Car Insurance Tips & Secrets

Your car insurance policy is a custom package of several coverage options. When you purchase insurance, you choose the coverage that best suits your needs. Typically, the more you have to lose, the more coverage (protection) you need to purchase.

These days, most of the United States of America require us to carry a minimum amount of liability coverage. For most of us, it makes sense to carry more insurance than required by state law. Unfortunately, insurance products are often oversold or undersold. This article offers a quick overview of common auto insurance products and tips for shopping for insurance and saving money.

AUTOMOTIVE LIABILITY INSURANCE

Automotive liability insurance is the basic insurance coverage required by law in most states. As of this writing, 47 states require basic auto liability insurance. Only Mississippi, Tennessee and New Hampshire do not have auto insurance liability laws. In these states, liability insurance is not compulsory; state limits are established for financial responsibility.

The following table shows liability insurance requirements by state. In thousands, the first number indicates liability limits for bodily injury for any one person, the second is the limit for all persons injured, and the third number indicates property damage limits.

<TABLE cellSpacing=0 cellPadding=0 border=0><TBODY><TR vAlign=top><TD><TABLE style="BORDER-COLLAPSE: collapse" borderColor=#111111 cellSpacing=0 cellPadding=3 width=430 border=0><TBODY><TR class=highlight vAlign=bottom><TD class=iii-fb-th style="BACKGROUND-COLOR: #003366" align=middle width=105>State</TD><TD class=iii-fb-th style="BACKGROUND-COLOR: #003366" align=middle width=92>Liability
Requirements</TD><TD class=iii-fb-th style="BACKGROUND-COLOR: #003366" align=middle width=120>State</TD><TD class=iii-fb-th style="BACKGROUND-COLOR: #003366" align=middle width=93>Liability
Requirements</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Alabama</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>20/40/10</TD><TD class=iii-fb-td2 width=120>Montana</TD><TD class=iii-fb-td2 width=93>25/50/10</TD></TR><TR vAlign=bottom><TD class=iii-fb-td2 width=105>Alaska</TD><TD class=iii-fb-td2 width=92>50/100/25</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>Nebraska</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/25</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Arizona</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>15/30/10</TD><TD class=iii-fb-td2 width=120>Nevada</TD><TD class=iii-fb-td2 width=93>15/30/10</TD></TR><TR vAlign=bottom><TD class=iii-fb-td2 width=105>Arkansas</TD><TD class=iii-fb-td2 width=92>25/50/15</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>New Hampshire</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/25</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>California</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>15/30/5</TD><TD class=iii-fb-td2 width=120>New Jersey</TD><TD class=iii-fb-td2 width=93>15/30/5</TD></TR><TR vAlign=bottom><TD class=iii-fb-td2 width=105>Colorado</TD><TD class=iii-fb-td2 width=92>25/50/15</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>New Mexico</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/10</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Connecticut</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>20/40/10</TD><TD class=iii-fb-td2 width=120>New York</TD><TD class=iii-fb-td2 width=93>25/50/10</TD></TR><TR vAlign=bottom><TD class=iii-fb-td2 width=105>Delaware</TD><TD class=iii-fb-td2 width=92>15/30/5</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>North Carolina</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>30/60/25</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>D.C.