Car Insurance online has created more competition between car insurance companies. It is easier than ever for consumers to compare car insurance rates, analyze the types of coverage with free car insurance quotes online, and happily end up with cheaper car insurance. Liability car insurance, that covers injuries and property damage done to others, is compulsory throughout the United States. Penalties for not purchasing car insurance vary by state, but generally involve a substantial fine, license and/or registration revocation or suspension, as well as possible incarceration. Third party insurance to protect against financial loss, damage or injury caused by a vehicle is usually the minimum requirement.

girl car insuranceThe primary role of a car insurance company is to analyze, to accept or reject risks, and to classify the ones that are accepted to determine the premiums. If you are approved for car insurance coverage, the insurance company will place you in one of three basic categories of drivers: Preferred, Standard, or Nonstandard.

  • Preferred: These drivers are considered the “best” risks, which means the safest drivers. Preferred drivers have clean driving records for at least the past three years and will pay the lowest rates.
  • Standard: These drivers are considered “moderate” risks. Premiums for standard drivers are higher than the rates for preferred drivers. People in this category often drive “family” cars and have reasonably good driving records.
  • Nonstandard: This category is for “high” risk drivers. Their insurance rates are the highest. This category may include drivers with histories of tickets or accidents, drivers under 25, drivers with little experience, drivers with poor premium – payment records, and those with convictions for driving under the influence of alcohol or other drugs, and reckless driving. Direct Car Insurance specializes in high risk policies.

When you buy an auto insurance policy, you’re actually buying several different types of coverage. There are seven basic types of automobile insurance coverage:

  • Bodily injury liability pays for damages other people receive if you or someone you permit to drive your car causes an auto accident. Examples of damages include funeral costs, medical expenses, rehabilitation, settlement of law – suits, and legal expenses.
  • Property damage liability pays for damage to other people’s property if you or someone you allow drive your car causes an auto accident. It usually pays for actual cash value (ACV) or repair of others’ property and your legal expenses.
  • Personal injury protection (PIP) pays for funeral, medical, rehabilitation, and child–care expenses as well as for in-home assistance and loss of earnings if you and your passengers are hurt in an accident, regardless of who is at fault.
  • Bodily injury coverage addresses the cost of funeral expenses, medical, rehabilitation, and loss of earnings, and other damages if you or your family are connected to a vehicle, bicycle, or pedestrian accident produced by an uninsured or underinsured motorist or a hit – and-run driver.
  • Uninsured motorist property damage coverage indemnifies for damage to your auto caused by an uninsured driver. This optional coverage usually duplicates your collision coverage, but may be a good option if you don’t have or have a high deductible on your collision coverage.
  • Collision pays for fixing your vehicle in a collision or rollover.
  • Comprehensive compensates for damage to your vehicle resulting from windstorms, theft, vandalism, fire, hail, etc. Collision and comprehensive coverage are almost always required, by the lender, on new car insurance (as long as they hold the title).

You can purchase a separate personal umbrella policy to give you extra liability protection if you are sued. An umbrella policy will begin paying when your other policy’s liability limits are used up. For example, if you lose control of your car and are the cause of an accident that seriously injures four, kills one, and damages several vehicles and one house. The liability damages suffered in this accident are likely to drain the limits of your normal auto policy.

If you are having difficulty buying automobile liability insurance coverage, you may qualify under the assigned risk pool through an Automobile Insurance Program in your state. Most states have a safety net to safeguard insurance consumers from financial loss if an insurance company becomes bankrupt and is unable to honor its claims. Claims are normally paid according to the terms of the primary insurance policy, and the plan won’t pay any claim that the auto insurance company would not have paid. Most state laws require every motor vehicle to be covered by car insurance. However, millions of dollars in damage is the result each year of uninsured drivers. This includes damages to vehicles and medical treatments for those injured in accidents. Mandatory auto insurance laws require that drivers have a minimum of these forms of coverage:

  • Bodily injury (BI) liability coverage of $25,000 per person, and $50,000 per accident for bodily injury to 3rd parties.
  • Property damage (PD) liability coverage of $20,000 per accident for damage to others property.
  • Personal injury protection (PIP) (a version of no-fault insurance) allows you and your passengers, regardless of who is responsible for an accident, to have coverage for “reasonable and necessary” hospital, medical, dental, ambulance, surgical, and prosthetic services suffered within one year after the date of an injury. Some car insurance companies offer higher PIP coverage.

Minimum PIP benefits cover funeral expenses, loss of earnings, essential services, and child care. Treatment is considered necessary and reasonable unless a provider receives a denial notification within 60 days of claim notice. After that, the burden of demonstrating that treatment was not necessary and reasonable is on the car insurance company.

