1 Auto Insurance for New Mexico s Young Drivers Prepared for New Mexico s Young Drivers and Their Parents by:
2 One of the major events in many people s lives is earning the privilege of driving a motor vehicle. An important thing to remember is this: driving is a privilege not a right. In order to keep this privilege, you will be required to do a number of things. Failure to abide by the rules of driving might result in a loss of these privileges. The information contained in this brochure will prove valuable to you as a licensed driver. Being familiar with this information could save you from a very expensive and embarrassing mistake. Everyone who drives an automobile has the responsibility not only for operating a safe vehicle in a safe manner, but also for being able to pay for injuries or damages he or she might cause. To remove from the highways those drivers who are not able to pay for such damages or injuries, all states have financial responsibility laws. Here is how they work: if you have an automobile accident involving bodily injury, or more than 1,000 in property damage, you must file a report with the proper state agency. You then may be required to present proof that you can pay damages up to certain minimum amounts required by law. You can satisfy the requirement by purchasing bodily injury and property damage liability insurance in the minimum amounts set by the state in which you keep your car. If you do not carry such insurance and your car is involved in an accident, you may be required to put up cash or other assets, as proof that you are able to pay for the resulting injuries and damages. If you cannot do this, your right to drive may be taken away until you provide proof of financial responsibility. The cost of auto insurance varies from one group of drivers to another. The reason for this is that, on average, some groups have inferior driving records, higher accident rates and more costly accidents than others. Unfortunately, young drivers fall into this category. Usually, the highest premiums are paid by the male driver under age 25. Under the most widely used rating system, the cost of auto insurance for young drivers goes down as drivers age. Rates for young drivers who are the owners of their cars are reduced periodically from age 17 to 29.
3 Each state requires that you have certain types of coverage with minimum liability limits. Although the insurance industry recommends that your bodily injury liability limits be at least 100,000 per person and 300,000 per occurrence, every state sets their own requirements. However, as long as you meet the minimum requirements in your home state, your insurance policy will cover the minimum limit in any state you travel to. New Mexico law requires drivers to have auto liability insurance. New Mexico is considered a traditional tort state, which means if you are in an accident with another driver his or her insurance company covers your losses or you have to file a lawsuit to recover disputed damages for injuries and property. New Mexico law mandates that auto insurance policies provide the following: Liability - Minimum Required: 25,000 per person for bodily injury 50,000 per accident for bodily injury 10,000 per accident for property If you can afford more insurance, carrying more than the mandatory minimum requirement is recommended. Think about it... hitting someone driving an expensive car could easily run 75,000 and injuries will more than double that amount. Families should sit down with their insurance agent or company representative to determine the right amount for each individual and family. In New Mexico, many companies offer young drivers a good student discount of up to 25 percent on auto insurance rates. The eligibility requirements for these discounts and the amount of discount vary from company to company. Generally, to be eligible for a discount, a person must be at least of driving age and be a high school student or full-time college student. In addition, the student must achieve some level of academic excellence for instance, be on the dean s list, maintain a B average, or be on the honor roll.