</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>25/50/10</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>North Dakota</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/25</TD></TR><TR vAlign=bottom><TD class=iii-fb-td2 width=105>Florida</TD><TD class=iii-fb-td2 width=92>10/20/10</TD><TD class=iii-fb-td2 width=120>Ohio</TD><TD class=iii-fb-td2 width=93>12.5/25/7.5</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Georgia</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>25/50/25</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>Oklahoma</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>10/20/10</TD></TR><TR vAlign=bottom><TD class=iii-fb-td2 width=105>Hawaii</TD><TD class=iii-fb-td2 width=92>20/40/10</TD><TD class=iii-fb-td2 width=120>Oregon</TD><TD class=iii-fb-td2 width=93>25/50/10</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Idaho</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>25/50/15</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>Pennsylvania</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>15/30/5</TD></TR><TR vAlign=bottom><TD class=iii-fb-td2 width=105>Illinois</TD><TD class=iii-fb-td2 width=92>20/40/15</TD><TD class=iii-fb-td2 width=120>Rhode Island</TD><TD class=iii-fb-td2 width=93>25/50/25</TD></TR><TR vAlign=bottom><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Indiana</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>25/50/10</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>South Carolina</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>15/30/10</TD></TR><TR><TD class=iii-fb-td2 width=105>Iowa</TD><TD class=iii-fb-td2 width=92>20/40/15</TD><TD class=iii-fb-td2 width=120>South Dakota</TD><TD class=iii-fb-td2 width=93>25/50/25</TD></TR><TR><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Kansas</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>25/50/10</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>Tennessee</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/10</TD></TR><TR><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Kentucky</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>25/50/10</TD><TD class=iii-fb-td2 width=120>Texas</TD><TD class=iii-fb-td2 width=93>20/40/15</TD></TR><TR><TD class=iii-fb-td2 width=105>Louisiana</TD><TD class=iii-fb-td2 width=92>10/20/10</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>Utah</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/15</TD></TR><TR><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Maine</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>50/100/25</TD><TD class=iii-fb-td2 width=120>Vermont</TD><TD class=iii-fb-td2 width=93>25/50/10</TD></TR><TR><TD class=iii-fb-td2 width=105>Maryland</TD><TD class=iii-fb-td2 width=92>20/40/15</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>Virginia</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/20</TD></TR><TR><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Massachusetts</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>20/40/5</TD><TD class=iii-fb-td2 width=120>Washington</TD><TD class=iii-fb-td2 width=93>25/50/10</TD></TR><TR><TD class=iii-fb-td2 width=105>Michigan</TD><TD class=iii-fb-td2 width=92>20/40/10</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>West Virginia</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>20/40/10</TD></TR><TR><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Minnesota</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>30/60/10</TD><TD class=iii-fb-td2 width=120>Wisconsin</TD><TD class=iii-fb-td2 width=93>25/50/10</TD></TR><TR><TD class=iii-fb-td2 width=105>Mississippi</TD><TD class=iii-fb-td2 width=92>10/20/05</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=120>Wyoming</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=93>25/50/20</TD></TR><TR><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=105>Missouri</TD><TD class=iii-fb-td1 style="BACKGROUND-COLOR: #cccccc" width=92>25/50/10</TD><TD class=iii-fb-td2 width=120>*</TD><TD class=iii-fb-td2 width=93>*</TD></TR><TR><TD class=iii-fb-td1 width=375 colSpan=4>Source: Insurance Information Institute</TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>

