FAQs: Auto

If a driver who is not named on my policy borrows my vehicle, is that driver and my vehicle automatically covered?

Most policies are “permissive” use policies so you would be covered. If you purchased a “named-driver” or “named-operator” policy, only drivers listed on the policy are covered.

What should I consider when purchasing automobile insurance?

There are a number of factors you should consider when purchasing any product or service, and insurance is no different. Here is a checklist of things you should consider when purchasing automobile insurance.

  • Purchase the amount of liability coverage that best fits your budget and protects you,
    your family, and your assets or future earnings.
  • Decide which optional coverages you want. For example, do you want the optional physical damage coverages in Comp/Collision or is the market value of your car too low to warrant purchasing them.
  • Finally, once you have decided what you want in your automobile insurance policy, you can now decide who you would like to purchase the insurance from. For example, you may decide you like the idea of purchasing insurance from a mutual company rather than a stock company.
  • You should also decide whether you would like an insurance broker to assist you in your purchasing decision or if you would like to buy the insurance directly from a company that sells insurance over the phone or through the mail. There are several reasons why
    you should choose an Independent Agent instead of purchasing directly from the internet
    or a direct writing company like Farmers or State Farm.
What is the minimum amount of auto insurance that I am required to carry?

Insurance requirements relating to minimum coverage differ from state to state. Liability is the only insurance required by law in California. The limits required in California are often referred to as “15/30/5” coverage and include:

  • $15,000 bodily injury per person
  • $30,000 maximum per accident
  • $5,000 property damage per accident

Is minimum coverage sufficient?
In determining your coverage limit, one of the most important factors to consider is the overall value of your assets. If, for example, you own a business or a home, you may want higher limits of liability coverage to protect those assets. Another consideration is to protect future earnings. While there is no set formula, you always want to secure coverage in proportion to your assets, so in case an accident did occur, you have sufficient coverage to cover the loss. If you are at fault and severely injure another person, you may be held personally liable for the bodily injury and physical damages beyond the scope of your liability coverage.

Additionally, if you lease or finance your car, it’s likely that your liability coverage limits may have to be higher, usually $250/500,000. You should check with the leaseholder to determine the appropriate level of your coverage. For our customers who own businesses we recommend a minimum of $1,000,000 in auto liability coverage. Most auto policies do not offer a liability limit this high so a personal umbrella may be needed.

Our main rule of thumb is to buy as much liability insurance as you can afford. PIA customer support agents are licensed, non-commissioned insurance professionals and can provide advice regarding general coverage limits.

What is liability coverage?

If you are involved in an accident, liability coverage covers the costs related to the injuries and property of the other parties involved in the accident, up to the limits of your policy. This does not include your own medical expenses or the expenses of any of your passengers.

What is a deductible?

The deductible is the amount of money you must pay “out of pocket” in the event of a loss before payment is made by your insurance company.

I was the victim of a hit and run, am I covered?

Yes and no. If you have collision coverage on your policy you are covered. However the deductible still applies. Most people believe they are covered under Uninsured Motorists coverage. This is not the case. The company believes that you cannot prove if the motorist that hit your vehicle was uninsured. They also believe that most of the claims are for damage the insured caused to their own car. Even if you have a witness and police report, you will only be covered if the motorist that hit your car is identified and it is determined that they do not have coverage.

I just bought a car and the dealer said I am covered, what does that mean?

Danger, Will Robinson!! Dealers are not insurance agents. There have been a lot of problems with auto dealers telling people they have insurance when they drive off the lot. Most dealers do not have licensed agents on staff. Occasionally they will sell you or include an insurance policy. However 99 times out of 100 that policy is just a physical damage policy that only covers the car. IT CONTAINS NO LIABILITY INSURANCE. This usually happens when you buy a car and get a loan from the dealer. They are only making sure you are insured to cover the dealers loan to you. See next question.

If I purchase a new vehicle, is it automatically covered?

Call your Customer Service Representative before you purchase your new, or used, vehicle to make sure you will be covered when you take possession of the vehicle.

I bought a red car, does it cost more to insure a red car?

This is one of the biggest and oldest insurance myths. Vehicle color is not a factor in determining your auto insurance premium.

A friend is going to borrow my car, am I covered while they drive my car?

