AUTOMOBILE INSURANCE HOW MUCH COVERAGE DO I NEED?

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1 HM 680 April 1991 $ $$ Southern Selection AUTOMOBILE INSURANCE HOW MUCH COVERAGE DO I NEED? You may not realize how much you rely on your car until something happens and you are unable to use it. You cannot protect yourself against the inconvenience of losing your transportation, but you can buy insurance and protect yourself from the financial losses that could result from damage to your vehicle. expenses. These are covered by your medical payments insurance. Property damage liability covers payments when your car damages another car, or other property such as signs, telephone poles, buildings, and landscaping. There are various types of automobile insurance available to car owners. LIABILITY Liability insurance protects automobile owners and drivers from financial losses that result when they are legally responsible for an auto accident. There are two basic types of liability insurance for automobiles, bodily injury liability and property damage liability. You and members of your family who live with you are covered when driving your own car or driving someone else s car with the owner s permission. Other people who drive your car with your permission are also covered under your liability policy. Bodily injury liability provides coverage when you injure or kill guests in your car, people riding in other cars, or pedestrians. Bodily injury insurance does not cover your personal medical When you are legally liable for an injury or property damage, liability insurance will pay for your legal defense and damages up to the limits of your policy. The South Carolina Financial Responsibility Law sets minimum liability insurance limits at 15/30/5. This means that the insurance company will pay up to $15,000 per person for bodily injuries, up to $30,000 for total bodily injuries, and up to $5,000 for property damage from one accident. This minimum level required by South Carolina law is considered too low for most car owners. Relatively small increases in premiums can provide a more adequate protection level of 100/300/50, or an even better protection level of 250/500/50. PHYSICAL DAMAGE INSURANCE This pays for direct and accidental loss to your car, a car you are driving with the owner s permission, and car equipment. It will only pay the actual cash value of the car (determined by the book

2 value) minus any deductible. It is divided into collision and comprehensive insurance. Collision pays for accidental damage to your car when it is hit by or it hits another car, it hits another object, or it rolls over, regardless of who is at fault. Comprehensive insurance, now called other than collision insurance, pays for accidental loss to your car in situations other than a collision, for example: * a flying stone cracks the windshield * damage from fire, flood water, or hail * a tree falls on the car * hitting an animal or other damage caused by animals * vandals slash your tires * someone steals your car bills and funeral expenses for you and your family, whether you are injured in your car or someone else s. It also applies to guests who are riding in your car. Typical limits are $1,000 to $5,000. UMBRELLA LIABILITY INSURANCE If you have high exposure to liability through your employment, have a high net worth, or people just think you have a high net worth, you might want additional liability coverage. Although you get some liability coverage from both your homeowner s and auto policies, it may be insufficient for your needs. Owners of both homeowner s and auto liability insurance can purchase an umbrella policy to increase total liability coverage. Policies are sold in increments of $1 million. UNINSURED MOTORIST INSURANCE Consumers have the option to select this type of insurance to provide protection from losses caused by drivers who do not have auto insurance. Damage caused by hit-and-run drivers who are legally liable is also covered. UNDERINSURED MOTORIST INSURANCE Consumers also have the option of purchasing insurance with liability limits higher than the 15/30/ 5, set by South Carolina s Financial Responsibility Law. If a person with insurance causes an accident that results in injuries to you or to your family that are in excess of that person s coverage, your underinsured motorists protection will pay the difference up to your policy limits. Personal property that is damaged or stolen from your auto is covered under the personal property limits of your homeowner s or renter s policy. You may need to show that you took steps to safeguard your car. If you leave your car unlocked with the keys in it, your insurance company may not pay for the theft. MEDICAL PAYMENTS This insurance provides coverage for medical costs resulting from an accident, regardless of who is at fault. Medical payments insurance covers medical INSURANCE COVERAGE OPTIONS Deductibles are the amount of money you agree to pay if you have a covered loss. They may vary for each auto you insure and for each type of coverage you select. Choosing a higher deductible will result in a lower insurance premium. Towing and labor insurance may pay reasonable towing expenses or only a set amount each time you have your car towed in for repairs. If you are an auto club member, you may already have this coverage. Besides towing costs, membership in a

