What is auto insurance?
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to
pay the premium and the insurance company agrees to pay your losses as defined in your policy.
Auto insurance provides property, liability and medical coverage:
An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If
you're financing a car, your lender may also have requirements.
Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay
your premium.
What is covered by a basic auto policy?
Your auto policy may include six coverages. Each coverage is priced separately.
1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are
also covered when driving someone else’s car with their permission.
It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely
consider buying more than the state-required minimum to protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost
wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage
to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by
potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at
fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance
company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the
deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling
objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold with a $100 to $1,000 deductible, though you may want to opt for a higher deductible as a way of lowering your
premium.
Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a
deductible.
6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect
you if you are hit as a pedestrian.
What determines the price of my policy?
There are many factors that influence the price you pay for auto insurance. The average American driver spends about $850 a year. Your premium may be
higher or lower, depending on:
1. Your driving record.
The better your record, the lower your premium. If you've had accidents or serious traffic violations, you will pay more than if you have a clean driving record.
You may also pay more if you haven't been insured for a number of years.
2. The number of miles you drive each year.
The more miles you drive, the more chance for accidents. If you drive a lower than average number of miles per year, less than 10,000, you will pay less. For
instance, some companies will give discounts to policyholders who carpool.
3. Where you live.
Insurance companies look at local trends, such as the number of accidents, car thefts and lawsuits, as well as the cost of medical care and car repair.
4. Your age.
In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. So insurers generally charge more if teenagers or
young people below age 25 drive your car.
5. The car you drive.
Some cars cost more to insure than others. Variables include the likelihood of theft, the cost of the car, the cost of repairs, and the overall safety record of
the car.
6. The amount of coverage.
Of course, like anything else, the more coverage you have, the more you pay. However, you may qualify for discounts.
Deductible
Definition: An Insurance Deductible is he amount the insured is required and obligated to pay by the insurance policy. The deductible is chosen by the
insured and is usually applied to coverage's such as comprehensive and collision. Generally the lower the deductible, the higher the insurance premium.
Examples: After John filed his insurance claim his insurance agent said that they would cover the entire cost of replacing the door of his car after he
contributed his insurance deductible of $1,000.
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to
pay the premium and the insurance company agrees to pay your losses as defined in your policy.
Auto insurance provides property, liability and medical coverage:
- Property coverage pays for damage to or theft of your car.
- Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
- Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If
you're financing a car, your lender may also have requirements.
Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay
your premium.
What is covered by a basic auto policy?
Your auto policy may include six coverages. Each coverage is priced separately.
1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are
also covered when driving someone else’s car with their permission.
It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely
consider buying more than the state-required minimum to protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost
wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage
to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by
potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at
fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance
company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the
deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling
objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold with a $100 to $1,000 deductible, though you may want to opt for a higher deductible as a way of lowering your
premium.
Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a
deductible.
6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect
you if you are hit as a pedestrian.
What determines the price of my policy?
There are many factors that influence the price you pay for auto insurance. The average American driver spends about $850 a year. Your premium may be
higher or lower, depending on:
1. Your driving record.
The better your record, the lower your premium. If you've had accidents or serious traffic violations, you will pay more than if you have a clean driving record.
You may also pay more if you haven't been insured for a number of years.
2. The number of miles you drive each year.
The more miles you drive, the more chance for accidents. If you drive a lower than average number of miles per year, less than 10,000, you will pay less. For
instance, some companies will give discounts to policyholders who carpool.
3. Where you live.
Insurance companies look at local trends, such as the number of accidents, car thefts and lawsuits, as well as the cost of medical care and car repair.
4. Your age.
In general, mature drivers have fewer accidents than less experienced drivers, particularly teenagers. So insurers generally charge more if teenagers or
young people below age 25 drive your car.
5. The car you drive.
Some cars cost more to insure than others. Variables include the likelihood of theft, the cost of the car, the cost of repairs, and the overall safety record of
the car.
6. The amount of coverage.
Of course, like anything else, the more coverage you have, the more you pay. However, you may qualify for discounts.
Deductible
Definition: An Insurance Deductible is he amount the insured is required and obligated to pay by the insurance policy. The deductible is chosen by the
insured and is usually applied to coverage's such as comprehensive and collision. Generally the lower the deductible, the higher the insurance premium.
Examples: After John filed his insurance claim his insurance agent said that they would cover the entire cost of replacing the door of his car after he
contributed his insurance deductible of $1,000.
| INSURANCE 101 |
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CALICO Insurance
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