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AUTO INSURANCE

What is Liability Insurance?

What Are Collision and Comprehensive Insurances?

What Are Medical Payments and Personal Injury Protection Insurances?

What Is Uninsured/Underinsured Motorists Protection?

How Are My Rates Determined?

How can I Save Money on Auto Insurance?

What to Do in Case of an Accident

Terms to Know

The Insurance Package

When Requesting Price Quotes Have the Following Information Available

For More Information

Driving is a privilege, but it comes with a price tag. There's the cost of the vehicle itself, maintenance, repairs, fuel and auto insurance. Many states require you to carry a basic, minimum level of auto insurance. It's a way of sharing the risks of driving. You pay premiums to an insurance company for coverage. In return, your coverage will protect you against most financial losses that might otherwise be staggering.

Auto insurance is more than a matter of insuring your vehicle for loss or repairs after an accident. It is a financial safety net that can help you offset the cost of:

• Bodily injuries to yourself or others
  
• Lost wages due to injury
  
• Benefits to survivors when an accident results in death
  
• Lawsuits brought against you as the result of an accident
  
• Repairs made to your car due to damage caused in an accident.

• Bodily Injury Liability
  
• Property Damage Liability
  
• Collision Coverage
  
• Comprehensive Coverage
  
• Medical Payments Coverage
  
• Uninsured/Underinsured Motorist Protection

If you are judged to be legally liable for an accident, you may be held responsible for property damage, hospital and medical payments, rehabilitative care, lost income and even the pain and suffering of the injured person. You can be sued for the full cost of the damages. If the cost of this loss exceeds the amount of your liability insurance coverage, you may have to pay the rest. So, be sure you have sufficient liability coverage to protect your assets.

Your insurance policy usually describes the amount of liability coverage you have as a series of three numbers, called split limits. Suppose your contract coverage reads 50,000/100,000/50,000. In this example, $50,000 is the maximum the insurance company will pay for bodily injuries to any one person in the accident. The maximum amount paid for all bodily injuries, no matter how many people are hurt in the accident, is $100,000. The maximum amount paid for damage to someone else's property in the accident is $50,000. Your Bodily Injury and Property Damage Liability may also be shown as a single limit, e.g., $100,000 Combined Single Limit (CSL).

Many states require drivers to carry a minimum amount of liability insurance of approximately 20,000/40,000/10,000. That means there would be $20,000 to cover injuries to any one person, $40,000 total for all injuries, and $10,000 for property damage.

What Are Collision and Comprehensive Insurance?
Collision coverage pays for damage to your own auto that results from colliding with another vehicle or object, or from a vehicle rollover. Your car is covered no matter who caused the accident.

Comprehensive coverage pays for damage to your auto caused by something other than a collision. This includes theft and vandalism, and disasters such as fire, flood and hail.

Collision and comprehensive coverages usually do not pay for the total loss. You generally have a deductible, an amount you must pay out of your own pocket before your insurance payment takes effect. Suppose, for example, that you have a $250 deductible. On a loss of $1,000, you would pay the first $250 and your insurance company would pay the remaining $750.

Depreciation will also affect the amount you recover. As your car ages and its value declines, the amount you would collect for a total loss declines as well. Your insurance company reimburses you for the actual cash value of your car or its parts, at the time of the loss. For example, if your car was purchased for $20,000, you will get less than your original purchase price to replace it. You can find out the current value of your car by consulting the N.A.D.A. Official Used Car Guide, which is in most public libraries and banks.

Sometimes it may not make financial sense to buy collision and comprehensive insurance on an older car. Why? Generally, speaking, cars decline in value as they age. The maximum amount that will be paid under Collision coverage is the actual cash value of your car minus the deductible. When making this decision, you need to know, the "book" value of your car, your deductible for each loss, the cost of coverage, and the amount you would receive if your car was "totaled" (after subtracting your deductible from the book value). Only you can decide after considering everything whether the cost of insurance is more economical than the cost of repairing or replacing the car at your own expense.

