Frequently Asked Questions

Frequently Asked Questions

What is auto insurance?

What is auto insurance?

Auto insurance is a contract between you and the insurance company. It protects you against financial loss if you find yourself in an accident. It’s a mutual contract in which you, the customer, agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

Auto insurance provides property, liability, and medical coverage

Auto insurance provides property, liability, and medical coverage:

Property coverage pays for the damage to your or other party’s car or covers your car in the event of theft.

Liability coverage pays for your legal responsibility to others for bodily injury or property damage.

Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

Most states require you to buy at least liability insurance. If you are financing your car, your lender may also have requirements to have more coverage on your car.

Most auto policies are for six months or one year. Your insurance company should notify you by mail when it’s time to renew your policy and pay your premium.

Why do you need auto insurance?

Why do you need auto insurance?

Having auto insurance is about protecting yourself financially in unforeseen events such as accidents, theft, etc…

If you’re in an accident or your car is stolen, it costs money, often a lot of money, to fix or replace it.

If you or any passengers are injured in an accident, medical costs can be extremely expensive.

If you or your car is responsible for damage or injury to others, you may be sued for much more than you’re worth.

Other than the fact that auto insurance may be required by law in your state, having insurance is also a prudent financial decision.

How much auto insurance is required by law?

How much auto insurance is required by law?

ILLINOIS

In Illinois, in which drivers are financially responsible for any damage and injury they cause in an accident, auto insurance laws require liability insurance to help fulfill this responsibility.

Illinois laws require minimum liability limits of 25/50/20. (That’s $25,000 per person for injuries you cause to the other party, up to $50,000 for all, and $20,000 for damage you cause to the other party’s property.)

Illinois auto insurance laws also require that you purchase uninsured motorist bodily injury coverage of at least 25/50 ($25,000 for injuries per person, up to $50,000 total). This policy helps pay your expenses in case you should be struck by a driver with NO insurance or inadequate liability coverage.

What are auto insurance limits?

What are auto insurance limits?

100/300/100 do these numbers make sense to you? These numbers refer to auto liability insurance.

They’re usually called the split limits of liability insurance. Under our example auto liability insurance policy, you’d be covered for up to:

$100,000 worth of bodily injury caused to another person.
$300,000 for bodily injuries caused to everyone.
$100,000 worth of property damage.
Even though it may be tempting to save a few bucks by going with the minimum liability required in your state, it is always worth investing in a little extra protection.

Insurance Terms

Insurance terms

Actual Cash Value

The amount awarded for property damage losses, usually equal to the cost of replacing the damaged item, minus depreciation.

Assigned Risk

If an applicant for auto insurance cannot find a company able to insure him or her voluntarily, the state assigns the risk to an insurance company in that state.

Automobile Shared Market

All automobile insurers in a state participate to make coverage available to car owners who are unable to obtain insurance in the regular marketplace. These are usually called assigned risk plans, joint underwriting associations or reinsurance facilities (see Assigned Risk, above).

Bodily Injury Liability

Coverage that protects you against financial loss and pays legal defense costs when you are legally liable for injuring other persons in an auto accident. In auto insurance, both bodily injury and property damage liability are usually required by state law. The two are often referred to jointly as liability insurance.

Claim

A policyholder’s request to recover losses covered by an insurance policy. Collision Insurance. Coverage that reimburses you or damage to your own car resulting from a rollover or collision with another object (not necessarily another vehicle).

Comprehensive Insurance

Coverage that reimburses you for damage to your own car from causes other than collision, rollover or general wear-and-tear. It covers dangers such as hail, flood, theft, fire, glass breakage, falling objects, missiles, explosions, earthquakes, windstorms, vandalism or malicious mischief, riot or civil commotion, and damage from a bird or animal.

Coverage

Indicates the type of coverage and/or how much protection your insurance policy will provide.

Deductible

The amount you must pay before your insurance coverage begins paying. For example, if you had a $250 deductible and a loss of $800, you would pay the first $250 and the insurance company would pay the remaining $550. However, if the loss were only $250, you would pay the entire amount and the insurance company would pay nothing.

Depreciation

The decrease in the value of your car or its parts due to age and general wear-and-tear.

Exclusion

A type of loss your policy will not cover.

First Party Coverage

Compensation for your losses by your own insurance company rather than the insurer of the person who caused an accident (for example, collision and comprehensive insurance).

Insured

A person covered by a policy.

Liability

Any legally enforceable obligation.

Liability Insurance

Covers accidental losses resulting from injury to body or damage to the property of someone else for which the insured is legally responsible (legally liable). If the loss is covered by the insurance policy, the payment is made directly to the party who suffered the loss.

Limits

The maximum amount of insurance that can be paid for a covered loss. For example, if you have a $5,000 loss and the limit on your policy is $2,500, then $2,500 is the maximum your insurance company will pay.

Loss

The basis for an insurance claim. Insurers also refer to losses as payments made on behalf of the insured.

Medical Payments Insurance

Coverage that reimburses you and your passengers-regardless of legal liability-for medical or funeral expenses stemming from bodily injury or death by accident.

No-Fault Insurance

Each insured person’s insurance company pays for certain financial losses, such as medical expenses and lost wages, regardless of who caused the accident. In exchange for these benefits, the right to sue may be restricted in some cases.

Peril The cause of a loss

Perils include theft, glass breakage, floods, hail and fire.

Personal Injury Protection (PIP)

A broader form of medical payments insurance coverage under the no-fault concept. PIP offers protection for expenses actually incurred, up to a specific, per-person dollar amount. States with no-fault laws require drivers to buy PIP. It also is offered as an optional coverage in some states without no-fault laws. Coverage varies from state to state.

Policyholder

The person who pays a premium to an insurance company in exchange for the protection outlined in an insurance policy.

Premium

The amount of money paid for an insurance policy.

Property Damage Liability

Insurance that protects you against financial loss if you are legally liable to others for auto-related damage to their property.

Renewal

A policy renewal takes place when the coverage of a policy or standard certificate are to continue by the insurance provider in exchange for your payment for another policy period (typically six months or one year).

What Should You Do In Case of an Auto Accident?

What you should do in case of an auto accident.

Hopefully you will never be in an accident.

In the event of an accident follow the steps below…

If possible, stop your car in a safe and visible place. If a car cannot be moved, turn on the hazard lights. Turn off the ignition. Be careful when exiting your car.

Determine if anyone is injured. Do not move an injured person.

Call the police (911 in most places) immediately. Report any injuries.

If another vehicle is involved, get the car’s year, make, model and license plate number; the driver’s name, address and license number; and the name of his or her insurance company and agent. If the driver does not own the car, get the name of the car’s owner. Write down names and addresses of other passengers or witnesses.

Write down the names and badge numbers of police and emergency personnel at the scene. Ask the officer how to obtain a copy of the police report for your insurance claim.

If you suspect that the other driver was under the influence of alcohol or drugs, ask that a breath test be performed on you and the other driver.

Cooperate with the police, but do not admit guilt for the accident in any way. You may be required to show proof of insurance, but do not reveal how much coverage you have.

Do not accept any money the other driver may offer. By accepting money, you may give up your right to file a claim against the other driver.

Write an account of what happened: time of day, weather, hazards, road conditions and driving speed. Draw a picture of the site, showing stop signs, signal lights, etc. Try to measure skid marks and determine the point of impact. Note any damage already on other cars involved. If a camera is available, take pictures of the accident. Make copies of the pictures.

Report the accident to your insurance company or agent as soon as possible.

*Always remember that, if anybody other than your insurance agent contacts you, do not discuss the accident with them and do not agree to make a recorded statement.