Do I Need Uninsured Motorist Coverage?

 

Although you probably carry vehicle insurance coverage as required in North Carolina, you may never expect to be in a car accident, although accidents happen every day here in the Triad Region of N.C.  What's worse than being in a car accident is being in an accident where the other driver is at fault and he or she doesn't have insurance.  This may surprise you: according to the Insurance Information Institute (III), nearly 10% of North Carolina's drivers are driving without vehicle insurance.  

Required By Law

In answer to the question of whether or not you need uninsured motorist coverage (UM), the answer is "YES."  UM is required of all drivers in NC in the same minimum amounts as liability protection, which is also required:

• $30,000 bodily injury protection for one person per accident
• $60,000 bodily injury protection for all persons per accident
• $25,000 property damage per accident

How Much Is Enough?

If you're carrying the mere minimum coverage for either UM or your liability protection, consider what the real costs would be if you were involved in a serious auto accident, your fault or not, $25K may be enough to cover the repairs or replacement of a single vehicle, but maybe not.  Medical costs have shot through the roof in the past few years, including hospital and doctor's costs, not to mention long-term costs for disabilities resulting from a car crash.  There's also lost wages to consider.

Experts suggest that when purchasing your liability coverage and your uninsured motorist coverage that you increase the benefit amounts to several times the minimums required.  Any costs not covered by your uninsured motorists benefits may likely have to come out of your own pocket, although you may be able to claim against your base policy if you have collision protection or medical benefits protection.

When Does Uninsured Motorist Insurance Pay?

Uninsured motorist insurance typically covers the following:

• An accident that's caused by an uninsured driver
• An accident caused by a driver whose insurer has gone bankrupt
• An accident caused by a motorist whose insurance company denies liability
• An accident caused by a driver driving an uninsured vehicle despite having insurance himself

Besides the fact that uninsured motorist and underinsured motorist coverages are required by North Carolina state law, it would still be an important coverage to have in light of the fact that NC has so many uninsured motorists.

Car Insurance: Teen Driver Discounts

 

As the parent of a teenage driver, you're not only becoming aware of how quickly your son or daughter is growing up to be an adult but also seeing the looming cost involved with teen driver insurance.  Fortunately, help is available.  Read on to learn about teen driver discounts and other ways to save money when insuring your teen driver.

Why Teens Are So Expensive to Insure

The reason teen drivers are more expensive to insure than drivers 25 years and older is because they represent a higher claims risk to insurers.  This may be due to:

• Their inexperience
• Their likelihood to speed, drive after drinking and not use seatbelts, causing them to have more accidents and submit more claims

Money-Saving Teen Driver Insurance Tips

Consider these teen driver insurance tips:

• As with the purchase of any insurance, experts agree that the number one rule before buying is to shop around.  Best advice is to obtain at least three price quotes from different providers.  The easiest way to do this is to utilize the services of a quality insurance broker with access to numerous different insurance companies.  They'll do the legwork and then present you with a number of options for the coverage best suited to your particular needs.  In this case, you'll want quotes from companies that specialize in teen driver's insurance
• While adding a teen driver to your existing car insurance coverage will add significantly to your current coverage costs, it's still less expensive than having your teen obtain their own, separate policy.  Having your teen complete a safe teen driving program or other defensive driving course can help lower the cost of your insurance policy
• Other valuable teen driver discounts offered by many vehicle insurance companies include a good student discount for students maintaining a "B" average (3.0 GPA) or higher at school.  This particular discount can often mean 10-15% off of coverage costs.  Add to this a distant student discount and a low mileage discount

The Advantage of Telematics

Some insurers offer installation of a small telematics device into your teen's car so you can monitor their driving behavior.  Positive results of driving habits may bring a driving insurance discount.  A telematics device can keep track of number of miles driven, speeds driven, times driven and number of hard brake applications.  Knowing they're being monitored in itself may prove to make your teen a safe driver.

What Drives Auto Insurance Rates Up?

 

Many of our clients are noticing that their Greensboro auto insurance rates continue to increase year over year and they're wondering why.  There are a number of answers to this question and they can be divided into two sections:

1.  Rate increases affecting everyone
2.  Rate increases specifically affecting you

Everyone's Coverage Rates Going Up

The auto insurance business is highly competitive and many auto insurance companies are struggling to stay profitable in these days of unusually high claims payments.  This has caused insurance rates to spiral upwards during the past several years.  This affects your Greensboro auto insurance rates as well as rates with companies all across the country.

