What causes auto insurance rates to increase?

Several factors can lead to a higher auto insurance premium. Insurance companies (insurers) lose money when they cover drivers who get into accidents and make claims, so it’s in their best interest to predict driver risk factors that indicate a higher chance of a claim and charge the driver an increased premium to compensate for the elevated probability of a payout.

Based on this knowledge there are many factors that can lead to increased premiums, but some of the most popular ones include:

Accidents

If you file an accident claim with your insurance company, your premium will increase at its renewal period based on the claim.

Violations

If you are convicted of a moving violation, your premium rate may increase at its renewal period. Your driving history, length of time you’ve been insured with a company and speed you were going when cited can affect whether your rate increases or not.

Moving

Where you live (zip code) influences your rate. If you move to an area with higher theft or accident rates (city versus a rural town for example), your renewal premium could reflect this change.

New Car

A new car is worth more than an older model and will cost more money to replace if it is damaged or stolen, which could result in a spike in your premium rate.

Age and Marital Status

If you’re young, single and without children, you are considered part of a higher risk category than a married person with kids. Besides the fact that a young driver will have less experience on the road than an older driver, it is assumed a single adult may not be as serious about becoming a better driver than a married adult with kids, and that can cause increases in your auto insurance rate.

Commute

If you drive a lot and have a long commute to and from work or use your car for work, your premium rate can be higher because frequent driving leads to more opportunities for accidents to occur.

Many insurers use credit score to determine auto insurance rates, but at Active Insurance we work with companies that don’t use credit history so you’re eligible to receive the best rates from us, even if you don’t have the best credit score.

Car insurance is mandatory for all drivers and how much you pay is determined by several factors. It’s important to contact your insurance company with any questions regarding increased premium rates. Contact Active Insurance for more information about car insurance in Chicago. We provide a variety of options that fit the needs of Illinois drivers and would be happy to help you.

 

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Does my car insurance policy cover car theft?

The short answer is every individual car policy will be different in regards to theft, so it depends. But there are some common factors that will apply to most policies.

If your vehicle is stolen and not retrieved by the police your insurance policy may cover the theft, but you must have full coverage that includes comprehensive insurance. Comprehensive insurance protects your car against damages outside of a collision, which include a wide range of events like falling objects, fire, vandalism and theft.

If any standard part of your vehicle is stolen (engine, stereo, etc.) you could be covered by your car insurance policy assuming again you have full coverage. If any personal property items are stolen from your vehicle, your car insurance policy will not cover it since protection applies to the vehicle and not to the personal items in it. However, if you have renters or homeowners insurance with off-premises coverage, one of those policies may cover your loss if you have proof (a receipt, for example) you owned the lost items.

Unlike property damage and other basic coverages where the amount of protection you want dictates the cost, comprehensive coverage prices depend on the deductible you select and the amount of coverage comprehensive insurance provides will depend on your car’s actual cash value (the car’s purchase price minus depreciation and the deductible).

It’s important to stress again that all auto insurance coverage is not equal in regards to theft. It depends on what kind of individual car insurance policy you have, so it’s important to understand what exactly your policy covers and ask your agent any questions you may have regarding theft.

Car theft isn’t completely preventable, but there are some ways to stop it by making your vehicle unattractive to car thieves. Keep your doors locked at all times, hide valuable items out of sight, always roll up your windows, never leave a spare key in the car and never leave your car running when you are not in it. Many stolen cars are due to the mistakes and oversights by the owner, so use a little common sense with your vehicle and it can go a long way.

 

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What if I get into a car accident out of state?

outofstateaccidents

Getting into a car accident is rough, but getting into one out of state can feel even worse when you are in an unfamiliar territory. Reduce the potential anxiety and mistakes associated with out-of-state auto accidents by knowing the basics.

If you get into an accident out of state, what will happen depends on a case-by-case basis. However it is always beneficial to have adequate auto insurance and generally become familiar with the road laws of the state you plan on visiting before you leave home in case of a ‘what if’ scenario.

Most automobile policies cover all areas in the U.S., U.S. territories and even Canada so you shouldn’t have an issue reporting claims that occur out of state. Your insurance company will assign you to an insurance adjuster who will handle the accident.

