There are times when an automobile is involved in an accident that is so severe the car is a total loss.  What is a total loss?  How is it determined?  Put simply, a total loss is when the cost to repair the car is greater than the vehicle’s actual cash value.

The longer explanation involves a combination of factors: total loss is when the cost of repairing the automobile, plus its salvage value, plus rental reimbursement expense during repair equals or exceeds its actual cash value.  (Salvage value is the money an auto insurance company would recoup when selling the damaged vehicle through a licensed salvage vendor.)

In general, most auto insurance companies will declare a car to be a total loss if it could not safely or physically be repaired to its pre-accident condition.  Also, a total loss would also occur if the vehicle were stolen and not recovered.

It’s important to note that there are state thresholds that can dictate when a car is considered a total loss and when it’s not.  There are some cases where a vehicle may have sustained damage and the cost to repair doesn’t exceed the state’s threshold.   The threshold varies from state to state.  In order to determine what your state’s threshold is, contact your auto insurance agent for more information.

If a car is declared a total loss, what will the auto insurance company pay for?  This can depend on the individual situation.  The auto insurance agent or insurance company can advise what it is willing to cover and how it determines what constitutes a total loss of a vehicle.

NOTE: The purpose of this article is to provide general information on the law, which is subject to change.  If you have a specific legal problem, you may want to consult your lawyer.  For any auto insurance related questions, you may wish to consult your insurance company or insurance agent.

There are times when you need to borrow a car from a friend, or, when a friend borrows a car from you.  But what if an accident happens if you are driving your friend’s car?  Whose auto insurance is going to cover the damage – yours or your friend’s?

Most people loan cars to others with the assumption that their auto insurance coverage will automatically transfer to the person who is borrowing the car.  In general, auto insurance policies cover the sporadic sharing of cars between friends – however, before borrowing a car or loaning yours out, check your auto insurance policy to be sure.  Sometimes there are specific insurance policy conditions that relate to permissive user guidelines and you are better off knowing what these conditions are before sharing a vehicle.

You should also check who is covered under your auto insurance policy – for instance, it’s possible that some drivers are excluded under your policy.  To get the best information, contact your auto insurance agent or company to ask details on their guidelines for lending others a car.  You should not assume that drivers are automatically covered if they do not live in your household.  It’s always best to contact your insurer if you have any questions or doubts about your coverage or the rules of your policy.

NOTE: The purpose of this article is to provide general information on the law, which is subject to change.  If you have a specific legal problem, you may want to consult your lawyer.  For any auto insurance related questions, you may wish to consult your insurance company or insurance agent. This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein.  No warranty or appropriateness for a specific purpose is expressed or implied.

Will your auto insurance cover your rental car?  Should you take or turn down the coverage a car rental agency usually tries to sell you?  It depends on what your own auto insurance covers.  Some companies will provide rental car coverage only if you are renting a car on vacation.  This is why you should call your auto insurance company or your agent to find out.Several states require that your insurance company provide coverage when you are renting a vehicle.  As mentioned, some insurance companies will only cover rental cars if you are specifically on vacation – the coverage is not extended for rentals on a business trip.

The car rental agency offers insurance to you to help to cover any accidents that might happen while you are on your trip.  Generally, it is okay for you to turn down the coverage, but only if you have the same or better protection from your personal auto insurance company.  Also, you may already have rental-car insurance provided by your credit card.  Both options can give you big savings over what the car rental agency offers.  Before you say no to the coverage, though, make sure that your auto insurance or credit-card coverage protects you – otherwise you could be driving your rental uninsured.  Also note that the rental agency’s coverage can include things like “loss of use” and “diminution of value” coverages that are almost never found in personal auto policies.

Keep in mind that since auto insurance is state regulated, the cost and coverage will vary from state to state.  You should check with your auto insurance company to be sure which coverage you either have or need.

NOTE: The purpose of this article is to provide general information on the law, which is subject to change.  If you have a specific legal problem, you may want to consult your lawyer.  For any auto insurance related questions, you may wish to consult your insurance company or insurance agent.

It happens.  You are out to dinner with your family, shopping at a local mall, or perhaps attending a show or event.  Parking in these locations can sometimes be difficult to find on your own, so you chose to use the valet service.  When you are finished with dinner, your shopping, or the show and get your car back, it’s not exactly in the same condition as it was when you dropped it off.  There’s damage.

So, who is responsible?  You can consult the operation manager of valet facilities to resolve the issue.  If you find major damage then you should consult your auto insurance agent for an initial survey and investigate coverage from the valet company.  This is something that you should immediately bring to the attention of your auto insurance company.

Just as it’s a possibility when you park your car on your own, scratches and damages can occur with a valet.  This is especially true if the parking space is small and cars are parked behind and next to each other in a crammed lot.