Like any other business, an auto insurance company must stay profitable in order to remain in business.  They make money in two ways:  by collecting premium dollars from their policyholders and by putting these collected funds into profitable investments.  These funds are then used to pay out claims and to cover employee salaries and other administrative costs.  When claims payments going out surpass premiums coming in, a phenomena that's known as underwriting loss, premium costs must be increased in order to make ends meet.   There are some definite reasons why claims have risen so much recently.  Consider this:  

In the past several years, eight out of the ten largest auto insurance companies in the U.S. have reported losing money in their policy underwriting efforts.  In other words, they've paid out more in claims than they've collected in premiums.  Reasons for this include:

• A record number of disasters occurred in 2018-2019, including wildfires, hurricanes, floods and more.  These disasters not only negatively affected home insurance companies but also those companies insuring automobiles.  An inordinate number of claims were made on vehicles that burned, suffered flood damage or were damaged in tornadoes.
• An increase in distracted-driving accidents, mostly attributed to cell phone use, have been occurring lately.  Millions of crashes are blamed on distracted driving, causing insurers to raise rates.
• Expensive technology added to newer vehicles have made repairs more costly.  What used to be a simple rear bumper repair, for example, now includes repair of rearview video cameras, now required on all new cars sold in the U.S.

Rate increases affecting you individually may result from:

• Too many claims filed
• Adding a teen driver to your policy
• Moving to a higher crime/higher accident-prone area
• Too many moving violations
• You've turned 70 years old

What Is Usage-Based Car Insurance?

Usage-based car insurance is known by a number of different names, including:

• Pay-as-you-drive (PAYD) insurance
• Pay-per-mile insurance
• Behavior-based insurance
• Telematics

These forms of usage-based car insurance are ones where your insurer calculates your insurance premium rates based on your car usage and how you actually drive your car rather than the way they think you'll drive your car based on their statistical data used during the underwriting process.

Traditionally, car insurance premium rates are determined by using lots of data that are meant to tell the insurance company what type of risk you represent to them.  This is done by trying to figure out how other drivers displaying your characteristics and driving habits are most likely to drive. There are also lots of other factors used to determine what level of risk you represent to your insurer. These may include:

• Age
• Gender
• Zip code
• Occupation
• Marital status
• Driving record
• Credit rating
• and other factors, depending on the insurer

How Usage-Based Car Insurance is Different

With usage-based car insurance, your policy premiums are based on how and how much you actually drive your car. As a safe driver, you should look forward to saving some money. Conversely, as a riskier driver, your premiums will be higher than your peers who are considered safer.

This type of insurance is relatively new and has been fairly slow to catch on with the public. One reason for this is the fact that people may feel it an invasion of privacy to allow their insurance company to track their driving.

 

 Different Types of Usage-Based Coverage

Some usage-based policies figure premium costs strictly on the number of miles you drive during the policy period. Even as a risky driver, you won't see a premium penalty unless a claim is filed against you.

Other policies are behavior based, meaning premium rates are determined by how and when you drive. Using a mobile app that works in conjunction with your smart phone, data can be sent to your insurer to tell them not only where and how many miles you drive, but also any risky actions you take. These may include:

• Talking on your phone while driving
• Fast accelerations
• Hard braking
• Speeding

As an alternative to the mobile app, some companies use a dongle that plugs into your car's on-board diagnostics port.

Not all insurers offer usage-based car insurance, but some of the best, such as Progressive, do.

Car Insurance: What If Someone Else Is Driving My Car?

In the State of North Carolina, all vehicles being operated on public roads are required to be covered by at least a minimum of liability insurance. If you're involved in a car accident, either your car insurance company or the other driver's insurance should pay for damages. But what if someone else is driving your vehicle? Whose insurance pays then? As with many insurance questions, the answer to this one is, “It depends.”

Who's At Fault?

If someone else is driving your car and is involved in an accident, the liability for any damages falls to the driver deemed responsible for causing the accident. If the other driver is liable, their car insurance company will usually be responsible for paying damage costs.

If the person driving your vehicle is held liable, your car insurance company will usually be responsible for paying damage costs, with some possible exceptions. In most instances, your vehicle insurance applies to your car more than it applies to you as a driver. If your car insurance limits are not sufficient to pay for all the damages and the person who was driving your car has their own car insurance, their policy may contribute secondary payments after your policy limits are reached.