Loss of earnings benefits are accessible if your injury keeps you from returning to work. It starts on the 14th day of your disability. You receive up to 70% of your salary up to a maximum of $3,000 per month for 1 year. If you are unemployed, you are entitled to incurred expenditures for essential services that you would generally perform. You will receive up to $30 per day for up to 1 year. This benefit will begin on the 14th day of disability. You will be paid for necessary and reasonable funeral expenses within 1 year from the date of injury up to a maximum of $5,000. Your car insurance policy allows PIP benefit challenges to be resolved by arbitration, if both parties agree at the time of the disagreement.

Normal PIP limits for uninsured motorist bodily injury is $25,000 per person, $50,000 per accident to you and your passengers caused by an uninsured driver. This coverage requires your car insurance company to pay all of the expenses that would generally be paid by the other individual’s company if you are injured. This is the minimum coverage required by law, so, consider boosting this coverage on your policy, because an underinsured or uninsured motorist will probably not be able to compensate you for your losses.

Proof of insurance laws obliges drivers to carry proof of liability insurance. The law also directs your insurance company to send you an insurance card that indicates the effective date and expiration date of your policy. Keep this card in your car at all times. Driving without liability insurance could result in suspension of driving privileges, fines, and the seizure of your vehicle. If a judge convicts you of driving while uninsured, you will be ordered to file proof of financial responsibility with the Driver and Motor Vehicle Services (DMV) for three years or cope with suspension of your license. This is on top of any fines you must pay.

Familiarize yourself with your insurance policy before you have an accident. Carefully read your policy, and if you have any doubts about what is or is not covered, call your company or agent. If you are embroiled in an accident, get the other driver’s phone number, name, address, insurance carrier, and insurer’s phone number. Give the same information about yourself to the other involved driver. You can find the insurance company’s telephone numbers on proof-of-insurance card.

Ask any witnesses to the accident for their phone numbers and names in case their account of the accident is needed. If the accident results in injury or death, or more than $1,500 in damages to your vehicle or any property, and a vehicle is towed, make an accident report. Accident reports are available at sheriff offices, police departments, DMV field offices, and on DMV’s web sites.

Contact your insurance agent or company about the accident as soon as possible. An insurance adjuster will determine who was at fault in the accident. If you have collision insurance coverage and the accident was not your fault, you can have either your insurance company or the at-fault driver’s company deal with the repairs or replacement of your vehicle. Use the other driver’s insurance company and you usually won’t have a claim on your insurance policy and you won’t have to cough up the deductible.

Until all damages are settled to your satisfaction, don’t sign any release that absolves your insurance company of their responsibility. For example, file a claim with your insurance company if the other party’s company questions its negligence or offers an unsatisfactory settlement. You may warrant a monetary award for injuries caused by another responsible party. It can take several days or longer for injuries to become evident.

The insurance company is liable to pay for the fair cost of repairs to your vehicle. An insurance adjuster will appraise the damage. Insurance companies and auto body shops agree about what should be repaired. If you disagree with their decision, you have the right to get another estimate at any auto body shop.

Most auto insurance policies contain an appraisal clause, which can be used to help settle differences about physical damage claims between you and your auto insurance company. The clause doesn’t apply for damages you file with the other party’s company. If you can’t reach a understanding with your company, you or your insurer can begin the appraisal clause. Your appraiser and your company’s appraiser then select an independent arbiter to try to settle the dispute. Check your policy or ask your agent or insurance company for more info on the appraisal clause.

Insurers can declare your vehicle a total loss when they feel it is economically unfeasible to restore a vehicle to its original state. A car insurance company must provide reimbursement for a vehicle that is a total loss by presenting a comparable vehicle in your area or by providing a cash settlement based on the vehicle’s fair market value. There are several acceptable methods insurers can use in establishing the value of your car. They must also tell you how they ascertained the value, if you request.

If you have collision coverage, you can file a total-loss claim with either your own insurance company or the company of the other person involved in the accident. The company of the other person has the right to examine the accident facts and accept or deny any fault for damages to your vehicle.

The company will prepare an estimate of your vehicle and then make an offer. You should have an idea of how much your vehicle is worth. If you feel that the value is not the correct value, you must justify a higher value.

Ask for a copy of the valuation and read it carefully. Correct any erroneous information, and notify your car insurance company of the corrections, and have them perform another valuation.

Go through your local newspaper for personal vehicle sales and dealership sales of like vehicles, and browse the Internet (Edmunds, Auto Trader, etc). If you filed the claim with your own insurer and you do not concur with the price it has set, ask for the appraisal process.

You can request to be paid the unchallenged amount (the figure the insurance company offered) and inform the insurer that you are continuing your search for similar vehicles.

If you decide to keep your vehicle and have it fixed, know that the company is only liable for the cost to replace or repair, whichever is less. You can ask to retain the salvage and if the company is agreeable, it will send you the amount minus the salvage estimate of your vehicle.

