DE Unit 29
nonrenewal
An insurance company can only refuse to renew your policy until you have been covered for at least 12 months. If a company decides not to renew your policy, it must inform you 30 days before your coverage expires. In general, a company's refusal to renew will be based on your behavior as a driver. A company cannot refuse to renew your policy for claims or crashes that cannot reasonably be blamed on you, unless such incidents occur multiple times within a 12-month period. As soon as your insurance company informs you of its decision to end its relationship with you, you should start looking for a new insurer immediately. You may have to apply for TAIPA coverage if you cannot find another insurer to cover you. If your coverage lapses, you won't be able to drive until you obtain a new policy. By law, an insurance company cannot deny, refuse to renew, limit, or charge more for your coverage on account of your race, color, religion, or national origin. Additionally, age, gender, marital status, geographical location, and disability can only be used to refuse, limit, or charge more for coverage if sound actuarial principles indicate that you present a greater risk of loss to your insurer.
collisions
As we discussed in Unit 27, when you are involved in a collision you must exchange information with the other parties involved. In addition to your names, addresses, and license information, you must exchange the names of your insurance companies and your policy numbers. This information can be found on your insurance card. Be sure you record the company name and policy number printed on the other driver's insurance card accurately. Insurance company names are often similar and can cause confusion. Following a collision, your insurance company requires you to: Notify the company promptly and provide the names and addresses of witnesses and injured persons. To ensure your claim is paid in a timely manner, first make a report by phone, and then follow up in writing. Send the company copies of any notices or legal papers you receive concerning the collision. Cooperate with the company's investigation. A proof-of-loss form and a medical exam may be required. If you are involved in a crash where someone is injured or killed, a car is too damaged to move, or a hit-and-run driver was involved, you must contact the police. UM/UIM coverage will only pay for claims involving a hit-and-run driver if the incident is reported to law enforcement. Even if a crash is not investigated, you must file a crash report with the police within ten days for any collision involving injury, death, or property damage worth $1,000 or more. If you're involved in a collision with a driver who refuses to give you his or her insurance information, you can get this information by requesting a copy of the crash report, or by reporting the driver's refusal to the police. By law, your insurance company must respond to your claim within 15 days of receiving it in writing. Provide as much information as possible, as you may be requested to document your loss. After you submit any requested documentation, the company may accept or reject your claim. If the company accepts your claim, it must send you payment within five business days. If the company rejects your claim, it must explain the rejection in writing. If your claim is rejected, review your policy's language to determine whether the company's decision was valid. If you have been the victim of a collision, the other driver's insurer may attempt to get you to sign a settlement, or may refuse to pay if the other driver denies fault. Don't sign a release unless you are satisfied with a settlement. You may want to ask your doctor about your anticipated medical costs, and consult a lawyer, before making a decision. Get the personal information of independent witnesses to the crash and provide it to your insurance company. This information may be necessary to resolving the dispute. If you need to make a claim against your own insurance policy following a collision, you should: Make sure you get an appraisal for car damages. Your claim will be considered by an appraiser that you hire and one hired by your company, as well as an arbitrator. An appraisal is the best way to determine the value of your loss. Find out how your claim will affect your insurance rates when you renew your policy. Any crash reported on your driving record may affect your rates in the future. Be prepared to negotiate with your insurance company concerning the worth of your car and the value of the damages. A company might raise its offer if you can show that your car could sell for a higher price in your area. If you have trouble getting your insurance company to recognize your claim, try to resolve the problem yourself by talking to your agent or a company representative. Sometimes direct communication is enough to resolve the problem. If the dispute continues, you may be able to receive help by filing a complaint with the Texas Department of Insurance. Even though TDI does not have the authority to resolve questions of fact, it may be able to encourage the insurance company to review your problem more thoroughly.
shopping for a car
Before purchasing a vehicle, research the market and decide if you want to buy a new or used car. The advantages of a new car include low initial maintenance costs and superior fuel economy and safety features. Moreover, the cost of vehicle repairs will be covered by the manufacturer's warranty for at least a year. However, the purchase price and cost of insurance will be significantly higher for a new car: according to the National Automobile Dealers Association the average price of a new car sold in the U.S. in 2013 was $30,000. New vehicles are too expensive for most young drivers, leading many of them to opt for a used car. Used cars can be purchased at most car dealerships as well as from private owners. However, when you buy from a private owner, you are unlikely to receive any assistance if you have problems with the car, whereas most dealerships will provide some sort of warranty. If you decide to purchase a used car, ask a mechanic that you trust to assess its condition and address any repairs that need to be made. Find out the car's Vehicle Identification Number (VIN) before purchasing so you can get a full history report that shows if the car has ever been in a collision or damaged in any way. Other than a house, a car is the most expensive purchase that most people make. Before you settle on anything, research the available options so you can make an informed decision. The age, type of vehicle, and optional features included with the car will all affect the price. Determine how much you are willing to spend and whether you need extras like a GPS system or four-wheel drive. By being a patient and informed consumer, you will be less likely to be pressured into a decision you can't afford! Before you decide on the car you want to purchase, you should: Check the most recent car buyers' guides at a library or bookstore, or research car features and prices for yourself on the Internet. You will be better able to compare similar models and may find out how much a dealer will negotiate. Shop around by checking out dealer showrooms and local advertisements. Identify and test drive several options before coming to a final decision. If you know a car model is right for you, consider having a dealer order it for you if you don't see it on the lot. While this may cost you extra money, you'll be happier with the car you really want rather than an available substitute. All new cars are required by law to have a Monroney sticker attached to the side window that includes information about the car's price and features. In addition, a supplemental dealer sticker may be affixed that indicates dealer-installed options and the price the dealer would like to receive for the car. Most dealers are willing to bargain, often discounting the sticker price of a car by 10 to 20 percent. By knowing what you're looking for, you'll be in a better position to make a deal. If possible, bring an expert to help you negotiate.
