Automobile Insurance

Mississippi

Insurance Department

Automobile

Insurance

A Shopping Tool for

National Association of Insurance Commissioners

Insurance Products & Services Division

816-783-8300

http://store.naic.org

[email protected]

Printed in the United States of America

You may reprint this consumer guide in hard copy, on a website, or via other

electronic communication. The consumer guide must be reproduced in full and

contain the copyright of the National Association of Insurance Commissioners.

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About the NAIC …

The National Association of Insurance Commissioners (NAIC) is the oldest

association of state government ofcials. Its members consist of the chief

insurance regulators in all 50 states, the District of Columbia and ve U.S.

territories. The primary responsibility of the state regulators is to protect the

interests of insurance consumers, and the NAIC helps regulators fulll that

obligation in a number of different ways. This guide is one example of work done

by the NAIC to assist states in educating and protecting consumers.

Another way the NAIC lends support to state regulators is by providing a forum

for the development of uniform public policy when uniformity is appropriate. It

does this through a series of model laws, regulations and guidelines, developed

for the states’ use. States that choose to do so may adopt the models intact or

modify them to meet the needs of their marketplace and consumers.

The NAIC’s mission is to assist state insurance regulators, individually and

collectively, in serving the public interest and achieving the following fundamental

insurance regulatory goals in a responsive, efcient and cost effective manner,

consistent with the wishes of its members:

• Protect the public interest.

• Promote competitive markets.

• Facilitate the fair and equitable treatment of insurance consumers.

• Promote the reliability, solvency and nancial solidity of insurance institutions.

• Support and improve state regulation of insurance.

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Need Auto Insurance?

Here is What You Need to Know.

Whether you are buying auto insurance for the rst time, or shopping to be sure

you are getting the best deal, you already know how important auto insurance is.

By law in most states, if you own a car, you must have some auto insurance.

Remember, there is no such thing as a “full coverage” auto insurance policy.

Policies are made up of different types of coverages. Your state’s laws or your

auto lender may require you to have some coverages, but you may want to buy

others, if you can afford it.

Your family and friends can be great resources to nd an agent or insurance

company. You also can look online or in your local phonebook. Some insurers do

not use agents and deal with customers directly online or via toll-free numbers.

Some agents represent more than one insurance company. Contact more than

one agent or insurance company to be sure you get at least three quotes when

you shop for insurance.

The information in this guide will help you become an informed shopper. It will

help you understand the coverages you can buy. The suggested questions to ask

an agent or insurance company will help you be sure you get the coverages you

want. It also will help you understand the types of information you will need to get

a premium estimate or quote.

This guide helps answer the following questions:

• What policy should I buy?

• What are the different types of auto coverages?

• How much liability coverage should I buy?

• What information will I be asked for?

• What questions should I ask?

• How do insurers determine auto premiums?

• What should I look for when I comparison shop?

• What is a declarations page?

• What should I know if I am changing insurance companies?

• What is the difference between cancellation and non-renewal?

• What if I cannot nd auto insurance?

• Where can I get more information?

Remember, the information in this guide is intended to help you understand

auto insurance. The information is general and not specic to your state or your

insurance policy. If you have specic questions about your coverage, call your

agent or insurance company.

What Policy Should I Buy?

Everyone has different needs. But when you buy auto insurance, everyone

should look for a policy that does the following:

1) Provides at least the minimum coverage that your state’s law requires.

You do not want to be ned or lose your license because you did

not follow the law. The minimum coverage amounts are different in

each state. Check with your state Department of Motor Vehicles or

Department of Insurance to learn what your state requires.

2) Provides enough liability coverage to pay someone else for their

property damage, medical care and other costs that you may cause.

Accidents happen, even to the best drivers. You should buy as much

liability coverage as you can reasonably afford to protect yourself

nancially. See the “What are the different types of auto coverages?”

section for more information.

3) Provides you with enough coverage to pay for your own property

damage, medical care and other costs if there is an accident. If you are

in an accident, you probably will need insurance to be able to repair

your car and pay for your medical care.

4) Provides you with coverage you may be required to buy if you have

an auto loan or lease. Most often, you must have comprehensive

(sometimes called “other than collision”) and collision coverages until

you pay off your loan. See the “What are the different types of auto

coverages?” section for more information.

