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What is covered by a basic auto policy?
Your auto policy may include six coverages. Each coverage is priced separately.
1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members
listed on the policy are also covered when driving someone else’s car with their permission.
It’s very important to have enough liability insurance, because
if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to
protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car.
At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may
also cover funeral costs.
3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property.
Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage
caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are
at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your
insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for
the deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold
with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.
Comprehensive insurance will also reimburse you if
your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
States do not require that you purchase collision or
comprehensive coverage, but if you have a car loan, your lender may insist you carry it until your loan is paid off.
6. Uninsured and Underinsured Motorist Coverage
T
his coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an
uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss.
This coverage will also protect you if you are hit as a pedestrian.
How do I get a drivers license in Texas?
New residents moving into Texas, who have a valid driver license from their home state, have 30 days after entry into the state to secure a Texas driver license.
Applicants age 18 and over with a valid out-of-state driver license will be required to:
- Provide proof of Identity.
- Provide proof of Social Security Number.
- Provide proof of Texas vehicle registration and liability insurance, if you own a vehicle.
- Complete required forms available at any Texas Driver License office.
- Pay the required fee.
- Pass a vision exam.
- If you have a valid out-of-state license in your possession, it must be surrendered at the driver license office.
How Do I register My Vehicle in Texas?
When filing your application,you may need some or all of the following:
- A completed Application for Texas Certificate of Title, Form 130-U.
- Original out-of-state title or current foreign or military ownership document
- A completed Form VTR-68-A and proof of compliance with U.S. Department of Transportation safety requirements if you have a foreign ownership document.
- Vehicle Identification Certificate, issued by an approved safety inspection station.
- Valid proof of liability insurance meeting Texas requirements.
- The vehicle’s current odometer reading, if the vehicle is less than 10 model years old.
- Sales or use tax verification if you have not previously registered the vehicle in another state.
Do I need insurance?
Almost every state requires you to buy a minimum amount of liability coverage. Chances are that you will need more liability insurance than the state requires
because accidents cost more than the minimum limits. If you’re found legally responsible for bills that are more than your insurance covers, you will have to
pay the difference out of your own pocket. These costs could wipe you out!
The Insurance Information Institute (I.I.I.) recommends that you have $100,000 of
bodily injury protection per person and $300,000 per accident. If your net worth is more than $300,000, consider buying additional liability insurance.
You may also consider purchasing an umbrella or excess liability policy. These policies pay when your underlying coverages are exhausted. Typically, these
policies cost between $200 and $300 per year for a million dollars in coverage. If you have your homeowners and auto insurance with the same company, check
out the cost of coverage with this company first. If you have coverage with different companies, it may be easier to buy it from your auto insurance company.
In addition to liability coverage, consider buying collision and comprehensive coverage. You don't decide how much to buy. Your coverage reflects the market
value of your car and the cost of repairing it.
Decide on a deductible—the amount of money you pay on a claim before the insurance company reimburses you.
Typically, deductibles are $500 or $1,000; the higher your deductible, the lower your premium.
What does my credit rating have to do with purchasing insurance?
Credit scores are based on an analysis of an individual’s credit history. These scores are used for many purposes such as securing
a loan, finding a place to live, getting a telephone and buying insurance. Insurers often generate a numerical ranking based on a person’s credit
history, known as an “insurance score,” when underwriting and setting the rates for insurance policies. Actuarial studies show that how a
person manages his or her financial affairs, which is what an insurance score indicates, is a good predictor of insurance claims. Insurance scores are
used to help insurers differentiate between lower and higher insurance risks and thus charge a premium equal to the risk they are assuming. Statistically,
people who have a poor insurance score are more likely to file a claim.
As a result, establishing a solid credit history can cut your insurance costs. To protect your credit standing, pay your bills on time, don’t obtain
more credit than you need, and keep the balances on your credit cards as low as possible—ideally, try to pay off the bill in full each month. Also,
check your credit record regularly, and request that any errors be corrected immediately so that your record remains accurate.
The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies—Equifax, Experian, and TransUnion—to provide
you with a free copy of your credit report, at your request, once every 12 months. For more information, go to the
Federal Trade Commission’s Web site on credit.
Free annual credit reports can be ordered from AnnualCreditReport.com
How do I insure my teenage driver?
As soon as your teenager begins to drive, notify your insurance agent that there will be an additional driver in the house. Since teenagers
are inexperienced drivers, they tend to get into a lot of accidents. This will, unfortunately, be reflected in higher insurance rates. If you
have a daughter, you can expect your insurance to go up as much as 50 percent. A son will increase your car insurance by as much as 100 percent.
Consider also raising liability limits or buying an umbrella liability policy for additional protection.
Should I purchase an umbrella liability policy?
If you are ever sued, your standard homeowners or auto policy will provide you with some liability coverage, paying for judgements against
you and your attorney's fees, up to a limit set in the policy. However, in our litigious society, you may want to have an extra layer of liability
protection. That's what a personal umbrella liability policy provides.
An umbrella policy kicks in when you reach the limit on the underlying liability
coverage in a homeowners, renters, condo or auto policy. It will also cover you for things such as libel and slander.
For about $150 to $300 per year
you can buy a $1 million personal umbrella liability policy. The next million will cost about $75, and $50 for every million after that.
Because the
personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to
purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability
insurance on your homeowners policy before selling you an umbrella liability policy for $1 million of additional coverage.
©Insurance Information Institute, Inc. - ALL RIGHTS RESERVED.
Will my insurance cover a rental car after an accident?
Many drivers don't think about their insurance coverage until after they have an accident and call their insurance company to file a claim to
help pay for car repairs, a rental car and other expenses.
Unfortunately, many insured drivers are surprised to find out that their auto insurance does not automatically cover the cost of a replacement rental car after
an accident. Since the average car is in the repair shop for two weeks after an accident, it can cost as much as $500 to rent a replacement car. But, some insured drivers
pay little or nothing to rent a car because of an inexpensive but often overlooked option known as rental reimbursement.
Rental reimbursement coverage is available for only $1 or $2 a month with almost every auto insurance policy, but it is bypassed frequently by those who believe
they will not have a car accident or those shopping only for the lowest cost premium. The cost of a rental replacement car adds up fast, so even if you don't
have an accident for eight or nine years, the coverage pays for itself when you need it most.
Sometimes working out the details of a claim with the auto insurance company can take time. Even if the accident is the other driver's fault, you may have to wait
several days or longer to get the other insurance company to agree to pay for a rental car. With your own coverage, there is no waiting.
If I file a claim, will my premium go up?
You may be reluctant to file a claim because you fear that your premium will go up or your insurance will be canceled. Practices vary from company
to company. In general, an insurer will increase your premium by specific percentages for each chargeable claim made against your policy above a specific
dollar amount. A chargeable claim is one the insurer considers primarily your fault. The percentages and ceilings vary from company to company. These
increases generally stay on your premium for three years following the claim.
Your company may also decide not to renew your policy if your driving record
gets markedly worse or you have several accidents. Different insurers have different rules about what constitutes an unacceptably bad driving record. But
some accidents, such as those caused by drunk driving, will probably trigger a nonrenewal from virtually every insurance company.
If you have an accident but
don‘t report it to your insurer, you are taking a risk, even if the damage seems minor. If the other driver sues you weeks or months later, your failure to
report the accident might cause your insurer to refuse to honor the policy. And even if they do honor the policy, the delay will certainly make it harder for
the insurer to gather evidence to represent you.
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