Automobile Insurance

Whether your only exposure to automobile insurance is a commercial featuring a tiny green gecko or you're already paying for insurance on your minivan, pick-up truck, and motorcycle, many of us don't know the ins and outs of automobile insurance.

It helps to know some of these laws and how they affect your rights and responsibilities as a driver. No federal law requires you to have automobile insurance. But almost all states require car insurance (all except New Hampshire). State laws vary relating to those requirements. This article will discuss important automobile insurance terms and laws.

Common Types of Car Insurance Coverage

Having an auto insurance policy means that in exchange for paying monthly premiums, your insurance carrier agrees to certain responsibilities. The car insurance company must help pay for specified damages sustained during a car accident or other mishap after you file a claim. You may pay for additional coverage for any number of coverage types.

The auto insurance rate will depend on several factors. The auto insurance quote depends on any of the following, including:

• Your age
• Your gender
• Your driving record (i.e., whether you are a safe driver or have a poor driving record)
• The deductible selected
• The type of vehicle (i.e., a new car or an expensive make or model will have higher insurance costs than an older economy vehicle)
• Where you live
• The type of coverage you select

An insurance agent can help you compare car insurance policies. They can offer a car insurance quote based on the coverage options selected. They can tell you about auto insurance coverage types, eligibility for any car insurance discounts, and car insurance rates.

Types of coverage include the following:

• Liability or casualty insurance: Bodily injury liability means your insurance company pays for damage done to another person in an accident you caused. Property damage liability covers instances where you're at fault for damage to someone else's property.
• Personal injury protection (PIP): This covers medical payments for injuries you or your passengers sustain during an accident. This coverage can often include money you lost because you had to take time off work due to your injuries.
• Collision: With collision coverage, the insurance company pays for damage to your car when you're at fault in an auto accident.
• Comprehensive coverage: This coverage covers mishaps that damage your car, such as theft, fire, falling tree branches, weather, hitting a deer, and vandalism.
• Uninsured motorist coverage/underinsured motorist coverage (UM/UIM): Despite the rule to carry automobile insurance in most states, many drivers remain uninsured or underinsured. If you have UM/UIM coverage, it pays for your medical bills if the at-fault party doesn't have enough or any insurance. The insurance company may then file a lawsuit against the uninsured driver to recoup those costs.

Ask your automobile insurance carrier or insurance agency representative what's covered under your plan before paying for damage yourself. Some plans even cover things like cracked windshields, pothole damage, roadside assistance, compensation for car seats damaged in an accident, and pet injuries.

Minimum Coverage Requirements

Insurance policies generally cover different types of damage up to a certain amount. Three numbers, such as 15/30/5, usually represent the liability limits. The first number is the amount the insurance will pay for each person's bodily injuries ($15,000). The second number is the bodily injury damages it will pay per accident ($30,000). And the third is the total it will pay for property damage ($5,000).

Each state sets its minimum coverage requirements. States like Alaska and Maine have high minimums at 50/100/25. Others, like Florida, require much less coverage at $10,000 for property damage and $10,000 for personal injury protection.

States also specify which types of insurance are mandatory. For example, in Oregon, you must have:

• Bodily injury
• Property damage liability coverage
• Personal injury protection
• Uninsured motorist coverage
• Underinsured motorist coverage

You only need bodily injury and property damage liability insurance in many other states, like California and Texas.

Penalties for Inadequate Automobile Insurance

State laws also vary when it comes to penalties imposed for having inadequate insurance. Penalties can include any of the following:

• Fines
• Traffic tickets
• License suspension
• License revocation
• Vehicle impoundment
• Jail time

You could face a fine between $1,500 and $2,000. The state could also suspend your license and registration in Delaware. The state may also confiscate your license plates.

In Georgia, you could spend up to a year in jail, aside from other consequences. Of course, these penalties include any damage or injuries you cause in an at-fault car accident. Without insurance, other drivers can sue you for damages, ruining you financially.

Responsibilities of the Insurance Company

Many states require insurance companies to help enforce insurance laws to deal with the problems and costs associated with uninsured and underinsured drivers. For example, Arizona, Louisiana, New York, and many others require the insurer to notify the DMV or other agencies when a policy gets canceled or not renewed. Some states, such as Virginia and Delaware, require the insurer to verify a person's financial responsibility or insurance after an accident or arrest.

Also, some states have no-fault insurance laws that require your insurer to pay for your personal injuries up to the policy limit regardless of fault, except in certain circumstances. If your insurance company fails to pay for reasonable and necessary medical expenses promptly, it could be ordered to pay even more damages.

Whether you live in a state with fault or no-fault laws, your insurance company has contractual obligations to you. If the insurer fails to meet the obligations, you may be able to file a lawsuit against them or other parties if your insurance claim gets denied or doesn't cover your damages.

Get Help With Your Automobile Insurance Issues

The costs of a car accident or driving while underinsured can be devastating. Whether you're dealing with an uncooperative insurance company, an uninsured driver, or a lawsuit related to an accident, an experienced insurance lawyer can help. They can guide you through the process and protect your interests. Speak with a local attorney today.