Additionally, accidents can occur while a valet drives your car.  Sometimes, the valet has to drive a car on city streets to park in a designated valet parking location.  These types of accidents are part of the risk inherent when you give your car keys to someone else to drive, regardless of whether or not it’s the fault of the valet or someone else.

Should an accident happen to your vehicle, call your auto insurance company to inform them and be sure to complete any claims paperwork from the valet service.  Reputable valet companies should have a claims process in place in the event of any damage to your vehicle.

What can you do to prevent damage or accidents to your car in these situations?  You can either self park if possible or you can make a specific request to the valet to park it in an isolated area and then get your keys back. This way, since the car is an isolated area, the valet service doesn’t need to move it to get other cars out and as such won’t need the keys.

NOTE: The purpose of this article is to provide general information on the law, which is subject to change.  If you have a specific legal problem, you may want to consult your lawyer.  For any auto insurance related questions, you may wish to consult your insurance company or insurance agent.

Actual cash value (ACV) is a term that refers to a method of computing what an insurer (such as an auto insurance company) will pay an insured, after a loss, for a specific insured item (such as a car).  Generally, ACV is determined by subtracting depreciation from replacement cost.  Replacement cost is the typically the preferred method of insuring.  However, ACV is often a less costly method of insuring articles like cars.

There are several different methods by which your auto insurance company may calculate the amount it will pay you for a loss.  ACV, sometimes known as market value, is the standard that insurance companies normally prefer when reimbursing policyholders for their losses.  The ACV represents the dollar amount you could expect to receive for an item like your car if you sold it in the marketplace.  The auto insurance company determines the depreciation based on a combination of objective criteria and subjective assessment.  The objective criteria are calculated using a formula that takes into account the category and age of the property and the subjective assessment comes from the auto insurance adjuster’s visual observations of the car or a photograph of it.  In the case of auto theft, the insurance company would deduct from its replacement cost an amount for wear and tear prior to the time it was stolen.

Certain property may be subject to a special valuation basis other than replacement cost or actual cash value.  To find out about ACV and to learn if your auto insurance company has special valuations, contact your agent to learn more.
NOTE: The purpose of this article is to provide general information on the law, which is subject to change.  If you have a specific legal problem, you may want to consult your lawyer.  For any auto insurance related questions, you may wish to consult your insurance company or insurance agent.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein.  No warranty or appropriateness for a specific purpose is expressed or implied.

If you get into a car accident with an uninsured driver and the accident is the other driver’s fault, will your property damage coverage pay for the cost of repairs to your vehicle?  Unfortunately, the answer is no.  Property damage coverage protects you for damage that you may have caused to the vehicles or property of others.

In order for your vehicle repairs to be covered in the event the driver at fault is uninsured, you would need to have collision coverage on your auto insurance policy.  Collision insurance pays for damage to your car resulting from an automobile accident regardless of who was at fault.  If the other driver was at fault, your auto insurance company may try to recover the amount they paid for your damages from the other driver or his insurance company.  A standard collision automobile insurance policy will pay for any repairs up to the actual cash value of your car.

It is important to remember that this value can be significantly lower than the cost of replacing your vehicle or the cost of replacing your car loan balance.  If your car is financed or leased, you will need gap insurance to reimburse you for the difference between what you owe and what the car is worth.

Collision coverage usually also comes with an insurance deductible.  It’s the amount of money you pay toward repairs before your collision insurance kicks in.  The higher the deductible you’re willing to pay, the less the collision policy will cost.  Also, while collision insurance coverage is not required by law in any state, if you’re driving a car purchased from a dealership or financed through a lender, you may be required by the dealership or lender to carry collision insurance.

Uninsured coverage or underinsured coverage, also known as UM or UIM, provides coverage if an at-fault party either does not have insurance, or does not have enough insurance.  Simply put, your insurance company pays your medical bills and then would subrogate (or to act as a substitute) from the at fault party.  The definition of an uninsured/underinsured motorist, and corresponding coverage, is set by state laws.  You can check with your state’s department of insurance or with your auto insurance company to find out more.

NOTE: The purpose of this article is to provide general information on the law, which is subject to change. If you have a specific legal problem, you may want to consult your lawyer.  For any auto insurance related questions, you may wish to consult your insurance company or insurance agent.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein.  No warranty or appropriateness for a specific purpose is expressed or implied.

Emergency roadside service is exactly what its name implies. Although roadside service is recommended for everyone; it is especially crucial for those who do a lot of driving; especially in more remote areas. Depending on your provider it may be called something else such as roadside assistance or motor club, but they all serve the same purpose; to get you out of a jam.Depending on your provider, actual coverage may vary; but most plans include the cost to cover a flat tire, retrieving your keys from inside your vehicle, running out of gas, jumpstarting your vehicle, or towing your car to one of the nearest service stations. Some companies offer additional coverages such as an arrest bond for traffic related offenses or trip interruptions. Trip interruption coverage is becoming more common and it covers any unintended interruptions during your trip. These can include reimbursement for meals, lodging, a rental car and other related travel expenses. In order to receive these benefits you usually have to be more than a certain number of miles away form your home.