pre purchase inspection
Before you purchase a car, you should inspect the vehicle in person to make sure its condition is as advertised. This is especially true when buying a used car. When you go to check out a car, bring a notepad, pen or pencil, and list of questions you have about the car, as well as a flashlight and magnet to facilitate your inspection. Bring a knowledgeable friend or expert if possible. For practice, you should inspect a vehicle your family or a friend already owns so you can familiarize yourself with the inspection process. Your inspection will be more successful if you know what to look for. Try to arrange with the seller to see the vehicle after it has been sitting overnight so you can see how it starts first thing in the morning. You should always inspect a vehicle during the day, when there is plenty of light. If you have scheduled an appointment with a private seller, try to arrive 15 to 20 minutes early as the seller may be preparing the vehicle for your visit. Do not be afraid to ask the seller to show or demonstrate features of the car. Always ask to see maintenance records. As you inspect the car, you should check: The body: Look for signs that the car has been repainted or that body panels have been repaired or replaced. The tires: Inspect the condition of each tire, including the spare, making sure that their brand, size, and tread width are consistent. The suspension: Make sure the car sits level. Bounce each corner of the vehicle to see if any responds differently or makes a creaking noise. The frame: Check inside the trunk and wheel wells and under the sides of the vehicle for signs that the frame has been straightened following a crash. The interior: Make sure that all seat belts, window cranks, door locks, dashboard controls, seat adjusters, interior lights, and accessories are present and operate correctly. Check the upholstery, dashboard, and carpet for signs of damage. The gas cap and filler neck: Remove the gas cap to check inside the filler cap. Make sure the gas cap is tightly secured when you replace it. You should also inspect under the hood and underneath the car for any signs of a problem. Look for signs of oil or fluid leaks in the engine compartment and try to make sure that nothing has been removed. Activate the engine and check under the hood for abnormal smells and clattering and hissing noises. Look on the ground beneath the car for fluid leaks. Check underneath the car for rust, scrapes, and loose or missing parts such as bolts or cables. In order to ensure that the car works correctly, take it for a test drive. While driving the car, watch for any warning lights on the instrument panel and ask yourself: Does the engine start, run, and idle smoothly, accelerate without hesitation, and demonstrate sufficient power? Does the transmission system allow you to shift gears smoothly and without grinding or jerking? Do the brakes (including the parking brake) stop the vehicle adequately without pulling to one side? Does the steering system work smoothly and correctly? Do you hear any noises when you turn the wheel? Do advanced systems like antilock brakes and four-wheel drive function as expected? When you test drive the car, try to drive at 20 to 30 mph beside a pavement line or side wall so you can test the wheel alignment. Roll down the window so you can hear if the car is making any unusual noises. Whether you're buying a new or used car, you should take the time to perform the inspection to your satisfaction. Don't let the seller rush you or pressure you into a decision. If you make the wrong decision, you could be stuck with the consequences for a long time.