The Exceptions

There are three situations in which your car insurance may decline paying for damages caused by someone else who was driving your car:

1. The person driving your car and held liable for causing the accident is found to have been doing something illegal at the time. This could include driving without a valid operator's license or driving under the influence of drugs or alcohol.
2. The person who was driving your car was specifically excluded on your policy. You may have excluded someone from your policy because of their poor driving record that you knew would cause an increase in your policy premiums.
3. If someone is driving your car without permission and has an accident, your insurance company may refuse to pay a claim.

Other Considerations

When you lend your car to another driver, you are taking responsibility for their driving and if they cause an accident your insurance rates may go up because your insurer now sees you as a higher risk policyholder.

Your policy's deductible will need to be paid when making a claim. As the policy owner, you'll have to decide between you and the at-fault driver who will pay this.

What Does Car Insurance Cover?

When you take out a Greensboro car insurance policy, it's recommended that you read it through completely so you have a good idea of exactly what's covered and what's not. There's no simple answer to the question, “what does car insurance cover,” because each policy is unique in that it's drawn up to fit your specific wants and needs.

For starters, your Greensboro car insurance policy is required by North Carolina state law to contain at least a minimum of third-party liability coverage. Here in NC that minimum is $30K per person for bodily injury costs, $60K for all third-party injuries in a single incident and $25K for loss or damage to third-party property.

It's Not Enough

The above-stated mandated liability minimums only protect third parties suffering losses as a result of an accident for which you are held liable. Considering the high rates of today's medical costs and property values, including replacement of totaled vehicles, these minimums are woefully low. Experts agree that your liability coverage should be five or ten times the required minimums. Many recommend purchasing a $1M umbrella policy, especially if you have significant assets that may be at risk in a liability lawsuit.

Other Policy Protections

One other requirement mandated by state law is a minimum amount of protection against losses suffered as the result of liability by a driver who is uninsured or underinsured. Beyond these insurance requirements, you have several options for choosing policy protections that cover other than liability losses. Here are some of the most typical coverage options for those drivers who choose to add them to their basic coverage:

• Medical Payments or MedPay – pays toward losses suffered by you or any of your passengers as the result of a vehicle accident.
• Collision Protection – pays toward repair or replacement of your vehicle caused by a collision. If the accident is another driver's fault, their liability coverage should pay first and your collision protection should pay in addition if needed.
• Comprehensive Coverage – pays toward repair or replacement of your vehicle when damaged or loss due to something other than a collision with another vehicle or object. This includes fire, vandalism, theft, falling objects, flood, earthquake and more.

Is Car Insurance Different for Leased Cars?

All motor vehicles being driven on public roads in NC are required by law to be covered by at least a minimum amount of vehicle insurance. This includes liability protection and protection against losses from injuries resulting from an accident caused by an uninsured or underinsured driver. Liability coverage is meant to protect the other drivers involved in an accident for which you are deemed responsible. It can help pay for their losses resulting from physical injury or damaged/destroyed property. Greensboro car insurance liability coverage does nothing to protect you from losses such as personal injuries or damaged, destroyed or stolen vehicles.

To be protected for these losses you must add more to the basic liability coverage found in a minimal Greensboro car insurance policy. For more complete protection you need to at least add collision and comprehensive coverage to your policy. There are other protections you may choose to add, but these three – liability, collision and comprehensive – should be at the top of your list unless your car is of such low value you can't justify the additional cost of adding this coverage.

Buying Versus Leasing Insurance Requirements

Whether you're buying a car, using a car loaner or leasing a car, insurance requirements are similar. The specifics of the coverage are dictated by the lender or the lessor, with their main concern making sure their financial exposure is protected in the event that something unexpected  happens to your car. With this in mind, you'll be required to have full coverage in place, including collision and comprehensive protection.

As with all cars being driven on NC public roads, you must carry at least the minimum amount of liability protection. It's worth mentioning here that the State's minimum liability requirements are low and would typically only cover a small fraction of the money you'd need to pay for losses you cause to others in an accident deemed your fault.

Gap Insurance

One other type of protection leasing companies typically require is something called gap insurance. New cars start to depreciate in value the minute they're driven off the lot. A new car may depreciate in value as much as 20% or more during the first year. If you have an accident and total your leased car early on, the payoff from your insurer may not be enough to cover your outstanding financial obligation. Gap insurance will cover this shortfall and can be purchased from your loan officer.