Under most emergency roadside service plans, your immediate family is covered as well. Usually this would include any spouse, children, siblings or parents. The coverage applies to the vehicle that is listed on the policy and generally is not transferrable.

Roadside Assistance is a very valuable coverage. It gives you piece of mind when taking your next road trip. All you have to do if you’re in a jam is call your service provider and explain the situation and wait for help. In most cases you can add this to your policy for just a few dollars a month. Check with your local agent to see the rates and coverages available to you.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein.  No warranty or appropriateness for a specific purpose is expressed or implied.

Do you need auto insurance if you have a learner’s permit?  This is a question that comes to mind for most young drivers and their parents.  The car that the permitted driver practices in (with a licensed adult) must be insured. 

This means that if a driver has a learner’s permit and will be learning on his or her parents’ car, it’s the parents’ insurance that will cover the driver during this time.

Whether the permitted driver is required to be a listed, rated driver on the insurance policy depends on the state and the insurance carrier. This should be verified with the insurance company.  For example, the parents of the permit driver may need to formally notify the insurance company that their son or daughter has a learner’s permit and will be driving the family car.  Most insurance companies do not charge extra during the learning process, but will begin charging when the student driver becomes a licensed driver.  Families should always contact their auto insurance carrier to make sure that all drivers are covered.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein.  No warranty or appropriateness for a specific purpose is expressed or implied.

Comprehensive and Collision coverage are the two most common types of coverage for your vehicle. These types of coverage are not mandated by the state but may be by your loan or leasing company. The only type of coverage mandated by the state is liability coverage. Liability covers any of the damage to others that you are at fault for, up to your policy limits.

Collision Coverage:

Collision coverage takes care of damage to your vehicle, resulting from a motor vehicle accident. This can be an accident between you and another vehicle or between your vehicle and fixed property. Your collision coverage is applicable regardless of who is at fault for the accident. If the accident is your fault, you will have to open a collision claim if you want your vehicle repaired by your insurance company. If the accident is not your fault, you have the option to open a collision claim if you want. Assuming the person at fault for the accident has a valid auto insurance policy; your damage can be covered under their policy as a property damage claim. However, if you want your company to take care of the damages, they can and will then get reimbursed from the adverse party’s company.

Comprehensive Coverage:

Comprehensive covers your vehicle from any damage not caused by a collision. Examples of when this type of coverage would apply are if your vehicle is stolen, if your vehicle catches on fire, if your vehicle sustains damage from wind, a hurricane or any other act of nature and other situations where there was no collision. Just like collision coverage, comprehensive coverage is not mandated by any state agency. Like collision coverage, it is required if there is a bank interest in your vehicle.

Deductibles:

A deductible is the amount of money you will be responsible for when filing a collision or comprehensive claim. Deductibles range from $0 to a couple thousand dollars. The higher your deductible is, the lower your premium will be. The most common deductible amount is $500. Make sure you select a deductible you can afford. If you file a claim, you will be responsible for your deductible before insurance starts paying out. For example, if you have a $1,200 repair and your deductible is $500, then you will be responsible for paying the first $500 of the repair and then your insurance policy will cover the remaining amount.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein.  No warranty or appropriateness for a specific purpose is expressed or implied.

The laws covering car insurance vary from state to state. However, there are many general laws that are followed by most. The most important is the requirement to have insurance. It is against the law to drive or own a motor vehicle that is not insured.

Insurance protects you from liabilities that may arise from a car accident. If you don’t have insurance, then you are liable for any damage that you may cause; and that can be very costly. In addition to the damages you may have to pay for, you will most likely get yourself into some legal trouble as well. In most cases, you will receive a ticket for driving without proof of insurance.

If you plan on financing a vehicle or leasing one, you won’t be able to do so without insurance. Since the bank holds an interest in the vehicle, they will not loan you the money if they are not protected from liabilities. The lenders will also most likely have minimum requirements of insurance coverage. Sometimes this may be more than your states minimum requirements.

Many carriers offer a “persistency” or renewal discount, which rewards you for maintaining continual insurance coverage.  If you allow your policy to lapse, you can lose eligibility for this discount and will pay a higher rate.

So if you’re caught without the minimum required insurance; be prepared to pay fines, possibly do some community service, pay higher rates and even pay for damages caused. It is never a good idea to not carry insurance, no mater what the reason. If you can’t afford car insurance there are other ways to get around. Try to take the bus, the train, walk or get a ride from a friend or co-worker.

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein.  No warranty or appropriateness for a specific purpose is expressed or implied.