5) Provides coverage for all members of your household, including

students away at school or other adults who live with you. You may

have teenagers in your household or others living with you who have

bad driving records. Including them on your policy will increase your

insurance costs. While it may seem easy to leave them off your auto

policy to save money, you may be responsible for any damages or

injuries they cause. It is best to insure everyone living with you who has

a driver’s license, not just your immediate family.

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Medical Payments/Personal Injury Protection (PIP)

In some states, you must have a minimum amount of coverage to pay for

your medical expenses and lost wages, regardless of who is responsible

for the car accident.

Medical Payments Insurance. This coverage pays to treat injuries to you

and your passengers.

Personal Injury Protection (PIP). This coverage, if available or required

in your state, pays to treat injuries to you and your passengers, but also can

cover such things as lost wages and funeral costs.

Excess Medical Payments. This coverage pays for necessary medical

costs greater than those paid under PIP/ benets.

What Are the Different Types of Auto Coverages?

You may be shopping for insurance in person, over the phone or via the Internet.

Regardless of how you are shopping, one of the rst questions you will be asked is

which coverages you want. Remember, there is no such thing as “full coverage.”

Following are the common auto insurance coverages and a brief description of

what each does. Not all of these coverages will be available in your state. Each

coverage you buy is priced separately. Ask your insurance agent or insurer for

more information.

Liability Coverages

Most states require you to buy a minimum amount of liability coverage to pay

for damages or injuries you cause to others. The amount varies by state. You

will be responsible for any property damage or bodily injury you cause above

this amount, so think carefully before buying only the minimum. See “How

Much Liability Coverage Should I Buy?” for more information.

Bodily injury liability insurance. This coverage applies to injuries that you

cause to someone else. You (and anyone else listed on your policy) are covered

for your liability for damage and injuries caused in an accident, up to your policy

limits.

Property damage liability insurance. This coverage pays for damages

you cause to someone else’s car or to objects and structures your car hits.

Note: In some states your policy could cover others not listed on your policy,

up to your policy limit, if they drive your car with your permission.

Property (Physical) Damage Coverages

State laws do not require you to buy physical damage coverages for

your car, but your lender may, at least until you pay off your loan.

Collision. This coverage pays to repair your car. Or if the insurer decides

your car is “totaled,” it pays you your car’s actual cash value. This coverage

usually has a deductible, which is the amount of the claim that is your

responsibility.

Comprehensive (sometimes called “Other than Collision”). This

coverage pays for damage to your car that is NOT from a collision. This

usually includes damage caused by re, theft, vandalism, falling objects, hail,

ood or an accident involving a bird or animal. This coverage usually has a

deductible, which is the amount of the claim that is your responsibility.

Uninsured and Underinsured Motorist Coverages

By law in most states, you must have a minimum amount of both types

of coverage. The amount varies by state.

Uninsured Motorist Bodily Injury (UM or UMBI). This coverage pays

for your bodily injuries and those of your passengers if you are hit by a hit-and-

run driver or an uninsured driver who is at fault.

Uninsured Motorist Property Damage. This coverage pays for damage to

your car if you are hit by a hit and-run-driver or an uninsured driver who is at fault.

Underinsured Motorist Coverage. This coverage pays for your bodily

injuries and those of your passengers if you are hit by an underinsured driver

who is at fault. “Underinsured” will be dened by your state law or by your

insurance policy. That means this coverage can vary by state or by insurance

policy.

A Note about Deductibles

If you le a claim with your insurance company for damage to your

vehicle, you will have to pay the amount of the deductible to repair your

automobile. Keep in mind that you will have to pay this deductible any

time you le a claim with your insurance company – even if you are not

at fault for the damage.

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Other Optional Coverages

You also may be able to choose other optional coverages. Some of the

common optional coverages are described below. Ask your insurance

company or agent about what coverages you may want or need.

Rental reimbursement pays a limited amount for daily rental car charges

while your car is being repaired for covered damages. Policies usually limit

the dollar amount and the number of days covered. In some states rental

car coverage would fall under your comprehensive and collision coverage;

however, there are variations in how this coverage applies. If you want to

know what your auto policy will cover when you rent a car, ask your agent.

Towing coverage (also could be called Roadside Assistance)

reimburses you for your costs if your car is disabled. For example, the

coverage might pay if you have your car towed to a service facility or you lock

your keys in the car.

