Auto Insurance FAQ's

What factors influence the cost of auto insurance?

First of all, the kind of car you drive will influence your insurance costs. A high-performance sports car will be more expensive. Other factors that will affect cost include your age, marital status, where you live and how you use your car (business or pleasure).

What factors can reduce auto insurance costs?

Cars that have safety features such as antitheft devices, air bags and anti-lock brakes may have a lower cost. A higher deductible can reduce your premiums. A driver with a safe driving record and no accidents will have a lower cost.

What are some of the coverages available in an auto insurance policy?

• Bodily injury liability: In case you cause an accident in which someone else is hurt or killed.
  
• Property damage liability: If you damage someone else's property.
  
• Collision: When your car is damaged as a result of colliding with another car or object.
  
• Comprehensive: If your car is stolen or damaged in ways that don't involve a collision.
  
• Medical payments: Pays the doctor bills, hospital bills or funeral expenses for injuries that occur to you or members of your family that live with you, no matter who caused the accident.
  
• Uninsured motorist: Pays for your injuries when you're hit by a driver who has no insurance.

What are the penalties for driving uninsured?

Continuous insurance coverage must be maintained on all vehicles. If it is not maintained, the vehicle owner could be fined and also could:

• Lose his or her license plates and vehicle registration privileges
  
• Have to pay uninsured motorist penalty fees for each lapse of insurance in the amount of $150 for the first 30 days, and $7 per day thereafter.
  
• Have to pay a restoration fee of up to $25 for the vehicle registration privilege
  
• Be kept from registering any future vehicles until the insurance violation is cleared
  
• Be kept from renewing the suspended registration until the insurance violation is cleared
  
• Have his or her license plates taken by an authorized tag recovery agent, as soon as registration suspension is in effect

What determines my auto insurance premiums?

Your Driving Record
The rates used in determining your premium are affected by your history of claims and traffic violations for up to three years. Drivers with more accident/ticket records will have higher premiums.

Your Age, Sex and Marital Status
Statistics show that the frequency of accidents is higher for males than females. Teenagers have more accidents than adults and single people have more accidents than married people. High accident frequencies mean higher premiums.

Your Residential Location
Congested areas such as cities, have heavier traffic and more thefts and vandalism. Consequently, these areas pay higher premiums than rural areas.

Type of Vehicle and Vehicle Use
Some vehicles cost more to repair than others do and therefore cost more to insure. Higher premiums are also the result of vehicle usage, such as business use and vehicle performance, such as turbo or other high performance engines.

What factors affect auto insurance premiums for all of us?

There are also factors that drive up the cost of claims, and thus raise auto insurance premiums for everyone.

Lawsuits
One of biggest factors affecting premium is Liability Claim Lawsuits. According to the Insurance Information Institute, claims for bodily injury liability from 1985 - 1988 rose more than 13 percent a year. Fourteen of the 15 states with the highest auto insurance premiums were also among the 15 states with the highest bodily injury paid claim costs.

The number of suits being filed is increasing. Since 1981, auto lawsuit filings in California have increased by more than 50 percent. Because insurers are obligated to pay defense costs even in minor or frivolous lawsuits, increases in filing lawsuits mean increases in their cost of doing business.

Medical Costs
Rising medical costs are contributing to the increases in bodily injury liability claim costs. In general, medical costs have been rising at a 6% rate. On the other hand, advances in medical technology and improved rescue and life saving techniques result in fewer deaths, but this also drives up the cost of medical care.

Car Repair Costs
It costs more to fix cars nowadays, and that means higher claim costs. As cars have become more sophisticated through advancements like air bags, fuel injection, unibody construction and on-board computers, they also have become more expensive to repair in the event of an accident.

Theft & Fraud
Motor vehicle theft is the fastest growing crime in the nation. Fraud, a more sophisticated form of theft, is a major problem for insurers. According to the National Insurance Crime Bureau, fraud costs property and casualty insurance companies more than $20 billion a year, that's equal to 10 percent of all property and casualty claims paid industry wide.


