A consumer's guide to: Auto insurance

A consumer’s guide to:

Auto

insurance

Choosing and using your auto insurance coverage

Washington State Office of the Insurance Commissioner

Dear auto insurance consumer:

Auto insurance is one of the most personal kinds of coverage we purchase. Yet

my office receives more complaints about auto insurance than any other type of

coverage.

While we are able to solve many of those problems, complaints too often involve

discrepancies between what consumers thought they were buying and the actual

coverage they receive. This guide will help you understand how auto insurance

works and what coverage is right for you.

The Office of the Insurance Commissioner (OIC) publishes additional insurance

information to educate and assist consumers at: www.insurance.wa.gov.

Also, if you need help with an insurance problem, or want to file a complaint, call

our Insurance Consumer Hotline toll free at

1-800-562-6900

We’re here to help you.

Sincerely,

Mike Kreidler

Washington State Insurance Commissioner

Washington State Office of the Insurance Commissioner

Understanding your auto

insurance policy

The policy

The second part of your insurance contract is the

policy itself. This includes:

•

Insuring agreement

•

Definitions

•

When and where coverage applies

•

Conditions if the vehicle is financed

•

General conditions

•

Mutual conditions

•

Exceptions and endorsements of the policy

Your insurance policy is a contract between you and your insurance company. It spells out exactly

what the company agrees to do in exchange for the premium that you pay. This contract is

divided into two sections: a declarations page and the policy itself.

The declarations page

This section of the policy includes basic details of

the agreement. It is important that you review this

page to make sure all the information is correct and

all the coverages you requested are included. The

declarations page includes:

•

Name of the insurance company

•

Name(s) of the policyholder(s)

•

Policy number

•

Policy period

•

Description of the vehicle(s) insured

•

Coverages purchased

•

Limits of liability and deductibles

purchased

•

Premium charge for each coverage

•

List of forms that are a part of the policy

Make sure you review your declarations page to verify that your policy

includes the types and amounts of coverage you requested.

Washington State Office of the Insurance Commissioner

Types of coverage

Emergency road service

This covers towing when your car breaks down.

Car rental expense

If you have a claim that is covered under your auto

policy, this coverage pays to rent a car. Be sure to

check your policy for any limitations.

Death, dismemberment and loss

of sight

This pays for death and certain injuries to people

named in your policy due to an auto accident.

GAP coverage

In the event your vehicle is a total loss, this pays the

difference between the current market value of your

auto and the amount you still owe the lender. This

coverage is generally only available for new cars.

Custom equipment coverage

This covers direct and accidental loss to custom

furnishings or equipment.

Many companies also offer other endorsements

(additional coverage). Ask your insurance agent or

broker about:

• Trailer/camper body coverage

• Snowmobile coverage

• Limited Mexico coverage

• Joint ownership coverage

• Auto loan/lease coverage

Remember to check your declarations page to

verify the coverage you purchased.

There are many different types of coverages available to meet your auto insurance needs. Some

are required and some are optional. Here are brief descriptions of the available coverages:

Liability

Washington state requires liability coverage. This

covers bodily injury and damage to property that

you cause to others while using your car.

Personal injury protection

This covers a limited amount of medical and hospital

costs, income continuation, funeral expenses, and

loss of services. Coverage limits are defined in the

policy.

Medical payments

This covers medical and funeral expenses (not all

companies offer this coverage).

Uninsured/underinsured motorist bodily

injury

This covers injuries an uninsured or underinsured

driver causes to an insured person.

Uninsured/underinsured motorist

property damage

This covers property damage an uninsured or

underinsured driver causes to your insured vehicle.

Collision coverage

This covers damage to your car that is caused by

a collision.

Comprehensive coverage (other than

collision)

This covers damage to your car -- except by collision.

For example, this covers your car if a tree falls on it

or someone vandalizes it.

Washington State Office of the Insurance Commissioner

Shopping for automobile insurance

whose services you choose, it is important to do

your homework in advance. You should:

• Know what types and limits of coverage

you need.

• Ensure you’re dealing with an authorized

company and a licensed agent or broker.

• Make sure you have the make, model and

other details of the vehicle you wish

to insure.

• Answer any questions about your driving

record and accident history fully and

accurately.

• Shop for customer service and price.

Agents and brokers selling insurance in Washington

must be licensed with our agency. We regulate

nearly 85,000 licensees. Some are employed

exclusively by a specific insurer, while others work

independently. You can find agents and brokers:

• In the Yellow Pages of your local phone book

• Through referrals from friends and family

• On the Internet

To find out if an agent, broker or company is licensed

in our state, go to: www.insurance.wa.gov.

