THE BASICS OF AUTO INSURANCE
Losses from property damage, medical and legal costs, and lost income add up to billions of dollars annually for automobile mishaps. Automobile insurance plays an important role in protecting consumers from serious financial losses that can result from such accidents.
The basic types of auto insurance coverage include:
WAYS TO SAVE $ ON YOUR POLICY
State-by-State Requirements . . .
Not all states require you to have automobile insurance, but all states do require you to prove that you can pay specified amounts if you cause bodily injury or property damage while driving. Your proof would be insurance or large amounts of cash or some other security. Without one of these, you may lose your driver's license and registration. Visit the Insurance Information Institute’s web site at www.iii.org to find the specific auto insurance coverages required by each state.
Savings Check List . . .
Also, check the financial ratings of insurance companies with one of the major ratings services. The following provide free information on the claims-paying ability ratings of companies: Standard & Poor’s at 212.208.1146 and Moody’s Investor Service at 212.553.0300.
IN CASE OF AN ACCIDENT
If you are involved in an auto accident, take the following steps:
FILING YOUR CLAIM
WORDS TO KNOW
Before purchasing auto insurance, you should know the following definitions:
Conditions -- Explanations in the policy of your responsibilities and the company's; for example, how claims are to be filed and what proofs you must submit with your claim.
Coverage -- Description in the policy of the specific circumstances under which you receive benefits.
Declarations -- Listing of the details of your particular coverage, such as the policy number, kinds of coverage and amounts of money provided by each, your name and address, a description of your vehicle, the premium, and coverage duration.
Exclusions -- Descriptions of the situations under which you and your car are not covered.
Supplemental Payments -- Court costs, bail bonds, expenses related to a lawsuit including defense, or any other specific payments your insurance provides which are not specifically listed in other parts of the policy.
Deductible -- The amount of a loss or claim you must pay before you can collect from the insurance company.
Liability -- Your financial responsibility incurred because of an accident.
Rating -- The process by which the price of your insurance coverage is determined. States are divided into rating territories. Your insurance company bases part of the price of your policy on the claims history of all the drivers it insures in your territory. Other factors such as your driving record and age also affect the rating.
Premium -- The cost of the insurance policy (usually paid out in periodic payments).
HOW TO PROTECT YOURSELF
Taking the following proactive steps can help you avoid becoming a victim of auto insurance fraud:
Plan Ahead. Purchasing insurance itself is not enough. Decide what type of coverage you want and what you can afford in terms of deductibles.
Shop Around. Average auto insurance rates have declined in recent years. Comparison shop as you would for any other major purchase. The cost of insurance can vary significantly from com-pany to company.
Get What You Pay For. Make sure your policy contains the coverage you've selected. Take the time to review your coverage and get a second opinion from a reliable source.
Investigate. Check out the reputation of the agent as well as the insurance company. If you buy a policy from an unlicensed agent, you are not protected. Don't rely on someone's identification for verification. Get their agent license number and call your state insurance commissioner’s office to verify an agent's licensing status. To locate your state insurance department, visit the National Association of Insurance Commissioners web site. Do not give out any financial or personal information until you do so.
Never Pay Cash. Always pay your insurance premiums by check or money order. And, if possible, make your check out to the insurance company.
Protect Your Records. Store copies of insurance documents and receipts in a safe deposit box or with an attorney. Documents should include up-to-date pictures of your vehicles.
Detail Your Claims. In the event of an accident, your insurance company will meet with you to determine the validity of your claim. Keep a log of your interactions with adjusters and agents, including conversations, documents and phone calls, etc.
Beware of Unsolicited Offers. Be wary if, after an auto accident, one or more strangers contact you to offer “quick cash” or to recommend a particular medical clinic, doctor or attorney. This unsolicited help could be the work of a fraud ring.
Check All Related Bills. Ask for detailed bills for all services associated with your auto insurance policy. Carefully check them for accuracy. Be sure you actually received the service(s) listed and watch for double-billing or unexplained excess charges.
REPORT FRAUD. If you’ve been the victim of auto insurance fraud, immediately contact the fraud division of your state insurance department. Remember, detailed and precise documentation is your greatest asset when filing claims and will enhance your chances of fighting back.