Taylor Agency

How does where I live affect my premium?
Where you live (or, more precisely, where you keep your car) has a bearing on your chances of having an accident or becoming a victim of theft or vandalism. That's why a vehicle owner in Brooklyn, New York, pays a higher rate than the owner of an identical vehicle in Casper, Wyoming.

Other factors affecting regional insurance rates include time and efficiency of police response and law enforcement, local road and traffic conditions and the quality of local medical services. Insurers even factor in the litigation rates in a given area--that is, how many lawsuits are filed, go to trial, are settled out of court and for how much.

Why are rates different for different cars, even if the cars cost the same?
Vehicles are also grouped into categories according to their likelihood of being damaged, vandalized or stolen. Insurers generally consider the size and type of vehicle, as well as the value and the cost of repairs (which can vary greatly, even on vehicles that cost roughly the same). Thus, a new station wagon is expected to hold up better in an accident than a sports car or a subcompact.

Putting insurance aside, safety is key when buying an automobile. Your life depends on it! Some cars are considered safer than others because of their performance record in safety tests and real accidents.

That's why you should research insurance coverage before you buy your car. It helps you to understand the actual cost and indicates those vehicles with good safety records. Your insurer will ultimately reward you for putting safety first.

What is "no-fault" insurance?
No-fault insurance is a system adopted in some states that essentially bypasses the conventional legal procedure which finds fault in an accident. (This is the procedure by which you hire a lawyer, file suit and possibly go to court to prove the accident was the other guy's fault.) No-fault simply does away with the concept of one party or the other being at fault--no lawyers, no court, no judge, no jury, no lengthy lawsuits against the other party. This is considered beneficial to taxpayers, because it eliminates costly legal proceedings that the state must manage, and to insurance policyholders, because it helps keep rates down.

If you are insured in a no-fault state and have an accident, you don't go after the other driver. You contact your own insurer and file a claim. Your own insurance policy guarantees you immediate compensation for damages, medical expenses, lost wages, etc.

The type and range of no-fault coverage varies from state to state. What defines the limitations of no-fault policies can differ in two critical areas:

Threshold--The type of damage/injury or the cost of repair/recovery that triggers the need for legal action.
Mandated--Benefit Level--The package of benefits (medical, wage loss, replacement services and other expenses) your state requires you to carry.

The details of no-fault insurance can be complicated. Contact your agent or state's insurance department for further information.

Do all states require some kind of liability insurance?
No. Some states, while not mandating auto insurance, have "financial responsibility laws" that require all drivers to be able to pay for any damage or injury they may cause. However, carrying liability insurance is still the best way for you to meet your state's financial responsibility requirements.

UM and UIM policies are offered by law in all states, including no-fault states. In fact, some states require all motorists to carry this coverage in order to gain protection from inadequate insurance coverage of other drivers.

What happens if I have an accident with an uninsured driver?
First, call the police to the scene to be sure all pertinent information is properly recorded. Your nerves will be shaken right after an accident, and it helps to have a calm and knowledgeable person walking you through the necessary details.

Then, contact your agent immediately and ask about filing a claim. If you followed all the recommended guidelines when you bought your policy, you should be covered within the limitations of that policy. Remember, your insurance policy is designed to protect you.

If the cost of your damages or injuries exceed the amount your policy will pay out, it may be time to take legal action against the other party. Even if you have no-fault insurance, sometimes the only way to be compensated is to place blame and responsibility where it belongs.

Why would my insurer cancel my policy?
Technically, in most states your insurer can cancel your policy only if:

you fail to pay your premium;
you lose your driver's license;
you are guilty of material misrepresentation during the application process--i.e., you fail to notify your insurer of a recorded violation, such as a drunk-driving offense; or
you fail to report a substantial change of risk, such as buying a high-powered sports car to replace a family sedan.

However, your insurer can choose not to renew your policy for a variety of reasons.

Do you have a bad driving record? Have you received a lot of speeding tickets? Have you ever been caught driving drunk? Not only are these scenarios considered unsafe and illegal, they are justifiable cause for your insurer to label you a bad risk and refuse to renew your policy. (Some underwriters may feel compelled to cancel policies after only one accident.)