need for car insurance
Between vehicle damage, medical expenses, lost work, and legal fines, the financial costs of a collision are often more than most people can afford. Given the number of collisions that happen daily, the impact of these costs on the economy could quickly become catastrophic if they were directly borne by the individuals involved. As a result, the Texas Motor Vehicle Safety Responsibility Act (TRC §601.051) requires every driver to maintain financial responsibility for any vehicle he or she operates on public roads. This means that you must be able to meet certain financial obligations resulting from a collision you cause while driving, or a collision that occurs as a result of your ownership or maintenance habits. The most common way that drivers choose to ensure that they can cover the costs of a collision is with a motor vehicle liability insurance policy. However, Texas will also allow you to establish financial responsibility by: Making a deposit worth $55,000 with the state comptroller or a county judge Taking out a surety bond capable of meeting the state's minimum insurance requirements with a licensed agency Obtaining a certificate of self-insurance from the DPS The concept of insurance was introduced in America by Benjamin Franklin, who established a company called "The Philadelphia Contributionship for the Insuring of Houses from Loss by Fire" in 1752. Every member agreed to make equal payments to the company, which would cover the losses of any members whose property was destroyed in a fire. Insurance policies today work the same way. Each policy holder pays a relatively small amount. In exchange, the insurance company will compensate the holder a much larger amount in the event of a loss. Today, individuals can insure pretty much anything to protect themselves from a potentially catastrophic financial loss. Some forms of insurance include: Homeowner's insurance Renter's insurance Life insurance Health insurance Dental insurance For instance, a homeowner may pay an annual premium of $600 for an insurance policy that will pay up to $250,000 in the event of a fire or natural disaster. An insurance policy is a financial contract between a policyholder and an insurer. The terms of the policy, including the kinds of losses that the insurance company will pay for and the situations in which the insurance company can reject a claim, will be specifically stated in the contract. Before you purchase an insurance policy, you should read the contract carefully. Don't rely on the person selling you the policy to accurately describe its contents, as it may include special terms that would make it harder for you to file a claim. To obtain insurance coverage, you must pay a premium, which is typically paid every month but may also be paid in a single sum. You must pay the insurance premium regardless of whether you need to make an insurance claim. Moreover, your insurance policy will specify the deductible you will have to pay towards any loss covered by the policy. For instance, if your policy has a $1,000 deductable and you are in a collision that results in $5,000 in damages, you will have to pay $1,000 and the insurance company will pay $4,000. In general, policies with lower premiums have higher deductibles, and vice versa. Choose a policy with a premium and a deductable you can afford.
comprehensive coverage
Comprehensive Coverage A comprehensive policy will pay to repair or replace your vehicle following theft, fire, vandalism, damage caused by an animal, or "acts of God" (such as a tree falling on top of it). Like a collision policy, a comprehensive policy will pay up to the current value of your car less the deductable, and it may also pay for the use of a rental car while yours it being repaired. A comprehensive policy will be required if you lease your car or borrow any money against it.
losing insurance
Having an insurance policy isn't a license to be reckless on the road. If you demonstrate poor driving habits, your insurance company may decide to stop covering you by cancelling or refusing to renew your policy. Cancellation refers to a company's decision to terminate your policy before it expires. Nonrenewal refers to a company's decision not to renew your policy when it expires. If a company cancels or does not renew your policy, or declines to extend you a policy, it must explain its reasons in writing and indicate the incident or risk factor that informed its decision.
insurance requirements
In the event of a collision, the liability insurance of the responsible party will pay for the expenses of others who are injured or killed, or whose property is damaged, in the crash. The insurance company will pay the amount for which a driver is legally responsible, less the deductable, up to the limit of the policy's coverage. By law, you must obtain a liability insurance policy that provides the following minimum amounts of coverage: $30,000 for the injury or death of a single person $60,000 for a single collision that causes the injury or death of more than one person $25,000 for property damage These amounts are only the legal minimums. Many collision-related lawsuits are settled for much greater sums. If the damages resulting from a collision you caused are determined to be more than your insurance policy will pay, you will be personally responsible for the difference. If your finances will allow, consider purchasing more than the basic amount of insurance. While you may consider it wasteful to spend extra money now for a situation that may never occur, you will be grateful for the added protection if you're ever in a serious collision. When operating a vehicle, drivers must carry proof that they have met the financial responsibility requirement. For most people, this will be an insurance card issued to them by an insurance company. However, you may also display evidence of financial responsibility using your cell phone if it is equipped with this capacity. You must provide proof of financial responsibility if it is requested by a law enforcement officer or a person with whom you have been involved in a collision, as well as when you: Apply for or renew a driver's license Register your vehicle or renew your registration Have your vehicle inspected According to the Texas Department of Insurance, approximately 4 million vehicles, or about one in five vehicles on Texas roads, are not insured. If you are involved in a collision with an uninsured driver, you may find it difficult to collect the full amount you are owed. To reduce the number of uninsured drivers, Texas has established the TexasSure program that allows law enforcement agents to immediately confirm whether a vehicle is insured. This prevents drivers from demonstrating their financial responsibility with a counterfeit or expired insurance document. If you are stopped by a law enforcement agent, he or she will consult the TexasSure database to determine your insurance status. Nevertheless, you are still required to carry proof of financial responsibility with you whenever you drive. Driving without insurance is a serious crime: The first time you are convicted of driving without insurance, you will be fined between $175 and $350. You will be fined up to $1,000 for subsequent violations of the state's financial responsibility law. If you are convicted of driving without insurance more than once, your license and registration will be suspended and your vehicle may be impounded. If you drive without insurance and without a valid drivers license, you will be penalized with a fine of up to $2,000, a 180-day jail sentence, or both. The penalties for driving uninsured and unlicensed will be doubled if you cause a collision that results in serious injury or death. There are long-term consequences for driving without insurance. A single offense can end up costing you over $1,000: after being convicted of driving without insurance, you must pay an annual surcharge of $250 for three years to maintain your license. Your license and vehicle registration will be suspended if you are convicted of driving without insurance more than once. This suspension will remain in effect until you obtain insurance and file evidence of financial responsibility. When reinstating your license following an insurance-related suspension, you will have to submit an SR-22 form to the DPS that requires your insurance company to monitor and report any changes to your policy for up to three years. If you cancel your policy or let it lapse during this period, your license will be suspended immediately. If you are uninsured and cause a collision, you will be personally responsible for covering the losses sustained by the other people involved. Without insurance, it could take you years to pay for the damages resulting from a collision. Moreover, if there is a judgment against you, you will be unable to reinstate your license until you have satisfied the judgment or have entered into an agreement to pay the judgment in installments. You will have to pay an additional fee of $100 when you have your license reinstated.