If you cause an accident, it is your liability insurance coverage that pays for the personal injury and property damage you inflict on other parties. Your liability coverage does not cover injury to you or damage your car. It only pays for medical bills, lost wages and suffering of those you harm, and for the repair or replacement of the things your wreck.

It`s very important to understand liability insurance coverage and what it means to you if you cause a serious accident. The minimum liability coverage required by most states will not protect you in the event of a serious accident.

Just think if you have a head-on collision with a family of five at an intersection, where you thought the road was clear to turn left, and their small Toyota does a T-bone into your big Chevy Suburban at 50 MPH? The driver will have a crushed chest, broken nose and two broken legs, the middle rear seat passenger is dead because they went through the windshield, the front seat passenger has severe facial lacerations and a broken collar bone, and the other two rear seat passengers have severe neck injuries. There you are with a measly $40,000 or $50,000 to cover the carnage you created.

So sorry if that graphic picture was unpleasant, but it is an all-to-real scenario. If you cause an accident like the one described, and you don`t have enough liability coverage, the victim`s insurance company will be coming after your personal assets until you have nothing left to give. You stand to lose anything and everything that can be attached as an asset until the bills are settled. Make sure you have enough coverage to protect your assets.

COLLISION INSURANCE

Automotive collision insurance pays to repair your vehicle when you cause an accident. Because it is more likely that you will have a small fender-bender in a parking lot or pulling into the garage, collision coverage is almost always the most expensive insurance coverage you will buy. Most auto collision insurance policies carry a coverage deductible as a means to limit insurance company liability and to reduce the cost of collision insurance (e.g., the higher the deductible, the lower the cost). The "deductible" is the amount you pay before your insurance policy kicks in.

COMPREHENSIVE INSURANCE

Comprehensive insurance coverage pays for incidental damage to your vehicle or its contents, including theft, vandalism, broken windshield, fire, natural disasters (flood, mud slide...) and hitting an animal. Like collision insurance, you buy comprehensive coverage with a specified deductible level.

UNINSURED MOTORIST INSURANCE

Uninsured motorists insurance coverage pays for your injuries if you`re hit by a driver who doesn`t have auto insurance, or if you are involved in a hit-and-run accident. Uninsured motorists coverage is required in many states. Even if the coverage is not required in your state, it is a wise investment to take the coverage.

Most uninsured motorist policies also cover underinsured motorists. This component of your auto insurance pays out to you if the driver who hit you causes more damage than the limit of their liability coverage.

MEDICAL AND PERSONAL INJURY

Medical Payment (MedPay) or Personal Injury Protection (PIP) insurance coverage pays medical expenses for you and your passengers after an accident in your car or a car you have permission to drive. Typically, MedPay insurance also covers you and your family members if you incur injuries as pedestrians. The coverage pays regardless of who is at fault.

PIP and "no-fault" auto insurance coverage are forms of medical payments protection that is required in a growing number of states. This is an attempt by states to reduce the amount of state funded medical costs.

GAP INSURANCE

If you`re leasing your car, you may need to carry gap insurance. Gap insurance pays for the difference between what your insurance company pays and what you owe on your lease in the event your car is totaled. Many lease contracts already include gap insurance, so check before you buy.

SUPPLEMENTAL COVERAGE

Most auto insurance companies offer supplemental coverage. Here are some of the more common coverages you can purchase:

Auto replacement -- This coverage guarantees that your car will be completely repaired or replaced, even if the cost exceeds the depreciated value of the car. This can be a very important add-on if you own a classic car, custom car or high-value sports car. Insurance companies normally will not pay you more than your car`s book value. So, if you buy a new Porsche 911 Twin Turbo for $120,000 and it gets totaled, unless you have auto replacement coverage, you may only get the "Blue Book" value, which could be thousands less than what you owe.
Rental reimbursement -- This is a common add-on that pays for your use of a rental car while your car is being repaired or as temporary transportation if your car was stolen.
Towing and labor -- This add-on pays for charges in case of a breakdown on the road, where a tow truck or roadside repair is required.

HOW MUCH INSURANCE IS ENOUGH?

Now that you know what the different insurance products cover, you can begin to assess what you need. Start with your liability insurance, the foundation.

Although most state laws require only basic coverage, most insurers recommend a policy with 100/300 bodily injury liability coverage (that`s $100,000 per person and $300,000 per accident). This amount of coverage will protect you from all but the very worst accidents. If you buy this level of insurance, a plaintiff attorney will likely settle their case for the limit of the policy. If you have minimum coverage, or no coverage at all, the plaintiff`s attorney will likely sue you to go after your assets.

If you don`t own significant assets, such as a home, a fat savings account, or hefty retirement fund, you may not need 100/300 bodily injury liability coverage. If you can afford it, you should buy it. If you`re strapped to make ends meet, buy what you can afford. Just remember that you`re risking the financial well-being of yourself and others if you carry an insufficient amount of liability insurance.

The other component of liability insurance is property damage. The best way to assess the amount of property damage coverage you need is to take a look at your neighborhood. If you live in an affluent community, you should purchase $50,000 to $100,000 of property damage coverage. If you live in an average neighborhood, $25,000 is probably sufficient. It`s pretty simple to figure out. Look at your neighbor`s car and ask yourself if your insurance is enough to replace it when your teenager smashes it.

