|
Frequently
Asked Questions
Q.
What is auto insurance?
Auto insurance is a contractual agreement
between an insurance company and an insured
(policyholder). In exchange for a premium,
the insurance company promises to provide
bodily injury liability coverage, property
damage liability coverage and uninsured
motorist coverage.
Q. What are the different parts of the
auto policy?
The first section of the policy is the
"declarations page," which lists what
coverages are in effect and the dollar
amount of coverage. The next section of the
policy includes the actual contract
language, which clearly describes the
insurance company's rights and
responsibilities as well as the
policyholders. Your policy may also contain
a third section called the endorsement
section, which changes or modifies the
policy. Certain general provisions are
required by law, but policies can be very
different. It is important to read any
policy issued to you as soon as you receive
it. If you have questions, contact your
insurance agent or company for
clarification.
Q. Who does the auto policy cover?
The personal auto policy provides coverage
to the named insured, spouse and other
relatives living in the home as well as
anyone to whom the named insured has given
permission to operate the vehicle.
Q. Is auto insurance mandatory in
Wisconsin?
Wisconsin has a financial responsibility
law. It is designed to make sure that any
motorist licensed to drive in Wisconsin has
insurance or enough money to pay for damages
to others that may be caused by a motor
vehicle. These requirements may be met
through a motor vehicle liability insurance
policy, a surety bond, personal funds, or
certificate of self-insurance. Details are
available at the Department of
Transportation, Division of Motor Vehicles
(DMV), Hill Farms State Office Building,
4802 Sheboygan Ave., Madison, WI 53702.
Q. If I decide to satisfy the financial
responsibility requirements of Wisconsin by
buying auto insurance, what coverages are
required in Wisconsin and what are the
minimum limits I can purchase?
If you decide to satisfy the requirements of
the Wisconsin Financial Responsibility Law
by buying auto insurance, your policy must
provide the following minimum liability
coverage:
* $25,000 for injury or death of one person;
* $50,000 for injury or death of two or more
people; and
* $10,000 for property damage.The law also
requires uninsured motorist coverage of
$25,000/$50,000 for bodily injury liability
coverage only.
You may
want to protect your assets by purchasing
more coverage than what is provided in the
minimum policy required in Wisconsin. Higher
limits are available for an additional
premium.
Q. What is covered under bodily injury
liability coverage?
This coverage does not protect you or your
car directly. If you cause an accident
injuring other people, it protects you
against their claims up to the stated
amounts for medical expenses, lost wages,
pain and suffering and other losses. It will
also usually pay if the accident was caused
by a member of your family living with you
or a person using your own auto with your
consent. It does not pay for bodily injury
you may sustain.
Q. What is covered under property damage
liability coverage?
Property damage liability coverage pays for
any damage to the property of others up to
the stated amount provided by the policy
(i.e., a crushed fender, broken glass, or a
damaged wall or fence). Your insurance will
pay for this damage if you were driving your
auto or if it was being driven by another
person with your consent. Property damage
liability also pays if you damage government
property like a light pole or signpost, up
to the limit you choose.
Q. What is uninsured motorist coverage?
Uninsured motorists (UM) coverage applies to
bodily injury you, your family, and other
occupants of your vehicle incur when hit by
an uninsured motorist or hit-and-run driver.
It also covers you and your family if
injured as a pedestrian when struck by an
uninsured motorist or hit-and-run driver. It
protects you by making sure that money is
available to pay for your losses that were
caused by someone else. The minimum amount
of coverage required by law is $25,000 per
person and $50,000 per accident for bodily
injury only.
You may want to purchase more than the
minimum coverage required by law if you feel
the need for more protection. Uninsured
motorist coverage does not cover your
property damage and does not protect the
other driver. Your insurer may sue the other
driver for any money the insurer pays you
because of the other driver's negligence.
Q. What is underinsured motorists coverage?
Underinsured motorists (UIM) coverage
increases the bodily injury protection to
you and the people in your car up to the
amount of coverage you purchase. It becomes
effective when the party causing an accident
has lower bodily injury liability limits
than your UIM limits. The maximum dollars
paid is then the difference between the two
limits.
For example, assume the UIM limits selected
were $100,000 per person and the person
causing the accident had bodily injury
limits of $50,000 per person. Under this
scenario, you could collect up to $50,000
from the at-fault driver and up to an
additional $50,000 (the difference in
limits) under your own UIM coverage. UIM
coverage typically does not add the amount
you purchased to the amount available from
the person causing the accident.
UIM coverage is an optional coverage in
Wisconsin. Insurance companies are required
to notify you of its availability. The
minimum limits of UIM coverage, if accepted
after notification, are $50,000 per person
and $100,000 per accident.
Q. What does collision coverage provide?
Collision coverage pays for physical damage
to your vehicle caused by your vehicle
colliding with an object, including another
car or if it overturns. In the event of an
accident, collision coverage will pay to
repair your vehicle up to the amount equal
to the value of the vehicle before the
accident. Your own insurer will pay for such
damage even if the collision is your fault.
