Frequently Asked Questions About Automobile Insurance

Why do I need auto insurance?

Your car has two unique qualities. First, it is probably one of the most expensive things you own. Insurance protects your investment and guarantees you a way of coping with the expense of accidents, vandalism or theft, as well as securing your financial responsibility to the bank or other institution lending the money to buy your vehicle.

Second, when you drive, you are operating a powerful machine, weighing one ton or more and capable of moving at over 100 miles per hour. You are responsible for the safety of your passengers, your fellow drivers, other people's property, pedestrians and yourself. Insurance helps you live up to that responsibility by ensuring your ability to cover the costs of potential damages or injuries.

You are also required by state laws to be financially responsible. This requirement is best satisfied through your insurance coverage. In most states, insurance is a prerequisite to registering your car. So if you want to drive your own vehicle, you must be insured.

What does auto insurance cover?

At the very least, you need the coverage's required by your state to register and operate a vehicle. You should consider purchasing enough coverage to protect your assets and ensure that you can be financially responsible if you injure someone in an accident. You may also want the added coverage of a Personal Umbrella Policy. (Excess Liability) depending on your assets and need for coverage.  

How are rates set?

All insurance companies use statistical history to set rates because they reliably predict future claims. Rates are based on the loss history of all Hartford policyholders, the amount needed to pay expected claims and our business expenses.

Why do companies charge different rates for different cars, drivers and situations?

Rates are based on statistics involving a company's experience with different cars, drivers and situations. For instance, some vehicles cost more to repair than others, some are more likely to be stolen and, according to statistics, some are more likely to be involved in accidents. Some people drive many more miles than the average, increasing the likelihood that they'll be involved in an accident. Other drivers have very little annual mileage, decreasing the likelihood of an accident.

The more you are on the road, the higher your chances of being involved in an accident. The same principle applies to commuting. If the majority of your driving is spent in commuter conditions (increased congestion, people rushing to get to work, inattention due to familiarity with roads) you're more likely to be involved in an accident than someone who is traveling in off peak traffic hours. <![endif]-->

Why do I need to buy Uninsured Motorist coverage?

Uninsured Motorist coverage protects you and anyone riding in your vehicle if you are involved in an accident with someone who has no insurance. Even if your state requires insurance coverage, there are those who ignore the law. Should you be injured due to someone else's irresponsibility, Uninsured Motorist will cover your medical expenses up to the limit on your policy.

What is the difference between split-limit and single-limit coverage's?

Generally, split-limit and single-limit coverage's apply to Liability and Uninsured Motorist coverage's. Liability consists of Bodily Injury (coverage for the injuries you cause to another person) and Property Damage (damage you do to another person's property) in an accident. Uninsured Motorist coverage pays damages for bodily injury or death caused by an uninsured driver or hit and run driver who is legally responsible for the accident.

Split-limit coverage gives you a separated dollar amount for Bodily Injury and for Property Damage. For example, limits of 100/300/50 translate to $100,000 per person to a maximum of $300,000 per accident for Bodily Injury and $50,000 for Property Damage. A single limit combines the amount of coverage for Bodily Injury and Property Damage. A typical single limit would be $300,000; this would be the total amount that could be paid as the result of an accident. It does not have a per person or property damage maximum.

Why is the cost of my auto insurance affected by where I live?

Bear in mind that where you live is only one factor in determining your insurance rates. For example, statistics have shown that those who live in more traffic-congested areas tend to have more frequent but less severe accidents, and those who live in rural areas tend to have fewer but more severe accidents.

As I grow older and drive less, can I save money? Or will my insurance go up due to age?

In general, lower mileage does mean a lower rate. But mileage is not the only factor in determining rates. Rates are also based on age groups and the statistics which show the likelihood of accidents within these groups. Statistics show an increase in the number of accidents per miles driven for those over age 75, which results in a higher rate. However, some companies do offer a discount to older policyholders who limit their driving.

What is a surcharge, how is it calculated and why does it exist?

A surcharge is the amount of money by which your premium is increased based on Safe Driver Insurance Plan (SDIP) points assigned to your policy. SDIP points are assigned after you are involved following in an at-fault accident and/or one with damage exceeding predetermined amounts, depending on the state. Most states also allow surcharges for motor vehicle convictions. A surcharge is usually added to the policy upon the first renewal following the accident or conviction.