Deciding your collision and comprehensive coverage needs is pretty easy. If you can whip-out your checkbook and write a check to replace your new Bentley, you may be better off self-insuring your car. Conversely, if your car is paid in full and has little value (less than $2,500 or so), it may not be worth buying collision and comprehensive coverage. You`d be better off saving the money you spend on collision and comprehensive coverage to buy a new car when you need it.

For most of us, replacing a car is a huge financial burden. Moreover, if you financed a new car, the lender will require collision and comprehensive coverage. The general wisdom is to lower the amount you pay for collision and comprehensive coverage by increasing your deductible from the standard $50 or $100 to $250 or $500. If you have a track record of making a collision or comprehensive claim every four to five years (or less frequently), a high deductible is a good bargain.

Now we get to the more subjective coverage: MedPay and PIP. My basic rule on MedPay is to compare the product to health care insurance. If you don`t have a good health care plan, get a minimum of $25,000 MedPay coverage. If you have good health care insurance, it may cover doctor and hospital costs due to an auto accident. In such a case, a lower MedPay coverage can be considered ($10,000 or less).

Typical MedPay covers expenses for medical, hospital, ambulance, surgical, dental, chiropractic treatment, X-ray, professional nursing, prosthetic devices, and funeral services. If your health care insurance covers all of this, you may be in good shape. Most health care providers will not ask about auto insurance coverage, but I will guarantee you that your auto insurance provider will ask about your health care insurance coverage before they pay out any claims.

If you live in a "no-fault" state, you do not have a choice on buying PIP. However, don`t buy both PIP and MedPay, because most PIP policies offer the same or better coverage than MedPay. The big difference is that PIP carries a mandatory 20% deductible.

PAYING FOR INSURANCE

Let`s face it, auto insurance is a big expense. As the roadways become more and more congested, accidents increase and insurance rates go up. Likewise, as the cost of repairing cars continues to skyrocket, insurance follows.

Many insurance companies realize the financial impact of paying for insurance and offer their clients monthly or quarterly payment schedules. Others require payment in full to start the policy. If you`re on a payment schedule, be sure to make your payment on time.

Most insurers write a clause into their policies allowing them to cancel your insurance when payment is not received on time. There are no "grace period" requirement with auto insurance as there are with health care and life insurance premiums.

You can just imagine if your auto insurance payment is a day late and you have a bad accident what might happen. "We`re sorry, sir, but we have not received payment and your policy was cancelled!" This is a common problem for both car owners and insurers.

If you are cancelled due to late payment, don`t think that your policy will be reinstated when you make your payment. While most insurers value their customers, they won`t hesitate to get rid of you if you if you have a record of late payment. To add insult to injury, if your insurance policy is cancelled due to late payment, you may find yourself paying more for insurance later.

Insurance companies report late payments and cancellation due to nonpayment of premiums. So, you can run but you can`t hide. If you pay slow or have a bad credit history, you`re going to pay higher rates. It`s a well-known fact that insurance underwriters believe people with poor credit ratings are more likely to become involved in an auto accident or file fraudulent auto insurance claims.

It seems quite discriminatory to view insurance risk based on credit history, but insurance companies get away with it for the same reasons that they charge higher rates for young people: overwhelming, historical statistics.

Bad credit will not preclude you from getting insurance, it just means you will likely have to deal with a high-risk carrier who charges higher rates. These companies insure people who are thought to be a higher risk due to their driving record, accident history, payment history. If you have a bad driving record (tickets or an arrest), recent accidents and bad credit, you may find it very challenging to get insurance. In this case, since most states require insurance to drive, you must apply for your state`s "assigned risk plan" insurance.

WHAT DETERMINES INSURANCE RATES?