3 club provides additional benefits and may be a better choice for people who travel extensively by car. Equipment coverage may be purchased for CB radios and other sound equipment that is not covered by standard auto policies. Recreation vehicles such as boats and campers may be insured on your automobile policy. Loss of use coverage is available to pay for a rental car while your car is being repaired for comprehensive or collision damages. Temporary rental car insurance coverage may be provided by your personal auto policy to insure you when you are driving a rented vehicle. This coverage will save you money because you will not have to purchase the collision damage waiver (CDW) from the rental company. Before you rent a car, check with your agent to see if you have this coverage and what proof you may need to show the rental company of the coverage. RATING FACTORS Insurance rates generally are determined by the amount of money companies have to pay out in claims. The following factors may influence how much you have to pay in premiums for your auto insurance. Where you live. Accidents and damage due to theft or vandalism are more likely to happen in large, densely populated areas. Thus, insurance rates may be higher in certain urban areas. Your driving record. Drivers with poor driving or accident records, or other drivers that insurers believe are more likely to have accidents, pay higher premiums. Your driving record and those of the members in your household who drive are extremely important considerations. Automobile insurers operating in South Carolina must use two different sets of rates: a base rate, and a rate 25 percent higher than the base rate, called the objective standards rate. The higher rate applies to individual operators and is based on traffic violations, accidents, or a combination of both. A copy of the South Carolina Objective Standards Test is included at the end of this publication. Car use. If you drive your car to work each day or you drive many miles each year, you may pay a higher premium. If you use your car for your business, you need to list this use on your auto policy. Type of car insured. High-performance sports cars, cars that are expensive to repair, or models that are frequently stolen will have higher insurance coverage costs. Personal characteristics of the insured drivers. Males and young drivers generally have more accidents than other population groups; thus their insurance rates tend to be higher. Protection coverage. If you purchase higher policy protection limits or purchase additional coverage for special equipment, your insurance will cost more. KEEP YOUR INSURANCE UPDATED Even if a policy change will result in a higher premium, make sure that you keep your agent fully informed and up-to-date about the coverage you need. This will reduce the possibility of a loss that is not covered by your insurance. Notify your agent if you or a member of your household: * buys or sells a car * substantially reduces/increases amount of driving * begins driving * turns age 21 or 25 * gets married or divorced * has driver s license revoked * moves to a different location

4 QUESTIONS AND ANSWERS What should I do if I have an accident? * Stop and turn off the ignition. * Get help for the injured. * Guard against further damage or injury. Stay clear of traffic and disabled vehicles. * If there has been an injury or property damage of more than $400 you must report the accident to the police. * Get the other driver(s) name, address, phone number, driver s license number, insurance company name, and policy number. * Make notes about witnesses, location of cars, weather conditions, and traffic signals. * If there is a police report, write down the reporting officer s name and badge number. Ask where you may get a copy of the report. * Take pictures if you have a camera. * Regardless of who was at fault, report your involvement in any accident to your insurance company as soon as possible. Accidents causing less than $750 in damages will not affect insurance premiums. What can I do if I have a problem that is not being handled to my satisfaction by my insurance company? If you have tried to have your insurance company resolve your problem, but are not satisfied with the results, you may contact: State Commissioner of Insurance 1612 Marion Street Post Office Box Columbia, South Carolina (803) (800) (toll free) Whenever you contact someone about an insurance problem, have the following available: * your policy number or claim number * a list of dates of previous contacts * a record of who you spoke with and when What is no-fault auto insurance? South Carolina does not require no-fault auto insurance, but some other states do. No-fault allows injured people to collect from their own insurance company for losses from an auto accident for hospital bills, doctor s fees, and lost wages, regardless of who is at fault. Some no-fault laws provide similar coverage for accidental property damage. If you have an accident outside of South Carolina, your auto policy will conform to the laws of the state in which you have the accident. In other words, if you have an accident in a state that has a no-fault auto insurance law, you will collect from your own insurance company for collision damages and bodily injuries. If you do not carry collision insurance you cannot collect. How can I stretch my auto insurance premium dollar? Physical damage. Collision and comprehensive premiums can be reduced by dropping coverage on older cars. Generally, if a car is valued at $2,000 or

