Auto Insurance Primer

One of the most important things to understand about insurance is that it is state-regulated, so much will depend on where you live. Every insurance company operating in your state must be licensed in your state no matter where their headquarters are. Most states will require you to carry at least liability insurance. Some states allow you to ‘insure’ yourself. You need to be familiar with at least the basic requirements of your state, and make sure you do some homework before moving to a different state—your coverage and costs may well change. The place to start is with the website of your state’s insurance commissioner. There should be information there about what is required.

Your state’s insurance laws will determine: whether you pay vehicle tax or property tax on a mobile home, whether you have No-Fault insurance (sometime a collision is simply unavoidable and nobody’s fault), whether it assigns risks, etc.

What is an assigned risk?
In states that require vehicle insurance, people with poor driving records that nobody wants to insure are put into a pool from which they are ‘assigned’ to one company or another by the state. Neither the company nor the insured has anything to say about it. Yes, of course, the rates tend to be quite high, but that’s because the company really doesn’t want your business in the first place if you are at high risk. The only thing you can do about it is bite the proverbial bullet and keep your nose clean for the duration. Eventually, if you shape up your driving record, you will be able to buy regular insurance.

What’s the difference between a motor home and a mobile home?
A motor home is an actual vehicle. It must be insured as a vehicle. A ‘mobile home’ designation depends on the state. Some states consider everything from a dinky travel trailer to a triple-wide that is never going to be moved, to be ‘vehicles’, some do not, and some do some of one and some of the other. Whether you insure your travel trailer as a vehicle, whether you have to register your mobile home every year or so, depends entirely on the laws of your state.
Getting the best rates on your policy

First, do your homework. The company with the best rates may not have the best fulfillment history—then again, it might. Getting the cheapest rates may not get you the best performance when you need it the most. What you want to do is find the best rates with the most reliable company you can afford. So how do you do that? You make yourself the most attractive client. That means a pristine driving record, good credit rating, a high GPA if you’re still a student, a non-smoker. If you live in a high-risk neighborhood or drive a car that thieves prefer—well, your rates are going to be higher than if you lived elsewhere and drove something thieves avoid. There are things you cannot affect that can also impact your rates, for instance, a nineteen-year-old male with the same risk factors as a twenty-five-year-old female will probably pay higher rates. All you can do is keep your nose clean and wait for the calendar. By the way, don’t pretend to be an ‘A’ student if you’re not, or otherwise fudge on the application. If you do, and it is proved against you, you will forfeit your coverage and you could be in lots of trouble. Don’t even think about it.

If you have all the best qualifications, make sure you get all the discounts to which you are entitled. You do that by asking: ‘do you have a discount for good students, non-smokers’, etc. Or you can ask a more open-ended question: ‘What discounts do you offer’? Don’t expect an insurance agent to volunteer ways he will make less money. You may also be pleasantly surprised.

What are deductibles?
A ‘deductible’ is the amount of money you pledge to pay up front toward the cost of a claim. If you have $500 deductible and damage to your vehicle is estimated at, say, $1500, you will be expected to cough up the $500 before the insurance company will cover the rest of the claim. You can lower the cost of your policy by contracting for a higher deductible; just make sure you can manage it, if you need to. Yes, you can get a policy with zero deductible, but guess what? It will cost you more. It’s a good idea to put the amount of your deductible into a CD which you simply roll over regularly. That way, you’ll always have the deductible just in case you need it.

Who is an uninsured motorist?
That’s the person that just hit you, that you just hit, or the one you’re looking at in the mirror, that is driving a car without insurance. That person causes a lot of trouble for people who are insured. It means your insurance company has no other insurance company to deal with, and has to fork over on your claim, alone. Your insurance company is not happy about that. Depending on the laws in your state, the uninsured motorist who is responsible for an accident could be in very big trouble. If you are injured by an uninsured motorist, you will be covered only up to the maximum on your policy. You could sue, but chances are, if the person wasn’t responsible enough to carry insurance, they probably don’t have enough assets to collect damages from.

What is ‘No-Fault’ insurance?
Some states have ‘no-fault’ insurance. That means one party does not have to be found wholly at fault before a claim can be determined. The exact provisions can vary from state to state. Sometimes percentages of ‘fault’ are determined. In any case, it avoids the good-guy/bad-guy divide. It’s a more realistic assignation of accountability since many collisions are at least partly avoidable by one side or the other.

What if I use public transportation?
What other insurance policies do you have? Do you have health coverage? Renter’s insurance? Get your policies out at and go over them with a fine-tooth comb, or at least a straight edge and maybe a magnifying glass. You may find provisions that would cover you in the event you were injured. Theoretically, if you are injured on public transport, the transport authority is liable, but it may require a civil suit to get compensation. If you were covered under your own policy, the insurance company would pick up the gauntlet on your behalf. If you can’t find coverage on any of your policies, call your agent and see if you can get some kind of ‘rider’. It’s best to have an insurance company at your back in the event you are injured. They fight better than individuals can. But you may want to watch the video on Allstate and State Farm.

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