What Are Medical Payments Coverage and Personal Injury Protection Insurances?
Medical payments insurance covers the cost of doctors, hospitals and funeral expenses of you and/or your passengers, that result from an accident, regardless of who is at fault. This insurance coverage will protect you when you drive another person's car (with permission) or if you or your family are struck by another vehicle as pedestrians. The coverage is relatively inexpensive and generally available with limits between $1,000 and $100,000. This varies state by state.

Personal injury protection (PIP) is a form of no-fault insurance required in states with no-fault laws. This coverage is a broader form of medical payments insurance. It pays for medical care, lost wages and replacement services for the injured party (for example, paying for a babysitter for children while a mother is hospitalized). It pays regardless of who is at fault in an accident. States with no-fault laws usually limit the right to sue for nonmonetary damages such as pain and suffering, but you still may be able to sue in cases of incapacitating disability or death. This coverage varies by state and is sometimes an optional offering in states without no-fault laws. In your evaluation of coverage, remember that Medical Payments and PIP also protects your passengers. If you exceed your medical medical coverage on your auto policy, then Bodily Injury coverage may be needed.

Before choosing medical payments or no-fault protection, check with your state's insurance department for details of no-fault coverage in your state. Then review your other insurance policies. If you already have good medical and disability insurance, you may not need protection in addition to the minimum limits of your state (if Medical Payments/PIP is a required coverage).

What Is Uninsured/Underinsured Motorist Protection?
If you are involved in an accident with an uninsured driver, you have very little chance of collecting damages from that driver. Uninsured motorist (UM) coverage* pays the cost of damages and injuries resulting from being hit by an uninsured driver or by a hit-and-run driver.  Both you and your passengers are covered for medical expenses, lost wages and other injury-related losses. You may also be able to collect for pain and suffering.

Similarly, Underinsured motorist (UIM) coverage* will pay for damages that exceed the amount of coverage carried by an underinsured driver. You choose the amount of coverage when you buy this protection.

*Keep in mind that uninsured motorist coverage and underinsured motorist coverage vary by state law.

What Are My Rates Determined?
The premiums you pay to insure your car can vary dramatically. Here are some of the factors that may influence how much you pay:

• Your driving record. Your record plays a crucial role in determining premiums. If you've been involved in an accident that was determined to be your fault or if you have traffic convictions on your record, you may pay more for your insurance. That's because statistics indicate such drivers generally have repeat accidents or violations within three years. For drivers with poor records who cannot find coverage, there are state-regulated insurance plans called "assigned risk pools" or "shared markets." In these plans, the state assigns a company to provide coverage for a high-risk driver.
  
• Your family members. Insurance premiums not only reflect your age, gender and driving record, but those of other licensed drivers in your household as well. A teenage son who drives your car or a spouse with a poor driving record is likely to increase your insurance rates.
  
• The car you drive. Certain car models may be considered risky because they cost a lot to repair, are frequently involved in accidents or are popular with car thieves. Owning one of these cars may double your collision and comprehensive premiums. High-performance cars and sports cars, for example, usually cost more to insure. Keep this in mind when shopping for a car to prevent costly surprises when it comes time to insure it.
  
• Marital status. Statistically, young married drivers have fewer accidents than young single drivers, so they generally pay lower premiums.
  
• Where you live. Rates are regulated on a state-by-state basis, therefore rates in California and Rhode Island will differ. Rates also vary between locations within a state. That's because the risks of accidents, theft and vandalism vary significantly from one community to another. For example, people in small towns generally have been found to have fewer auto accidents than people living in large cities, so they may pay less for insurance. Other variables include typical regional weather conditions and local auto repair prices.
  
• Age. As a general rule, drivers under age 25 have more accidents than older drivers, so they pay more. Drivers between 50 and 65 years of age have low accident rates and are sometimes offered discounts. Past the age of 65, accidents seem to increase and rates generally begin to rise again. People over 70 may have trouble finding an insurer to accept them as a new customer, and when they do find coverage, it may be expensive.
  