Insurance can be a sophisticated product. You

need to do your homework and shop the market,

regardless of whether you buy in the traditional

manner or online.

Many insurers offer auto insurance in Washington state. Under state law, insurers may

consider your age, driving record, where you live, credit history, and other factors to decide

if they will offer you coverage. Not every insurer will offer you coverage or charge you the

same premium for the same coverage.

If an agent or broker is unable to find coverage

for you, it doesn’t mean that there isn’t an insurer

willing to cover you. No single agent or broker will

have access to all auto insurers doing business in

Washington state.

There are three segments of the auto insurance

market you should know about:

Preferred market -- This market features the

lowest premiums and it is available to low-

risk drivers with exceptional driving records.

Standard market -- This market refers

to the average driver who uses family-type

cars and has a reasonably good

driving record.

Non-standard market -- This market

includes young drivers with less experience,

drivers with multiple tickets or accidents,

and drivers with reckless or drunk driving

histories.

Most insurers offer coverage that falls into

the standard or the preferred markets. A few

corporations have several companies within their

group and establish tiers that range from the

preferred market to the non-standard market.

We cannot recommend or suggest specific

companies, but we can offer tips to help you shop

for auto insurance. Regardless of how you shop or

Washington State Office of the Insurance Commissioner

What to do if you can’t find auto

coverage

If your driving record prevents you from obtaining

a policy in the non-standard market, your agent

or broker will contact the Automobile Insurance

Plan on your behalf. More than 55 years ago, the

Washington State Legislature created this plan to

provide auto insurance coverage to high-risk drivers

who are unable to find coverage. To qualify for this

special coverage, you must:

• Be a Washington state resident or a member

of the U.S. military

• Hold a valid Washington state driver’s

license

• Not have any debt from previous auto

insurance coverage

Some drivers have a hard time obtaining insurance. This can result from a number of factors,

including a poor driving record, type of vehicle, claims history, experience, etc.

The cost of auto insurance

Auto insurance cost is a major concern to Washington’s drivers. Insurance companies must submit their

rate requests to our agency for review. These requests must include enough financial information (actuarial-

based) to verify the need for the requested rate. If we are satisfied with the rate information, we must

approve the request.

Insurance companies can rate all licensed drivers

in the household -- the policyholder and his or her

spouse, and other household members, whether

or not they are related by blood. This includes

roommates. As a result, insurers generally base their

premiums on all household members.

Insurance companies base auto rates on a variety

of factors. The premium you pay consists of a “base

rate.” The base rate is adjusted based on factors

such as your age, sex, marital status, driving pattern,

claims history, location, credit history, and the make,

model and year of your vehicle. When you shop for

auto insurance, remember that each company uses

these factors differently.

There are insurance companies that write non-

standard policies in this state.

They include:

• Allstate

• Dairyland

• Farmers

• Financial Indemnity

• Guaranty National

• Infinity

• Leader

• Nationwide

• Progressive

• Safeco

• Viking Insurance Company of Wisconsin

Washington State Office of the Insurance Commissioner

Age

Statistics show drivers under the age of 25 have

more accidents than adults between age 25 and

65. As a result, insurers charge young drivers and

families with young drivers in the household higher

rates. Statistics also show that senior citizens are

more likely to be involved in an accident.

Gender

Young men under the age of 25 are involved in more

accidents per miles driven than any other population

group. Washington state law allows insurance

companies to charge based on gender and age when

statistics indicate a greater risk.

Marital status

Statistically, married couples have fewer accidents

than singles and generally pay lower rates.

Vehicle type

Generally, the more expensive your vehicle, the

more you will pay for comprehensive and collision

coverage. Also, because sports cars and high-

performance cars are involved in more accidents,

cost more to repair, and are stolen more often, they

cost more to insure.

Location

A higher number of accidents in a highly populated

area will raise both liability and collision premiums.

Higher crime rates in urban areas can also raise

premiums for comprehensive coverage. The law also

allows companies to base your rates on your address

(where you keep your car), even though you may

drive to a more urban or rural area.

Driving patterns

The number of miles you drive per year can increase

your rates. For example, if you drive a total of 7,000

miles in a year, you will normally pay lower rates

than if you drive 15,000 miles in a year. Insurance

companies consider the distance you commute

to work as additional miles you add to your non-

commuting, “pleasure” miles.

Driving record and claims history

Most companies apply a surcharge to drivers

involved in an accident or convicted of multiple

traffic violations. Likewise, the more claims you file,

the more likely your rates will increase.

Credit history

Under federal law (Fair Credit Reporting Act),

insurance companies can use credit history as one

factor that impacts your auto rate. They may assign

you an insurance score based on your credit history.

