The single greatest influence on the rating process is claim frequency. This does not mean how many times you specifically have made an insurance claim, although that will have an additional effect. Claim frequency measures how often an insured event occurs within a group relative to the number of policies contained in that group. Persons sharing characteristics with high-claims groups will be charged more for insurance coverage. At the same time persons who share characteristics with low-claims groups will be charged lower rates. In addition, insurance companies offer discounts to individuals who exhibit certain characteristics.

Discounts

1. Multiple Vehicles Most insurance companies offer a discount to consumers that insure more than one car with their company. Companies offer these discounts not only because they want all of your business but also because it is easier for them to underwrite individuals that they know; thus, reducing their risk and saving the company money. In addition, industry statistics show that individuals and families that insure more than one car have a better than average claims experience. Through this discount companies pass along some of their savings to you.
2. Driver Education Courses Discounts for driver education courses are targeted primarily at younger and older drivers.
3. Good Student Insurers have found that students who are responsible enough to earn a B average or better tend to be more responsible drivers. For that reason, many companies offer a "Good Student Discount."
4. Safety DevicesAutomobile safety devices can lower insurers' costs by preventing accidents or limiting their severity. These savings are passed along to the policyholder through discounts for safety equipment. This equipment includes air bags, automatic seat belts and anti-lock brakes.
5. Anti-theft Devices Devices or systems that deter theft or vandalism also lower claims costs. Many companies offer discounts for anti-theft devices.
6. Low MileageThe fewer miles you drive the less chance you have of getting into an accident. Insurers recognize this fact and generally offer discounts for low mileage drivers. Some companies also offer discounts for drivers that participate in car-pools.
7. Good Driver-Renewal Some insurers offer discounts to drivers who maintain a good driving record and renew their policy with the same insurer.
8. Auto/Home Package Some insurers offer a discount on one or both policies if an individual buys a homeowner policy and an auto policy from the same insurer.
9. Dividends Some insurers, particularly mutual insurers, offer dividends to policyholders if the sale of auto insurance has been profitable to them. Dividends are declared and paid after the policy period has expired.

Discounts are not only ways for companies to attract customers, they are also ways for companies to compete and retain business. So when you shop, do not just ask if a discount exists, but also ask how much you save. Savings can differ from company to company. In addition, consumers should make sure that they receive the discounts for which they qualify. When comparing the price of insurance between different companies, compare the total cost after any discounts.

Liability Insurance
Most auto liability insurance policies contain three major parts: liability insurance for bodily injury; liability insurance for property damage; and uninsured/under-insured motorists coverage.

1. Bodily injury liability insurance does not protect you or your car directly. If you are the cause of an accident in which other people are injured, this insurance protects you against their claims for damages such as medical expenses, lost wages, and pain and suffering. This insurance coverage will also pay if the accident was caused by a member of your family living with you or a person using your car with your consent.

   Bodily injury liability insurance carries specific benefit limits. These limits address how much money your insurance company is committed to pay for any one victim injured in an accident and limits the amount they must pay for multiple victims.

   To make a smart consumer purchase, you must understand these limits for bodily injury liability insurance. In most states you will be required by law to purchase minimum amounts of bodily injury coverage. However, these minimum amounts are generally low and you may decide to purchase additional coverage. This decision may be based on your desire to project your assets from additional claims above the minimum amounts. If this is the case, keep in mind that as you raise your coverage, your premiums will increase. This is because you are asking the insurance company to assume responsibility for a higher claim. The extra cost of higher coverage tends to be relatively low.

2. Property damage liability insurance pays for any damage you cause to the property of others, such as a crushed fender, broken glass, or a damaged wall or fence. Your insurance will pay for this damage whether you are driving your automobile or whether it was being driven by another person with your consent. Once again there will be maximum limits set by your policy on the claims your insurance company commits to pay as a result of property damage losses, as well as a minimum limit set by the state on how much coverage you must buy.
3. Uninsured motorists coverage protects you directly. This coverage pays if you are injured by a hit-and-run driver or a driver who does not have auto insurance. This coverage in effect takes the place of the insurance that the other driver should have purchased but did not. Some policies also contain coverage for under-insured drivers. These are drivers who purchased insurance but not enough to cover your claim.

Once again, uninsured motorists coverage will have policy limits. In addition, the state may require you to purchase specific minimum amounts of coverage. Uninsured motorists coverage does not protect the other driver and it may not cover damage to your vehicle. Your insurance company may sue the other driver for any money the company pays to you because of the other driver's negligence.

