Frequently Asked Questions
Q: Is automobile insurance required?
A: Most states have minimum coverage requirements that may include, for example:
Medical payment coverage
Liability coverage for both personal injury and property damage
Insurance on vehicles that may be located in another state or even if inoperable if they are registered
If your vehicle is financed, the lender may require a specific type or amount of insurance
Q: What is “Personal Injury Protection” insurance (‘PIP’)?
A: PIP is “no fault” coverage that will compensate a loss due to injury, regardless of who is charged with causing the crash. PIP insurance may also protect you if you’re injured as a pedestrian or bicyclist, as long as the injury is caused by an accident involving a motor vehicle. Only certain states are “no-fault” states.
Q: What is “Property Damage Liability” (‘PDL’) insurance?
A: This coverage pays for damages you or members of your family cause (and are liable for) to other people’s property in a crash involving a motor vehicle. The damages would include the vehicle but can also include real estate damage (if you lost control and ran off the road and hit a fence, deck or even a home) or even the contents of the other party’s automobile.
Q: What is ” Bodily Injury Liability” (BIL’) insurance?
A: Bodily Injury Liability coverage pays for serious and permanent injury or death to others when you cause an accident involving your automobile. Your insurance company will pay for injuries up to the limits of your policy and provide legal representation for you if you’re sued. In particular, your company pays for injuries caused by you or members of your family who live with you, even if they were driving someone else’s vehicle. It may also cover others who drive your automobile with your permission. This coverage also provides you with legal defense in the event the injured party sues you. If you’re sued due to an accident and the jury or judge awards a verdict to the injured party larger than your Bodily Injury Liability insurance limit, you may be held personally liable for the difference to satisfy the judgment.
Q: What is “collision coverage”?
A: This type of insurance pays for damages to your auto caused by impact with another vehicle or object such as a tree, telephone pole, building and so forth.
Q: What is “comprehensive coverage”?
A: Comprehensive insurance covers damage that occurs to your auto in a situation other than in an accident, for example:
Q: What is Uninsured or Under-insured motorist coverage?
A: If you’re in an auto accident caused by the negligence of the other driver, and the other driver has no insurance or not enough insurance, this coverage will kick in to the limits allowed by the policy.
Q: What factors can an insurance company look at to determine if they will insure me?
A: Typically, insurance companies weigh the following factors to determine if they will write, or continue, coverage for an individual:
The type of vehicle you drive
Your claims history
Your driving record
Insurance companies cannot discriminate against providing coverage based on a protected class such as race, sex, religion, national origin or ancestry. Your state may also have additional restrictions such as profession or marital status.
Q: Can I require my insurance to authorize the use of original equipment parts when repairing my vehicle? My policy says they will return my damaged vehicle to “pre-accident condition.”
A: Possibly. This can depend on both the state you are in as well as the terms of your auto insurance policy. Some automobile insurance companies automatically use original equipment manufacturer (OEM) parts. Others use non-OEM parts. If the repair of the damaged part directly affects the operational safety of the auto, the insurance company may be required by your state law to replace it with an original equipment manufacturer (OEM) part.
For non-safety-related parts, there may be more restrictions on the use of OEM both under state law as well as your policy. You may be able to insist on OEM parts, but where they aren’t?t required you will generally have to pay the difference in cost.
Q: My insurance company is denying my claim because the location where I keep my vehicle is not what is listed on the application. Is this right?
A: Yes, it is possible. If you give false, misleading or incomplete information on the application and if such information increases the insurance company’s risk of loss, your company may then be able to refuse to pay the claim under guidelines set out by your state. Misleading information includes the description of where the vehicle is kept, the names of the operators or any information related to those who operate the vehicle.
Q: Is my insurance company required to provide me advance notification if they are canceling my policy?
A: Yes. A notice is generally required. Depending on the state you live in, the method of notification (regular, certified or registered mail) and the amount of advance notice may vary.
Q: The accident I was in was determined not to be my fault. The insurance company is offering far less for my vehicle than what I owe. Don’t they have to at least pay off my loan?
A: No. The insurance company is not required to take into consideration any outstanding loan on the vehicle. They generally are only required to pay the fair market value of the vehicle.
Q: May I keep my auto if I have a claim and the insurance company declares it a total loss?
A: Your insurance company is entitled to any salvage value your auto may have and will typically take title to your auto when it pays your claim. You may be able to negotiate with your insurance company to purchase the vehicle from them.
Q: Am I entitled to a rental vehicle and for how long?
A: If your personal automobile insurance policy has an endorsement for rental coverage, or “rental reimbursement” clause, you may be entitled to reimbursement for the cost of a rental vehicle while you are waiting for your vehicle to be repaired within your policy limits. If you’re collecting for your damages from a company other than your own, your state may or may not have a law requiring rental reimbursement. Typically, insurance companies allow for a rental vehicle for a specific amount of time once they determine their insured is liable.
Q: Do I have to hire a lawyer to defend me if I’m sued because of an auto accident?
A: No. The liability portion of your automobile insurance provides for representation by the insurance company. The insurance company provides the lawyer but he or she represents you, not the insurance company.