Wednesday, April 14, 2010

Top 10 Questions to Ask When Purchasing Auto Insurance

The New York State Insurance Department recently released its "Top 10 Questions" to ask when purchasing personal auto insurance.  Those questions and the Department's answers are:
  1. What auto coverages do I need? 
    New York Law requires all vehicles to carry a minimum amount of liability insurance in the amount of $25,000 for bodily injury to one person, $50,000 for bodily injury to two or more persons (Uninsured motorists protection subject to the same minimums), $10,000 for damage to property of others, and $50,000 for Personal Injury Protection (PIP), also known as No-fault. These minimum coverages are applicable to any one accident. However, depending on your individual situation, it is advisable that you consider increasing the amounts of your liability coverages depending on your needs and the assets you would like to protect.

  2. What optional coverages should I consider purchasing?
    You may consider purchasing Comprehensive and Collision coverages to protect against theft or damage to your vehicle. Insurers also offer other valuable coverages to protect you and your family, such as Additional PIP and Supplementary Uninsured/Underinsured Motorists (SUM). It is recommended that you review the Insurance Department’s Consumer Guide to Automobile Insurance, located in the Automobile Insurance Resource Center at, for more general information about auto insurance. You may also consult with the producer or insurer to help determine the types of coverages that are ideal for you.

  3. Am I being placed into the New York Automobile Insurance Plan (NYAIP)?
    The NYAIP (also known as the “Assigned Risk Plan”) is a mechanism established by law to offer insurance to applicants that are unable to find insurance in the voluntary market. The NYAIP provides insurance as a last resort, so the premiums are generally higher than insurance obtained through the voluntary market. Consumers who shop around usually get the best insurance value for their money.

  4. Does my policy protect me for liability against a lawsuit from an injured spouse?
    The standard auto policy does not automatically provide coverage for an insured against liability due to death of or injuries to a spouse. However, an insured may purchase Supplemental Spousal Liability, which does provide coverage for an insured against liability due to death of or injuries to a spouse.

  5. What effect does my credit history have on my insurance?
    Many insurers consider consumer credit information as part of their underwriting process and, for those that do, your credit history may have an affect on the premium charged. However, insurers are prohibited from rejecting an application for insurance solely on the basis of credit information and from using credit in any way to terminate a policy or increase the premium on a renewal policy. Insurers are required to disclose the use of credit information to their policyholders.

  6. Is there a separate fee charged for obtaining the policy?
    For policies procured through a broker, the insurance law allows the broker to charge a separate fee as long as you sign a written memorandum agreeing to the specified charge for services performed by the broker in obtaining the policy. For NYAIP policies, the maximum amount of the fee is limited to $50. Keep in mind that you have the option of contacting an insurer that deals directly with the public, to use an insurance agent, or to shop around for a broker that does not charge a fee for such services. It should be noted that unlike a broker, an insurance agent is not allowed to charge a fee for services rendered in the procurement of an insurance policy.

  7. What discounts are available?
    While all insurers are required to offer certain mandatory discounts (such as for vehicles equipped with air bags, anti-lock brakes or daytime running lights, or for taking a DMV approved Accident Prevention Course), many insurers have a wide range of other discounts that may also be applicable to you. Ask the insurer or producer about the discounts offered by the insurer to see if you qualify or could qualify for any of the available discounts.

  8. Are there any ways to reduce my premium with regard to youthful drivers?
    Various insurers offer discounts geared toward youthful drivers. You may qualify for a reduced premium, if a youthful driver attends college over 100 miles away (i.e. “resident student”), meets certain academic requirements (i.e. “good student”), or has taken a driver’s education course.

  9. Would my policy be non-renewed if I’m involved in an accident or convicted of a moving violation?
    This depends on your insurer’s underwriting guidelines. Generally, an insurer is allowed to non-renew up to approximately 2% of its policies per year based on objective criteria. Insurers are required to provide a notice stating the specific reason for non-renewal of the policy. You should also be aware that your premium is likely to be increased for a three-year period via a surcharge if you’re convicted of certain traffic violations (e.g. speeding more than 15 MPH over the legal limit, leaving the scene of an accident without reporting or driving while intoxicated).

  10. Will purchasing a brand new vehicle have an effect on the insurability and cost of a policy?
    Premiums charged for physical damage coverages (Collision and Comprehensive) are based on the estimated cost of future claims for damage to, or loss of, the vehicle. Higher-priced vehicles generally cost more to insure. Please refer to Sections IX. Rating Basis For Physical Damage Coverages and X. Difficult-To-Insure Vehicles of the Consumer Guide to Automobile Insurance for specific vehicle information regarding this matter. It is also recommended that you obtain an insurance quote prior to purchasing a new vehicle.

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