Guaranteed Asset Protection (GAP) insurance (sometimes called loan/

lease coverage or debt cancellation) may help pay off what you owe if you

owe more on your car than it is worth. It would provide protection whether the

accident is your fault or someone else’s. This protection can be purchased

from a lender, your car dealer or an insurance company or agent. Contact one

of these entities if you want to know more about this coverage.

What Do My Liability Limits Mean and

How Much Should I Buy?

Liability insurance coverage usually is described in three numbers: 25/50/15, for

instance. These numbers refer to limits for the different types of liability coverage.

These coverage limits are the most your insurance policy will pay for injuries to

any one person, all persons injured in an accident and for property damage.

The rst number in the example means $25,000 is the most this policy would pay

for bodily injury per person. The second number means $50,000 is the most this

policy would pay for bodily injury per accident, regardless of how many people

are injured. The third number means $15,000 is the most this policy would pay

for any property damage you cause in one accident, regardless of the number of

cars or other properties damaged.

You should consider buying more coverage than the law requires because

accidents happen every day – even to good drivers. If you do not have enough

liability coverage, and you are found at fault for an accident, you would be

responsible to pay for anything your insurance does not cover. Medical costs

and legal costs are very high and increasing every day. If you could not afford to

pay these costs out of pocket, then you should buy more than just the minimum

liability coverage limits your state law requires. You should purchase the most

coverage you can reasonably afford to protect your nancial security.

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What Information Will I Be Asked For?

When you shop for auto insurance, you will be asked to give a lot of information

about yourself, other household residents including students away at school, your

car and how you use your car. Below are some questions you may be asked. If

you do not have all of the information, pull together what you can and an agent or

insurance company representative may be able to help you with the rest.

Questions about the people the insurance policy covers

Principal Driver

• Address, Social Security Number, age or years of driving experience, sex,

marital status

• Driver’s license number

Other Drivers in Household (may include future drivers)

• Social Security Number, age or years of driving experience, sex, marital status

• Driver’s license number

• Number of accidents in the last three years for the principal driver

• Number of accidents in the last three years for other drivers living in your

household

• Number of trafc convictions for moving violations for the principal driver

• Number of trafc convictions for moving violations for other drivers living in

your household

• Principal driver’s previous auto insurer and policy number

• Insurance information for other drivers in your household who will not be

covered under your policy

Questions about the car the insurance policy will cover

Type of car(s) to be insured

• Make (e.g., Ford or Chevrolet)

• Model (e.g., Taurus or F-150)

• Year

• VIN Number (you often can nd this on your title or registration)

• Odometer reading

• Name of lender and/or owner of the car

Questions about how the car is used

• Do you use the car for pleasure only (for example, a convertible you drive

on the weekend)?

• Do you use the car to commute to and from work or school?

• Do you use your car for business purposes (for example, sales or

transporting goods for hire)?

• What is your average annual mileage?

• How many miles do you drive to work or school?

• Where do you live? Is that where the car is?

What Questions Should I Ask?

The insurer will ask you questions and use the answers to decide whether

to insure you and how much your premium should be. You also should ask

questions to be sure you are getting the coverage you want and from an agent

and insurer you trust.

Here are some questions you should ask your agent or company representative

when you shop for auto insurance:

• What coverages am I required to have in this state?

• What is the minimum amount of liability insurance coverage this state

requires me to carry?

• Are these liability limits high enough to cover me if I have an accident and I

am at fault?

• How much would it cost me to buy more than the minimum amount of

liability insurance coverage?

• Do I need collision and comprehensive (sometimes called “other than

collision”) coverage?

• What deductible should I have for collision coverage? For comprehensive

(sometimes called “other than collision”) coverage?

• Will this policy cover me if I let someone else drive my car?

• Will this policy cover me if I have an accident in a rental car while on

vacation?

• Will this policy cover me if I have an accident while traveling for work?

• If my car is totaled, how is the value of my vehicle set?

• Can I choose any body shop or glass shop to repair my car? Does the

policy pay for original manufacturer’s parts or aftermarket parts?

• If my car is disabled, will this policy pay for a rental car while it is being

repaired? Is there any cap or limit?

• If my car is disabled, will this policy pay to have it towed to a garage or

body shop?

• How much can I save with a higher deductible?