car owner
While it's difficult to estimate how much it will cost to own and operate a car, you should consider all potential expenses when deciding what vehicle to purchase. The amount you spend on your car will be based on costs that fluctuate depending on how much you actually drive (such as gasoline, replacing tires and other components that wear out, and oil changes) and costs that remain relatively stable even if you don't use your car that often (such as insurance, registration, and depreciation). Over time, your car will become worth less and less because of normal wear and tear and the availability of newer vehicles with more advanced technology. This process is known as depreciation. As soon as you drive your car off the lot, it becomes a used car rather than a new one, and you won't be able to sell it for as much as you paid. Cars depreciate especially rapidly during the period immediately after buying a new car, and then more slowly as the car gets older. Even if the number of miles you travel remains relatively low, your car's resale value will decrease over time. Perhaps the biggest expense you'll have to regularly deal with as a driver is gas for your car. Gas prices have always been a concern for drivers, but in recent years the price of fuel has fluctuated greatly and become more expensive than ever before. When purchasing a car, make fuel efficiency a priority. Not only will gas cost you a lot of money, but it has significant costs for the planet as well. When you burn fuel, you deplete the vital resource of petroleum and expel harmful toxins into the atmosphere. The less fuel you use, the better! By adopting responsible driving habits, you can make your vehicle cheaper to run and slow the rate at which it depreciates: Avoid making fast starts and stops and cornering too fast: Not only is this behavior unsafe, but it wears out the tires and brakes, increasing the cost of maintaining your vehicle. Drive more slowly: The ideal speed for maximum fuel efficiency is between 45 and 50 mph. You will use 20% more fuel traveling between two points at 65-70 mph than you would traveling between the same two points at 55-60 mph. Anticipate the need to stop: By watching for stop signs, traffic lights, and congestion, you can slow to a stop smoothly and gently. Quick braking can wear out your brakes and tires. Perform maintenance tasks regularly: Your vehicle will run better and you'll face fewer costly repairs. It's also important to remember that, as the most valuable piece of property you own, it's also your possession most likely to attract the attention of desperate people with criminal intentions. Protect your investment! Always keep your car's doors locked whether it's parked or on the road. In general, your windows should be rolled up far enough that no one can reach in. At night, travel on streets that are busy and well-lighted. Keep your purse and other valuables out of sight when you're driving and when your car is parked. Identify safe places on your normal route that are likely to be open at all hours, such as gas stations and police stations. On average, a car is stolen in the United States every 45 seconds. About 45% of stolen vehicles are never recovered. Nearly one in every two cases of vehicle theft is due to carelessness by the driver, such as leaving the doors unlocked or the keys in the ignition. Always keep your doors locked and windows closed, park in safe and heavily-traveled areas, invest in anti-theft devices, and take your keys with you. If your car is stolen, report it to the police immediately. Also notify law enforcement if you recover your car yourself, as you may be arrested for driving your own car if it's still considered stolen.
