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What is an Accident?

Written by Todd Clay. Posted in Definitions Last Updated: 03/22/2011

Comprehensive, at-fault and not-at-fault auto accidents are all the different categories that help define a car accident.

A Tow Truck Needed for this Accident

A tow truck may be needed if you role-play a real accident.

We have all heard someone say that they have been in a car accident at one time or another.  But, what is an accident?

Is it just damage to their car, someone getting hurt or even just damage done to someone else’s property?  Per the Webster Miriam dictionary, the term accident means “an unforeseen and unplanned event or circumstance”.

In the world of insurance, these unplanned events fall under three different categories; Comprehensive Accidents, Not-At-Fault Accidents and At-Fault Accidents.

What it a Comprehensive Accident?

There is a difference between a comprehensive claim and a comprehensive accident.  A comprehensive claim is when you file with your insurance company that you have a rock chip or a broken windshield.  A comprehensive accident is when you hit an animal or even in some cases when the animal hits you.

Most comprehensive accidents happen when you are driving along the road and a deer jumps out in front of your vehicle and you hit it.  Even though this is technically a collision as you have “collided” with the animal, the insurance companies file this under your comprehensive coverage.  This is good for you because most people carry a lower deductible on their comprehensive coverage than they do for collision coverage, meaning you will pay less out of pocket to get your vehicle fixed.

What is a Not-At-Fault Accident?

Accidents that are covered under the collision portion of your policy fall into two categories; you are either at fault for the accident or you are not-at-fault.  A not-at-fault accident is when you are hit by someone or something else.  These types of accidents do not get counted against you on your driving record or on your insurance record.

What is an At-Fault Accident?

An at-fault-accident is just what it sounds like: you are the one that caused the accident.  These types of accidents go on both your driving record and your insurance record. This means you will most likely see not only the points go up on your driving record, but you will also see your insurance premium go up.  If you have too many of these types of accidents, your insurance company may cancel your coverage because you are too high of a risk for them to insure.

Even if you are not the main cause of the accident you could still be found at some percentage of fault in the states that have what are called Comparable Fault Laws.  These laws assign fault to both drivers if it is found that both drivers both did something to contribute to the accident.

For example, in a comparable fault state if you hit someone that pulled out in front of you, you could still be assigned a certain percentage of fault if you did not do everything you could to avoid the accident.  It could be that you weren’t paying attention and didn’t apply the brakes soon enough or that you were going too fast.  The percentage of fault that you are assigned will determine how much your insurance company has to pay for the amount of damages to your vehicle and how much the other company has to pay for your vehicle.

Full Coverage on an Old Car

Written by Michele Wilmonen. Posted in Research Last Updated: 03/21/2011

What is the definition of “full coverage”, should you drop it on an old car and what old cars should you drop it from.

An Old Car Past its Prime

It would be a good idea NOT to carry full coverage on this hunk of metal.

Sometimes there are investments that you make that are just not financially sound and having full coverage on an old car may be one of them.  Cars start losing their value as soon as you drive them off of the lot and the value just continues to decline from there.

There is a point in a car’s life that the cost to repair any damages that may happen to it actually exceeds the worth of the vehicle itself and when a car gets that old it may be time to stop paying for full insurance coverage.

What do you Mean “Full Coverage”?

When you hear people in the insurance industry talking about “full coverage” what they are talking about is the combination of your liability coverage and the property damage coverage for your own vehicle (comprehensive and collision).  So when some someone tells you that it may be not worth having full coverage on your old vehicle, they mean that it may not be worth having the Comprehensive and Collision coverage.  They are not telling you to cancel your whole insurance policy as you still need your Liability insurance no matter how old your vehicle may be.

Why Should I Drop Full Coverage?

When a vehicle is in a car accident the insurance company will compare the value of the vehicle to the amount of money it will cost to repair the damages to the vehicle.  If the cost of the damages exceeds a certain percentage of the value of the vehicle the insurance company will deem the vehicle a total loss and will pay you for the value of the vehicle. No matter how much you pay in insurance premiums for your vehicle the insurance company will never pay out more than the value of your vehicle (don’t forget they also subtract your deductible from this amount).