Whenever you knowingly loan your car to a friend, family member, co-worker etc, you may be covered under your automobile insurance policy. In fact, even if you do not give explicit permission each time a person borrows your car, you may be covered as long as they had a reasonable belief that you would have given them permission to drive the car. If you are carrying a named-operator policy, only the individuals named on the policy are covered while they drive your car. Although often less expensive, a named operator policy should be clearly disclosed before you purchase the policy.
Also you should be aware that when you purchase liability insurance, that coverage goes with you from car to car. (This is not true in all cases read your policy) In other words if you borrow a friends car and are involved in an accident, and have car to car coverage, your liability policy will cover you when driving your friends car. However your liability policy will not protect your friend, he/she must have their own liability insurance to be protected. Conversely it is important to make sure that the people who drive your car have insurance. Because irregardless of whether or not they have insurance, you can still be sued. Very important to understand is that under California law the registered owner of the vehicle is the one responsible for the damage caused by their vehicle, even if they are not driving it (except in the case of stolen cars). So if your friend is driving your car not only will your friend get sued but so will you.

I am renting a car, does my insurance policy cover me?

Remember that your liability coverage travels with you from car to car. So whether you are driving your car, a friend’s car, or a rental car, your liability insurance follows you. However the physical damage coverage does not work the same. In most cases, your personal automobile insurance policy will provide coverage only when you are renting a car on vacation. Many insurance companies no longer extend personal automobile insurance coverage when you are traveling on business. The best way to find out what rental car coverage you have under your automobile policy is to call your insurance agent and verify if you have coverage or not.

My car isn't worth much, should I insure the car itself?

Many people forgo the Comp/Coll coverages because of the relatively low values of their car. It does not hurt to find out the cost of the coverage to see if it fits in your budget. Say you have a car worth $3000. It may only cost $200 a year to insure it with a $500 deductible. If the car is totaled you would get a check for $2500. So it might be worth the coverage. However sometimes the cost of repairing the damages to an older car is greater than its value. In these cases, your insurer will usually just “total” the car and give you a check for the car’s market value less the deductible.

What is the difference between collision physical damage coverage and comprehensive physical damage coverage?

Both collision and comprehensive are often referred to as Comp/Collision (Comp/Coll) coverage. Collision is defined as losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage. While Comprehensive provides coverage for most other direct physical damage losses you could incur. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage. It is important to know the differences between the collision and comprehensive coverages for a couple of reasons. First, in order to make an informed purchasing decision about these optional coverages, you need to know the difference between them. Second, the deductibles under the collision and comprehensive coverages are often different in amount.

What should I do if I have an accident?

The duties you need to perform after you have an accident are prescribed both by state law and by terms of your contract.

  • First call an ambulance if anyone is injured..
  • If the property damage appears as though it may exceed $500, call the police to have a report taken.
  • Exchange information with the other driver(s) involved in the accident your name, address, telephone number, and the name of your insurance company and/or your insurance agent. Also get the license plate number of any car involved.
  • At the first opportunity, you should contact either your insurance agent or your insurance company to notify them that you have been involved in an accident.
  • Finally, there are a number of conditions in the insurance contract that you must satisfy in order to receive compensation from your insurer. For example, you need to cooperate with your insurer during any investigation undertaken during the claims settlement process.

Failure to complete any of these actions can, and sometimes does, result in non-payment by your insurance company for losses that otherwise would have been covered.

If I get into an accident or get a ticket will my rates go up?

Under California law a good driver is defined as someone who has been licensed to drive in the continental United States for three continuous years and has one point or less on their driving record. Insurance companies verify your point count by checking your motor vehicle record and through the use of shared claims data companies such as CLUE and ChoicePoint. Most tickets and accidents count as one point. However, some count as two. Accidents involving property damage only count as one point. If the accident involved any bodily injury, any at all, it counts as two points. The only way to prove an accident did not involve bodily injury is to obtain a copy of the police report, or a letter from your insurance company who covered you at the time of the accident. Major violations such as drunk driving, reckless, exhibition of speed, speeding over 100 MPH are two point tickets. Tickets count as points for three years. After three years they drop off your point count. They may still appear on your driving record, but the insurance company cannot count that against you. Also note that some companies use the Violation date to determine the three year period while others use the Conviction date.

As long as you have one point or less and have been licensed for three or more continuous years, your rates should not fluctuate more than 5% or so.

I got a ticket, do you recommend I go to traffic school?