insurance rates
While you must pay a premium (monthly or annually) to maintain your insurance policy, the cost of this premium can vary considerably from driver to driver, even for the same level of coverage. Insurance companies use a process called underwriting to determine how likely a policy holder is to make a claim on his or her insurance. Drivers who are deemed to be statistically more likely to cause a collision will be charged a higher premium for a liability insurance policy, as these drivers are likely to cost the insurance company more. Each insurance company uses its own underwriting formula for assessing risk factors, so get quotes from several companies before deciding which policy is right for you. The cost of your insurance premium is based on a number of factors, including: Age, gender, and marital status: Male drivers under 25 and unmarried women under 21 have the highest rates. Generally, a driver's insurance premiums decrease as he or she gets older and gains driving experience. Geography: Drivers in urban areas typically have higher rates due to the increased risk of theft or collision. The value of your deductable: Drivers with higher deductibles generally pay lower rates. Vehicle type: You will pay more to insure an expensive car or a car that costs more to repair. Usage habits: Your rates will be higher if you drive your car to and from work regularly, or if you use your car for business. Credit score, education, and occupation: While not directly related to driving, these factors have been statistically correlated with an individual's chances of being involved in a collision. However, an insurance company cannot deny you coverage based solely on your credit history. The factor most likely to raise your insurance rates is a record of careless driving. You will have to pay more for insurance if you are cited for traffic violations or involved in a collision. When you are found at-fault for a collision and an insurance claim is filed for damages, your rates will be higher for at least three years. A history of driving while uninsured can also lead to increased insurance premiums. If you operate a vehicle without insurance for more than 30 days in the 12 months before you apply for insurance, you will face increased rates. A history of major driving violations can increase your insurance rates even more. Surcharges worth up to 60% of your premium may be added to your insurance costs for: Multiple collisions (the more crashes you're involved in, the higher the surcharge will be) Involuntary manslaughter with a motor vehicle Driving under the influence Criminally negligent driving Driving without a license or with a suspended license If your record is bad enough, an insurance company may refuse to insure you or cancel your insurance. If this happens, you will be unable to drive until you obtain a new insurance policy. However, discounts on insurance rates are typically available for demonstrating a responsible driving attitude by: Completing a defensive driving course or a driver education course for young drivers Earning good grades as a student Having safety features in your car including air bags, seat belts, daytime running lights, antilock brakes, and antitheft devices Having a good driving record and claim history when renewing a policy Having multiple cars on the same insurance policy Having a concurrent homeowner's policy Consult your insurance agent to find out if you're eligible for an insurance discount. By being a smart consumer, you're more likely to end up with a policy that provides the coverage you need at rates you can afford: Buy only from a licensed agent or company. Answer the agent's questions truthfully: wrong information may result in an incorrect quote, rejection of your application, or cancellation of your policy. Get price quotes from several companies for the same amount of coverage. Consult independent agents who can give you multiple quotes at once. Consider factors other than price, like a company's financial rating and its complaint index. This information can be found at the Texas Department of Insurance (TDI) website. Get an idea of the insurance rates you can expect based on your driver profile by visiting the TDI "Help Insure" website.
ownership requirements
After you purchase a car, you must make sure the car is titled in your name. The title certifies that you are the legal owner of the vehicle. Once the title has been registered in your name, you will receive a Certificate of Title from the Texas DMV. Sometimes, more than one owner may be listed on the title. For instance, if you have a car loan, the bank that issued the loan may be listed as an owner until your loan is paid off. This will allow the bank to repossess your car if you fail to make payments. The procedure for obtaining a title for your car differs depending on whether you purchase the vehicle from a dealer or an individual: If you buy a car from a dealer, the dealer is required to file the title paperwork on your behalf. If you buy a car from an individual, you must accompany the seller to your county tax office to make sure the title is transferred to you. You will also be responsible for paying the motor vehicle sales tax (6.25%) on the car at this time. The title must be assigned to the buyer within 20 days of purchasing a vehicle (or 45 days if the vehicle is being financed by the dealer). When you purchase a car, you must also make sure it is registered to you. It is illegal to drive a car on Texas roads if it lacks registration or if its registration has expired. If you buy a new vehicle, the dealer will fill out the registration paperwork for you. If you buy a used car with its current license plates, the registration will be transferred to you when the vehicle becomes titled in your name. You will be responsible for renewing the registration before its next expiration date. Some vehicle sellers opt to keep their license plates. If you buy a used car from such a seller, you will have to re-register the car when the title is transferred to you. Once a car has been registered, its owner will receive two official Texas license plates for the car. License plates show the unique number assigned to the car by the state. License plates must be displayed clearly on the front and back of the car and the license numbers must not be obscured in any way. You can be fined up to $200 for not displaying both license plates. Texas offers many specialized license plates associated with specific organizations. Contact the Texas DMV to find out more about obtaining one of these plates. When you receive your license plates, you will also receive a registration sticker for your car. This sticker, which indicates the month and year that your current registration expires, should be affixed to the lower left hand corner of your windshield. If you buy a used car that retains its original license plates, you must renew the car's registration by the date indicated on the current registration sticker. Depending on when the owner last renewed the registration, it could be anywhere between a couple of weeks and nearly a year before the current registration expires. The sheet that your registration sticker is attached to is known as the registration receipt. Keep the registration receipt in your glove compartment. If you buy a used car, make sure you get the vehicle's registration receipt from the seller. You must present the registration receipt to a law enforcement officer if asked. Your registration must be renewed every year. You may renew by mail, in person, or, in some counties, online. Once you submit your renewal application and pay the registration fees, you will be sent a new registration sticker and receipt. You can find out more about vehicle registration requirements here. You should receive a registration renewal notice in the mail before your current registration expires. To renew your registration by mail, you must return this form, along with the registration fee and proof of insurance, to your county tax office. If you don't receive a renewal notice, you are still required to renew your registration. You must visit the county tax office in person with your license plate number, VIN number, or registration receipt from the previous year. If you move, you should notify the DMV of your new address immediately to make sure you receive your renewal notice. To save you time, you are allowed to renew your vehicle registration for up to three years when you submit the renewal application. You will receive a single registration sticker that will remain valid until your registration has to be renewed again. Your renewal application can be refused for a number of reasons, including the condition of your car, a lack of vehicle insurance, or a failure to pay traffic tickets or other fines. In addition to having its registration renewed every year, your car must pass an annual safety inspection. After your car passes the inspection, you will receive an inspection sticker that you must place on your windshield underneath or next to your registration sticker. The two stickers cannot be more than six inches apart. If you buy a new vehicle, you are not required to get a safety inspection for the first two years you own the car. If you buy a used vehicle, you must get a safety inspection before the current inspection sticker expires. Keep in mind that while the registration and inspection stickers are independent, usually they will both expire in the same month.
