Answers to Frequently Asked Questions
Claims Causing Canceled Insurance
Q: I hear that with some companies, your insurance can be cancelled if you have just one claim. Is this true?
It’s very unlikely that your policy would be canceled after you file a single claim. However, filing a claim could increase your premium.
Your auto insurance premium will almost certainly increase after an accident – especially if you were at fault. Actuarial evidence shows that people who have had accidents in the past are more likely to have accidents again. There is a logical reason to charge you more for insurance coverage because of this increased probability of a future claim.
The next question is how much your premium will increase. This is harder to answer, because insurance companies often use different formulas to calculate rate increases. In most cases however, your policy will not be canceled. And because we represent more than one insurance company we can find a better fit for you and you stay with the same agency!
College Kid With a Car
Q: I am adding my daughter to my auto insurance policy, and she’ll be taking one of my cars with her to college. Will she be considered the principal driver on the policy?
If she is borrowing your car to take to college, she must be listed as either a principal driver or an occasional driver on your insurance policy. Most insurance companies will consider someone as the principal driver on the policy if he or she:
- Is the registered owner of the vehicle,
- Drives the vehicle to work or school, or
- Drives the vehicle more than anyone else.
We can help you to determine if your daughter is a principal driver, and if so, how your insurance coverage and premiums will be affected.
Your Credit & Your Insurance
Q: Why do auto insurance applications include questions asking for my credit information or if I have claimed bankruptcy?
The connection between your safety record and your credit rating seems confusing. Many consumers feel uncomfortable about providing this information on an automobile insurance application. Insurance companies explain that credit information is necessary for a proper risk analysis when evaluating an insurance application.
They have determined that there is a connection between credit risk and safety risk. Some insurance company statistics show that drivers with bad credit file more accident claims than drivers with good credit. It seems that consumers who are careful with one aspect of their lives (e.g., financial affairs) are likely to be careful with other aspects of their lives (e.g., driving habits). Credit information is also needed to determine whether an applicant is likely to pay premiums on time. WE WORK WITH SEVERAL COMPANIES THAT DO NOT CHECK YOUR CREDIT.
Your Driving Record & The Point System
Q: How do points on my driving record affect my insurance rates, and when do insurance companies check driving records?
In most states, the department of motor vehicles has a “point” system, which is used to track and measure your driving record. Generally, each type of infraction (moving violations, parking tickets, at-fault accidents, driving under the influence, etc.) is assigned a certain point value. When you are found guilty of one of these infractions, the appropriate number of points is added to your driving record. The more points you have, the worse your record.
Typically, an auto insurance company has the right to review the driving record of anyone who applies for an auto insurance policy from that company.
There are two purposes for this initial review:
- To determine whether you meet the insurer’s standards of insurability
- To evaluate your risk potential (i.e., how much your insurance will cost).
Each insurance company has its own method of evaluating applicants. So the points on your driving record may have a direct impact on the rates you pay for auto insurance. This is one of the reasons why we shop among 40 different insurance companies and programs to find the best policy for you.
There are certain times when you can be relatively sure your insurance company will be checking your record. These include:
- When you initially apply for coverage
- When your policy comes up for renewal
If a review of your driving record uncovers negative information, your insurance rates may increase. Insurers typically have their own “point” system to calculate the increase (if any). Then we go to work for you to find you the lowest rate even with this negative information.
Driving Without Insurance
Q: I have been driving without insurance for a few years. Will you have trouble finding a company willing to insure me?
You’re right to be concerned, but we can find you an insurance policy even if you have been driving without one for some time.
Q: What is a FS-1?
FS-1 is a document required by the court in the state of North Carolina for persons convicted of certain traffic violations that demonstrates proof of financial responsibility. If you need one, we will assist you for FREE when you get your policy.
My First Car
Q: I’m buying my first car. Can you give me some tips on finding a good insurance policy?
Many insurance companies issue automobile insurance, but finding the BEST policy for you can be challenging and time consuming. This is why people come to The Insurance Doctor – because we do the shopping for you through 40 different companies.
Remember that your profile will be a good fit for one of our companies. Our shopping helps you find the policy that’s right for you.
We compare premiums offered by 40 different companies and look for high customer service standards. The ability to pay a claim promptly will be important if you’re ever involved in an accident. And of course, we offer 24 hour claims service.
Finally, we understand insurance discounts and how you may be able to take advantage of them. You may benefit from multi-car and/or multi-driver discounts. You may receive a multiple policy discount if you purchase your auto insurance coverage through the same insurer that covers your motorcycle or boat insurance. An insurer may also offer you a discount if you have a safe driving record or have completed a driver’s education course.
Give us the chance to compare 40 companies and rates to ensure that you make the decision that’s right for you.
Insuring Used Cars
Q: I am buying a used car that is worth only a few hundred dollars. Do I need to insure it?
An auto insurance policy is a package of different kinds of coverage. You generally have some flexibility in terms of both the types and amounts of coverage you select. However, practically every state has enacted insurance laws that require drivers to carry at least liability auto insurance. Many states even require that you present proof of insurance before you register a car. So the short answer to the question is that you will need to insure your car, regardless of its value.
Drivers must carry liability insurance. The liability coverage section of an auto insurance policy provides financial protection from liability claims against you when you (or certain other people) cause an accident that results in bodily injuries to other people and/or damage to their property. Every state has mandatory minimum limits of liability coverage.