How can I lower my insurance premiums?

Maintain a good driving record
Higher premiums are often the result of accidents and tickets. Be a defensive driver, watch out for the other drivers and obey the speed limits. Cautious drivers can afford an extra minute or two, and can pay less in premium dollars.

Explore higher deductibles
Purchase the highest deductible you can afford, to reduce the physical damage premium. The more you are willing to pay shows that you are investing in your own safe driving.

Consider the age and condition of your automobile
Physical damage coverage on an older vehicle or one in poor condition may cost more to insure than it. s worth. In the event of an accident, you may receive less than you pay in annual premiums.

Shop for the best premium
Each year you should shop for the best coverage at the best price. You should contact any licensed agent or broker in the state of Maryland and compare quotes with another to make certain that the terms, conditions, limits, deductibles, etc. are the same. Rates and coverage can change.

How do I present my proof of Insurance?

When your auto insurance cancels, the insurance company is required to notify the Motor Vehicle Administration of the insurance termination date. You will be asked to get a FR-19 insurance certification form from each insurance company that has provided liability insurance prior to the termination date. You can obtain a FR-19 from your agent or your insurance company.


My vehicle is stolen. What do I do?

Call the police and make a police report, then call your insurance company and provide:

The specific location from which vehicle was taken, when the theft was discovered, when the vehicle was last seen at the location and the police precinct and police report number.

Most often, the ticket/accident will result in an increase of your insurance premium.

To protect yourself in the event you are involved in an accident with an uninsured illegal driver, be sure to keep your insurance coverage paid up to date. With uninsured motorist coverage, you will be paid for damages just as if the other driver were covered.

It is not unusual for a lender to require full coverage on a new car. Your new car serves as the collateral for the lender, so it is in the best interest of the lender to have it financially protected. This is legal so long as the lender does not mandate which insurance company you must use.

Insurers use statistical evidence to determine which groups, such as young males, are more likely to have more accidents and file more claims. Under-25 drivers, particularly men, are much more likely to be involved in accidents. (15% of all licensed drivers are under 25, yet this group accounts for 29% of all accidents, and 26% of fatal accidents.)

Should I buy collision coverage on my ten year old car?

The answer depends on many factors. Compare how much your car is worth versus the cost of collision coverage plus your deductible. You can get an estimate of how much your car is worth from the "blue book" or N.A.D.A. which can be found at book stores and libraries. If you have not transferred the collision risk to an insurance company by buying collision coverage, you are assuming the entire risk yourself. Sometimes the collision coverage may seem expensive, but it should be purchased if you could not afford to absorb the total loss of the value of the car. Remember collision coverage responds to damage to your car only. If it is the other party's fault their policy will pay for damages to your car and there is no deductible.

If I drive someone else's car and wreck it, does my policy pay for the damage?

No. Insurance follows the car not the driver. The insurance covering the car would respond to damages. Your policy may respond but only as excess over the primary insurance covering the car.

What can I do to keep my auto premiums down?

Make sure you are getting all the discounts allows by your insurance company such as: Multi-Car, renewal, claim-free, good student, driver training, defensive driver course, anti-lock brakes, air bags, anti-theft device, and multi-policy discounts. Households with drivers having no tickets or accidents will be eligible for the best rates. Ask us how much you can save by increasing your deductibles. Sports cars, four-wheel drive vehicles and expensive cars will increase your premiums.

How will an alcohol-related ticket (DUI or DWI) affect my premium?

If you already have a policy in effect, it is possible that nothing will happen for some time. Your current insurance company may not find out that you have the ticket. However, sometimes insurance companies randomly check driving records. Many companies would non-renew your policy at expiration in such an instance. If that were to happen, there are several non-standard, commonly referred to as high-risk, companies that would take you. It would not be unusual for your premium to triple with a non-standard company. If you are currently getting your insurance from a preferred company, you should sit tight and not make any waves. Pay your bills on time and do not let it cancel. Also, do not change companies, as any company writing a new policy will order your driving record and find out about the ticket.

Back to Top