4 So you ve got your new driver's license and, as you re probably aware, it s illegal to hit the streets without auto insurance. You probably also know that insurance rates are based on how likely you are statistically to get into a crash. Unfortunately, as a first-time driver, the numbers aren t on your side. The risk of crash per mile driven is three times higher for year olds than for drivers age But, there are some things teenagers and parents can do to save money on insurance rates. Get on your parents policy. It s usually cheaper to add a teenager to their parents policy, rather than be insured separately. Most companies won t charge an additional premium until the teen is a licensed driver. Parents need to inform their insurance agent or company that their teenager is being added to the policy. Deliberate concealment could impact coverage. Good grades pay off. Most insurers offer a discount, some as high as 25%, for students who maintain a B average or better. Driver experience. Graduated Driver Licensing law requires teens to log 50 hours with an experienced driver, but taking a formal drivers training course will likely save on insurance cost. Many companies offer up to a 10% discount. Penalties can land you back in the passenger seat. Death and injury are the highest price drivers can pay for drinking and driving, but even if you manage to survive, a D.U.I. ticket will cost teenagers big time. As a teen driver, you ll likely be cancelled, and if you can get insurance, expect to pay a much higher rate for the next 3-5 years. Traffic crashes and citations will also impact your premium. Rack up more than three and teens face cancellation or non-renewal. Drive an "insurance friendly" vehicle. Cars that are a favorite target for thieves, are expensive to repair, or are considered "high performance" have much higher insurance costs. Before you buy a car, contact your insurer to get a quote on what it will cost to insure. Safety features and crashworthiness. Don t assume an old clunker is your best insurance bet. Newer makes and models are designed to be safer and discounts may be available (if you have automatic seat belts and/or air bags, for example). Shop around. Even for teens, rates can vary by hundreds of dollars. Also, if you can afford it, ask for higher deductibles. Insurance safety programs. Some insurance companies such as SAFECO offer technology to help parents track teen driver behavior with global positioning systems (GPS) which record where a car is driven and how fast.
5 Bodily Injury Liability Insurance This coverage applies when your car injures or kills pedestrians, persons riding in other cars or guests in your own car. When claims or lawsuits are brought against you, bodily injury liability insurance provides protection in the form of legal defense. If your insurance company agrees or a court decides that you are legally liable for an injury, the company will pay the damages assessed against you up to the limits stated in the policy. Property Damage Liability Insurance This coverage applies when your car damages the property of others. More often than not, the property is another car, but you are also covered for damages to other property. When claims or lawsuits are brought against you, property damage liability provides protection in the form of legal defense and payment of damages for which you are legally liable, up to the limits of your policy. Many insurance companies combine this coverage with bodily injury liability under a single coverage and limit. Medical Payments Insurance Under this coverage, your insurance company agrees to pay, up to the limits of your policy, medical expenses resulting from accidental injury. Medical payments insurance differs from bodily injury liability coverage in that it covers medical expenses incurred by you and members of your family, as well as guests in your car. Payment is made regardless of who is at fault. Uninsured Motorists This coverage applies mainly to bodily injuries for which an uninsured motorist or a hit-andrun driver is legally liable. Your insurance company agrees to pay damages to injured persons in your car up to the limit you chose for your policy. It is a good idea to match these limits with your liability insurance limits. Comprehensive Physical Damage Insurance This coverage provides protection for your car against financial loss resulting from fire, theft or larceny, glass breakage, falling objects, missiles, explosion, earthquake, windstorm, hail, water, flood, vandalism or malicious mischief, riot or civil commotion, or collision with a bird or animal. However, it does not apply when your car is damaged in a collision with another car or object. (See collision insurance below) Most comprehensive insurance is sold with a deductible. Collision Insurance This coverage applies when your car is damaged as a result of colliding with a vehicle or other object, or as a result of turning over. Damages are paid by your insurance company regardless of who is at fault. Most collision insurance is sold with a deductible usually 250 or 500. Collision insurance does not cover injuries to people or damage to the property of others.