Where do you live? Has the neighborhood changed in the last few years? Have the accident or crime rates risen noticeably? As regions are reassessed periodically, their status could change and you could suddenly find yourself living in a high-risk area, where your insurer's rates may not be adequate to cover losses.

What do I do if my insurer cancels or refuses to renew my policy?
Even "good" drivers can find themselves in the position of being dropped by their current carrier. Reasons range form a "drinking while driving" violation or other serious violations (that make you a high risk) to situations outside your control, such as when insurers in your state are suffering severe business losses. Overall rises in claims or losses can cause insurers to become highly selective in determining whom they can afford to insure.

That is why it is important to note that if you are licensed to drive, by law, you are eligible for insurance. However, your options for new coverage may be limited. Each state has created and regulates a market of last resort for those who cannot otherwise obtain coverage. These groups have various names, depending on the state you live in, such as assigned risk plans or the residual market. Your agent will know more about the particulars in your state.

Regardless of the reason you were dropped, you need to act immediately to get another policy. Under no circumstance should you drive your vehicle without insurance. Call your agent to help you find new coverage. If you do find yourself in the residual market, the price may be higher but it may be your only alternative in maintaining your freedom to drive.

How do I keep my insurance company from canceling my policy?
The most obvious way to maintain your low-risk status is to keep a clean driving record. If you've been in an accident, consider taking a defensive driving course. Even those of us who have been driving for years rarely know the simple tricks to preventing accidents through defensive driving.

Also, look into purchasing special safety and security features for your car, such as anti-lock brakes and an alarm system. Your insurance agent can give you further tips on how to convince your insurer you're a safe driver.

What steps can I take to reduce my rates?
Insurers often discount their rates in order to encourage good driving practices and the use of safety and security precautions. Depending on the insurance company, you can often lower your rates from 5 to 35 percent.

Sometimes the investment you make in your vehicle is worth the discount, and sometimes it's simply worth some peace of mind. For example, the purchase of anti-lock brakes merits a discount from nearly every insurer, but the discount probably will not pay for the brakes (which cost several hundred dollars) during the normal life of your vehicle. Anti-lock brakes are touted, nonetheless, as a life-saving feature (a serious consideration when safety is a top priority).

Insurers generally offer discounts for:

Safety Features--Anti-lock brakes, air bags and passive restraint systems (i.e., automatic seat belts).
Defensive Driving--Clean violation record, driver's-ed courses for teenagers and defensive driving or accident prevention courses for adults (insurance discounts for the latter are required in some states).
Security Systems--Alarms, electronic locks and disabling devices.
Changing Driving Habits--Commuting by public transit, using a company vehicle for work-related travel and car-pooling.
Formal Agreements Not to Drink and Drive--The availability of a discount for signing such an agreement varies among insurers and states.
Buying Home Owners and Auto Policies from the Same Company--If you own a home and an automobile and you are insured by two different companies, check into the cost of carrying both policies by one insurer. Your agent can give you guidance as to which insurers offer discounts.

You can also lower your insurance rates by requesting higher deductibles (the amount of money you pay before you make a claim). Increasing your deductibles on collision and comprehensive coverage from $100 to $250, or even $500, will bring your rates down. Moreover, you may not need collision and comprehensive coverage if you drive an older car. Ask your agent which discounts are available to you.

How does adding drivers to my policy affect my rates?
The more people you allow to drive your vehicle on a regular basis, the greater the chances of your vehicle being in an accident. Teenagers are especially expensive to insure because they are the least experienced drivers.

A driver's-ed course can help ease the burden of insurance costs since it teaches your teenager defensive driving techniques. If your child's high school does not offer driver's-ed, try to find one offered by another school or a private firm in the area. After all, the cost of driver's-ed could be cheaper than the extra cost of your insurance. (Many insurers offer "good student" discounts as well.)

An adult's driving experience can also affect your rates significantly. Don't assume that every adult you know has been driving since age 16 or is a competent driver with a clean record. Again, taking a defensive driving course is a good way for adults to prove they are responsible drivers, thus lowering their risk and their insurance rates. (This is a great solution for new couples who are jointly insured but unmatched in their driving skills or experience.)