The higher the

deductible, the lower your payment will be for the policy.



Insurance department:  Enforces rules for the insurance business in

each state.  Valuable source of information about all types of

insurance; also handles consumer inquiries and complaints.



Insurance company:  A company which, in exchange for a fee (known

as a premium), agrees to pay all legitimate claims that may arise

under your policy.



Liability: A legally enforceable financial obligation.



Liability coverage:  Insurance which pays the losses of other

people which you cause unintentionally or through negligence. a)

Bodily injury liability coverage pays medical costs of others and

your legal defense costs if your car injures or kills someone; b)

property damage liability coverage pays claims against you if you

damage someone else's car or property.



Medical payments coverage:  Optional insurance in states without

"no-fault" insurance systems.  It pays for medical and funeral

expenses for you and your passengers from an accident, up to policy

limits, regardless of who is at fault.



Negligence:  Failure to exercise a generally acceptable level of

care and caution.



No-fault insurance:  A form of insurance available in many states

under which each driver in an accident files claims for losses,

such as medical expenses, with their own insurance company,

regardless of who is at fault.



Policy period:  The amount of time an insurance contract (policy)

lasts.



Policyholder:  The person who buys insurance.



Premium:  The amount you pay for insurance coverage.



Proof of loss:  Documents that you give to the insurer to support

your request for payment of losses.  The company uses these

documents to determine whether and how much it will pay. (Examples:

written repair estimates from auto body shops, police reports.)



Uninsured motorist coverage:  Insurance which pays for your costs

resulting from an accident involving a hit-and-run driver or a

driver who does not have insurance.