• Gender. A young man under age 25 generally pays more than a woman of the same age. This is because young men are involved in more accidents than young women and have more than three times as many fatal accidents.

How Can I Save Money on Auto Insurance?
Here are some tips for trimming the cost of your auto insurance:

1. Get quotes from at least three different companies to compare prices and services.

2. Before purchasing a new car, read sources of information such as Consumer Reports magazine to see if the vehicle has a high accident rate or is popular with thieves. You also can write to the Insurance Institute for Highway Safety, 1005 N. Glebe Rd., Suite 800, Arlington, VA 22201 and ask for the Highway Loss Data Chart.

3. See if you can get a package deal by buying your homeowners, auto and other insurance from the same company. You may also get a discount if you insure all of your family's cars with the same company.

4. Increase your deductible if you feel you can handle the out-of-pocket expense in the event of an accident. For example, increasing your deductible to $500, rather than the standard $250, will cut the cost of your insurance.

5. Consider dropping collision coverage as your car ages. There comes a point when your aged auto's book value is less than the cost of repairing it, and remember, the most your insurer may pay is the car's book value. You can find out the current value of your car from the N.A.D.A. Official Used Car Guide, available at most local libraries, bookstores or banks.

6. Drive safely and obey the speed limits. Don't drink and drive. A good driving record lowers your insurance rates. Always wear your seat belt.

7. Check to see if you qualify for any of the following discounts (which are not permitted in all states and are not offered by all insurance companies):

• Good driver. The definition of a good driver varies but usually includes those with no accidents or convictions on their records for the previous three years.
  
• Driver training, improvement and defensive driving courses. You may qualify if you have taken an approved driver education course. Call the National Safety Council at 1-800-621-6244 or check your yellow pages for the number of an AAA or Top Driver near you to inquire about courses.
  
• Mature driver discount. For drivers between 50 and 65.
  
• Multi-car discount. For those insuring more than one car with the same company.
  
• Restricted mileage discount. For those who drive less than 7,500 miles annually.
  
• Anti-lock brakes discount. For cars equipped with computerized anti-lock braking systems.
  
• Passive seat belts and air bags discount. On cars equipped with factory-installed air bags and automatic seat belts.
  
• Anti-theft systems discount. For vehicles with devices that make them more difficult to steal -- for example, ignition- and fuel-cutoff systems, alarms, and hood- and wheel-locking devices.
• Good student discount. Sometimes offered for drivers under age 25 who have maintained a B average for the preceding semester in high school or college.

What to Do in Case of an Accident
Step 1
If possible, stop your car in a safe and visible place. If the car cannot be moved, turn on the hazard lights. Turn off the ignition. Be careful exiting your car. 

Step 2
Determine if anyone is injured. Do not move an injured person.

Step 3
Call the police (911 in most places) immediately. Report any injuries.

Step 4
If another vehicle is involved, get the car's year, make, model and license plate number; the driver's name, address and license number; and the name of his or her insurance company. If the driver does not own the car, get the name of the car's owner. Write down names and addresses of other passengers or witnesses.

Step 5
Write down the names and badge numbers of police and emergency personnel at the scene. Ask the officer how to obtain a copy of the police report for your insurance claim.

Step 6
If you suspect that the other driver was under the influence of alcohol or drugs, ask that a breath test be performed on you and the other driver.

Step 7
Cooperate with the police, but do not admit guilt for the accident in any way. You may be required to show proof of insurance, but do not reveal how much coverage you have.

Step 8
Do not accept any money the other driver may offer. By accepting money, you may give up your right and the insurance company's right to file a claim against the other driver, even if the damages turn out to be more extensive than you first thought.

Step 9
Do not agree to forget about a minor accident. You may see later that there were hidden damages or injuries. The other person may even file a lawsuit against you.

Step 10
Write an account of what happened: time of day, weather, hazards, road conditions and driving speed. Draw a picture of the site, showing stop signs, signal lights, etc. Try to measure skid marks and determine the point of impact. Note any damage already on other cars involved. If a camera is available, take pictures of the accident. Make copies of the pictures.