5 less, the premium cost over a few years may add up to more than you would receive if the car were damaged. Multi-car discounts. Insuring more than one car in a household on a single policy may reduce premiums by percent. Insuring your home and your auto with the same company may also qualify you for a discount. Young drivers. It is usually less expensive to insure young drivers on their parents policy than on a separate one. However, a separate policy could limit the parents liability. Some companies offer discounts for high school or college students who have a good grade average. Discounts may also be offered to students who have completed a driver education course. Students who are away at school and are infrequent drivers may receive reduced premiums. Good drivers. Many companies offer discounts for drivers who have not had traffic violations or accidents for a certain time period. Mature drivers. Drivers aged 50 or 55 and older may receive a discount of percent. Car pools. Commuters who share driving to school or work with others may qualify for a discount. Shop around each time your policy comes due. You may find that rates change among the companies and that premiums are different as your car and you age. However, take into consideration any discounts your company may offer for long-time policy holders. When comparing rates between companies, be sure you are comparing equal coverage. When shopping for auto insurance, the chart on the next page may be used to compare different coverages and premiums. Adapted for use in South Carolina by Nancy M. Porter, Extension Family Resource Management Specialist, from materials Dr. Porter originally prepared for the Virginia Cooperative Extension Service. Reviewed by South Carolina Department of Insurance and by Joyce H. Christenbury, Extension Family Resource Management Specialist.

6 Policy 1 Policy 2 Policy 3 NAME OF COMPANY LIABILITY COVERAGE Limit Premium Limit Premium Limit Premium Per Person $ $ $ $ $ $ Per Accident $ $ $ $ $ $ Physical Damage Per Accident $ $ $ $ $ $ UMBRELLA LIABILITY $ $ $ $ $ $ MEDICAL PAYMENTS $ $ $ $ $ $ UNINSURED OR UNDERINSURED MOTORIST COVERAGE Per Person $ $ $ $ $ $ Per Accident $ $ $ $ $ $ Physical Damage Per Vehicle $ $ $ $ $ $ COLLISION COVERAGE ACTUAL CASH VALUE $ $ $ $ $ $ (Deductible) (Deductible) (Deductible) COMPREHENSIVE COVERAGE ACTUAL CASH VALUE $ $ $ $ $ $ (Deductible) (Deductible) (Deductible) ADDITIONAL DISCOUNTS OR SPECIAL RATES $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ TOTAL PREMIUM $ $ $