The Safe Driver Insurance Plan (SDIP) was implemented by the majority of states and insurance companies to fairly distribute the rising costs of auto insurance among policy-holders. Drivers with accident-free records pay the lowest possible rates. Those who have had accidents or convictions pay more through surcharges added by SDIP points.

Why does my insurance go up after an accident that's my fault even if I haven't had one in years? And why would I be surcharged if I don't have the insurance company pay the claim but choose to pay it myself?

If you haven't had an accident in years, you have probably been paying the best rate available from your company. Once you have an accident, you are no longer eligible for the best rate due to your accident and because statistics show that those who have an accident are more likely to have another. Because insurance rates are based on statistics involving the company's experience, your rate is likely to be affected even if you pay the claim yourself - because the statistical likelihood of your having another accident in which the company will have to pay has increased.

Why is it important to report an accident that is not my fault to my insurance company when the other driver's insurance is paying for repairs to my vehicle?

Most insurance policies require that you notify the company when you've been involved in an accident, whether or not you were at fault. Immediately reporting a claim allows the insurance company to fulfill its responsibility to the policyholder by conducting a proper investigation and protecting the policyholder's interests should there be a need for legal representation.

Why do companies give discounts to people who take defensive driving courses?

Defensive driving courses refresh old skills and teach new ones to help prevent accidents. The driver's initiative in taking steps to improve driving skills combined with his or her increased awareness of defensive driving skills leads many companies to offer a discount.

Why do companies give discounts when you have both auto and homeowners coverage with them?

When people have both auto and homeowners with the same company, both parties win. The company wins because it saves money. The initial cost of writing a new policy is very high. Companies don't generally show a profit on a policy for about three years. (This also explains why many companies give customers a credit for renewing their policy.) Another factor is that people who have both policies with the same company are more likely be long-term policyholders, which is cost-effective for that company. The policyholder wins because of the discount (and usually an additional discount upon renewal) and the convenience of having to deal with only one company.

If a friend is driving my vehicle and is at fault in an accident , whose insurance will pay for damages? Will I be surcharged?

If someone uses your vehicle (with your permission) and has an accident, your company will pay for damages he/she causes. However, in states with No-Fault coverage, the insurance company of the person using the vehicles (if the person is insured) would pay for that person's injuries. You would not be surcharged.

If someone uses your vehicle without your permission (i.e. it is stolen), you are not legally liable for any damages they may cause, and there is no liability coverage afforded by the policy. There is however, coverage for any damage to your auto provide by your comprehensive and/or collision coverage.

You would not be surcharged due to any damages resulting from theft of your auto.

Why do accidents that aren't my fault render me ineligible for insurance?

Statistics show that those who have a number of not-at-fault accidents are more likely to continue to have accidents. Also, at some point consideration must be given to whether the driver involved in the not-at-fault accidents is contributing to the cause of the accidents.

Why does my spouse have to be listed on my policy?

A spouse living in the household is automatically insured because of the way the policy provisions are written. Also, legally, if your spouse is insured separately with lower limits than yours and has an at-fault accident, your insurance company may be held liable for amounts over your spouse's coverage to the limit of your policy. For example, if your spouse carries $100,000 liability and you carry $300,000 and your spouse has an at-fault accident resulting in $150,000 in damage and injuries, your insurance company can be held liable for the $50,000 your spouse's policy does not cover. This is a liability for which your insurance company is not collecting premium because the unlisted spouse is not included in the rating of the policy.

Why do I have to list young drivers on my policy, even if I don't allow them to drive my vehicles?

Automobile policies are written to automatically cover any licensed relatives living in your household. Therefore, coverage is afforded to them, via your policy, regardless of whose vehicle they are operating.

For example, your son is away at college and has an accident while driving a friend's vehicle. He is covered by your policy for damages for which he is legally liable. So, unless household members have vehicles registered and insured in their own name, they need to be listed on your policy. Many companies offer credits for young drivers such as good student and driver training credits.

Does the AARP Insurance Program have local agents?

No. With the exception of claims offices, all service is provided either through the mail or by phone on toll-free numbers.

How are claims filed and questions answered?

For both automobile and homeowners insurance program claims, call our toll-free claims hotline 1-888-380-4774. Claims representatives are available 24 hours a day, seven days a week. The claims representative provides step-by-step guidance through a procedure that keeps paperwork to a minimum.

The program features or coverage descriptions above are general and for information purposes only. Actual claim coverage in the event of a loss would be determined by your policy's terms and conditions.