Liability limits vary from state to state so you will be required by the state in which the accident occurred to comply with their auto insurance requirements, not the state where you live. Insurance policies may not adjust to meet a state’s minimum legal requirements. So if, for example, you have car insurance in Chicago and the state of Illinois’ liability limit is lower than the liability limit of the state where your accident occurs, the insurance company may not adjust your policy to meet the higher liability limit of the other state. What exactly happens will depend on your specific situation, but in any case it’s important to check your policy to see if it meets the requirements of the state you plan on visiting before you leave home.

If you are injured in an out-of-state accident and want compensation for the bills acquired from it, you will need to find out if you are supposed to file in your state or in the state where the accident occurred. This will depend on the laws of the state where the accident happened. As each state has their own laws regarding limitations and conditions, several factors can affect your ability to be compensated. Contact your insurance company and an attorney (depending on the severity of the accident) to better understand how you should proceed.

State-by-state minimum coverage requirements

The following table provides information on each state’s minimum coverage requirements. The first two figures refer to bodily injury liability limits, and the third figure refers to the property damage liability limit. For example, 20/40/10 means coverage up to $20,000 for each person injured in an accident, up to a maximum of $40,000 for the entire accident, and $10,000 worth of coverage for property damage. The state minimums are based on the most current information available. You should check your specific state requirements to verify these figures.

 

State Type(s) of Coverage Required Minimum Liability Limits
AL Bodily Injury and Property Damage Liability 25/50/25
AK Bodily Injury and Property Damage Liability 50/100/25
AZ Bodily Injury and Property Damage Liability 15/30/10
AR Bodily Injury and Property Damage Liability 25/50/25
CA Bodily Injury and Property Damage Liability 15/30/5
CO Bodily Injury and Property Damage Liability 25/50/15
CT Bodily Injury and Property Damage Liability, Uninsured/Underinsured Motorist 20/40/10
DE Bodily Injury and Property Damage Liability, Personal Injury Protection 15/30/10
DC Bodily Injury and Property Damage Liability, Uninsured Motorist 25/50/10
FL Property Damage Liability, Personal Injury Protection 10/20/10
GA Bodily Injury and Property Damage Liability 25/50/25
HI Bodily Injury and Property Damage Liability, Personal Injury Protection 20/40/10
ID Bodily Injury and Property Damage Liability 25/50/15
IL Bodily Injury and Property Damage Liability, Uninsured Motorist 25/50/20
IN Bodily Injury and Property Damage Liability 25/50/10
IA Bodily Injury and Property Damage Liability 20/40/15
KS Bodily Injury and Property Damage Liability, Personal Injury Protection, Uninsured Motorist 25/50/10
KY Bodily Injury and Property Damage Liability, Personal Injury Protection 25/50/10
LA Bodily Injury and Property Damage Liability 15/30/25
ME Bodily Injury and Property Damage Liability, Uninsured/Underinsured Motorist 50/100/25
MD Bodily Injury and Property Damage Liability, Personal Injury Protection, Uninsured Motorist 20/40/15
MA Bodily Injury and Property Damage Liability, Personal Injury Protection, Uninsured Motorist 20/40/5
MI Bodily Injury and Property Damage Liability, Personal Injury Protection 20/40/10
MN Bodily Injury and Property Damage Liability, Personal Injury Protection, Uninsured/Underinsured Motorist 30/60/10
MS Bodily Injury and Property Damage Liability 25/50/25
MO Bodily Injury and Property Damage Liability, Uninsured Motorist 25/50/10
MT Bodily Injury and Property Damage Liability 25/50/10
NE Bodily Injury and Property Damage Liability 25/50/25
NV Bodily Injury and Property Damage Liability 15/30/10
NH Financial Responsibility Only, Uninsured Motorist 25/50/25
NJ Bodily Injury and Property Damage Liability (Standard Limits Shown), Personal Injury Protection, Uninsured Motorist 15/30/5
NM Bodily Injury and Property Damage Liability 25/50/10
NY Bodily Injury and Property Damage Liability, Personal Injury Protection, Uninsured Motorist 25/50/10
NC Bodily Injury and Property Damage Liability 30/60/25
ND Bodily Injury and Property Damage Liability, Personal Injury Protection, Uninsured Motorist 25/50/25
OH Bodily Injury and Property Damage Liability 12.5/25/7.5
OK Bodily Injury and Property Damage Liability 25/50/25
OR Bodily Injury and Property Damage Liability, Personal Injury Protection, Uninsured Motorist 25/50/10
PA Bodily Injury and Property Damage Liability, Personal Injury Protection 15/30/5
RI Bodily Injury and Property Damage Liability, Uninsured Motorist 25/50/25
SC Bodily Injury and Property Damage Liability, Uninsured Motorist 25/50/25
SD Bodily Injury and Property Damage Liability, Uninsured Motorist 25/50/25
TN Bodily Injury and Property Damage Liability 25/50/15
TX Bodily Injury and Property Damage Liability 25/50/25
UT Bodily Injury and Property Damage Liability, Personal Injury Protection 25/65/15
VT Bodily Injury and Property Damage Liability, Uninsured/Underinsured Motorist 25/50/10
VA Bodily Injury and Property Damage Liability, Uninsured Motorist 25/50/20
WA Bodily Injury and Property Damage Liability 25/50/10
WV Bodily Injury and Property Damage Liability, Uninsured Motorist 20/40/10
WI Financial Responsibility Only, Uninsured Motorist 50/100/15
WY Bodily Injury and Property Damage Liability 25/50/20