Yes, under all circumstances. You need to keep your point count at one or less. Also remember you can only go to traffic school to dismiss moving violations, not accidents. Say you get a ticket and decide not to go to traffic school, after all with only one point you are still a good driver. But what if you get into an accident after that? Now you have two points. And you cannot go to traffic school to remove the accident from your record. Protect your self and go to traffic school. Plus with many of them on-line, they can be completed easily and quickly.

Are there ways to lower my insurance premiums?

Insurance companies use several factors to determine how much your premium will be. The most important are your years of driving experience, violation and accident point count in the last three years, type of car you drive, where the vehicle is garaged, and most importantly how much insurance you buy.

The best way to lower the cost of your automobile insurance is to look for any discounts that you may qualify for. Examples:

  • Multi Car Discount, put all vehicles you own on same policy.
  • Auto & Home Discount, insure your car and home with the same company.
  • Driver Training Discount
  • Good Student Discounts, 3.0 or better GPA.
  • Mature Driver Discounts, for drivers over 55, course certification required.
  • Educational Discounts – For certain degrees, Educators, Engineers, etc
  • Government/Military Discounts , for civil servants and government officials.

Find out how much you can save if you increase your deductibles.. Usually it is best to keep your Comprehensive Deductible lower. You will find there is little savings in lower the deductible. However there are larger savings when you increase your Collision Deductible, sometimes 5-10%.

I already have insurance. Can I cancel my current policy?

You can cancel your existing policy at any time. The company will keep a portion of the premium that has not been earned. It is usually best to let the policy expire, or cancel for non-payment of premium.

What discounts do you offer?

We represent insurance companies that offer the following discounts:

Good Driver Discounts, 1 or fewer points in the last three years of driving
Good Student Discounts, full time students with a GPA 3.0 or higher
Marriage Discounts
Multi Car Discount, put all vehicles you own on same policy.
Auto & Home Discount, insure your car and home, or renters/condo policy, with the same company save 5-10% on both policies
Driver Training Discount
Mature Driver Discounts, for drivers over 55, course certification required.
Professional/Educational Discounts – For certain degrees, Educators, Engineers, Doctors, etc
Government/Military Discounts, for civil servants and government officials.
Motorcycle – members of the Gold Wing Club

What if I don't list all drivers on my policy?

The safest thing to do is list all of the people on your application who will be driving your car. Most policies are “permissive use” policies, which covers you (the named insured), others listed on the policy, and any drivers who have been given permission to drive your vehicle. However it is always safe to check with your insurance company. Contact your Customer Service Representative.

Do all of my insured vehicles need to be registered at the same address?

Yes. A new policy is required for each address.

Can I use another address for a lower rate?

Absolutely NOT! You must list the proper address, otherwise you are committing insurance fraud and are putting your coverage at risk.

Can I have my bill mailed to an address other than where I am currently living?

Yes. However, the insurance company may require that you provide proof of residency such as a utility or cable bill.

Where can I drop off a payment?

The payment options for your policy will vary depending upon which company you choose to place your coverage with. Most companies offer, monthly, quarterly, or semi-annual payment. Also a few companies offer discounts if you pay your annual premium in full.

The rate you quoted me is different than my policy?

The rate originally quoted and your final rate should be the same unless there was a discrepancy between the information you provided. Notably about your driving history. Also if you did not disclose any prior claims the company may run a Claims report on you and any discrepancy on the application could cause you rate to change.

When my policy expires, will I automatically receive a renewal notice?

Yes. You will receive a renewal notice before your coverage expires. The only time you will not receive a renewal notice is when the insurance company decides to non-renew your policy.

If points drop my driving record will my rate drop automatically?

With most companies yes. We automatically check your driving record each time your policy renews. If points have dropped off we will often check the rates of other companies to make sure we are offering you the best quote we can.

Does my car have to be registered in my name?

Your car must be registered in your name in order for you to obtain insurance. If the vehicle is registered under a different name, no insurance can be issued to you until your name is on the registration. An electronic registration verification is available through the DMV for an additional cost.

If I missed an insurance payment and my policy lapses, do I have to reapply and pay new application fees or can I have my policy reinstated automatically?

If you miss a payment and do not reinstate your policy after receiving a cancellation notice, there will be a lapse in coverage. As with any insurance, you will need to have a new application completed and pay the down payment for your new policy.

If I get married, will my insurance rates automatically drop?