So if the value of your old vehicle is not very much, you need to sit down and compare how much you are paying in insurance premiums to keep Comprehensive and Collision coverage on you vehicle, to how much your vehicle is worth.

If the premiums exceed the value of your vehicle it may be a better financial decision for you to drop the full coverage and put what you would be paying for that premium in a savings account.  Then if you are ever in an accident you will have cash set aside to pay for the damages to your vehicle or for a down payment on a new car if your old vehicle is totaled.

By putting what you would be paying in premiums into a savings account, you are not only saving more money by keeping it instead of paying an insurance company more in premiums than what they are going to pay out for your vehicle, you will also be earning interest on this money.

Should Full Coverage be Dropped on All Old Vehicles?

Short answer: no. Full coverage should not be dropped on all old vehicles.  The age of the vehicle should not be the reason that you drop full coverage on a vehicle, but the value of the vehicle should be.   The reason that people refer to old cars not needing full coverage is that as the older a vehicle gets the less that it is worth.

The exception to this is classic cars.  Classic cars are vehicles that are so old that people start collecting them and restoring them back to the point that the vehicles value is increased.  These types of cars need to have full coverage on them to protect the money that has been invested in their restoration.

What Happens if I Drop Full Coverage on my Old Car?

If you drop full coverage on your vehicle your insurance company will not pay for any damages that you may have to your vehicle in the case of an accident.  This also includes damages caused by hitting an deer or any damages to your windshield as you will also no longer have Comprehensive coverage.

This means that you will have to pay for the damages out of your pocket and if you didn’t put aside the money that you had saved from dropping the full coverage on your vehicle, you may have to drive around a damaged vehicle or be completely without a vehicle if the car was totaled.

Does Car Insurance Cover Hitting A Deer?

Written by Michele Wilmonen. Posted in Research Last Updated: 08/21/2012

What to do after hitting a deer, car insurance coverage that fixes the damage, and how to prevent it in the first place.

Deer Running from Oncoming Car

Comprehensive coverage will repair the damages to your car if you hit this deer.

Between 2005 and 2008 the National Highway Traffic Safety Administration estimated that there were about 275,000 accidents in the United States that involved a vehicle hitting a deer.

Deer are fast and are easily hidden in the trees so they are hard to see until you are just about to come in contact with them.  So if you do hit a deer what do you do and is there any way of preventing it from happening in the first place?

Or more importantly, does car insurance cover hitting a deer?

What to do After Hitting a Deer

Once you have hit the deer pull over to the side of the road to make sure that everyone in your vehicle is okay and then call 911. Do not try to move the deer out of road or you could be hit by a car yourself. You also never know when a deer is actually dead or just stunned and if you try to move them and they are only stunned they may end up injuring you if they wake up.

Never take the deer home with you!  This is considered poaching in most states, especially if you do not have a hunting license and it is not deer season.  If you want to take the deer home as a trophy and are caught you will be slapped with a huge fine, lose your hunting privileges and Fish and Game will seize your trophy.  It’s just not worth the risk.

What Insurance Covers Hitting a Deer

Even though you have had a “collision” with a deer it is actually your comprehensive insurance that will cover the damages to your vehicle, not your Collision coverage. This is good news for most as this also means that you will only have to pay your Comprehensive deductible and most people carry a lower Comprehensive deductible than they do Collision deductible. Other coverages may also be available for you in this case, like towing and rental car coverage, but only if you purchased these coverages on your policy in advance.

Tips to Decrease your Chances of Hitting a Deer

An accident involving hitting a deer is just something cannot be avoided most times, but here are some ideas that may at least decrease your chances of hitting one:

  • If you can, do not drive after sunset.  Deer are out in the highest numbers at night.  Also combine this with the interference in vision from the setting sun and the lack of light at night and your chance of getting into an accident with a deer increases.
  • Don’t assume that it is only the one deer.  Most deer travel in herds so keep on the lookout for more.
  • If a deer is running alongside your vehicle, get in front of it to prevent it from having the chance to jump out on the road in front of you.
  • If the vehicles in front of you are slowing down keep an eye out for what they are slowing down for.

