1. Personal Automobile Insurance Overview
April 2016

2. Personal Automobile Insurance
Coverage in an Auto Policy
An auto insurance policy usually has several types of protections or “coverage” — some required and some optional. Some coverage may automatically be part of the policy unless the client opts out of them. You must decide what coverage best fits your clients’ needs, which may mean choosing more coverage than needed to meet requirements.
Each coverage is usually priced separately.
The auto policy may include the following coverage.
Required by State Law
Bodily Injury Liability
This coverage applies to injuries that the insured causes to someone else. The insured and family members listed on the policy also are covered when driving someone else’s car with their permission.
Property Damage Liability
This coverage pays for damages the insured causes to someone else’s car or to objects and structures their car hits.
Uninsured and Underinsured Motorist Coverage (Required in some states- insured has to sign to opt out)
Uninsured motorist coverage reimburses the insured if an uninsured or a hit-and-run driver hits them. Underinsured motorist coverage pays when an at-fault driver doesn’t have enough insurance to fully pay for the insured's loss.
Medical Payments or Personal Injury Protection (PIP)
This coverage pays for treating injuries to the insured and their passengers. Personal Injury Protection (PIP), which is available in “no-fault” states, can also cover lost wages and funeral costs.

3. Required by a Lender if there is an Auto Loan
Collision
This coverage pays for damage
to the insured's car from a
collision with another car, an
object, pothole, or from flipping
over. Coverage will be subject to
a deductible.
Comprehensive
This coverage reimburses the insured for damage to their car that’s not caused by a collision.
Includes: Theft, hail, windstorm, flood, fire, and hitting animals.
Comprehensive coverage also will reimburse the insured if their windshield is pitted, cracked or damaged. Some companies won’t charge a deductible for windshield repairs.
Fast and the Furious(2001)
Tommy Boy(1995)

4. Extra Coverage – These will increase the premium, but set your offer apart
Most insurers offer other types of coverage. These include:
Towing
Rental Reimbursement (if they are in a covered loss and need a rental car while their car is being repaired)
Some preferred insurers may offer the following
Diminishing Deductible
Minor Violation or Accident Forgiveness
Identity Theft (Allied if it’s not on Home/Renters)

5. Interesting Tidbits:
Modifications to vehicle, permanently installed – NEED to be added to the value of the car
Most auto policies don’t cover equipment not permanently installed or maintenance for your car.
Including: stereos, CD players, navigation systems, and cell phones.
Auto Insurance doesn’t cover paying off a loan if the car is damaged and the market value is less than what is owed. Auto dealers and lenders may offer Guaranteed Auto Protection (GAP) insurance for this purpose.
Auto insurance covers driving into Canada
Auto insurance does NOT cover driving into Mexico. Ask insurers about requirements for coverage.
You’ll likely need a separate insurance policy for these types of vehicles:
All-Terrain Vehicles (ATVs)
Batmobiles
Classic Cars (Not everyday cars. Mileage caps).
Commercial Vehicles
Kit Cars
Motorcycles
Off-Road Vehicles
Watercrafts
The “Tumbler” Batmobile – The Dark Knight(2008)

6. How Insurers Determine Premium
Many factors affect the premium your insured pays, including the company you choose. Different insurance companies use different methods to rate their risk of insuring the client and charge different premiums for similar coverage.
These items will affect the premium:
Driving record during the past 3-5 years of anyone insured on the policy.
Credit-based insurance score. A better scored insured often pays lower premiums. Some states restrict the ways insurers can use credit-based scoring, and some ban it.
Studies show a correlation between poor credit scores and the likelihood of filing an insurance claim.
Insurance scores are not the same as credit scores.
Credit-based insurance scoring is NOT applicable in CA.
Age, gender, and marital status.
Those under 25, males, singles, and families with young drivers in the household, tend to have more accidents. Therefore, these types of risks pay higher premiums. Accident rates (and premiums) also increase for people over the age of 65. Insurance companies can base premiums on all insured drivers in the household, including those not related by blood, such as roommates.
Type of vehicle insured.
Generally, a client will pay more for insurance, particularly for comprehensive and collision coverage, if the vehicle is newer or more expensive.
Sports cars and high-performance vehicles will cost more to insure because they’re involved in more accidents and thefts, as well as cost more to repair.
SUVs and Trucks will have a higher premium in liability because they can cause more damage if involved in and accident.
How
Insurers
Determine
Premium