Comprehensive and collision insurance is optional in virtually every state. The collision and comprehensive section of your policy covers physical damage to your own vehicle resulting from collisions and a variety of other causes (e.g., fire, falling objects). It may also cover losses associated with theft. However, your car’s value plays a big part in assessing your need for this type of coverage. It may not be cost-effective if your vehicle is worth less than $1,000 because you’ll have to satisfy a deductible, and the most you’ll receive (even if your car is totaled) will be its actual value (i.e., after depreciation). That’s not much, especially taking into account the premiums you would have been paying for coverage. If your care is over 15 years old (and is not a collectible), you may only get liability insurance on it.
Missed Auto Insurance Premium
Q: I forgot to pay my auto insurance premium last month. Will my policy be canceled?
Each state has its own rules governing the cancellation of automobile insurance policies. You should check Part F of your personal auto policy (PAP) regarding termination and cancellation conditions. This section will address when, how, and for what reasons coverage under your personal auto policy can be terminated. You should also check any applicable endorsements regarding cancellation.
If you fail to pay your premium on time, your insurance company has the right–after providing you with at least 10 days notice–to cancel the policy. The notice of cancellation, mailed to the named insured shown on the Declarations page of the policy, will inform you of the date and time the cancellation will take effect. Even if you’re only a day late with your premium payment, your state may allow your insurance company to cancel your insurance policy, and the company won’t necessarily reinstate you once it gets your money. Furthermore, once your policy has been canceled, you may find yourself paying more money for a comparable policy or having trouble finding insurance at all. For our clients, sometimes we can be of help in this situation by dealing with the insurance company for them.
That being said, some insurance companies will not immediately issue a cancellation notice. You may simply receive an overdue notice, asking you to pay the past-due premium plus a late fee. Other companies may state in the cancellation notice that if payment is received by your insurance agent prior to the effective cancellation date shown, your coverage will be considered “reinstated.” It may also be possible for you to reinstate coverage after the effective cancellation date by paying the overdue premium and perhaps an additional sum. (However, it is likely that you will not be covered for any accidents between the effective date of cancellation and the date of reinstatement.)
In any event, you must look to state law and your automobile insurance policy to learn whether your policy will be canceled. Feel free to call us to ask for assistance.
Higher Premiums for Select SUV’s
Q: Why is it more expensive to insure certain sport utility vehicles?
Insurance premiums depend on several factors, including your age, sex, place of residence, and driving record; the amount and type of coverage you select; and whether you drive your vehicle primarily for business or personal purposes. This explains why one driver might pay a different premium than another for the same make of vehicle.
But why might it cost more to insure one sport utility vehicle (SUV) than another? In addition to the factors listed above, insurance companies consider the likelihood that a particular brand of vehicle will be stolen, vandalized, or involved in an accident. They also track the cost of repairs. They gather their information from claim statistics. The Highway Loss Data Institute, for example, indexes the amount of money insurance companies have paid out (on average) for collision, injury, and theft claims for various types of motor vehicles. Therefore, the SUV that is most attractive to thieves across the country will probably be more expensive to insure than the one that is stolen least often.
Insurance companies also consider their own past claim payouts. For instance, if one company has paid numerous claims regarding a particular make of SUV, it may charge higher insurance rates for that type of SUV than another company would. This is why we shop for your insurance through 40 different companies – to find the right policy for you.
Spouse with Poor Driving Record
Q: I’m about to marry someone with a bad driving record. Will my insurance premium go up?
If your fiancé has a poor driving record, you can expect it to affect your insurance premium after you get married. Your automobile insurance policy covers you, your spouse, any other named insured listed under the policy, and any licensed driver in your household. If any of those people have bad driving records, it will affect your rates.
Of course, insurers consider marital status when calculating risk, so the very act of tying the knot may improve your future spouse’s risk profile. But if their driving record is really bad, you may want to consider additional strategies related to carrier selection, adjusting deductibles, driving school, and other approaches to avoid a hike in your premium. We can provide you with specific advice in this regard.
What strategy will work for you depends on your circumstances. We can discuss all of your policy options with you and make recommendations.
Q: What is a SR-22?
SR-22 is a document required by the court in the Commonwealth of Virginia for persons convicted of certain traffic violations that demonstrates proof of financial responsibility. If you need one, we will assist you for FREE when you get your policy.
Q: My teenager just got his license. How can I insure him without spending a fortune?
As you have probably discovered, insuring a teenage driver can be very expensive. Drivers under the age of 25 pose the greatest risk to insurers. Insurance companies try to limit their exposure by charging higher insurance rates for 16- to 24-year-olds than for any other age group.
The least expensive option would probably be to add your teenager to your existing auto insurance policy once he gets his learner’s permit. Although this can still be an expensive prospect, your teen might be able to take advantage of certain discounts as a driver on your policy (e.g., safe-driver and multiple-car discounts for which you are eligible).
We can help you determine your most cost-effective option. If you’re thinking about purchasing a used car for your teen, be prepared to tell us the make, model, VIN#, and year of the cars you’re considering. This way, we can give you accurate insurance quotes and help you decide whether to purchase separate insurance for your son or add him to your policy. Sometimes these quotes can even help you decide which car to purchase.