Insurance State Coverage

In the insurance state regulations the standard auto policy, “collision” is defined as “the upset of your covered auto or a non-owned auto or their impact with another vehicle or object.” Note that collision with an object is covered, even if it is not another vehicle. Click here for the cheapest insurance quote in your state.

For all insurance state coverage, the standard policy clearly spells out the losses that are not collision losses (“Other than Collision Coverage”): missiles, falling objects, fire, theft, explosion, earthquake, windstorm, hail, water, flood, malicious mischief, vandalism, riot, civil commotion, contact with a bird or animal, and breakage of glass.

Auto policies are almost always written with higher deductibles for collision than for non-collision losses in all insurance state coverage.

Deductibles are an amount of money you have to pay before your insurance takes over. In auto insurance, deductibles usually fall in the range between $250 and $1.000 per toss. If you have a $500 deductible and get in an accident that does $2,000 in damage to the front end of your car, you have to pay the first $500 and the insurance company will pay the $1,500 balance.

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By treating contact with an animal as a non-collision loss, you have the advantage of having a lower deductible2 apply. This difference in deductibles is an implicit recognition of the fact that drivers usually have greater opportunities to avoid contact with other cars or objects than free-moving creatures that react unpredictably to lights, motion, and sound.

If you cause an accident that results in damage to a car you’re driving but don’t own, the ISO standard policy will provide the broadest coverage applicable to any covered auto.

Insurance state the standard policy defines “non-owned auto” as any private passenger auto, pickup, van or trailer which is operated by or in the custody of, but is not owned by or furnished for the regular use of, the named insured or a family member. Also included is coverage for “temporary substitute automobiles.”

TRAVEL

Drivers often take their cars into a state other than the one in which they live. Because insurance state laws vary from state to state, settling a claim can become complicated if an accident occurs when you are away from your home state.

The out-of-state coverage provisions in a standard auto policy refer not only to the required minimum amounts of coverage, but to required types of coverage as well. This means that if you drive into a state where no-fault benefits or other types of coverage are required, the policy will automatically provide the minimum amounts and types of coverage.

Most personal auto policies restrict the policy territory to the United States, its territories and possessions, Puerto Rico, and Canada.

If you are traveling outside your home state, the policy will adjust to these laws by automatically increasing the liability limits to conform to that state’s laws, and providing coverages as required by the state to conform to its laws with respect to a nonresident driving in the state.

Insurance state regulations specify if you drive your car into Mexico you must have valid liability insurance from a Mexican insurer. If you do not and are involved In an accident in Mexico, you may be detained in jail, have your car impounded, and be subject to other penalties.

When you rent a car, you will usually be offered a collision damage waiver or CDW. (Some rental companies use the term loss damage waiver or LDW—the coverage is effectively the same.)

This waiver releases you from responsibility for damage to the rental car, provided you comply with the rental contract terms. If you decline the coverage and have an accident, you may be held responsible for the entire value of the car.

One common problem is that many of these insurance state policies contain limitations and loopholes that renters can unwittingly violate, voiding the coverage. For example, CDW can be voided if you drive on an unpaved road…or if you engage in “negligent” driving—and the car-rental company defines negligent.

CDW is usually overpriced, adding about $11 a day to the cost of renting a car in 1995. In Illinois and New York—two states where rental companies have to bundle collision coverage into the advertised rental rate—average rates are only about $2.50 a day higher than in the rest of the country.

We will continue to closely monitor the insurance state regulators for updates.