What is an Insurance Actuary?

Written by W. Lane Startin. Posted in Definitions Last Updated: 06/11/2013

What the insurance actuary does, how car insurance premiums are calculated and how discounts are added later.

It's dry work, but someone has to do it.

You get your car insurance bill every month and pay it without question. It’s what the agent said you’d pay, right? So you do it.

But have you ever thought about how those premiums are actually calculated? Who’s in charge of that, anyway? As it turns out, there is a department in the insurance company responsible for just that.

Imagine that.

Meet the Insurance Actuary

Auto insurance is a business heavily dependent on statistics. It therefore follows that a statistician is somewhere in the mix. Enter the insurance actuary. Like an adjuster, an actuary is an insurance company employee or third party contractor who is never an agent. Instead, he or she has a specific job for the company: analyze loss data and determine premium accordingly.

While it’s true that the insurance company board and the state insurance commission have to approve premiums, it’s nevertheless the actuary who has the most say in how much gets charged for car insurance. The actuary almost never interacts with the public and rarely gets a lot of credit, even among insurance agents, but the job he or she does has a profound impact on not only how much you pay for insurance, but ultimately on how much the agent makes in commission.

How Auto Insurance Premiums are Calculated

As the auto insurance industry has evolved over the past century or so, it has looked at more and more variables when it comes to pricing its premiums. Today it’s not unusual for auto insurance company actuaries to consider thousands of variables including varying degrees of age, geographic location, make, model and so on. This shouldn’t surprise many people.

In other words, an actuary will look at loss history in a particular county or ZIP code for a particular demographic driving a particular type of vehicle, and do it again and again. Yes, it’s dry work, but the insurance companies consider it absolutely vital. The same actuarial work, by the way, is also done for every other type of insurance, including homeowners, commercial, life and all other lines.

What might surprise people is that auto insurance companies only look at their own loss histories. In other words, State Farm isn’t concerned with the loss ratio seen at Farmers in a certain area, or vice versa. It’s therefore theoretically possible for rates to be significantly higher in one area for one company over another because one company experiences significantly higher losses. This is one reason why auto insurance rates are different from one company to another all other things equal.

How Discounts are Factored In

Actuaries work exclusively with a base premium calculated before any discounts are factored in. Given that in today’s competitive car insurance market just about everyone qualifies for at least one car insurance discount, it’s therefore unlikely you’ll actually pay what the actuary says you should. Car insurance companies know this and build the discounts around the actuarial premiums accordingly.

What the insurance actuary does, how car insurance premiums are calculated and how discounts are added later.

You get your car insurance bill every month and pay it without question. It’s what the agent said you’d pay, right? So you do it.

But have you ever thought about how those premiums are actually calculated? Who’s in charge of that, anyway? As it turns out, there is a department in the insurance company responsible for just that. Imagine that.

Meet the Insurance Actuary

Auto insurance is a business heavily dependent on statistics. It therefore follows that a statistician is somewhere in the mix. Enter the actuary. Like an adjuster, an actuary is an insurance company employee or third party contractor who is never an agent. Instead, he or she has a specific job for the company: analyze loss data and determine premium accordingly.

While it’s true that the insurance company board and the state insurance commission have to approve premiums, it’s nevertheless the actuary who has the most say in how much gets charged for car insurance. The actuary almost never interacts with the public and rarely gets a lot of credit, even among insurance agents, but the job he or she does has a profound impact on not only how much you pay for insurance, but ultimately on how much the agent makes in commission.

How Auto Insurance Premiums are Calculated

As the auto insurance industry has evolved over the past century or so, it has looked at more and more variables when it comes to pricing its premiums. Today it’s not unusual for auto insurance company actuaries to consider thousands of variables including varying degrees of age, geographic location, make, model and so on. This shouldn’t surprise many people.