The three coverages mentioned above are the basic coverages contained in liability policies sold under the tort system. However, when you purchase auto insurance you will have to decide what other insurance coverages you would like to purchase.

Another way to provide higher limits of liability inexpensively is by purchasing a personal umbrella policy. An umbrella policy provides broad liability protection over and above your auto policy's liability limits. It will also cover some exposures to loss that are not covered by your auto or homeowner's policies.

If you live in a no-fault state, this section applies to you. Each state must implement either a tort system or a no-fault system. The system your state has implemented will determine what kind of insurance is available to you.

There are many variations on the no-fault system that make it difficult to provide accurate information on a national basis. This booklet provides a basic overview of no-fault, but for specific questions about your state's no-fault law contact your state insurance department.

In a no-fault state individuals need not go through the court system to have their financial loss paid if the loss results from an injury. Two individuals who have a traffic accident may file claims with their own insurance company. Each insurance company pays the claim for the personal injury to their policyholder regardless of fault.

First of all, under a no-fault system your insurance company pays you directly for your losses as a result of injuries sustained in an accident, regardless of who is at fault. Similarly, the other driver collects losses for his or her injuries from his or her insurance company. Under a no-fault law there is no need to determine who is at fault to receive payment for injury claims.

No-fault does not completely eliminate the risk of your being sued. However, no-fault laws do place restrictions on when a suit can be brought. This means that you can be sued but only under specific conditions. Since no-fault laws do not completely eliminate a person's right to sue, the possibility of your being sued is very real, especially in the event that you are the driver at fault in an accident that causes serious injury to others.

1. The most basic no-fault benefit is personal injury protection coverage (PIP). This coverage will pay you, your relative or any other person riding in your car a minimum benefit amount per person for injury regardless of fault. The level of benefits varies widely among states.

   The following are types of coverages that may be extended to you under typical personal injury protection coverage:

   a.) Medical Expense Benefits. This benefit includes all reasonable charges for medical, hospital, surgical, professional nursing, dental, optometric, ambulance, prosthetic services and X-rays.

   b.) Rehabilitation Expenses Benefit. This benefit includes charges for psychiatric, physical and occupational therapy, and rehabilitation.

   c.) Work Loss Benefit. This benefit includes coverage for loss of wages up to a specific limit for a specific time period following injury.

   d.) Funeral Expense Benefit. This benefit covers all reasonable charges up to a specific amount for funeral services including burial and cremation expenses.

   e.) Survivors Loss Benefit. This benefit provides a payment to your surviving spouse or dependents up to a specific amount for a specific time period.

2. Residual Bodily Injury Liability Coverage
   Under no-fault policies, most injury claims are covered under your PIP benefits. If there is a situation where those benefits are not enough and there is a possibility of your being sued, many states include residual bodily injury liability coverage. This coverage will protect your family and anyone else while in your car with your permission in the event you are sued because of injuries caused to others.

   What are the situations under which you can be sued? Again, no-fault laws will vary greatly from state to state, but each no-fault state has defined certain thresholds that, if exceeded, open the possibility of a suit. These thresholds can be based on specific dollar amounts, clearly defined injuries and/or a death resulting from an accident.

3. What No-Fault Doesn't Cover
   In most states, the no-fault law specifically excludes property damage liability for damage that you cause to the property of others. If you are at fault in such an accident, you will be held liable and can be sued for these losses.

   Only in a limited number of states does the no-fault law extend some coverage to damage you may cause another driver's automobile. Furthermore, even in these limited cases, property damage liability coverage does not extend to your car. You must buy a separate collision coverage to take care of this risk.

   Once again, you should be aware that this booklet can only give you a general overview of no-fault laws governing insurance. For specific information about the no-fault law and insurance in your state, contact your state insurance department. Most state insurance departments have written consumer information that will outline the specific limits and responsibilities for auto insurance in their state.

1. Collision Coverage pays for physical damage to your car as the result of your auto colliding with an object, such as a tree or another car. This is relatively expensive coverage. Remember, this coverage is optional and not required by law. However, collision insurance may be required by your lending institution or lessor.

   If you have an older vehicle worth less than $2,000 there is little reason for you to purchase collision coverage, because you are likely to pay more money in premium than you would ever receive as a result of a claim. Auto insurance policies only require the company to cover your financial expenses, not to replace your vehicle. In the case of an accident involving an older car, the cost of repairing the car can quickly exceed the worth of the car. In that case insurers will "total" the car and pay you what the car was worth rather than fixing it. In severe cases, the worth of the car may not exceed the premiums paid for the coverage.