They use your score as one factor to decide whether

to accept or decline your coverage, or how much to

charge you. A Washington state law limits the use

of certain information in credit scoring. For more

information, check out our website at

www.insurance.wa.gov.

Companies differ in the skill, care and speed with which they settle customers’

claims. The OIC cannot recommend one company or policy over another.

Washington State Office of the Insurance Commissioner

Insurance companies are required by state

law to give discounts to seniors, age 55 and

older, who complete safe driving courses. For

a list of courses, visit the Washington State

Department of Licensing at: www.dol.wa.gov.

Eliminate duplication

Your coverage may overlap in some areas, such

as medical, collision, and uninsured motorist

property damage. Ask your agent or broker to

explain your coverage and advise you if you are

duplicating coverage.

Buying collision/comprehensive

coverage

If you don’t think you could afford to fix

your car yourself if it was involved in an

accident, you may want to carry collision and

comprehensive coverage. These coverages

protect owners of expensive and late-model

autos against the cost of repairs. Though

coverage may increase your rates, you may

want to think about it if the difference in what

you pay would exceed your ability to pay the

repair bills. Your lender may require these

coverages until you’ve paid off your car.

Shop around

Each insurance company has unique financial

goals and costs. As a result, it isn’t uncommon

to find rate differences between companies

for the exact same coverage. The cheapest

insurance may not provide you with the

degree of coverage you need. It is a good idea

to discuss your coverage with your agent or

insurance company.

Select the right car

The type of auto you own has a direct influence

on your insurance costs. Before you buy an

auto, check with your agent or broker to find

out how much it will cost to insure.

Select higher deductibles

The amount of the deductible you select will

affect your auto rate. For example, you may

save money by increasing your collision and

comprehensive deductibles from $100 to $500.

To help keep your premiums down, you may

want to think about paying for smaller claims

yourself and using your insurance to only pay

for larger claims.

Special discounts

Ask each agent or company if they offer special

discounts. They often offer discounts to young

drivers who are good students or who have

completed a driver’s education course. Many

companies will give you a discount on your

auto premiums if you also insure your house

through the same company.

How to reduce your rates

Here are several options for saving money on auto insurance while making sure that you have adequate

coverage:

Washington State Office of the Insurance Commissioner

Additional information

• Use all means possible to warn oncoming

traffic of the danger at the scene.

• Give reasonable aid to the injured. Do not

move them unless it is absolutely necessary.

• Notify the Washington State Patrol (WSP),

city police or county sheriff, and if needed,

request a doctor or aid unit and ambulance.

• Obtain and give necessary information for

the accident report, including names of

witnesses and police officers.

• If there is any injury or death, or if property

damage exceeds $700 to any one person’s

property, you must notify the WSP, city

police or county sheriff. If you fail to

complete a written report, when required, it

may result in the suspension of your driver’s

license or instruction permit.

It is equally important that you promptly report the

incident to your insurance company. Also, you may

be subject to other reporting requirements specified

in your insurance policy. It is vital that you read your

policy and know what you must do to file a claim.

Coverage for home health care workers

If you are a health care worker and you use your

own auto to occasionally take clients to their

appointments, it may impact your coverage.

Insurance policies vary from company to company.

Always check the coverage and exclusions in your

insurance policy. If you still are unsure about what

uses your policy covers, contact your agent or

insurance company. For more information on home

health care workers, visit our website at:

www.insurance.wa.gov.

Auto service contracts

Auto service contracts extend and expand your car’s

original warranty. In Washington state, the company

issuing the service contract must be registered

with the Office of Insurance Commissioner.

Service contracts must be backed by an authorized

insurance company. The warranty contract must

clearly identify the insurance company and the

company that’s promising to repair your vehicle

(vehicle service contract provider) and how to

contact them. You have a right to deal with the

insurance company directly.

What you should do after an accident

Every driver involved in an accident is legally

required to remain at the scene. He or she must

also offer aid and give necessary information to

others involved and to law enforcement officers. If

you’re involved in an accident:

More information and publications

For more information about auto insurance, check out our auto section on the Web at:

www.insurance.wa.gov.

Washington State Office of the Insurance Commissioner

Need more help?

Call our Insurance Consumer Hotline!

1-800-562-6900

Our professional consumer advocates enforce insurance law and can investigate complaints

against insurance companies and agents on your behalf.

We also offer individual counseling and group education on health care issues in your

communities. Our highly trained Statewide Health Insurance Benefits Advisors (SHIBA)

volunteers can help you understand your rights and options about Medicare, health care

coverage, prescription drugs, government programs, and more.

Visit us at:

www.insurance.wa.gov

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