Insurance underwriters take many factors into account when determining what to charge you for insurance. The average American driver spends a little more than $700 a year on auto insurance. Here are the big factors that influence your premiums:

Your driving record. There`s no way around it... the better your record, the better your rates. If you have tickets and accidents on your record, expect to pay a lot more. You will also pay more if you have a gap in insurance. The longer the gap, the higher the rates. It pays to stay insured.
Your age. In almost all cases, as we mature we gain driving experience and have fewer accidents. As you get older, expect you rates to go down. If you`re under 25, expect to pay much higher rates. If you have a teenage driver at home, restrict their use of the car to 25% or less and list them as an occasional driver. If you are a teenager living away from home, ask your parents to list you on their insurance (and keep your driving record clean!).
The number of miles you drive each year. The more miles you drive, the greater your exposure to potential accidents. It pays to work at home or be near work. Most insurers will ask the distance to your work so they can compute your average mileage. If you carpool, let your insurer know, as it should reduce your rates.
The car you drive. The value of your car is a factor, as is the cost of repair and the likelihood of theft. Insurers also look at a car`s safety record. If a car has a bad collision safety record or a rollover record, you can expect to pay more. If you`re buying a high-performance care, beware. The larger the engine, the higher the rates.
Where you live. There`s no getting around it. If you live in a big city, like Los Angeles or Manhattan, you`re going to pay more. Insurance companies look at local statistics, including rate of accidents, theft, lawsuits, car repair and medical care to determine rates. If you own a country cottage as a second home, you might consider registering your cars to the cottage address to get better rates.
The amount of coverage. Of course, the more coverage you want the more the premium will cost.

SAVING MONEY ON INSURANCE

The Insurance Information Institute suggests nine ways to help you save on your auto insurance policies:

Shop around. Prices vary from company to company, so it pays to shop around. Get at least three price quotes. You can call companies directly or access information on the Internet.
Before you buy a car, compare insurance costs. Your premium is based in part on the carÃ¢â‚¬â„¢s sticker price, the cost to repair it, its overall safety record, and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft. These include air bags, anti-lock brakes, daytime running lights and anti-theft devices. Some states require insurers to give discounts for cars equipped with air bags or anti-lock brakes.
Ask for higher deductibles. Deductibles represent the amount of money you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15% to 30%. Going to a $1,000 deductible can save you 40% or more.
Reduce coverage on older cars. Consider dropping collision and/or comprehensive coverage on older cars. It may not be cost effective to continue insuring cars worth less than 10 times the amount you would pay for coverage. Any claim payment you receive would not substantially exceed your premiums minus the deductible. Claims occur on average only once every 11 or 12 years.
Buy your homeowners and auto coverage from the same insurer. Many insurers will give you a discount if you buy two or more types of insurance from them. Also you may get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce premiums for long-time customers. But shop around; you may save money buying from different insurance companies despite the multi-policy discount.
Take advantage of low-mileage discounts. Some companies offer discounts to motorists who drive a lower than average number of miles per year. Low mileage discounts can also apply to drivers who carpool to work.
Ask about group insurance. Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business and alumni groups or other associations.
Seek out safe driver discounts. Companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also qualify for a cut if you have recently taken a defensive driving course.
Inquire about other discounts. You may get a break on your insurance if you are over 50 or in some cases 55 and retired or if there is a young driver on the policy who is a good student, has taken a drivers education course or is at a college, generally at least 100 miles away.

When you comparison shop, inquire about discounts for:

$500 and $1,000 deductible
Multiple cars
No accidents and no moving violations in 3 years
Senior driver
Driver training or defensive driving course
Anti-theft devices
Low annual mileage
Air bag and anti-lock brakes
Daytime running lights
Student drivers with good grades or College students away from home
Homeowner coverage with the same company
Long-time customer

WHAT SHOULD YOU DO WHEN YOU HAVE AN ACCIDENT?

Very few lucky people go through their entire driving life without being involved in an accident. The odds are quite simply stacked against us. Driving is nothing more than semi-controlled chaos, and inevitably someone will do something stupid in your presence.