In other words, an actuary will look at loss history in a particular county or ZIP code for a particular demographic driving a particular type of vehicle, and do it again and again. Yes, it’s dry work, but the insurance companies consider it absolutely vital. The same actuarial work, by the way, is also done for every other type of insurance, including homeowners, commercial, life and all other lines.

What might surprise people is that auto insurance companies only look at their own loss histories. In other words, State Farm isn’t concerned with the loss ratio seen at Farmers in a certain area, or vice versa. It’s therefore theoretically possible for rates to be significantly higher in one area for one company over another because one company experiences significantly higher losses. This is one reason why auto insurance rates are different from one company to another all other things equal.

How Discounts are Factored In

Actuaries work exclusively with a base premium calculated before any discounts are factored in. Given that in today’s competitive car insurance market just about everyone qualifies for at least one car insurance discount, it’s therefore unlikely you’ll actually pay what the actuary says you should. Car insurance companies know this and build the discounts around the actuarial premiums accordingly.

Hit and Run Insurance

Written by Michele Wilmonen. Posted in Research Last Updated: 03/20/2011

What covers a hit and run accident on your insurance policy, and steps to take if you’re a victim in a hit-and-run accident.

Hit and Run Insurance Needed for Damage Done to This Car
The not-at-fault party is often left paying the damages because of a hit and run driver.

If you look at your insurance policy carefully there are no coverages that actually say “hit and run insurance”, this is because there is no insurance coverage available that exclusively covers hit and run accidents.  The damages caused by a hit and run accident are instead covered under either your collision coverage or, if you purchased it, your Uninsured Motorist coverage.

Hit and Run Uninsured Motorist Coverage

If you are in a Hit and Run accident, Uninsured Motorist coverage covers damages to your vehicle and also bodily injury done by uninsured drivers, underinsured drivers and hit and run drivers.  This coverage is an optional coverage on an insurance policy in most states so don’t assume that you have it on your policy.  Uninsured Motorist coverage also has limits on how much they will pay out for damages to your vehicle and may not cover the total cost of repairs.

Talk to your insurance agent if you feel that you need to have this coverage and also to find out what exactly your insurance company covers under this coverage.

Hit and Run Collision Coverage

Your Collision coverage acts as your safety net in the case that you do not have Uninsured Motorist coverage on your policy and are in a hit and run accident.  You purchased Collision coverage to protect you from having to pay out a lot of money to fix your vehicle if it was damaged and now after all the of the premiums that you have paid, the coverage will kick in to do what it was purchased for.  This doesn’t mean that nothing more will come out of your pocket though.

In the case that the other party cannot be identified, the insurance company is not going to be able to recoup any of the money that they are going to be paying for the damages to your vehicle so you will be responsible for part of that cost in the form of your Collision coverage deductible.  If the at-fault party is later identified, the insurance company will include the amount that you paid out of pocket for your deductible in the recovery amount that they pursue the other party for.

If you are the one that caused the accident and are later found after you leave the scene of the accident, the damages of your vehicle will also be covered under your collision coverage.  The damages to the other party’s vehicle will be covered under your liability insurance, just like it would for any other accident.  The difference with a hit and run accident caused by you is the legal issues you will have from the criminal charges that will be filed for leaving the scene.   In addition, both your driving record and your insurance record will be marked with a Hit and Run accident.

Identifying a Hit and Run Driver

  • Call 911 immediately after an accident and describe the fleeing vehicle to the dispatcher and which way the vehicle fled.
  • Write down the other person’s license plate number.
  • If you have a camera within reach take as many pictures of the other vehicle that you can as it leaves the scene.
  • If you do not have a camera, write down every little detail that you can remember of the car and the driver.  If you wait until later your memory is not as good and you may not remember an important detail or your brain will fill in details of its own that are not true.
  • Always file a police report in the case of a hit and run accident.  This will protect you legally and once provided to the insurance company will keep the accident from getting listed as an at-fault accident on your record.

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Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.