Auto Insurance
An informational
guide on AKAIP assigned risk and
AK preferred risk automobile insurance.
Where
you live or, more precisely, where
you keep your car at night has a
bearing on your chances of having
an accident or becoming a victim
of theft or vandalism.
Other
factors affecting regional insurance
rates include time and efficiency
of police response and law enforcement,
local road and traffic conditions
and the quality of local medical
services. Most insurance companies factor in
the litigation rates in a given
area--that is, how many lawsuits
are filed, go to trial, are settled
out of court and for how much.
Why are rates different
for different cars, even if the
cars cost the same?
Vehicles
are also grouped into categories
according to their chances of being
damaged, vandalized or stolen. Insurers
generally consider the size and
type of vehicle, as well as the
value and the cost of repairs which
vary greatly, even on vehicles that
cost about the same amount. Therefore,
it is assumed that a new sport utility
vehicle is expected to hold up better
in an accident than a sports car
or a subcompact or electric hybrid
car.
Putting
insurance aside for a moment, safety
is key when buying an automobile.
Your life and everyone who rides
with you depends on it! Some cars
are considered safer than others
because of their performance record
in safety tests and real accidents.
That
is why you consumers should research
insurance coverage before you buy
your car. It helps you to understand
the actual cost and indicates those
vehicles with good safety records.
Your insurer will ultimately reward
you for putting safety first.
What is "no-fault"
insurance?
No-fault
insurance is a system adopted in
some states that essentially bypasses
the conventional legal procedure
which finds fault in an accident.
This is the procedure by which you hire an attorney, file suit and possibly go to court to prove the accident was the other persons fault. No-fault
simply does away with the concept
of one party or the other being
at fault--no lawyers, no court,
no judge, no jury, no lengthy lawsuits
against the other party. This is
considered beneficial to taxpayers,
because it eliminates costly legal
proceedings that the state must
manage, and to insurance policyholders,
because it helps keep rates down.
If
you are insured in a no-fault state
and have an accident, you don't
go after the other driver. You contact
your own insurer and file a claim.
Your own insurance policy guarantees
you immediate compensation for damages,
medical expenses, lost wages, essential
services, rental car arrangements
etc.
The
type and range of no-fault coverage
varies from state to state. What
defines the limitations of no-fault
policies can differ in two important
areas:
- Threshold--The type of damage or injury or the cost
of repair or recovery that triggers
the need for legal action.
- Mandated--Benefit Level The package of benefits (medical,
wage loss, replacement services
and other expenses) your state
requires you to carry.
The
details of no-fault insurance can
be complicated. Contact your agent
or state's insurance department
for further information.
No.
Some states, while not mandating
auto insurance, have what is known
as financial responsibility laws
that require all drivers to be able
to pay for any damage or injury
they may cause. However, carrying
liability insurance is still the
best way for you to meet your state's
financial responsibility requirements
once you know what they are.
UM and UIM policies are offered
by law in all states, including
no fault states. In fact, some states
require all motorists to carry this
coverage in order to gain protection
from inadequate insurance coverage
of other drivers that may not carry
enough or higher limits as the majority
does; i.e., 100-300-50,000.
First,
call the police to the scene to
be sure all pertinent information
is properly recorded. Your nerves
will be shaken right after an accident,
and it helps to have a calm and
knowledgeable person walking you
through the necessary details.
Then,
contact your agent or policy holder
services or claims number usually
on your ID Card immediately
and ask about filing a claim. If
you followed all the recommended
guidelines and procedures when you
bought your policy, you should be
covered within the benefits and
or limitations of that policy. Remember,
your car insurance policy is designed
to protect you and anyone in your
vehicle.
If the cost of your physical damages
or personal injuries exceed the
amount your policy will pay for,
it may be time to take legal action
against the other party. Even if
you have no-fault insurance, sometimes
the only way to be compensated is
to place blame and responsibility
where it belongs. That is why it
is best to get a police report documenting
the incident and any witnesses statement
while it is fresh in their minds.
This will preserve that moment in
time and remove any room for doubt
later in the legal process.
It
is better to have the police report
and not really need it , than it
is to need one for court and not
have one because it would have taken
another thirty minutes to an hour
extra at the incident scene.
Technically,
in most states your insurer can
cancel your policy only if:
- you fail to pay your premium;
- you lose your driver's license;
- you are guilty of material misrepresentation during the application
process i.e., you fail to notify
your insurer of a recorded violation,
such as a drunken driving, or
possession of drugs or any illegal
activity offense; or
- you fail to report a substantial change of risk, such as buying
a new high performance sports
car to replace an old high mileage
family sedan.
However,
your current insurance company may legally choose not to renew
your policy for a variety of reasons.
Do you have a bad driving record?