• What discounts are available?

• What other types of property do you insure? Can I qualify for a discount if I

buy both policies from your company?

• What are my payment options? Can I pay monthly or quarterly? If I do, is

there an extra charge?

• How do I report a claim – do you have 24 hour claims service?

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How Do Insurers Determine Auto Premiums?

The insurer uses each piece of information it gets from and about you to decide

whether to insure you and how much you will pay for auto insurance. That is

because each is linked to a factor that affects your premium. Some factors are

related to the characteristics of the driver(s) and some to the type of car insured.

Others are based on the amount of coverage you buy. There also are discounts

that will reduce the premium.

Not every insurer uses the same factors. Which factors insurers use to determine

premium is different in each state. Below are examples of some of the most

common rating factors that insurers use.

Driver Characteristics

General Information about the Driver

Age, years of driving experience, gender and marital status are common factors

used to calculate premiums. The insurer will obtain information about your driving

record and accident history from a third-party company. Generally, younger, less-

experienced drivers pay more than older, experienced drivers; females pay less

than similar age males; and married people pay less than single people.

Driving Safety Record

You will pay more if you or other drivers insured by your policy have been

convicted of speeding or other trafc violations or were responsible for accidents.

Insurers get information about trafc convictions from the state Department of

Motor Vehicles and from third-party vendors, such as CLUE, that collect data on

insurance claims.

Principal Operator

When there is more than one driver or car in a household, insurers have rules

to decide which driver determines the premium for each car. Some insurers

calculate the premium based on the driver who uses a car the most. Other

insurers may use the highest-risk driver, usually the youngest driver in the

household, as the “principal operator” to determine the premium for a car, even if

that young driver uses the car very little.

Annual Mileage and Vehicle Use

Generally, the more miles you drive each year, the more you will pay for

insurance. You will also pay a higher premium if you use your car for business.

Location/Garaging Address of the Insured Vehicle

Your premium will be higher or lower based on the insurer’s claims experience in

the ZIP code or territory where you live. For example, urban areas tend to have

higher rates than suburban or rural areas.

Education

If state law allows, insurers may use the highest level of education achieved as

a rating factor. In this rating factor, for example, those with a college degree pay

less.

Insurance Credit Score

If state law allows, insurers may use an insurance credit score as a rating factor.

An insurance credit score is a number based on various nancial, credit and

risk factors. Some companies offer discounts to consumers who have higher

insurance credit scores.

“Usage-Based” Rating Factors

Some insurers use data from an electronic device in your car as a factor to

determine your premiums. The device collects information about when and how

you drive the car. Rates are lower if you drive fewer miles, drive during less

dangerous hours of the day and seldom brake hard or swerve. Insurers usually

give drivers a small discount just for agreeing to participate in the program. The

agent or company representative can give you more information about these

programs.

Type of Car

Cost to Repair or Replace

Rates are higher for cars that cost more to repair or replace. Expect higher rates

for higher value cars, new cars and cars that often are stolen.

Special Features

Rates are higher for cars with special features such as all-wheel drive

transmissions and hybrid engines, or for sports cars. Insurers charge less for

cars with features such as an alarm system. They also charge less for cars

with better passenger protection, such as those with comprehensive restraint

systems.

Amount of Coverage

Limits of Liability/Medical Payments/Uninsured Motorist/

Underinsured Motorist

Rates are higher for higher limits on these coverages.

Deductibles

Rates are higher for policies with lower deductibles. Consider increasing your

deductible to lower your premium.

Rental Reimbursement

Rates are higher for more generous benets – a larger dollar amount or more

days of coverage.

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Discounts

General Discounts

Rates are lower if you have more than one policy with the same insurer. Rates

also are lower if you keep a car insured than if you have never had coverage or

have a gap in coverage. Some companies offer discounts to good students and

those with defensive driving training.

Group Memberships

Rates may be lower if you qualify for a discount as a member of an organization

such as an alumni association, a union or another club or a purchasing group.

Summary

The premium you are quoted is based on your answers to the questions that

you are asked. Premiums for auto insurance are tailored to each individual and

each insurer uses different rating factors. So, it is likely your premium will be very

different at each insurer. That is why it is so important to shop around!

What Should I Look for When I Comparison Shop?