7. Premium Determination Continued…
Location
Urban areas usually have more accidents and auto thefts than rural areas.
Prior insurance coverage.
Most insurance companies will charge more if an insured doesn’t have auto insurance when applying for coverage. Some insurance companies will surcharge or tier for a higher premium rate if the limits are state minimum.
Vehicle annual mileage
Carriers require that the client provides the estimated annual miles driven and the carrier may also require or request information from the applicant during this process necessary to support the estimate. That could include their work address, their children’s school address. Their last oil change mileage.
Previous claims
Most insurance companies report auto claims to one or more private nationwide claims databases (Such as CLUE: Comprehensive Loss Underwriting Exchange). Insurance companies use these databases to see the claims submitted in the past.
The Limits of Liability
Required 100,000 Bodily Injury per person/300,000 Bodily Injury per accident/100,000 Property Damage per accident with preferred carriers
Most Non-standard companies won’t write 100/300/100 limits
The deductibles for comprehensive and collision
Standard is $500 or $1000
Driver Assignment
Most carriers will assign the highest rated driver on the highest rated vehicle, and we don’t have a way to change it.
Vehicle Usage
Business – covers the vehicle in connection with your job, such as driving to sites away from your place of work.
To and from work/school – Provides coverage for social, domestic, and pleasure, as well as back and forth to a permanent place of work/school.
Pleasure – used by the named drivers for social, domestic, and pleasure use only, excluding commuting.
(Don’t be fooled and try to use this instead of commuting, it can be more expensive than “to and from work” because pleasure usage is meant for retired and stay at home clients who have a lot of time on their hands).
A Deductible is the amount an insured has to pay out-of-pocket on a claim before the policy pays the loss.
Higher policy deductibles will lower the premium. A $1,000 deductible will have a lower premium than $500 on the same policy.
Having a higher deductible is a good way to save money on auto insurance premiums and submit fewer claims.

8. Some Discounts Available
Most insurance companies offer various types of discounts.
Multi-policy discount. Having home and auto with the same carrier will give a discount. It also helps with your customer retention.
Multi-vehicle discount. Someone with more vehicles tends to be more economically stable. Also, a client can only drive one vehicle at a time.
Protection devices such as airbags, anti-lock brakes, and anti-theft devices.
Defensive driving courses (the insurance company will have to say if it’s acceptable)
Being a member of an organization, such as an alumni association.
Good Student discount. Cumulative GPA of 3.0 (not just a term).
Mature Driver discount. (55+)

9. California Good Driver Discount
Does your Client Qualify for California’s Mandatory Good Driver Discount?
As your insured shops for cheap auto insurance in California, be aware that being a “good driver” is not simply a passé marketing spin, but rather a provision of California’s Proposition 103. Passed into law over 20 years ago, Prop 103 achieves many good things for Californians – especially good drivers.
California requires car insurance companies to offer a 20% good driver discount to California drivers who have had:
1. A California drivers license for the last 3 years, and
2. No more than one moving violation (1 driving record point) over the same 3 years.
3. Not been involved in an accident where they were responsible for more than $500 in property or medical damage.

10. Things To Keep In Mind When Quoting Auto Policies
State law sets the minimum amounts of liability coverage required. These minimums are too low to fully cover an insured if they cause a serious accident. Most insurers provide higher amounts or “limits” of liability coverage, often with minimal increase of premium. The minimum liability limits ICA quotes is 100/300/100 on auto.
When you get quotes, always ask for the same coverage and limits for each proposal/company. Auto insurers may use all of the factors listed in the “How Insurers Determine Premium” section, and maybe more, to price the policy. The insurer needs quite a bit of information to rate a policy, including the social security number (Colorado, not California), and the vehicle identification number (VIN).
The premium for an issued policy may be different than the initial quote for several reasons. For example, if there are no accidents or tickets input on a client for a quote, and the CLUE and/or MVR comes back with activity, the premium will be higher (and sometimes not eligible with that carrier anymore). Be sure to get rate quotes and coverage information in writing.
Apply discounts when available.
Quote different deductibles. You may save your client a lot of money on their premium.