Collision
premiums are based on the make and model
year of your car. You should evaluate the
current market value of your car and your
ability to afford a similar car should it be
destroyed before you purchase this coverage.
You may not need this coverage if your car
has decreased in value or if you can afford
to replace it.
Q. What does comprehensive coverage
provide?
Comprehensive (also called other than
collision) coverage pays for damage to your
vehicle resulting from fire, vandalism,
water, hail, glass breakage, wind, falling
objects, civic commotion, or hitting a bird
or an animal. Damage from striking a deer is
a relatively frequent accident in Wisconsin.
It is important to know that most policies
cover hitting an animal under comprehensive,
not collision, insurance.
Comprehensive coverage also pays if your
vehicle or parts of it, such as a battery or
tires, are stolen. Flood damage to your car
is also covered if your auto insurance
policy includes comprehensive coverage. If
you carry collision without comprehensive,
you are not covered for flood damage.
Q. How is the deductible for
comprehensive or collision coverage applied?
Deductibles for comprehensive or collision
coverage are applied for each occurrence. A
deductible is the dollar amount that you
have to pay toward the loss before the
insurance company begins to make payments on
the loss. For example if you suffered a
comprehensive loss (a deer hit) and that
same day suffered a collision loss (a rock
hit your windshield), your policy allows the
insurer to apply two different deductibles.
Many companies will waive the deductible for
the windshield occurrence if you can repair
it rather than replace it.
Q. If I have my car financed, do I need
to purchase auto insurance?
If you do finance the car, the financial
institution (lender) will require that you
have car insurance. The terms of your loan
will most likely require you to provide
comprehensive and collision insurance. This
is because the lender considers your vehicle
collateral for the loan. If your policy
lapses, the bank will force coverage (obtain
a policy) and add it to your loan. Forced
coverage provides protection to the bank,
not you, for their interest in the car and
nothing else. The cost of this insurance is
much higher than you would pay if you bought
your own policy through a standard carrier.
Q. Can I require the insurance company
to replace my car?
The personal auto policy is not a
replacement policy. Coverage for your car is
based on actual cash value. The actual cash
value (ACV) of your car is based on the
value of your car at the time of the
accident, taking into account its current
market value. Therefore, the insurance
company's obligation is to repair the car
based upon its actual cash value not its
replacement cost.
Q. What is meant by aftermarket parts?
Auto repair shops may use aftermarket and/or
used parts when repairing or replacing a
damaged part (i.e., bumpers, bumper covers,
and associated bumper parts, etc.).
Aftermarket parts are produced by companies
other than the original equipment
manufacturers (known as OEM parts).
Auto insurance contracts do not generally
specify what parts will be used. You may
request that aftermarket parts not be used
to repair your vehicle, but you are
responsible for any repair costs that exceed
the final claim settlement negotiated with
the insurance company.
Q. The insurance company is totaling my car.
How can I make sure I get what its worth?
An insurance company totals a car if repairs
would cost more than it is worth. An
insurance company will use various sources
to value your car, including, but not
limited to the National Automobile Dealers
Association Used Car Guide ("Blue Book") or
the CCC Information Services, Inc., guide.
The company's offer, therefore, might not
recognize your car's condition, special
features or value on the local market. A
company is more likely to raise its offer if
you can show that your car would sell for a
higher price in your area. Keep the lines of
communication open. Get several used car
dealers' to write price quotes for a similar
automobile. Newspaper used-car ads also can
build your case. Remember these quotes and
ads provide asking prices and the actual
value or sales price could be lower.
Q. The other driver's insurance company
wants me to sign a release on my injury
claim. How long can I delay this?
Sign the release when you are satisfied with
your total settlement. Get a letter from
your doctor estimating the cost and length
of your future medical treatment. You may,
of course, consult an attorney before
accepting a settlement. You have three years
after the accident, under Wisconsin law, to
either settle your claim or file a lawsuit.
Q. What is meant by comparative
negligence?
Wisconsin has a comparative negligence law
that means responsibility is frequently
shared. The comparative negligence law is
based on a percentage of negligence. This
means you may recover damages from another
party providing your negligence is not
greater than the other party, but your
damages shall be reduced by the percent of
negligence attributed to you. You are barred
from recovery if your negligence is greater
than another party's negligence.
Q. When may an insurance company cancel
my auto insurance during the term of my
policy?
An insurance company may cancel a new policy
any time within the first 60 days and are
not required to provide you with a reason
for the cancellation. A cancellation is also
permitted during the terms of the policy if
the premium is not paid when it is due,
discovery of fraud or material
misrepresentation made by you or your
representative in obtaining your insurance,
or by your pursuit of a fraudulent claim
under your policy, or significant changes in
insuring characteristics. For the situations
discussed above, no cancellation is
effective until at least 10 days after the
insurance company mails or delivers to you a
written notice of cancellation.
Q. When may an insurance company
nonrenew my auto insurance policy?