Use the chart on the following page to take notes as you are shopping for

auto insurance. It is important to compare the same or similar coverage

when you shop.

Company 1 Company 2 Company 3 Company 4

Liability Coverages

Note the limits of coverage below for each company’s quote to be sure you are comparing the same coverage.

Bodily Injury Liability

Property Damage Liability

Uninsured/Underinsured Motorist Coverages

Note the limits of coverage below for each company’s quote to be sure you are comparing the same coverage.

Uninsured Motorist Bodily Injury

Uninsured Motorist Property Damage

Underinsured Motorist Coverage

Coverages for Medical

Note the limits of coverage below for each company’s quote to be sure you are comparing the same coverage.

Medical Payments

Personal Injury Protection

Excess Medical Payments

Physical Damage Coverages

Note the deductible below for each company’s quote to be sure you are comparing the same coverage.

Collision – Deductible Amount

Comprehensive(Other than Collision) –

Deductible Amount

Other Optional Coverages

Note the cost below for each type of coverage. Not all coverages below have a coverage limit.

Rental Reimbursement

Towing

GAP Coverage

Quotes

Total annual premium

Six-month premium

Monthly premium

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What Is a Declarations Page?

A declarations page gives you details about your insurance coverage. Once you

receive your insurance policy, the rst thing you should read is the declarations

page so you can make sure you have the coverage you wanted to buy. Use

this example to help you read your declarations page to better understand your

coverage.

What to Do if You Cannot Find Insurance

If you cannot nd insurance because of your driving record, you are a new driver,

or do not have prior insurance, contact your state insurance department. Ask if

your state has an insurance program for high-risk drivers who are unable to get

coverage. The insurance premiums for high-risk drivers will be higher than the

premiums for other drivers.

For More Information

There is much more information available about auto insurance. If you still have

questions or want more information about auto or other types of insurance, you can:

• Talk with your insurance agent or insurer representative. They will help you

navigate the insurance shopping process and the insurer’s process to make

a claim. If you have questions or problems with your insurance coverage,

call your agent or insurance company.

• Visit insurance companies’ websites. Many companies’ websites have

information about auto insurance coverage.

• Contact your state department of insurance. Most departments have toll-

free numbers you can call to talk with insurance department staff who can

answer general questions and give you more information. Look in your local

phone book for the department of insurance.

• Visit your state department of insurance website. Most state insurance

department websites have consumer information. Some state insurance

departments post information on consumer complaints led against

insurance companies and agents. To nd the website of your state

department, visit the National Association of Insurance Commissioners

(NAIC) website at www.naic.org/state_web_map.htm and select your state

on the map.

The National Association of Insurance Commissioners (NAIC) also has a number

of online resources available for consumers on auto insurance as well as other

types of insurance. You can nd the NAIC’s Consumer Resources Web page at:

www.naic.org/consumer_home.htm.

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In addition to consumer news and alerts about insurance, the NAIC’s Consumer

Resources include:

• A Consumer’s Guide to Auto Insurance. A comprehensive consumer

guide on auto insurance, which provides a more detailed review of auto

insurance coverage, why you need it, how it works, how your premiums are

determined and your responsibilities as a policyholder:

http://www.naic.org/documents/consumer_guide_auto.pdf

• The Consumer Information Source. Do you want to know more about the

insurance companies you are comparing? This website gives you access to

information about insurance companies, including information on consumer

complaints against insurance companies: https://eapps.naic.org/cis/

Other Consumer Resources and Information

• For your free annual credit report, go to www.annualcreditreport.com or

call 877.322.8228. Check your credit report and dispute any errors with the

credit bureau before you apply for insurance.

• For your free annual (Comprehensive Loss Underwriting Exchange)

C.L.U.E. report CLUE report, go to www.choicetrust.com or call

866.312.8076. A C.L.U.E. report includes policy information, such as name,

date of birth, policy number, claim information such as date of loss, type of

loss and amounts paid, and a description of the automobile covered. Check

your CLUE report and dispute any errors before you apply for insurance.

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Automobile

Insurance

A Shopping Tool for

P.O. Box 79 • Jackson, MS 39205

501 North West Street, Suite 1001 • Jackson, MS 39201

(601) 359-3569 • Toll free 800-562-2957 • Fax (601) 359-1077

www.mid.ms.gov

Commissioner

Mike Chaney