1.WHAT DOES “FULL” COVERAGE ENTAIL OR PROVIDE?
Department of Insurance regulates the rules and laws for operating a motor vehicle in California. It further requires that all drivers carry bodily injury liability insurance of $15,000 per person, $30,000 per accident and $5,000 in property damage liability insurance for physical damage done, as when you strike someone else’s vehicle. Full coverage does not address this requirement, nor does it provide any details as to limit. It is a highly misunderstood term that could miscommunicate to the user that they were adequately insured. “Policies that only meet the State’s minimum coverage limits are typically known as basic liability-only policies.”1 As of the late 1990’s, California drivers are required to provide proof of insurance at the time of registration or when stopped by a peace officer.
Other than the basic liability-only policies, insurance companies sell more complete coverage policies that contain higher liability limits, comprehensive and collision (physical damage) coverage, uninsured and underinsured motorist coverage, medical payments, and rental car reimbursement coverage. “These policies are known as standard coverage.” 1
2. What are the best steps taken to getting a fair, accurate and timely insurance quote?
There are ten (10) factors that will make your process of obtaining, comparing and ultimately purchasing insurance efficient, accurate, timely and comprehensive. These are:
- Have your California Driver’s License number, or your current out of state/international license. An accurate copy of the license will aid in establishing driving experience and documenting discounts available.
- Have proper documentation of all vehicles to be insured as to registration and vehicle identification numbers (VIN).
- Be prepared to discuss driving record as to tickets and accidents, by date and violation for the most recent 6 years.
- When requesting insurance options from the companies you have selected, be consistent in the coverages you are asking for, understand the reasons for the limits you currently have and make sure you are comparing same limits and coverages. Obtain all quotes in writing.
- Ask how premium is to be paid or what options you have, asking for all fees charged over and above the actual cost of insurance and over what period of time the terms of the policy will run (effective dates).
- Do not sign anything you don’t’ understand. Provide no signatures on blank forms. Any financial information must be provided via voice or fax. Do not email confidential or critical personal information.
- Be sure that your responses are truthful and complete. Holding back information asked for may result in additional charges later in the term of the policy.
- Record and document all your dealings with the various companies quoting on your insurance. Reminding them of earlier conversations will be helpful in the event there is a misunderstanding or claim question over intended coverages not timely placed.
- Many companies do their business through other insurance companies. Make sure you get the complete name of the underwriting insurance company. Ask for the company’s financial rating and management strength ratings (A. M. Best can provide at no cost).
- Make sure you have your complete set of all documents supporting your transaction. There should be a receipt of payment, Binder of coverage, auto ID cards (can be temporary for each car insured & ID by car VIN).
3. WHAT ARE THE FACTORS AFFECTING THE COST OF YOUR AUTO INSURANCE?
There are many variations to the basic factors used in calculating the cost of your auto insurance. The primary factors can be broken down into those that can be controlled verses those that are uncontrollable.
Controllable Factors are:
- Where you live
- Annual miles driven
- Type of auto you are driving
- Driving Record – tickets & accidents
- The limits and coverage used to protect your risks
Uncontrollable Factors are:
- Your demographics such as male, female, married, with family & age of drivers in household
- Year’s licensed – driving experience
4. WHAT Financial responsibility do you have, in the event an uninsured accident happens to you, IF YOU DO NOT INSURE YOUR CAR?
Responsibility of an auto accident lies with the owner of the car. The most common way drivers comply with this law is by purchasing insurance. Failure to have insurance at the time of an accident could result in your license being suspended. Failing to even show proof of insurance (when asked by police or when registering your car) may result in fines and being assessed a fee.
5. WHAT CAN YOU DO IF YOU CANNOT AFFORD THE BASIC LIABILITY LIMITS REQUIRED BY LAW?
The California Low Cost Auto Insurance program is designed to reduce the high number of uninsured drivers. The program provides low-income good drivers with an affordable auto insurance option, which satisfies California’s financial responsibility laws. The program is available to qualified persons living in eligible counties.
Briefly, the qualifications are based primarily upon:
Must be at least 19 years old
Household income eligible
Good driving record
Have been licensed to operate a car for 3 years
Vehicle value at time of insurance purchase at $20,000 or less
To find out more about the program and see if you are eligible call:
California Low Cost Automobile Insurance Program
(This program is brought to you by the California Department of Insurance and administered by the California Automobile Assigned Risk Plan.)
6. WHAT IS THE DIFFERENCE IN BUYING INSURANCE FROM AN AGENT VERSES FROM A BROKER?
An Agent is authorized to sell insurance for a company and is paid by that company. A broker or broker-agent works for the insurance buyer and presents various insurance companies options. The broker is paid by the buyer. When you purchase insurance, you may buy directly from a company (a Direct Writer who is captive to a system that allows selling only that one company’s insurance or you may buy from an independent company that give you access to various insurance companies (independent agent or broker). Each insurance company is able to calculate its own rates based on its unique past loss experience and expenses. By contacting an agent who has access to that unique direct writer company, you get information one company at a time. By using a broker you will have access to several different companies for a rate comparison that the agent does not have access to. Using a broker can potentially save you time and money. Based on each carrier’s various critical operating criteria, you will need to identify which company is efficient and meets your needs in price, service, coverage and limits. You can measure the quality of those you are evaluating, to see what and how these companies are able to assist in the decision process, i.e. independent insurance brokers/agents; company agents who represent one company; direct writers; and, web sites.
7. WHERE CAN I TAKE MY CAR FOR REPAIRS AND CAN MY AUTO INSURACNE CARRIER TELL ME WHERE TO GET IT REPAIRED?
California Insurance Regulations does not allow insurance companies to direct where to have your vehicle repaired. However, under very specific conditions the Regulations do allow for insurance companies to control how an auto is repaired. There are four ways this can happen. They are:
- You can ask your insurance company to recommend a specific repair shop.
- You are provided written request to choose a recommended body shop of your choice to make the repairs.
- The insurance carrier recommends using a “Preferred or Choice” body repair shop and you agrees to use the Preferred body shop; then the repairs can be made as long as the insurance company repairs the car to its prior working condition. You should pay nothing additional, other than your deductible and any other terms and conditions in the policy.
- Your insurance company can tell the repair shop how and what to repair on your car. You may accept the recommendations. The recommendation and acceptance can be made orally, but the company’s recommendation must be followed up in writing
However, under California Insurance Code you may control how the repairs are made by an auto repair shop. This can happen as follows:
- You may choose the shop used for repairs, and the insurance company must pay any reasonable cost incurred as long as repairs are done correctly and according to industry standards.
- Your repairs may not be reduced or denied to be paid for by the insurance company if the charges are based on the same reasonable recommend repairs as at the company’s repair shop.
- Your insurance company must guarantee the repairs made at its recommended car repair shop.