Marriage generally cause a decrease in your insurance rates. Adding your spouse may affect your rates, depending on your spouse’s driving record and other factors. Generally speaking your rates will drop with the Married discount.

Will my insurance rates automatically drop when I turn 25?

Several factors determine your current rates, including your age, driving experience and the amount of time you have been a licensed driver. Your age is not so important as your driving experience. If you turn 25, but have only been driving for a year you are still considered a non-standard risk. However if you turn 25 and have been licensed since 16, you now have 9 years of experience.

If I drive in another state will I be covered? In Canada? In Mexico?

Your auto policy may provide coverage in all 50 states, U.S. territories and Canada. If you are traveling in Mexico, we recommend that you purchase a separate insurance policy, which is typically available at the border. Best to check with your company and ask your Customer Service Representative.

Will my insurance cover personal items left in my vehicle if they are stolen or damaged?

No, personal items would need to be insured on a homeowner’s or renter’s policy.

If I cancel my policy, do I get a refund?

Most policies are “permissive” use policies so you would be covered. If you purchased a “named-driver” or “named-operator” policy, only drivers listed on the policy are covered.

Are routine automobile repair costs covered by insurance?

No, the wear and tear on your vehicle is not covered as a part of your insurance policy.

What is commercial coverage?

Commercial coverage is for companies that own their own vehicles which are used solely for work related driving.

What is business use?

Business use means that the vehicle is used for work-related purposes but is not owned by the business. Examples include when a doctor makes an emergency call or an attorney visits a client outside of the office.

Can I use my vehicle for business or commercial use?

Most companies do not cover any business or commercial use. Check with your Customer Service Representative for verification.

If I am at work and I need to run a work-related errand, am I covered?

Most companies do not cover any business or commercial use. Check with your Customer Service Representative for verification.

What is artisan use?

Artisan use refers to someone such as a carpenter or landscaper who is not self employed and travels to different locations periodically as a part of their business. Contractors equipment, however, are not covered in this insurance.

What is replacement cost?

Replacement cost is a valuation method. This is not available for auto insurance. If you have a TV stolen from your house the company would pay for the cost to replace that TV with one of like kind and quality. Auto insurance is based on a “market” or actual cash value method.

What is actual cash value?

An evaluation method that depreciates the value of a good to determine current value. If you buy a car for $20,000 brand new and drive it for 3 years. The value depreciates each year due to wear on the car. To determine actual cash value you subtract the depreciation amount from the cost new.

What is market value?

Market value is the price for which something would sell for under current market conditions. For example, if you purchased a Ford Mustang in the late 1960s for $10,000, today’s market value of that car, because of its condition, age and collectible value, might exceed $20,000. If you have a claim and your car is totaled, it is a good idea to check the pricing of cars similar to yours that are for sale in the paper or at auto dealerships.

What if my driving record is incorrect?

The accuracy of your driving record is your responsibility. If you notice a discrepancy, you should notify the DMV immediately. You may also need to go to court to correct the error.

How do I get proof of a non-chargeable accident?

You can obtain proof of a non-chargeable accident from a police report or a statement of loss from your insurance company. This proof is required to verify a no-fault accident or to verify there was no bodily injury involved in the accident.

Do I need to pay to repair my window if it is broken or damaged?

If you have a glass waiver deductible, your insurance policy covers the repair cost for a broken or damaged window. Without a glass waiver deductible, your comprehensive deductible would apply, which can often total more than the cost to repair the window.

What is a non-standard risk?

Non-standard risk refers primarily to high-risk groups including drivers who have multiple tickets or who have multiple at-fault accidents on their records. Additionally, new drivers are often classified as a non-standard risk. In California if you are not a “good driver” by law, you are considered a non standard risk.

What is no-fault insurance?

No fault state insurance covers the victims of an accident regardless of who is at fault, with the goal of keeping claims to a minimum. California is not currently a no-fault state.

What are SR-1 filings? What are SR-22 filings?

SR-1 – Is a form used by the DMV that must be filled out by any driver involved in an accident involving bodily injury or property damage in excess of $500. Failure to comply will result in your license being suspended.

SR-22 filings – Are required by the Department of Motor Vehicles for those people who are involved in an accident and had no insurance, or for people who were unable to provide proof of insurance to a police officer. They remain with you for 3 years. Important notice for SR-22 policy holders the SR-22 is an agreement between the insurance company and the DMV stating that if your policy ever cancels, the insurance company will notify the DMV and the DMV will suspend your license immediately and send you notice in the mail. It is possible that if you are pulled over your license may have been suspended without you knowing it.