Most insurance policies offer the actual cash value (ACV) of a car that is totaled in an accident. The ACV is equivalent to the market value of the vehicle immediately prior to the accident. Insurers must use a reasonable and fair method to determine the worth of your car. They also must advise you in writing what information they used to determine the value, if you request it. Explain to the insurance company why you believe the car is worth more than the insurer is offering to pay you. This may turn into a negotiation between you and your car insurance company.

An insurance company won’t pay you for “sentimental value”. Sometimes the value of a vehicle is less than the balance on the loan. There can be a few reasons for this. The company bases its settlement on the actual cash value (ACV) of the vehicle, not the amount of the loan. A special form of car insurance called guaranteed auto protection (GAP), can be bought when you purchase a car, and may help in the event of a loss where you owe more on your loan or lease balance than the true cash value of the car. GAP coverage might not pay off your full loan balance, as there are elements that GAP insurance doesn’t cover. The means by which the GAP policy or rider decide the value of the car and the way the primary insurer arrives at the value are sometimes determined by distinct methods.

GAP policies generally do not pay the deductible from the auto insurer, late fees, or missed payments. Depending on the percentage of the car’s value to the loan balance, GAP may just pay off a part of the loan. There may be other limitations as well, so read your policy carefully. Your insurance company must send you a notification at least 10 days prior to canceling your policy for nonpayment. If your policy is “non-renewed” or canceled for a reason other than nonpayment, the insurance company must give you at least 30 days notice in advance. An explanation of the reasons for non-renewal or cancelation must be included or accompany the notice. Car insurance companies must be able to prove that notification was sent but not that you actually received it. It’s your responsibility to inform your insurance company if your address has changed.

If you require a rental car, and have rental car coverage under your policy, your insurer owes you the policy coverage depending on the circumstances. The other party’s insurance company only owes for the reasonable amount of time to finish the repairs to the damaged car. This “reasonable” amount of time does not automatically include the time it takes the car insurance company to complete their investigation.

The insurer normally pays storage fees at the body shop until the day it makes you the offer. If you choose not to accept the offer at that time, you may be liable for continuing storage fees. The insurance company might also request that you move your car prior to settling the claim in order to lower or avoid storage charges. If you do not move the vehicle, you may also be liable for those additional storage fees.

Discuss with your agent or insurance company the costs of insurance before you buy a vehicle. Certain models and makes, especially sports cars, constitute higher risks and cost more to insure.

Standard comprehensive coverage covers damage from theft, fire, vandalism, glass breakage, explosion, animal collision, and other occurrences not covered by collision coverage. Collision is generally defined as overturning or colliding with another object. Most car insurance policies have a lower deductible for comprehensive than for collision coverage. Older cars may cost more to repair than they’re worth, consider the following to save money:

  • Raise your deductible.
  • Drop your comprehensive or collision coverage.
  • Drop both your comprehensive and collision coverage.

An “Adjuster” is a representative of an insurance company whose job it is to determine and “adjust” the amount of a loss and decide how much the company will pay for it. An acknowledgment that the car insurance for which you applied is in effect, whether or not you have paid for or received the insurance policy. If you don’t pay your premiums, a car insurance company can cancel your policy by giving 10 days written notification. The company is obliged to give you 30 days written notification if it is canceling your insurance policy for any other reason.

Many auto insurance companies look at consumer credit information to determine whether to issue a car insurance policy and how much to charge. The deductible is the amount you consent to pay on a loss before your insurance company antes up. In most cases, the larger your deductible, the smaller your premium. After an accident, and repairs have been made, if a car is worth less than it was prior to the accident, its value is said to have diminished. That difference in market value is referred to as “diminution of value”. Most car insurance policies disallow coverage for diminution of value. However, if the damages are being covered by the “at-fault” driver’s insurance, you may be owed payment for diminution of value. You will have to prove that the value of your car diminished because of the accident. Evidence might include photos, appraisals, Blue Book estimates, a receipt for the fair market value of the car, etc.

Uninsured motorist and underinsured motorist coverage pays for bodily injury to you and your passengers, and damage to your auto caused by an uninsured or underinsured driver, “phantom vehicle”, or a hit-and–run driver. If a judge finds you guilty of driving while uninsured, you will be required to file a proof of future financial responsibility with Motor Vehicle Services (DMV) for 3 years or expect suspension of your driving privileges. This is besides the stiff fines you must pay. A certificate from a licensed automobile insurance company confirming that you have purchased liability insurance is required by the state’s financial responsibility law. Your car insurance company can provide a financial responsibility filing for you by transmitting the insurance certificate to the DMV to prove that you have liability insurance. Liability covers the losses to “other people” and their property caused by a fault on your part.

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