Step 11
Report the accident to your insurance agent or company as soon as possible.

Terms to Know
Actual Cash Value. The amount awarded for property damage losses, usually equal to the cost of replacing the damaged item, minus depreciation.

Assigned Risk. If an applicant for auto insurance cannot find a company able to insure him or her voluntarily, the state assigns the risk to an insurance company in that state.

Automobile Shared Market. All automobile insurers in a state participate to make coverage available to car owners who are unable to obtain insurance in the regular marketplace. These are usually called assigned risk plans, joint underwriting associations or reinsurance facilities (see Assigned Risk, above).

Bodily Injury Liability. Coverage that protects you against financial loss and pays legal defense costs when you are legally liable for injuring other persons in an auto accident. In auto insurance, both Bodily Injury and Property Damage liability are usually required by state law. The two are often referred to jointly as liability insurance.

Claim. A policyholder's request to recover losses covered by an insurance policy.

Collision Insurance. Coverage that reimburses you for damage to your own car resulting from a rollover or collision with another object (not necessarily another vehicle).

Comprehensive Insurance. Coverage that reimburses you for damage to your own car from causes other than collision, rollover or general wear-and-tear. It covers dangers such as hail, flood, theft, fire, glass breakage, falling objects, missiles, explosions, earthquakes, windstorms, vandalism or malicious mischief, and damage from a bird or animal.

Coverage. Indicates the type of coverage and/or how much the protection your insurance policy will provide.

Deductible. The amount you must pay before your insurance coverage begins paying. For example, if you had a $250 deductible and a loss of $800, you would pay the first $250 and the insurance company would pay the remaining $550. However, if the loss were less than or equal to $250, you would pay the entire amount and the insurance company would pay nothing.

Depreciation. The decrease in the value of your car or its parts due to age and general wear-and-tear.

Exclusion. A type of loss your policy will not cover.

First Party Coverage. Compensation for your losses by your own insurance company rather than the insurer of the person who caused the accident (for example, collision and comprehensive insurance).

Insured. A person covered by a policy.

Liability. Any legally enforceable obligation.

Liability Insurance. Covers accidental losses resulting from injury to the body or damage to the property of someone else for which the insured is legally responsible (legally liable). If the loss is covered by the insurance policy, the payment is made directly to the party that suffered the loss.

Limits. The maximum amount of insurance that can be paid for a covered loss. For example, if you have a $5,000 loss and the limit on your policy is $2,500, then $2,500 is the maximum your insurance company will pay.

Loss. The basis for an insurance claim. Insurers also refer to losses as payments made on behalf of the insured.

Medical Payments Insurance. Coverage that reimburses you and your passengers - regardless of legal liability - for medical or funeral expenses stemming from bodily injury or death by accident.

No-Fault Insurance. Each insured person's insurance company pays for certain financial losses, such as medical expenses and lost wages, regardless of who caused the accident. In exchange for these benefits, the right to sue may be restricted in some cases.

Peril. The cause of a loss. Perils include theft, glass breakage, flood, hail and fire.

Personal Injury Protection (PIP). A broader form of medical payments insurance coverage under the no-fault concept. PIP offers protection for expenses actually incurred, up to a specific, per-person dollar amount. States with no-fault laws require drivers to buy PIP. It also is offered as an optional coverage in some states without no-fault laws. Coverage varies from state to state.

Policyholder. The person who pays a premium to an insurance company in exchange for the protection outlined in an insurance policy.

Premium. The amount of money paid for an insurance policy.

Property Damage Liability. Insurance that protects you against financial loss if you are legally liable to others for auto-related damage to their property.

Renewal. A policy renewal takes place when the coverage of a policy or standard certificate are to continue by the insurance provider in exchange for your payment for another policy period (typically six months or one year).

The Insurance Package
Listed below are some of the basic elements available in typical automobile insurance policy.

