Understanding Auto Insurance

An insight into insurance terms to help you make a better decision

Title: Understanding Auto Insurance Authors: Alok Agrawal (

alok_agrawal01@infosys.com) Date written: 4/18/2008 Target readers: Anyone having a driver's license

in USA Keywords: Auto Insurance, liability, coverage,

deductible References: INS22, Geico auto insurance policy

document.

Questions we want to answer

Can I let my friend drive my car? Can I rent a car on my own insurance? Can I rent a UHaul on my own insurance? Why do I have to pay a ‘deductible’ for

damages to my own car?

Scenarios to consider Who is driving: I, R (roommate), S (Stranger) Driving which car: M (my car) or N (non-

owned car).

I-M: I driving my car I-N: I driving friend’s car or rental car R-M: My spouse/roommate driving my car R-N: My spouse/roommate driving a car rented by

me S-M: Stranger driving my car (only with my permission) S-N: Stranger driving a car rented by me (w/ permission)

Sections of Insurance Policy

Liability insurance coverage: Your protection against claims from others

Automobile medical payment coverage: Protection for you and your passengers for medical payments

Physical damage coverage: Your protection for loss or damage to your car

Un-insured/under insured motorists coverage: Road-side assistance Rental car coverage

I-Liability Insurance Coverage Covers 'insured' for bodily injury and property

damage due to the use of owned or non-owned auto What charges are covered?

Injury to any person (resulting in disease, sickness or death)

All legal costs and court charges All interest accrued on the payment All cost incurred by insured at the request of

the insurance company

I-Liability Insurance Coverage

What scenarios are covered under my policy? I-M is always covered I-N: covered (I driving roommate’s car, friend’s car,

rented car {not more than 30 days}, UHaul {not commercial} R-M: covered (my spouse or roommate driving my car) R-N: covered (my spouse or roommate driving a car

rented by me) S-M: covered (my friend driving my car w/permission) S-N: NOT covered (my friend driving a car rented by

me)

I-Liability Insurance Coverage

To what extent? Two separate limits for Bodily Injury liability

and Property Damage liability Bodily Injury liability has two limits: each

person/each occurrence. Ex. 100,000/300,000 Property Damage liability limit specifies each

occurrence limit. Ex. 25,000

I-Liability Insurance Coverage Exclusions

If you use your vehicle as a taxi. But all carpool rides are covered (including cost sharing)

Any intentional damages Your owned auto when used in Auto business You damaging your own property You driving a golf cart (any auto designed for use

principally off public roads) You participating in car race or any such contest Damages during armed war, or nuclear attack or

exposure to biochemical agents

I-Liability Insurance Coverage

Key learning You may let your friend drive your car (and vice versa) You may rent a car/UHaul & not take extra insurance

(not more than 30 days) You should not borrow and drive a golf cart You should not let your friend drive a car rented by you You should get extra insurance if you have to rent a

car for more than 30 days.

II-Automobile Medical Payments coverage Covers 'insured' for medical (surgical, x-ray,

dental, ambulance, hospital, funeral) expenses within 3 years from the date of accident.

To what extent? The limit is usually specified for ‘each person’.

Infosys All Infosions who has taken Aetna medical

insurance are covered for Automobile medical payments too.

Hence no need to take this coverage

II-Automobile Medical Payments coverage If you do take this coverage following are

covered – All the covered scenarios for Liability coverage All persons occupying the car in the covered

scenario Also covers you (and your room-mate) when

struck by an auto as a pedestrian.

II-Automobile Medical Payments coverage Exclusions

If you use your vehicle as a taxi. But all carpool rides are covered (including cost sharing)

You using your car as your residence You being hit by a train Your owned auto when used in Auto business You participating in car race or any such

contest Damages during armed war, or nuclear attack

or exposure to biochemical agents

II-Automobile Medical Payments coverage Key learning

Infoscions taking Aetna medical insurance does not need to take this coverage

But then think before seating a person who does not have medical insurance.

III – Physical Damage Coverage

Your protection for loss or damage to your car

Usually has two independent parts Comprehensive damage coverage (Excluding

collision) Collision damage coverage

Deductible is the portion of a claim you pay out of pocket. Choosing a higher deductible will lower your insurance premiums

III – Physical Damage Coverage

What is covered Your car Non-owned car (ex. friends car)

To what extent Usually the limits are specified for each type of

loss (fire, flood, earthquake etc.) Coverage includes glass breakage. Losses paid less applicable deductible. Transportation expenses (in some cases)

III – Physical Damage Coverage Exclusions

Losses due to war Tires only damage due to collision When used as a taxi or auto business Loss to tape or music systems, radar Loss due to nuclear exposure Loss to custom parts (unless endorsed)

Key learning Consider the present value of your vehicle and the cost

of coverage (and deductible) to make better decision whether (and how much) coverage is needed.

IV – Underinsured Motorist coverage

Protection for you and passengers for Injuries by Underinsured and Hit and Run Motorists

What is covered Bodily injury by you, spouse or any person

occupying the car Property damage (only if it is explicitly mentioned in the

policy) To what extent

Each person limit for bodily injury (per occurence) Per occurrence limit for property damage.

IV – Underinsured Motorist coverage

Exclusions Does not apply to non-owned auto. $100 deductible applies for property damage When participating in a race. As a result of nuclear exposure, bio-chemicals

Key learning Covers you against hit and run motorists. But does not cover any auto not on the policy.

V – Other Coverage Rental reimbursement

Not available without comprehensive coverage Covers rental car expense if your vehicle is disabled

longer than 24 hrs. Two limits: per day & per occurrence max.

Emergency road service (ERS) Only available with comprehensive & collision

coverage Pays for towing of a disabled auto to the nearest repair

shop. ERS does not pay for parts or subsequent repair costs Limit of one reimbursement per disablement. ERS also includes lockout service up to $100/lockout.

Other instructions in the event of accident Find a safe place to stop your vehicle Look for & provide first aid/assistance to anyone

injured Call 911. Be truthful in describing the accident. Notify the insurance company as soon as reasonably

possible. Collect following details Name and addresses of injured & witnesses Identity of insured Time, place and details of accident Policy report number.

Follow your duties as an insured.

DisclaimerUnderstand that every policy is different. The content of this presentation is

only to make you aware of different insurance terms and help you make better decision.

Please go through your own policy document (even amendments and endorsements) to understand your coverage. Please call your insurance company representative if you have question on any coverage.

I wish you safe driving – Please follow all safety signsWear seatbelts (even back-seat passengers, even if the state law does not require it)

- Alok Agrawalalok_agrawal01@infosys.com