2. Comprehensive Coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. Comprehensive coverage also will cover broken glass, such as windshield damage. Comprehensive coverage is less expensive than collision coverage and many consumers choose to carry it. However, remember it is your choice; you are not required by law to carry comprehensive coverage.

   When considering collision and comprehensive coverage, you should consider your deductible. A deductible is an amount of money you agree to pay as part of a claim before the insurer is committed to pay the rest of the claim. For example, if you carried collision coverage with a $200 deductible and you had a $500 loss, you would have to pay $200 and the insurance company would have to pay the remaining $300.

   Basically, deductibles reduce your premiums because you agree to deduct a set amount from the claim your insurer otherwise would have to pay. Insurance companies offer deductibles because they reduce the number of small claims, which are costly for them to handle.

   If you purchase a new car with a loan, the financial institution that loaned you the money may require you to purchase comprehensive and collision coverages. This is because they see your car as collateral for the loan, and they want to make certain it is worth something if they need to repossess it.

   In the event you have to buy, or decide to buy, collision or comprehensive coverage, you can save money by agreeing to the highest deductible you can afford to pay in the event on an accident. However, since comprehensive coverage is usually cheaper than collision coverage, many people save money by dropping the collision coverage and keeping the comprehensive coverage to protect against natural perils, theft and glass breakage.

Other Optional Coverages
Insurance that covers the medical bills of drivers and their passengers is not usually required in states without no-fault laws. However, you may decide to purchase this coverage.

Be cautious when purchasing these coverages. They can duplicate coverage that you may pay for through other insurance policies. For instance, medical payments coverage may duplicate health or disability benefits that you buy individually or receive as a benefit through your job. Before purchasing these coverages, review them and your other insurance policies carefully.

3. a.) Medical payments coverage
   is one such optional coverage. This coverage pays for the medical and funeral expenses for you or others injured or killed in an accident while riding in or driving your auto. Claims against this coverage include all reasonable hospital, surgical, chiropractor, X-ray, dental, professional nursing, prosthetic and funeral expenses. It will also cover you or members of your family if you are struck by an auto while walking or while riding in another auto. This coverage will pay for your medical and funeral expenses even if you cause another accident. Usually, only expenses incurred within a specified period of time after the accident are included.
4. b.) Rental Reimbursement coverage usually pays $15 to $20 a day to rent a car for a specific number of days while your vehicle is being repaired. The premium will vary from insurer to insurer.

5. Towing and labor coverage pays the cost of towing your car to the repair shop subject to the limit of your policy. Premium for this coverage can run as low as $5 to $10 per year. However, if you are a member of an auto club, you probably already have this service and may not want to duplicate your coverage.

Different companies charge different rates for the same coverage. In a 1989 Vermont Department of Banking, Insurance and Securities survey, premium rates varied as much as 72 percent for identical coverage offered by different companies. A 1991 Colorado Division of Insurance report shows a 200 percent difference for identical products.

No one wants to pay more for their auto insurance than they absolutely have to. The only way you can make certain you are not paying too much is to shop around. Find out what different companies charge for identical products and services.

Seek Unbiased Information
Information is available to consumers from a number of unbiased sources. These sources include public libraries, state insurance departments consumer groups and consumer publications.

Because the insurance industry, like many other industries, has developed many words not commonly used by the average person, consumers may need to find a good glossary or dictionary of insurance terms from the public library.

Consumers may also obtain a wide variety of information from their state insurance department. Most insurance departments publish auto insurance guides that contain information specific to that particular jurisdiction. Every state insurance department has personnel available to answer questions regarding auto insurance coverage.

Many state insurance departments help the citizens of their state to comparison shop by publishing premium comparisons. Premium comparisons survey the insurance companies with regard to their rates for a number of locations and typical drivers. The results of the survey are published for public use. If your insurance department publishes a premium comparison, it can only be used to give you a general idea of rates available in your state. For specific information, you must contact individual companies. However, premium comparisons may help you to narrow your choices of companies you want to call.

State insurance departments regularly publish written information valuable to the auto insurance consumer. They may have additional consumer guides that outline your specific rights and responsibilities under your state's insurance laws and regulations. They also may publish premium comparison reports for your use in shopping for insurance. If you do not understand your insurance policy, you can call your state insurance department and ask questions.

If you have a complaint against an insurer, it is always best to contact your insurance company first and attempt to settle the matter. Most insurance companies have policyholder service offices set up precisely to handle such questions. If you still are not satisfied, contact your state insurance department. State insurance departments have complaint specialists to help you with your problem. Although they cannot represent you legally against an insurance company or adjuster, they can make appropriate investigation into potential violations of insurance laws or regulations based upon your complaint.

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