collision coverage
Collision Coverage When you are involved in a collision and the other driver is responsible, his or her insurance policy will generally pay the costs of your damages. However, for collisions where you are at fault, you should obtain a collision policy. If your car is damaged in a collision, this coverage will pay to fix the damages or replace it, regardless of who is at fault. The highest amount your insurance company will pay is the current value of your car, less the deductable. A collision policy covers members of the policy holder's family, their passengers, and others driving the policy holder's car with his or her permission. If you lease your car or use it as collateral for a loan, you will be required to obtain collision insurance.
PIP coverage
Personal Injury Protection (PIP) Coverage Like a med-pay policy, a personal injury protection policy covers the costs of reasonable and necessary medical expenses when the policy holder or his or her family members are involved in a collision. In addition, PIP policies will pay up to 80% of your lost income as well as the cost of hiring a caregiver if you are too injured to perform regular household tasks. When you purchase an insurance policy, the company is required to offer you $2,500 in PIP coverage, though you can purchase more. If you don't want PIP coverage, you must decline this coverage in writing.
types of coverage
The basic policy that you are legally required to obtain as a Texas driver is known as liability insurance. In addition, there are seven other types of coverage you may want to consider: Medical Payments Insurance Personal Injury Protection Uninsured/Underinsured Motorist Insurance Collision Insurance Comprehensive Insurance Towing and Labor Insurance Rental Reimbursement Insurance When shopping for insurance, you should understand the benefits of the various coverage options available and decide which policies make the most sense for you.
cancellation
Cancellation During the first 60 days you have a policy, your insurer may cancel your coverage for any lawful reason, including a ticket or collision. However, the company cannot refuse to cover damages that occurred while you were still under the policy. If the company decides to cancel your policy, they must send you a written notice at least 10 days in advance of the cancellation. If you have already paid for more insurance than you received, the company must refund the difference. In general, your insurance company cannot cancel your policy once it has been in effect for more than 60 days, except if you violate the terms of your contract. Your policy can be cancelled at any time for failing to make premium payments, filing a fraudulent claim, or having your license or registration suspended or revoked.
insurance for high risk drivers
In general, insurance companies do not wish to insure drivers who have demonstrated high-risk behavior on the road. When you apply to purchase or renew an insurance policy, the insurance company will review your driving history and assess your risk factors. If you are deemed a risky driver, the company may decline to approve or renew your policy. Many companies use the Comprehensive Loss Underwriting Exchange (CLUE) to learn about the insurance claims you have filed in the past. You can review the auto and personal property report that insurance companies use to determine your eligibility online. Federal law allows you to request one free copy of this report every 12 months. Just because one insurance company declines to cover you because of your driving history, you shouldn't despair of ever getting on the road again. Every insurance company has its own guidelines for deciding whether they should insure someone. Some major insurers offer special policies for high-risk drivers. Remember, when you're looking for insurance, shop around. By giving yourself a number of options, you're more likely to find a company willing to insure you at rates you can afford. Not all drivers will be able to find an insurance company willing to extend them coverage. However, since Texas requires that all drivers have auto insurance, the Texas Automobile Insurance Plan Association (TAIPA) has been established to provide coverage to drivers declined by other insurers. If you are refused insurance by two insurance companies, you can apply for TAIPA coverage. TAIPA coverage is available through licensed insurance agents, not through TAIPA itself. If you go a year without tickets or crashes, your agent may allow you to apply for a normal policy with lower insurance rates. TAIPA offers only liability, PIP, and UM/UIM policies, and only to the minimum limits required by law. As with regular insurance companies, if you do not want PIP or UM/UIM coverage, you must decline it in writing. For almost all drivers, TAIPA insurance will cost more than coverage provided by a private insurance company. In addition, when you receive a ticket or are involved in a collision, you will be charged a substantial surcharge. Under TAIPA, you may face a surcharge as expensive as your premium for a severe violation!