See more at http://www.360financialliteracy.org/Topics/Insurance/Cars-and-Auto-Insurance/State-by-State-Minimum-Coverage-Requirements#sthash.ttCThm6d.dpuf

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No-fault Insurance Frequently Asked Questions

no fault insurance

What is no-fault insurance?

No-fault insurance, also called personal injury protection (PIP), is designed to lower potential litigation lawsuits and expenses associated with auto accidents. In its strictest form, no-fault insurance applies to state laws that both restrict the right to sue and provide for the payment of no-fault first-party (policyholder) benefits. The insurance companies in no-fault states compensate their policyholders for economic damages (personal injury claims), regardless of who is at fault in an auto accident.

There are only 12 states that currently have or include no-fault insurance. They are Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota Pennsylvania and Utah. Three of those states—Kentucky, New Jersey and Pennsylvania—have a “choice” no-fault law and may retain the right to sue for auto-related injuries, while the other nine states have no alternative to no-fault insurance.

How does no-fault insurance work?

Let’s say two cars collide in a no-fault state and both drivers need medical care. Each driver files their personal injury claims with their respective insurance companies instead of recovering their economic damages through reimbursements from the other driver’s insurance company. The insurance company must pay the personal injury claims filed by its policyholder regardless of who is at fault for the accident.

Under current no-fault laws, motorists may sue for severe injuries and for pain and suffering only if the case meets certain conditions, which are known as thresholds. A verbal threshold may be expressed in verbal terms (such as death) or a monetary threshold can be expressed in terms of dollar amounts for medical bills. The main idea of using thresholds is to prevent lawsuits over every single injury and to limit the suits to “serious injuries.” However, state no-fault laws differ on the definition of “serious.” As a result, it is crucial to understand your state’s no-fault laws.

What does no-fault insurance cover?

Bodily injury: Liability coverage in a traditional car insurance policy pays for bodily injury claims for anyone injured in an accident which you have been deemed at fault. The bodily injury coverage with no-fault insurance extends to you.

Medical bills and other losses: No-fault insurance covers your medical bills and possibly any associated losses (such as loss of income for a period of time) depending on the policy and state where you live. Because no-fault systems restrict litigation on economic damages, personal injury claims from an auto accident are paid pretty quickly as you don’t have to go after the other party’s insurance company to get reimbursed for damages.

What does no-fault insurance not cover?

No-fault insurance doesn’t generally apply to property damage claims (repair bills for your car or personal property inside the car that was damaged during the accident) since it covers the costs associated with personal injury. No-fault insurance also doesn’t cover severe injuries and pain and suffering.

If you live in a no-fault state, check the specifics of your policy to better understand what exactly it covers.

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