6 Commonly Asked Questions About Auto Insurance Q. Why is insurance so expensive for teenage drivers? A. The cost of auto insurance varies from one group of drivers to another because some groups have worse driving records, higher accident rates and more costly accidents than others. The highest insurance rates are paid by any male driver under the age of 25. His rate then hinges on whether he s married and whether he owns or is the main driver of the car being insured. With the increase in young female drivers in the last twenty years, however, the accident rates between the genders are evening out. Drivers age accounted for 12.9 percent of all the drivers involved in fatal crashes and 16 percent of all the drivers involved in police-reported crashes in Q. Can I be added to my parents auto insurance? A. If you drive a family car, you can be added to your parents policy. However, the cost of the policy will increase. (Some companies insure young drivers only on a family policy.) If you have your own car, your parents company may sell you a separate policy, but at a different rate than your parents. Q. Do I have to be a certain age to buy my own insurance? A. No. However, you must have a valid driver s license. Also, in many states, you must be 18 before you can own a car without an adult s name on the auto registration. Q. How often do I have to renew my insurance? A. Auto insurance policies usually last six months. Some last one year. You will receive a notice when it s time to renew your insurance. Q. Will my rates go up or will I lose my insurance if I get into an accident or get a ticket? A. If you are not at fault in an accident, your insurance should not be affected. If you are at fault, get a ticket for a serious violation (i.e. drunk driving), or are involved in an accident that racks up expensive property damage (i.e. crashing into a tree), your rates may increase at the time of renewing your policy because you will be placed into a higher risk group of people who have recently been in an accident. Q. If I loan a car to a friend who has an accident, is he or she covered by my insurance? A. Under most circumstances, someone using your car with your permission is covered by your insurance. If the person borrows your car with your permission and is involved in an accident, your insurance will pay just as if you were the driver. Q. Should I report all accidents to my insurance company? A. Yes. You should report all accidents even if you do not end up filing a claim. If you don t report these incidents, you run the risk of being sued by the other people involved and your insurance company will be at a disadvantage in defending you.
7 Test Your Auto Insurance I.Q. Answer True or False to the following statements: 1. It is unnecessary to re-check your auto insurance premium since rating factors generally don t change on your policy. 2. There is no way to receive a discount on your auto insurance. 3. Your driving record influences your premium more than any other factor. 4. There s no need to shop around for insurance because rates don t vary much from company to company. 5. You can save money on your insurance by increasing your deductible. 6. If you have an older car with low market value, it may be a good idea to lower your premium by eliminating collision coverage. 7. When you lend your car to someone and they cause an accident, it is their car insurance that will cover the damages on your car. (Answers: 1-False; 2-False; 3-False; 4-False; 5-True; 6-True; 7-False) More Info: New Mexico Teen Driving Laws, Insurance Requirements & Drivers License can be found at: Information on Drinking and Driving and its consequences can be found at: Information on obtaining your license:
8 What to do if you: Get a Traffic Ticket... When you receive a ticket for a traffic violation, the police officer will give you two options: pay a penalty assessment or go to court to contest the ticket. If the Penalty Assessment box is checked on your citation, you must pay the penalty assessment by any of the options stated on the ticket. Courts usually allow for payment by mail, or in person at the address indicated. Some courts allow payment with a credit card over the phone. Payment options are always listed on the back of the ticket. If the Court Appearance or Traffic Arraignment box is checked on your citation, you must appear in person in the specified Court by the date indicated on your citation. If you do not do so, the court will issue a bench warrant for your arrest, and the next time you try to renew your license, it may be suspended. Have an Accident New Mexico law requires that you must report an accident if there is a bodily injury or death or if there is 1,000 or more property damage to any one person s property. In the event you are involved in an accident resulting in an injury, death or property damage, you should: Immediately stop the vehicle at the scene of the accident or as close to the accident as possible in a manner that does not obstruct traffic more than is necessary. Exchange the following information with the driver of the other car(s): (A) The driver's name and address and the registration number of the vehicle the driver was driving. Check to see if the owner of the car on the registration matches the drivers information. (B) The make, model and license plate number of each car involved. (C) The insurance company, their insurance agent and any information available on how to reach them. (Found on the required insurance I.D. card) If the accident results in total property damage of at least one thousand dollars (1,000), forward a written report of the accident to your insurance company within ten (10) days after the accident. If an officer is not available at the scene of the accident, then make a station report at a police station. If a police agency investigates the accident, the police officer will fill out the accident report. Immediately following an accident, you should also contact your insurance agent and give complete information about the accident. You should seek medical attention if you are shaken up and remember, some injuries may not show symptoms right away.
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