7 OBJECTIVE STANDARDS TEST Applicants, or a current policyholder must be written or renewed at the base rate for both liability and physical damage insurance unless they fail the objective standards test below. The applicant, or any operator who is not excluded by endorsement, who resides in the same household or who customarily operates an automobile insured under the same policy, fails the objective standards test if, he or she: (1) has obtained a policy of automobile insurance or continuation thereof through material misrepresentation within the preceding 36 months; (2) has had convictions for driving violations on three or more separate occasions within the 36 months immediately preceding the effective date of coverage as reflected by the Motor Vehicle Record (MVR) of each insured driver as maintained by the Department of Highways and Public Transportation; (3) has had two or more chargeable accidents within the 36 months immediately preceding the effective date of coverage; Chargeable accidents happening between July 26, 1986, and July 1, 1988, require only property damage in excess of $400 and/or any form of bodily injury with no financial measurement. After July 1, 1988, a chargeable accident is one in which there is at least $750 property damage and/or more than $300 in bodily injury damage. (4) has had one chargeable accident and two convictions for driving violations, all occurring on separate occasions within the 36 months immediately preceding the effective date of coverage; (5) has been convicted of or forfeited bail during the 36 months immediately preceding the effective date of coverage for operating a vehicle while in an intoxicated condition or while under the influence of drugs (DUI); (6) has been convicted of or forfeited bail during the 36 months immediately preceding the effective date of coverage for: (a) any felony involving the use of a motor vehicle; (b) criminal negligence resulting in death, homicide, or assault arising out of the operation of a motor vehicle; (c) leaving the scene of an accident without stopping to report; (d) theft or unlawful taking of a motor vehicle; (e) operating during a period of revocation or suspension of registration or license; (f) knowingly permitting an unlicensed person to drive; (g) reckless driving; (h) the making of material false statements in the application for license or registration; (i) impersonating an applicant for license or registration or procuring a license or registration through impersonation, whether for himself or another; (j) filing of a false or fraudulent claim or knowingly aiding or abetting another in the presentation of such a claim; (k) failure to stop a motor vehicle when signaled by means of a siren or flashing light by a law enforcement vehicle. (7) has for 30 or more consecutive days during the 12 months immediately preceding the effective date of coverage, owned or operated the automobile to be insured (or if newly

8 acquired, the automobile it replaces) without liability coverage in violation of the laws of the state. (Failure to turn in motor vehicle license plates within five days of the lapse of liability insurance is owning an automobile in violation of law.); (8) has used the insured automobile as follows or if the insured s automobile is: (a) used in carrying passengers for hire or compensation, except that the use of an automobile for a car pool must not be considered use of an automobile for hire or compensation; (b) used in the business of transportation of flammables or explosives; (c) used in illegal operation; or (d) no longer principally used and garaged within the state, but not to include students who are operating a motor vehicle registered in this state while attending an institution located in another state. In the event that one or more of the conditions or factors in items (1) through (8) above exist, the automobile customarily operated by that individual driver must be written at the Objective Standards rate. ACCIDENTS NOT CHARGEABLE Accidents occurring under the following circumstances are not considered chargeable: (a) the automobile was lawfully parked. (An automobile rolling from a parked position is not considered as lawfully parked but is considered as operated by the last operator.); (b) the applicant or other operator or owner was reimbursed by or on behalf of a person responsible for the accident or has a judgment against this person; (c) the automobile of an applicant or other operator was struck in the rear by another vehicle and the applicant or other operator has not been convicted of a moving violation in connection therewith; (d) the operator of the other automobile involved in the accident was convicted of a moving traffic violation and the applicant or other operator was not convicted of a moving traffic violation in connection therewith; (e) an automobile operated by the applicant or other operator is damaged as a result of contact with a hit and run driver, if the applicant or other operator so reports the accident to the proper authority within 24 hours or, if the person is injured, as soon as the person is physically able to do so; (f) accidents involving damage by contact with animals or fowl; (g) accidents involving physical damage, limited to and caused by flying gravel, missiles, or falling objects; (h) accidents occurring as a result of the operation of any automobile in response to an emergency if the operator at the time of the accident was responding to a call of duty as a paid or volunteer member of any police or fire department, first aid squad, or any law enforcement agency. This exception does not include an accident occurring after the emergency situation ceases or after the private passenger motor vehicle ceases to be used in response to the emergency. Adapted for use in South Carolina by Nancy M. Porter, Extension Family Resource Management Specialist, from materials Dr. Porter originally prepared for the Virginia Cooperative Extension Service. Reviewed by South Carolina Department of Insurance and by Joyce H. Christenbury, Extension Family Resource Management Specialist. The Clemson University Cooperative Extension Service offers its programs to people of all ages, regardless of race, sex, religion, national origin, or handicap and is an equal opportunity employer. Clemson University Cooperating with U.S. Department of Agriculture, South Carolina Counties, Extension Service, B.K. Webb, Director, Clemson, S.C. Issued in Furtherance of Cooperative Extension Work in Agriculture and Home Economics, Acts of May 8 and June 30, 1914