insurance for young drivers
Inexperienced drivers generally have to pay significantly more for insurance. Typically, an inexperienced driver will have to pay approximately 250% of normal rates in his or her first two years of driving, and approximately 200% in his or her third year. While you may wonder why you should pay so much for insurance as a young driver, consider this: without insurance, driving could be restricted to people with enough money to pay for any damages they cause. By paying more now, you can get on the road earlier, gain experience, and have your rates reduced as you improve. In general, you will be able to receive insurance coverage through your parents' policy, especially if you plan to share a car with other family members. While this will significantly increase the rates your parents pay, it will be cheaper than if you purchased a separate policy for yourself. In order to be covered by your parents' insurance, make sure that they list you on their policy as soon as you start to drive. If you try to make a claim on a policy on which you are not explicitly listed, you may be charged for missed premium payments or your claim or coverage may be denied. The rates your parents are charged for putting you on their policy are determined in part by the car you choose to drive. If you only drive cars that are primarily used by other family members, your rate will be based on the household car that is most expensive to insure. If you are the principal driver of a particular family car, your rate will be based on that car. If you end up purchasing your own car, you may be required to obtain a separate policy for yourself. Once you leave home, you and your parents must decide if you should remain listed on their insurance policy. Unless you plan to obtain your own coverage, you should probably remain on your parents' policy if still visit your parents (and use their cars) occasionally. Your parents should inform their insurance company if you are going to school away from home. If you bring a car with you, your rates may be adjusted to account for your new location. On the other hand, if you're away at school without a car, your parents may be eligible for an insurance discount.
medical payment coverage
Medical Payments (Med-Pay) Coverage In the event of a collision, a medical payments policy will provide compensation for medical treatment or funeral expenses for the policy holder and his or her family members, as well as passengers in his or her car, regardless of who is responsible for the crash. It also protects members of the policy holder's family who are hit by a car as a pedestrian or bicyclist. Payouts are generally provided for minor injuries, the use of an ambulance or ER, and the deductable on a major medical insurance policy. However, it is not intended to cover all medical bills and you are not required to obtain it. In addition, you will not be allowed to collect from two separate policies for the same medical bills.
financing a purchase
There are different options to choose from when purchasing a new or used car. While it is generally best to pay in full, many car buyers pursue financing arrangements that allow them to make affordable payments every month. In many cases, you may also be able to lease the car without purchasing it outright. Always be careful to read and understand all provisions when signing any financing agreement. Sometimes you can get a better deal by contacting lenders directly rather than accepting the financing offered by your car dealer. When you finance a car, the repayment period and the interest rate will be specified. The following example illustrates a typical financing arrangement: Purchase Price: $15,000 Interest Rate: 7.5% Repayment Period: Four years Monthly Payment: $362.68 Total pay-out = 48 x $362.68 = $17,408.64. Always work out these calculations before purchasing a car. A high interest rate can cause you to have to pay significantly more that the purchase price. When you purchase a car, you may be allowed or required to make a down payment, decreasing the interest you will have to pay on the loan and the amount of money you will have to pay monthly. For instance, if you made a $3,000 down payment on the purchase discussed in the previous slide, you would end up paying about $16,900 on the car, saving you about $500 over time. You may also be able to reduce the price of a car purchase by trading in an old car. Consult reference books or Internet sites for information on the market value of your used car. Wait until you have negotiated a price to discuss your desire to trade in your car, as you are more likely to get a better deal. Before you sign a contract to purchase or finance a car, be sure you are making a decision you can afford. Once you and the dealer have signed all the paperwork, get a copy of the signed contract before you take possession of your car. If you fail to make payments that you owe on your car, it can be repossessed. Moreover, your credit history will be damaged, making it more difficult and expensive for you to get a loan in the future. If you finance or lease your car, you may also be required to purchase more expensive car insurance.
more coverage
Towing and labor coverage will pay for towing a car following a wreck or breakdown, or for performing labor on your car (such as changing a tire) at the location where it became disabled. Rental reimbursement coverage will pay for a rental car when the policy holder's vehicle has been stolen or is being repaired. When you rent a car, you will need to obtain additional insurance coverage for any damages you may cause to the rental. In general, you can purchase this coverage from the rental agency, although some rental companies will offer a collision damage waiver in place of insurance. If you don't own a car but borrow or rent cars often, you should obtain non-owner liability coverage. A non-owner policy will pay for any damages or injuries you cause while driving a borrowed or rented car, other than damages to the car you are driving. Frequently, when you purchase a new car, it will be covered under your existing insurance policy. If you are replacing an old car, your new car will automatically have the same coverage as the car you replace. If you are purchasing an additional car, it will usually have the same coverage as the car already on your policy with the broadest coverage. For instance, if you own two cars, but only have additional collision and comprehensive coverage for one, your new third car will have those additional coverages as well. Read your policy to find out whether it will cover an additional or replacement car automatically. When you purchase a new car, you must inform your insurance company immediately to ensure that it is covered. Some insurance companies allow you to purchase endorsements for your policy that provide extra coverage for specific situations: A stereo equipment endorsement provides coverage if stereo equipment that is not permanently installed in your car (such as a cell phone, CB radio, stereo, or CD or MP3 player) is damaged or stolen. If you plan to drive within Mexico, it's generally best to purchase a tourist endorsement from your insurance company, or to buy Mexican liability insurance from a licensed agent in Texas. Some insurance companies offer a limited tourist endorsement for free, but it may not be sufficient to meet Mexican legal requirements.
