What affects the price of auto insurance?

When determining the rate for an auto insurance policy, insurers separate drivers into categories called classifications. Drivers are classified based on a number of different characteristics, including but not limited to age and gender, marital status, where the vehicle is garaged, driving record, make and model of vehicle, prior insurance coverage and annual miles driven. History has shown that drivers with certain characteristics, such as a poor driving record, have a greater chance of being involved in an accident, and the drivers in those classifications must pay higher rates. While some of the classification criteria (such as age and sex) are out of your control, others, such as driving record and type of vehicle driven, are within your control.

Can the driving/accident records of my child and/or spouse have an impact on my ability to buy auto insurance?

Yes, the driving record of any licensed driver in the household will affect the decision of the insurance company to insure your vehicle(s). It can cause you to be turned down for insurance coverage or to pay higher insurance premiums.

How much will my insurance cost?

Premiums or the amount you pay for insurance can vary. The type of car you drive, your driving record, your age, your sex, where you live, and how much you drive usually affect the cost.

Is there a way I can reduce my premiums?

Every auto insurer has its own package of special discounts to attract particular types of customers. Most insurance companies provide discounts for at least some of the following: accident free drivers discount; a package discount for insuring your home and auto with the same company; multiple auto discount; good student discount; nonsmokers discount; and passive restraint discount (for vehicles with air bags or automatic seat belts). You may also consider higher deductibles for your comprehensive and collision coverages.

Will my insurance be affected if I'm in an accident or get a ticket?

You may have to pay more for insurance if you are involved in an accident, get a ticket for a traffic violation such as speeding or file too many claims. You may even lose your present insurance when it comes time to renew your policy if you appear to be a reckless driver. Every insurance company decides how it will treat accidents and violations for the risks it will insure.

What is a "nonstandard insurance" company and how can I return to the "preferred" market?

A nonstandard (high-risk) insurance company insures drivers who don't meet eligibility standards of preferred companies. Preferred market refers to a group of insurance companies that specialize in insuring drivers with excellent driving records. Usually, a person isn't eligible for a preferred company because of a ticket, an accident, or having been canceled by an insurance company. Some companies won't insure a person who has had a ticket or an accident in the previous three years. Other companies won't insure sports cars or other high-performance vehicles.

A nonstandard insurance company charges more because of the higher cost of insuring drivers whom have more tickets or accidents. Statistics show that companies pay more in claims insuring people with multiple accidents or traffic violations.

Usually, drivers can get insurance from a preferred company when they have had a clean driving record for the previous three years to five years.

Will my insurance be affected if I'm involved in an accident or get a ticket?

You may have to pay more for insurance if you're in an accident, get a ticket for a serious traffic violation such as speeding or file too many claims. You may even lose your present insurance when it comes time to renew your policy if you appear to be a reckless driver. But you'll still be able to get insurance from another company or your state's assigned risk plan.

If I borrow a car from a friend or relative for a short time while my car is being repaired, will my policy cover me while I am driving the borrowed car?

The policy covering the borrowed car would be primary and in most cases, your policy would cover the vehicle on an excess basis. If no policy covers the borrowed car, most companies will treat your policy as the primary coverage for the borrowed car and coverage would then depend upon what is provided by your policy.

What do you mean by primary and excess basis?

Primary means that the policy will provide coverage first, and excess means that policy will provide coverage after the limits of the primary policy have been exhausted.

If I rent a truck to move my personal property, will my personal auto policy provide any coverage for the rental truck?

Most personal auto policies do not provide any coverage for the rental truck. You might want to contact your insurance agent about what if any coverage is provided in your policy.

I am dissatisfied with the repair work done to my vehicle by a repair facility. What obligation does the insurance company have to correct this?

The insurance company is responsible for paying for repairs to your vehicle. Since you choose the repair facility, you are responsible for making sure the job is done satisfactorily.

What is the difference between betterment and depreciation? Can my insurance company reduce my settlement based on either?

Betterment means that your repaired vehicle is better than it was before it was damaged. Your insurance company may only reduce your settlement if your vehicle's resale value has increased over what it was before the accident. Generally, an insurer will deduct the difference between the cost of a used part (appropriate for age and condition of the vehicle) and the cost of a new part. Betterment is only considered for major parts such as transmissions or engine blocks. Betterment might be considered for other parts that if new would improve the value or salability of the vehicle.

Depreciation refers to a reduction in your settlement based on the age or use of a part that is to be replaced. Certain parts on your vehicle have a "life expectancy" and your insurance company may take this into consideration. For example, if a tire on your vehicle is expected to last 60,000 miles, but it was used for 30,000 miles at the time of the accident, your insurance company may elect to pay only 50% for a new tire.

Is there anything I should be aware of before switching companies?

When you apply for insurance to a new company, they have a right to underwrite your application. Insurers have the right to decide what types of drivers they wish to insure as long as they apply their criteria consistently and fairly. If you do not meet their underwriting guidelines, the company may cancel the policy within the first 60 days for their underwriting reasons. Therefore, any recent change in driving records, or claims history could result in cancellation. The cancellation is not effective until at least ten (10) days after the insurance company mails or delivers to you a written notice of cancellation.

Can my insurance company raise my premium due to an accident or traffic ticket?

Your insurer may charge an extra fee, a surcharge, if you are involved in a chargeable accident or were ticketed for a traffic violation. Surcharges must be applied in a uniform manner and are required to be filed with the Wisconsin Office of the Commissioner of Insurance (OCI).

A surcharge is used as a tool to properly price the exposure the insurer is writing, and not as a means to recoup payment made under a claim. The total dollar amount paid as the result of a claim usually does not affect the surcharge.

What happens if I file a claim with my own company for my share of the damages?

You pay your policy's collision deductible; your company will settle the full claim with you and take over your claim (subrogate) with the other company in order to collect the portion of the damages caused by the driver at-fault in the accident. If your company recovers from the other driver's company, it will refund your deductible minus your percentage share of the fault. Your insurance company will likely know about this accident whether you file a liability claim directly with the insurer of the at-fault driver or use your own collision coverage. Any type of claim or accident builds a history that insurance companies can use to underwrite or rate policies.

The body shop tells me the insurance company is forcing it to replace my Ford fender with an aftermarket part. Am I entitled to an original manufacturer Ford fender?

Your auto insurance policy requires the company to pay only for repairs with parts of "like kind and quality." That may include paying to straighten the fender, install a used one, or replace it with a new part from either Ford or an aftermarket part. Many insurance companies now specify aftermarket parts in order to hold down their claims cost and your premium price. You can request that aftermarket parts not be used to repair your vehicle, but you are responsible for any repair costs that exceed the final claim settlement negotiated with the insurance company.