Have you received a lot of speeding
tickets? Have you ever been caught
driving drunk? Not only are these
scenarios considered unsafe and
illegal, they are justifiable cause
for your insurer to label you a
bad risk and refuse to renew your
policy. Some underwriters may feel
compelled to cancel policies after
only one accident.
Where
do you live? Has the neighborhood
changed in the last few years? Have
the accident or crime rates risen
noticeably? As regions are reassessed
periodically, their status could
change and you could suddenly find
yourself living in a higher risk
area, where your insurer's rates
may not be adequate to cover losses.
Even
"good" drivers can find themselves
in the position of being dropped
by their current carrier. Reasons
range from a couple of moving violations,
or multiple accidents, or other
serious violations that make you
a high risk to situations outside
your control, such as when insurers
in your state are suffering severe
business losses. Overall rises in
claims or losses can cause insurers
to become highly selective in determining
whom they can afford to offer to
insure.
That
is why it is important to note that
if you are licensed to drive, by
law, you are eligible for insurance.
However, your options for new coverage
may be limited. Each state has created
and regulates a market of last resort
for those who cannot otherwise obtain
coverage. These groups have various
names, depending on the state you
live in, such as assigned risk automobile
insurance plans or the residual
market, or the high risk pool. Your
agent will know more about the particulars
in your state.
Regardless
of the reason you were dropped or
cancelled by your insurer, you need
to act immediately to get another
policy. Under no circumstance should
you drive your vehicle without knowing
one hundred percent that you have
current insurance. Call your local
agent to help you find new coverage.
If you do find yourself in the assigned
risk residual market pool, the price
may be higher but it may be your
only alternative in maintaining
your freedom to drive.
The
most obvious way to maintain your
low risk status is to keep a clean
driving record. If you've been in
an accident, consider taking a defensive
driving course. Even those of us
who have been driving for years
rarely know the simple tricks to
preventing accidents through defensive
driving.
Also, look into purchasing special
safety and security features for
your car, such as anti-lock brakes
and an alarm system, or try OnStar.
Your assigned risk insurance agent can give
you further tips on how to convince
your insurer you're a safe driver.
Insurers
often discount their rates in order
to encourage good driving practices
and the use of safety and security
precautions. Depending on the insurance
company, you can often lower your
rates from 5 to 55 percent.
Sometimes the investment you make
in your vehicle is worth the discount,
and sometimes it's simply worth
some peace of mind. For example,
the purchase of anti-lock brakes
merits a discount from nearly every
insurer, but the discount probably
will not pay for the brakes which
cost several hundred dollars during
the normal life of your vehicle.
Anti-lock brakes are touted, nonetheless,
as a life-saving feature and deserves
serious consideration when safety
is a top priority. Insurers generally
offer discounts for:
- Safety Features Anti-lock brakes, air bags and passive
restraint systems i.e., automatic
seat belts.
- Defensive Driving Clean violation record, driver's
education courses for teenagers
and defensive driving or accident
prevention courses for adults
insurance discounts for the
latter are required in some
states.
- Security Systems Alarms, electronic locks, VIN etching
and automotive disabling devices.
- Changing The Driving Habits Try commuting by public
transit, using a company vehicle
for work-related travel and
car-pooling.
- Formal Agreements Not to Drink and Drive The availability
of a discount for signing such
an agreement varies among insurers
and states, however is a powerful
idea that works.
- Buying Home Owners and Auto Policies from the Same Company
If you own a home and an automobile
and you are insured by two different
companies, check into the cost
of carrying both policies by
one insurer. Your agent can
give you guidance as to which
insurers offer discounts. This
will always offer your the best
buy, so put it in your corner
when shopping for rates
You
can also lower your insurance rates
by requesting higher deductibles,
which is the amount of money you
pay out of pocket before you make
a claim. Increasing your deductibles
on collision and comprehensive coverage
from $100 to $250, or even $500,
will bring your rates down. Moreover,
you may not need collision and comprehensive
coverage if you drive an older car.
Ask your agent which discounts are
available to you.
How does adding
drivers to my policy affect my rates?
The
more people you allow to drive your
vehicle on a regular basis, the
greater the chances of your vehicle
being in an accident. Teenagers
are especially expensive to insure
because they are the least experienced
drivers.
A driver's-ed course can help ease
the burden of insurance costs since
it teaches your teenager defensive
driving techniques. If your child's
high school does not offer driver's-ed,
try to find one offered by another
school or a private firm in the
area. After all, the cost of driver's-ed
could be cheaper than the extra
cost of your insurance. Many insurers
offer "good student" discounts as
well.
An adult's driving experience can
also affect your rates significantly.
Don't assume that every adult you
know has been driving since age
16 or 17 or is a competent driver
with a clean driving or insurance
record. Again, taking a defensive
driving course is a good way for
adults to prove they are also responsible
drivers, thus lowering their risk
and their insurance premium rates.
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