Most accidents will be "drivable accidents." This simply means that your car has minor damage, no one is hurt, and you can drive away. Here`s what you should do in a drivable accident:

Move out of the Flow of Traffic. When involved in a accident with less than four vehicles, there are no personal injuries and the vehicles are drivable, move all vehicles to a safe area out of the flow of traffic.
Exchange Critical Information. Exchange information with the other drivers involved in the accident. The critical information should include the names, addresses, phone number, vehicle (year, make and model), license plate number, vehicle identification number, state drivers license number, insurance company and policy number. To make this easy on yourself, create accident information cars and keep them in your glove box.
Get names and addresses of passengers. Also get the names of any persons who may have witnessed the accident. It may not seem important in a small fender-bender, but it will be if someone files a false personal injury claim.
Location, location, location. One of the most important pieces of information that is needed for your traffic accident report is the exact location of the accident. Write it down. Also, draw a diagram of the accident scene.
Report the accident to the police. You can report the accident by phone or drive to the nearest Police Station. Don`t wait to make your report. Your insurance company will need the accident report number.
Report the accident to your insurer. Some people feel that they should not report minor accidents to their insurance company because their rates will increase. While it is true that the number and size of the claims you make will influence your rates, your don`t want to be caught in a lawsuit for personal injury accident that you did not report. These days, it`s too high of a risk.

If you`re in a non-drivable accident or an accident with personal injuries, call 911 immediately. Tell the 911 operator the location of the accident and the nature of the injuries (to the best of your knowledge). Stay at the scene. The 911 operation will dispatch the necessary help. Call your insurer as soon as possible.

If you`re involved in a hit-and-run accident, don`t chase the hit-and-run driver. Doing so is a good way to get in another accident of get yourself killed by a lunatic. Call 911 immediately. Tell the 911 operator that the other driver left the scene. Give the best description possible of the driver, the type of vehicle and license plate number, and the direction the hit and run was traveling. Call your insurer as soon as possible.

WHAT HAPPENS WHEN YOUR CAR GETS "TOTALED"?

In 1992, I learned the hard way what it means to have your car "totaled" by an insurance company. My 1987 Porsche was stolen and recovered a week later. Unfortunately, what the police recovered was not recognizable as my original car. The car was stripped of all marketable parts. My insurer itemized the cost of repairing the car at $29,000 and change. What I received was a check for $24,000. I had receipts for the car plus modifications adding up to more than $62,000. My net loss was huge.

This is not a scenario most car owners want to think about. However, you need to consider it before it happens to you. My own experience showed me the value of buying replacement insurance.

It is not necessary for your car to suffer major damage for your insurance company to write it off as a total wreck. All they do is compare the repair cost with the value of the vehicle before the accident. If the repair will exceed 51% of the car`s value (depending on the insurer, this is not a hard rule), most insurers will consider writing it off as a total loss. In this case, what they owe you is the value of the car.

What`s the value of the car? Not what you might think. Insurers use the National Auto Dealers Association (NADA) Official Used Car Guide or the Kelley Blue Book as their source for car values. You cannot supply you own local current market value information. Once your insurer pays you, they own your car, and are free to sell it for salvage and keep the salvage dollars to recoup their costs.

If your car is a total loss but you want to keep it and repair it anyway, most insurers will let you do so. In this case, your insurer will pay you the car`s actual cash value, minus the salvage value of the car and your deductibles. If this is what you want to do, be sure to tell your insurer as soon as possible. Once a car goes to auction or salvage it`s nearly impossible to get it back.

SELECTING AN INSURANCE COMPANY

I have been with the same insurance company since 1977: USAA. If USAA were available to everyone, I would recommend them to you. Unfortunately, to join USAA you must serve in the armed forces of the United States of America.

Personal recommendation, in my opinion, is still one of the best ways to choose an insurer. You want to know you will be treated right, when you need the help. There`s no better recommendation than a happy customer who has experienced service when their chips were down.

Price is another huge factor. Rates are competitive, and the Internet makes it possible to shop for rates quickly.

Stability and longevity. The best source for this information is the Standard & PoorÃ¢â‚¬â„¢s Insurance Ratings Services (standardandpoor.com).

Finally, you need to feel comfortable with your insurance purchase. Whether you buy over the Internet, from a local agent you met at a ball game, or directly from the Insurance company over the phone, make sure you feel good about your decision before you sign. Make sure that the agent or company will be as easy to reach when you need to file a claim as they are when you`re buying their product.