Nonrenewal refers to the termination of a
policy at the expiration date. If an
insurance company decides it does not want
to renew your policy, it must mail or
deliver to you a nonrenewal notice at least
60 days before the policy's expiration date.
Q. Does an insurance company have to say why
it refused to renew my policy?
Yes, the nonrenewal notice must provide the
reason for its decision to nonrenew a
policy.
Q. Does my auto insurance policy have a
grace period?
Unlike health insurance policies, auto
insurance policies, do not have a required
grace period. The premium is due, at the
insurance company, on the date identified on
the premium notice. If the premium is not
received by that date the policy
automatically terminates.
Q. Can credit history be used as a
reason to nonrenew or refusal to renew my
car insurance?
Insurers may use credit information as one
of the criteria they consider when
underwriting personal lines insurance.
However, it is the position of the Wisconsin
Insurance Commissioner's Office that
insurers should not use credit information,
whether they use credit reports or credit
scoring mechanisms, as the sole reason to
refuse an application, cancel a new
insurance policy in its first 60 days of
coverage, or nonrenew an existing policy.
Q. What can I do if my policy has been
canceled or nonrenewed and I cannot find
another insurance company that will write
auto insurance for me?
If you try several insurance companies and
cannot find coverage, you can be insured
through the Wisconsin Automobile Insurance
Plan. You can apply through any licensed
property and casualty insurance agent. For
general information on the plan, you may
call or write to Wisconsin Auto Insurance
Plan (WAIP), 20700 Swenson Drive, Suite 100,
Waukesha, WI 53186 (262) 796-4553.
Q. What affects the price of auto
insurance?
When determining the rate for an auto
insurance policy, insurers separate drivers
into categories called classifications.
Drivers are classified based on a number of
different characteristics including, but not
limited to, age and gender, marital status,
where the vehicle is garaged, driving
record, make and model of vehicle, prior
insurance coverage and annual miles driven.
History has shown that drivers with certain
characteristics, such as a poor driving
record, have a greater chance of being
involved in an accident, and the drivers in
those classifications must pay higher rates.
While some of the classification criteria
(such as age and sex) are out of your
control, others, such as driving record and
type of vehicle driven, are within your
control.
Q. Can the driving/accident records of
my child and/or spouse have an impact on my
ability to buy auto insurance?
Yes, the driving record of any licensed
driver in the household will affect the
decision of the insurance company to insure
your vehicle(s). It can cause you to be
turned down for insurance coverage or to pay
higher insurance premiums.
Q. How much will my insurance cost?
Premiums or the amount you pay for insurance
can vary. The type of car you drive, your
driving record, your age, your sex, where
you live, and how much you drive usually
affect the cost.
Q. Is there a way I can reduce my
premiums?
Every auto insurer has its own package of
special discounts to attract particular
types of customers. Most insurance companies
provide discounts for at least some of the
following: accident-free drivers discount; a
package discount for insuring your home and
auto with the same company; multiple auto
discount; good student discount; nonsmokers
discount; and passive restraint discount
(for vehicles with air bags or automatic
seat belts). You may also consider higher
deductibles for your comprehensive and
collision coverages.
Q. Can my insurance company raise my
premium due to an accident or traffic
ticket?
Your insurer may charge an extra fee, a
surcharge, if you are involved in a
chargeable accident or were ticketed for a
traffic violation. Surcharges must be
applied in a uniform manner and are required
to be filed with the Wisconsin Office of the
Commissioner of Insurance. A surcharge is
used as a tool to properly price the
exposure the insurer is writing, and not as
a means to recoup payment made under a
claim. The total dollar amount paid as the
result of a claim usually does not affect
the surcharge.
Q. Will my minimum liability limits
Wisconsin policy protect me if I drive to
another state that requires higher minimum
liability limits?
Your Wisconsin policy limits will be
interpreted to provide at least the minimum
limits required by the laws of the state in
which you are operating your vehicle.
Q. When I buy an additional car or
replace a car, does my policy automatically
cover it?
Yes, but you need to be aware of certain
limitations. An additional car automatically
has the same coverage as the car with the
broadest coverage provided by your policy.
(For example: You already have two cars. One
has just liability coverage. The other has
liability, collision and comprehensive--the
broadest coverage afforded by the policy.
Therefore, if you buy a third car, it
automatically will have liability, collision
and comprehensive.)
A replacement car automatically has the same
coverage as the car it replaced. (For
example: You have two cars. You trade in the
older car, which has only liability
coverage, on a new car. This means the new
car automatically has only liability
coverage.)
Be sure to notify your insurance agent or
company as soon as possible that you have
added or replaced a car and which coverages
you want for the new car. The personal auto
policy requires the policyholder to notify
the agent or company within a specified
number of days. It is best to call your
agent before picking up your car to make
sure you have the coverages you want.
Q. What can I do if I have a problem
with my auto insurance company?
You should first attempt to resolve your
concerns with your insurance agent or with
the company that sold you the policy. If you
do not get satisfactory answers from the
agent or company, contact the Wisconsin
Office of the Commissioner of Insurance.
|
