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Nationwide Auto Insurance FAQ'sLearn more about car insurance in general with our most frequently asked questions and answers. 1.
Do I need an Auto Insurance Policy?
Your
automobile is a valuable asset, which could be very expensive to repair
or replace if is damaged. Part of what auto insurance does is to pay for
the repair or replacement of a vehicle which is damaged either as a result
of your driving or from other causes not related to driving, such as theft
or storm damage. Without insurance, many people would be unable to replace
vehicles that are stolen or become severely damaged. Auto insurance also
covers your legal liability, which could arise if you injure another person
or damage another person's property with your vehicle. Depending on the
extent of the damage or injury caused, the potential amount for which
you could become liable is far in excess of the value of your automobile,
perhaps in the hundreds of thousands of dollars or more. Auto liability
insurance pays the damage for which you become liable, up to the dollar
amount of liability coverage that you purchased. Without auto liability
insurance, all of your personal assets could be at risk. A
deductible is the dollar amount the insured must pay when he files a collision,
comprehensive or some in states uninsured motorists claim. Example an
insured has an at fault accident with damage of $1,000.00. If his deductible
is $250.00, his insurance company will issue him a check for $750.00.
The higher the deductible will lower the premium. Your
insurance policy follows your car. There may be specifics with each individual
carrier with regards to this. Generally they must have your permission
to drive to be covered while driving your car. All drivers in the house
must be listed on the policy unless they have there own policy. Many
states have laws which require that you must prove your financial ability
to pay a specified level of damages in order to register a vehicle or
renew license plates. The only way for most people to satisfy this requirement
is to have an automobile liability insurance policy for a specified minimum
amount of coverage, usually referred to as the "minimum limits" or "compulsory
limits" of coverage. If you have an auto loan or if you lease your vehicle,
the loan company or leasing company will require that you have insurance
to cover the repair or replacement of the vehicle in the event it is damaged.
Normally you will be required to name the loan company or leasing company
as a "loss payee" on your policy, which means that if the vehicle is damaged,
any insurance payment will go to the loan company so it can assure the
money, is used either to repair the vehicle or pay off the loan balance.
Insurance
policies offer protection against economic loss, that is, loss or damage
which can be measured in purely financial terms and compensated by money.
For example, an insurance policy can pay for the cost to repair or replace
a damaged automobile. The purpose is to place the injured party, as nearly
as possible, in the same financial position as if the loss had not occurred.
It is important to understand this limitation of car insurance, since
there are many types of losses which can not be compensated by money.
For example, insurance cannot replace a life or take away the emotional
injury or pain which often accompanies an accident. What should I know about auto insurance? Some people think of it in terms of "us versus them." Some of us have lives and property worth protecting and believe that there are people who have nothing, will never amount to anything and will take advantage of us anytime they can. Those of us who care purchase insurance for what we have to protect and keep it. In determining what Liability Limits you should purchase, you need to consider the amount of exposure that you have. As a general rule, the more property and wealth you own, the greater your exposure is, and the greater the need for protection against claims from third parties. Often, liability limits are set as a combination of numbers, such as 15/30, which means coverage of loss of up to $15,000 per person and up to $30,000 for all injuries, which occur in a single accident. Many states require a minimum amount of third party liability insurance be purchased before a you may drive a vehicle on public roads. This is referred to as the minimum liability limit. Who do I contact after an auto accident? Depending
upon the nature of the accident and the extent of the damages and injuries
involved, a series of auto accident reports must be filed. Reports typically
must be filed with three sets of organizations: Car insurance company
- Most auto insurance companies require their policyholders to promptly
report every auto accident. Most car insurance policies require Notice
of Loss be provided to the insurance company. When you are involved in
an accident, the terms of most insurance policies state that you must
contact your car insurance company and tell them about the accident. Should
you fail to tell your insurance company about an accident in a timely
manner, the insurance company may try to deny coverage for the occurrence.
The car insurance company will want to gather all of the basic information
concerning the accident for its records. Sometimes the insurance company
will want your authorization to make a recorded statement concerning the
accident. We suggest that if you or your passengers were injured in the
accident, or believe the insurance company will try to claim "you're not
covered". However, bear in mind that failure to provide information to
your insurance company on a timely basis -- your policy will set out how
quickly you must notify the company. Failure to comply could result in
loss of coverage for the accident.
For each type of policy, car insurance companies have a range of premium
levels that may be charged based on various factors that are considered
at the time an application is submitted. For example, the premium for
an auto insurance policy will vary depending on the applicant's driving
habits, such as number of miles driven and whether the auto is used for
business, the age and model of the vehicle, and whether the applicant
has recently been convicted of a traffic violation. fe insurance policy
will vary depending on the applicant's age and health condition. State
law often limits the specific rating factors that may be considered for
certain types of insurance. The rates and rating factors for most types
of insurance must be filed with the insurance regulatory agency for each
state where the insurance is to be sold. Once
a policy is issued, the car insurance company except for reasons specifically
stated in the policy can not cancel it, and state laws usually limit what
a company can include in the "cancellation" provisions of its policies.
Typically, policies will be subject to cancellation only for failure to
make required premium payments or for some type of serious misrepresentation
or fraud by the policyholder. Most auto insurance policies are issued
for a stated policy "term", such as six months or one year. The limitation
on cancellation mentioned above applies only during the policy term. Auto
insurance companies usually can decide to discontinue or "non-renew" these
policies at the end of the term for any reason except a reason that would
be prohibited by law. In most states, an insurance company must give the
policyholder a written notice at least 30 days prior to the end of the
policy term if it intends to non-renew a personal auto insurance policy. A
policyholder may elect to cancel an insurance policy at any time by giving
notice to the car insurance company. In some cases you may be required
to return the original policy or sign a "policy release", and of course
you will be responsible for any premium earned through the date of cancellation.
Sometimes there are financial penalties for early cancellation by the
policyholder. Most property and liability policies require what is called
a "short rate" penalty when a policyholder requests cancellation, which
means that the company retains a disproportionate amount of the premium.
For example, if you have a one-year policy and you request cancellation
after six months, the "short rate" penalty would allow the company to
retain more than one-half of the annual premium. A policy must clearly
describe any applicable cancellation penalties or surrender charges. Absolutely, but not always. The results will vary from state to state, and may depend on such factors as how long you have been insured with the company and your past driving record. If you are dropped, you will have to shop around for a new insurer and chances are your rates will be sky-high. Your increase in insurance rates can constitute the single biggest financial cost of being convicted for drunk driving. Check with your local DMV for more information. |
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