Lease Gap Coverage

A very important coverage, pays the difference in the vehicles market value at time of loss, and the value stated in the lease. If you lease a car we highly recommend this coverage.

Towing & Rental Car Benefit

Pays for the cost to have your car towed and/or rent a car after an accident. You must have Comprehensive and Collision coverage for this coverage to take affect.

 

What is collision coverage?

Collision coverage covers loss to your (the insured’s) vehicle caused by a collision with another vehicle or object. Collision coverage does not include coverage for bodily injury or property damage resulting from a collision.

  • CollisionNot required by law, but once again required by banks and lease companies if the vehicle is purchased on borrowed funds. Covers the vehicle for everything other than comprehensive when you are in an accident regardless of fault. Also this is the section that covers you if you are the victim of a hit and run. Hit and run is not covered under uninsured motorists coverage. Check the cost to lower or raise the deductible.  Remember the deductible is how much of the damage you have to pay before the insurance company will pay for the damage. The lower the deductible the higher the premium. Most people select a deductible of $500. A $250 deductible may cost you an additional 5% of the premium while a $1000 deductible will save you an additional 5% of the premium.
What is medical payment coverage?

Not required by law, covers you for your bodily injury bills if you are hit by someone who does not have enough insurance. In the form of a split limit or a single limit with some companies. Example if you purchase $15/$30,000 UM coverage, and you are hit by someone who only has $15,000 of bodily injury coverage but you have $30,000 of bills, the company will pay you up to $15,000 since you were hit by an underinsured motorist.

What is comprehensive coverage?

Also known as physical damage “other than collision” coverage, comprehensive coverage includes coverage for losses by fire, theft, vandalism, and falling objects, as well as other events listed in your policy.

  • Comprehensive

    Not required by law, but is required if you purchase the vehicle through a loan or lease a vehicle. Covers the vehicle for anything other than collision, such as theft, vandalism, fire, lightning, stolen car, stereo, rocks thrown up from other vehicles that hit your windshield, and if someone keys or scratches you car. This also the coverage under which your vehicle is insured for damage resulting from hitting an animal. Check the cost to lower or raise the deductible.  Remember the deductible is how much of the damage you have to pay before the insurance company will pay for the damage. The lower the deductible the higher the premium. However you will usually find that with Comprehensive coverage if you lower the deductible to $50 or $100 it will only cost you an additional $10-25 per vehicle per year. A much better option than a $500 deductible.

What is uninsured motorist coverage?

By law, every driver in California is required to have minimum (or 15/30/5) coverage. If you are in an accident where the other driver does not have insurance, uninsured motorist coverage ensures that you will be reimbursed for medical costs and auto repairs, as allowed in your policy. Injuries caused by a hit and run driver are also covered as part of uninsured motorist coverage.

  • Uninsured motorists bodily injury
    Not required by law, but a necessity with the large number of uninsured motorists in California. This coverage pays for the injuries caused by someone who hits you who has no insurance. Again in the form of a split limit with the minimum of $15/$30,000. If you are hit by someone with no insurance, and you have this coverage, your insurance company will pay you for your injuries. If you do not have this coverage you will have to take the time and expense to sue the other party. Odds are that if they had no insurance in the first place, they probably don’t have anything else.
  • Uninsured motorists property damage Also not required by law, provides coverage for your vehicle if you are hit by someone who has no insurance. The maximum amount of coverage afforded by any policy, without collision, is $3,500. However you will only receive the fair market value of your car if that value is less than $3,500. Note this does not cover you for Hit & Run.
  • Uninsured motorists collision deductible waiver  (only accompanies collision coverage) – Also not required by law, provides coverage for your vehicle if you are hit by someone who has no insurance. The maximum amount of coverage afforded by any policy, without collision, is $3,500. However you will only receive the fair market value of your car if that value is less than $3,500. Note this does not cover you for Hit & Run.
  • Underinsured motorists bodily injury Not required by law, covers you for your bodily injury bills if you are hit by someone who does not have enough insurance. In the form of a split limit or a single limit with some companies. Example if you purchase $15/$30,000 UM coverage, and you are hit by someone who only has $15,000 of bodily injury coverage but you have $30,000 of bills, the company will pay you up to $15,000 since you were hit by an underinsured motorist.