Bodily Injury Liability

• The medical costs of injury that you cause to other people, loss of income for someone you injure and the cost of your legal defense if you are sued and determined to be at fault in the event of an accident involving injury or death

• Claims against you for damage to someone else’s property caused by the auto.
• Your legal costs if your car damages someone else's car or property

• Pays for damage to your car caused by collision or rollover

• Pays for damage to your car from disasters such as theft, fire, vandalism, flood and hail

• Covers the cost of doctors, hospitals, medical care, lost wages, replacement services and funeral expenses for you and/or your passengers, regardless of who caused the accident (Payments are generally stopped two years after the accident.) Coverage varies by state.

• Covers the cost of injuries or death for you or your passengers in an accident caused by an uninsured or hit-and-run driver.
• Covers you as a pedestrian for these same events
• Covers expenses not adequately covered by an underinsured driver.

In addition to these standard coverages, optional coverages such as rental reimbursement, towing, vehicle customization and sound receiving equipment, to name a few, are available. You can buy these and other optional, or add-on, coverages for an additional premium, depending on your particular needs.

When Requesting Price Quotes Have the Following Information Available

For More Information

Reference Materials

BOOKS
The Consumer Bible, 1001 Ways To Shop Smart
Mark Green, Workman Publishing $15.95

Top Driver^® In-home Driver Education Video
Learn professional driving techniques in the comfort of your own home. Top Driver^® is a contemporary defensive driving program specially designed for in-home use with your VCR and TV. The comprehensive curriculum presented in this course has been shown to reduce the frequency and severity of accidents by up to 70%. Top Drivers are safe drivers. You can be a Top Driver too.

To purchase this complete in-home driver education kit--which includes the 75-minutes training video, workbook, all shipping and test processing fees for just $29.95--call Top Driver at 1-800-477-4330 in all states.

For free brochures on Nine Ways to Lower Auto Insurance Costs, Oops, and How to File a Claim, send a self-addressed, stamped envelope to the Insurance Information Institute, 110 William St., New York, NY 10038 or call 1-800-331-9146. The Insurance Information Institute is on the Internet.

For answers to your insurance questions, call the National Insurance Consumer Help Line at 1-800-942-4242.

PAMPHLETS FROM THE FEDERAL GOVERNMENT
The quarterly Consumer Information Center Catalog lists more than 200 helpful federal publications. For your free copy write Consumer Information Catalog, Pueblo, CO 81009, call 1-888-8-PUEBLO or find the catalog on the Net (http://www.pueblo.gsa.gov).

RELATED LIFE ADVICE^® PROGRAM PAMPHLETS
See other Life Advice^® Program pamphlets on related topics: When Your Child Gets a Driver's License and Buying a Car. To order, call 1-800-MetLife.

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www.iii.org
Insurance Information Institute Everyone with a car or truck needs auto insurance. Not everyone knows what it really means. Check out this Web site for information on auto insurance and other consumer issues.

www.quoteseek.com
Quote Seek Compare auto insurance, get quotes on cars, read auto reviews, check blue-book values, or find auto dealers.

Buying a Car-Life Advice®
Buying a car, like apple pie, is part of the American dream. But to make sure your dream doesn't turn into a nightmare, check out our tips on everything from negotiating with dealers to the pros and cons of leasing.

Advocates for Auto & Highway Safety
Saferoads.org is a not-for-profit alliance of consumer, health, and safety groups together to make America's highways safer. Read special reports on general driving issues and fact sheets on various auto safety topics.

MADD-Mothers Against Drunk Driving
An informative and educational site created by the organization that helped make America aware of the hazards of drunk driving. Check out this site and join in the fight to keep drunk drivers off the road.

Microsoft Car Point
This is a great site for anyone thinking about buying a new car or needs some information on how to get the best deal. The coolest part of the whole site is that you can see some of today's newest cars from all different angles. Definitely a must see site!

Trans Union-Driving Statisics
Surf here for statistics on driving safety topics ranging from teenage drivers to buying a safe car!

MetLife Auto Insurance
MetLife Auto & Home can provide you with a comprehensive auto insurance policy.

* Because the content of newsgroups and websites changes constantly, it is impossible for us to review it all. MetLife is not responsible for the content of any of the above links.