UM and UIM
Uninsured/Underinsured Motorist (UM/UIM) Coverage While every driver is legally obligated to have insurance to operate a vehicle on public roads, some drive illegally without insurance, with an expired insurance policy, or with an insurance policy unable to cover all the damages they cause in a collision. Uninsured and underinsured motorist policies provide payments for losses from a collision caused by a driver without adequate insurance or a hit-and-run driver. A UM/UIM policy will pay for medical bills, lost wages, pain and suffering, and permanent and partial disability, as well as vehicle repairs and replacement, for members of the policy holder's family, their passengers, and others driving the policy holder's car with his or her permission. Like PIP coverage, insurers must offer you UM/UIM coverage. In general, a UM/UIM policy offers the policy holder the same amount of coverage as his or her liability insurance policy. If you wish to decline this coverage, or if you want to request a lower amount of coverage, you must submit a specific request to your insurance company in writing.
texas lemon law
While a thorough inspection process is generally sufficient for detecting problems, sometimes a car's defects may not be apparent until after you've paid for it. In these situations, you may be protected by the manufacturer's warranty. If a dealer sells you a car but refuses to fix a problem while it is still under warranty, the Texas Lemon Law can help you. The Texas Lemon Law applies to new and used vehicles that are still covered by the original manufacturer's warranty, as well as used vehicles with a persistent problem that developed under warranty. You are eligible for protection under the Lemon Law if: Your car has a serious defect or abnormal condition The problem is covered by a manufacturer's warranty You report the problem to the dealer or manufacturer within the term of the warranty You have given the dealer and manufacturer a reasonable opportunity to correct the problem and sent the manufacturer written notice of the problem The problem persists, causing malfunctions or safety hazards You file a Lemon Law complaint in a timely manner If you have questions about filing a Lemon Law complaint, call the Consumer Affairs Section of the Texas Department of Transportation, Motor Vehicle Division at 1-800-622-8682.
making the right decision
While owning a vehicle often gives young drivers a new sense of freedom, it also carries a number of responsibilities and associated expenses that many teenagers are not accustomed to, including: The purchase price of a car The ongoing costs of maintaining and fueling the car Insurance payments Registration and inspection fees If you're unable to consistently meet your financial responsibilities as a car owner, don't buy a car! Before deciding to buy a car, you should consider how often you plan to use your vehicle and think about the costs you will face over the life of the car. The following factors should influence your decision to buy a vehicle: Will you drive your car to school, work, or sport activities? Will other family members use your car for transportation? Is there any family vehicle already available that you can use during the hours you expect to drive? Do you have alternatives to driving a car, like taking public transportation or biking? What kind of vehicle will be most appropriate for the tasks for which you intend to use it? Regardless of how you plan to use your car, your priorities should include safety, reliability, and fuel economy. Moreover, you should tailor your purchase to your driving habits: If you're going to be sharing your car with other members of your family, select a car that meets everyone's needs rather than the one you like the most. Choose a smaller car if everyone plans to use it at different times. If you chose a larger car, try to consolidate your trips as much as possible. If you plan on carrying heavy loads, choose a larger car or a truck. Excess weight can put undue stress on smaller cars and lead to vehicle damage. Different car models have different insurance, maintenance, and fuel costs associated with them. Be sure to choose a car you'll continue to be able to afford.
liability coverage
Your liability insurance will cover damages and injuries you cause up to the amount specified in the policy. Liability insurance can be used to compensate the injured party for medical costs, funeral costs, lost wages, car rental, repair and replacement costs, as well as to cover punitive damages awarded by the court. Typically, liability insurance can also be used to pay attorney fees if you are sued because of the crash. Most liability insurance policies cover the policy holder as well as members of the policy holder's family. Frequently, a liability policy will cover you and your family members when driving cars your family owns as well as cars (such as rental cars) being used temporarily. However, cars you don't own but have regular access to (such as company cars) are usually not covered. A liability policy may also cover other people driving your car with your permission. Be sure you review the terms of your liability policy carefully. Some policies will not cover other people, including your family members, unless they are specifically named in the policy.
