Auto Insurance FAQ
Dan Snyder Insurance Agency of Mentor, OH
Young Driver’s Guide to Auto Insurance
Knowing your responsibilities as a new driver
Why should I bother getting insurance?
First of all, it’s the law. Second, if you don’t get insurance, you could end up spending a lot more than the insurance would have cost. If you cannot demonstrate financial responsibility, then your license will be suspended, your car will be impounded and it will cost you a very large sum of money to regain your driving privileges.
OK, I’m reading about insurance, but what do all these different terms mean?
There are different types of coverages you can purchase in an insurance policy. They are:
Liability coverage – pays claims if you hurt someone else or damage another’s property. Ohio law requires you to purchase a minimum amount of this type of coverage. Those minimums are:
Bodily Injury Coverage
$12,500 per person
$25,000 per accident
Property Damage Coverage
$7,500 per accident
Collision coverage – pays you if your own car is damaged in a crash with another vehicle.
Comprehensive coverage – pays for losses that result from incidents that are not collisions, such as theft, fire, hail, falling objects or hitting an animal.
Uninsured motorists (UM) coverage – pays claims for your injuries and damage to your car if a driver without insurance hits you.
Medical expense coverage – pays medical expenses for you and your passengers.
Should I buy my own insurance policy or should I be listed as an insured under my parent’s policy?
There is no simple answer to this question. Begin the decision-making process by discussing your options with your parents’ insurance agent. You should shop around to determine the best option to meet your family’s needs. Be sure to let the agent know if you will be sharing a vehicle with your parents or if you have your own vehicle to use.
I have my insurance — why is it so expensive? I haven’t had an accident or a ticket!
Insurance rates, or premiums, are based on statistical groups. Your driving record, age, sex, age/type of vehicle and place of residence are all taken into consideration. As a group, teen drivers have a much higher accident rate than other drivers.
What are some ways to reduce my premium costs?
Increase your deductibles. A deductible is the amount you must pay out of your own pocket if you have a claim.
Drop collision and/or comprehensive on an old car.
Qualify for discounts. Most companies offer a “good student” discount.
Shop for a better deal.
Lower limits of liability.
Oops! I just got my first ticket. Can my company raise my premium?
That depends on the company. Some insurers do not raise premiums if the first moving violation is minor. However, if your first ticket is a major moving violation, the company may increase your premium. In all cases, ask the company about its policies regarding moving violations.
Somebody hit my car. Can the company raise my premium?
No. Your insurance company cannot charge you an additional premium for a single accident that was not your fault. However, the company has the right to increase your premium if you have a second, not-at-fault accident within the policy period.
Can my insurer cancel my policy?
A company can cancel for almost any reason in the first 89 days of your coverage. As of the 90th day, a company cannot cancel your liability coverage for at least two years. At the end of each two-year period, the policy may legally nonrenewed. The law has specific grounds permitting cancellation during the two-year protected period, if you:
Lie on your application, or
Have your license suspended, or
File a false claim or
Don’t pay your premium
I forgot to pay my premium.
If — for any reason — you do not pay your premium, the company will cancel the policy. The company must notify you 10 days before cancellation. Getting coverage from another company may be difficult and probably will cost more if you let your insurance policy lapse.
I gave a friend permission to drive my car. Does my insurance cover me and my friend?
That depends. Unless your policy states specifically that only you are covered when driving, other people will be covered as long as you give them your permission to drive your car.
What if I have a problem with the insurance agent or the company?
Call the Ohio Department of Insurance at 1-800-686-1526. The Department regulates agents and companies that are licensed to sell insurance in Ohio. The Department’s Consumer Services representatives can answer your insurance questions and investigate your complaints about an insurance company or agent.
What is Financial Responsibility?
In Ohio, it is illegal to drive any motor vehicle without insurance or other proof of financial responsibility (FR). It is also illegal for any motor vehicle owner to allow another person to drive the owner’s vehicle without FR proof. To comply with Ohio’s FR requirements, individuals must maintain insurance or get a bond. Both types of coverage are described on this tip sheet.
If I obtain insurance, what is required?
Ohio law requires the following for insurance coverage:
If a person purchases automobile insurance, the state requires the person to purchase Bodily Injury Liability Coverage as well as Property Damage Liability Coverage.
A motor vehicle liability insurance policy. Insurance cards are issued by an insurer to the policyholder for each motor vehicle insured under a motor vehicle liability insurance policy;
A certificate of proof of financial responsibility on a form prescribed by the Ohio Bureau of Motor Vehicles (BMV).
If I purchase auto insurance to demonstrate Financial Responsibility, what are the minimum coverage requirements in Ohio?
In Ohio the required minimum for Bodily Injury Liability Coverage is $12,500 per person injured in any one accident and $25,000 for all persons injured in any one accident. The required minimum for Property Damage Liability Coverage is $7,500 for injury to or destruction of property of others in any one accident.
Why should I get more coverage than the minimum?
The value of your assets (what you may have to lose in the event you cause an accident) may help you determine the amount of coverage you should carry. Having additional coverage could protect you and your assets in the event of a serious accident. If you do not have adequate coverage, the law allows the victim to take any assets that you may have in order to cover the costs of any damages that occur.
What could happen to me if I get in an accident and only have minimum coverage?
Your insurance should cover you up to the amount of the policy limits. If the damage in the accident exceeds an amount greater than your policy limits, you would be held legally responsible to pay for any damages that your insurance does not cover, including medical costs, costs to repair any property damage and legal costs for any court proceedings that may take place because of the accident. To pay for the damages, your home, car and other assets could be taken away from you. Your present and future wages could be garnished. If your child was driving a car that was underinsured and was in an accident, they too would be held responsible for any damages and could face significant debt. You and your family could end up paying for one accident for the rest of your life!
I have very limited income and can only afford minimum coverage. What can I do?
Ohio has the 13th lowest auto insurance rates in the country. Call around to several different companies and get quotes from them. More than likely you will be able to find a company that can provide more than the minimum coverage for your budget.
If I want to get a bond or post collateral instead of purchasing insurance, what is required?
Ohio law allows for the following alternatives to automobile insurance:
A certificate issued by the BMV, after proper application and approval, • indicating that money or government bonds in the amount of $30,000 is on deposit with the office of the Treasurer of the State of Ohio;
A certificate of bond issued by the BMV, after proper application and approval, in the amount of $30,000 signed by two (2) individuals who own real estate having equity of at least $60,000;
A certificate of self-insurance issued by the BMV, after proper application and approval, to those with more than 25 motor vehicles registered in their name or a company’s name;
A $30,000 bond issued by an authorized surety or insurance company.