The revolution in transportation during the lifetimes of some of our oldest citizens is incredible. Equally remarkable is the growth of automobile insurance as an industry. No one could have predicted the industry, much less the chaos and confusion we find it in today.

The reality is that most of us would not think of driving without the protection of adequate insurance. Added to that is the requirement of most states that we carry minimum protection. Complete protection is expensive, no matter where you live, so it is important to understand what protection we truly need and at what levels.

The regulation of the insurance business is in the hands of the state governments. Regulation varies between the states from rigid controls of rates, offerings, and settlement procedures to virtual laissez-faire attitudes toward the business.

TYPES OF COVERAGE
There are six basic areas insured by automobile insurance companies. They are:

1. Liability for bodily injury. This protects you, family members, and persons you allow to drive your vehicle against suit for bodily injury in an accident your car or one you are driving is in, up to the limits set in your policy.

2. Liability for property damage. You are protected from suit for property damage caused by your car or one you are driving. That includes other vehicles, houses, fences, or anything of value. Limits for the various kinds of liability are expressed in three numbers, i.e., 10/30/5. That means that $10,000 is the amount that they would pay to one person injured by your vehicle. They would pay up to $30,000 to all persons injured by your vehicle. They would pay up to $5,000 for all property damage in one accident.

3. When states require auto insurance it is for liability coverage. Most of them require 25/50/10. Any person who has assets to protect, such as a house, should carry more. Most experts suggest limits of 100/300/50, or even higher. Generally if you wish to go beyond those numbers you will need to purchase an umbrella policy. Many persons get $1,000,000 coverage in this way. Sometimes you can buy single limit liability insurance that provides a lump sum that is available for either bodily injury or property damage.

4. Medical payments insurance. This coverage protects you and members of your family in your car. It protects you and family members in another car. It protects you and family members as pedestrians. It also protects guests who are riding in your car from bodily injury costs. It even provides for funeral expenses.

5. Collision insurance. This coverage pays for damage to your car in the event of any accident, single car or multiple car. This insurance carries a deductible so that minor damage is not reimbursed. The amount of the deductible greatly influences the cost of the premiums. If you buy a new car and borrow money for the purpose, the lender will insist that you carry collision coverage. When the car is older you should consider dropping collision because when the value of the vehicle drops so does the amount you can recover in an accident.

6. Comprehensive physical damage insurance. Almost anything that happens to your car can be compensated by comprehensive insurance. If it is stolen, damaged by a fire, or by a falling tree, etc., you are protected. This coverage also includes a deductible. Again, when your vehicle ages, you should drop this coverage because it is wasteful in terms of what you can collect in damages.

7. Uninsured or underinsured motorist insurance. As insurance costs have increased, more drivers decide to drive without insurance. This may be particularly true in rural areas where there are no transportation alternatives. Many states require that this insurance be included in every policy sold. However, in such cases it is possible to reject that coverage in writing. It is wise to accept it, because the danger of being involved with an uninsured or underinsured motorist seems to become more likely all the time. NO-FAULT INSURANCE
   Many states have adopted what is called no-fault insurance. This system is intended to recognize that persons injured in automobile accidents often need help to cover the cost of their injuries. Therefore, all persons injured are given the money needed to treat their injuries, without regard to fault. In theory, they may not sue for additional damages unless their injuries are extremely serious. Unfortunately, in most states the rules have been so watered down through the influence of trial lawyers that the system does not work. The only state where real success seems to have been achieved in this field is Michigan. Ironically, under this system, in spite of smaller awards, those who are injured get more money than in states where litigation is common.

   FINANCIAL RESPONSIBILITY
   As we said earlier, regulations vary greatly from state to state concerning mandatory insurance. There are three basic variations:

   1. Some states require you have insurance before the fact. This is enforced in different ways. One method is to deny a driver's license if you do not have proof of insurance. Cancellation of your automobile registration is another weapon.

   2. Some states require insurance after you have had an accident and a judgment against you.

   3. Some require you to prove you can pay certain amounts in the event of an accident. Obviously, the most convenient way to accomplish that is through the purchase of insurance.
   INSURANCE RATES
   Many factors influence the premiums you are charged for your insurance. Some of them are:
   • The coverage you choose from the six categories of protection.
     
   • The cost of your automobile.
     
   • Where you live--urban versus rural.
     
   • The driving record of you and your family members.
     
   • Young drivers at home will cost more.
     
   • Variations between companies.
   Keeping costs as low as possible while obtaining adequate protection can be done by attending to the following:
   • Accept higher deductibles on collision and comprehensive.
     
   • Drop collision and comprehensive after a vehicle is about five years old.
     
   • Check for changes in circumstances such as a child marrying and moving away.
     
   • Insure all vehicles with the same company to get a multi-car discount.
     
   • Keep your driving under 7,500 miles a year.
     
   • Take advantage of good student discounts.
     
   • Select a car with lower loss insurance experience by checking with your company.
     
   • Compare rates between companies.
     
   • Buy from a company that rewards good driving.
   RENTING A CAR
   There has been a good deal of confusion about whether it is necessary to purchase damage coverage from the rental company when you rent a car. It can exceed the cost of the rental. Most broad coverage policies will cover you when driving a rental car. However, it is best to check with your agent to make sure of that coverage. Another way of obtaining such coverage is by using a premium credit card. The extra cost of a "gold" or similar premium card can easily be saved in one rental.

   WHAT IF YOU HAVE AN ACCIDENT?
   The selection of a policy and the payment of the premiums are all we hope we will have to do with the insurance company. However, the reality is that sooner or later most drivers will file a claim, even if they never have an accident. When that time comes, having a local agent you know personally who has a commitment to service makes all the difference. He or she will help you with your claim or file it for you, tell you what to expect, and go to bat for you with the company.

   WHAT TO DO AFTER AN ACCIDENT

   • If there are injuries, call the paramedics.
     
   • Call the police, and if they should not come to the scene, file a police report at the appropriate agency. Some states require that you inform the DMV (Department of Motor Vehicles).
     
   • Obtain information from the other driver, including license number of car and driver. Also get the number of his insurance policy and company name, telephone, and any other pertinent data.
     
   • Get the names and addresses of witnesses if there are any.
     
   • Record what happened while it is still fresh--location, time, directions of travel, weather conditions, traffic sign or signals. If you have a camera, take pictures at the scene.
     
   • Make no statement about your liability or how much insurance you carry.
     
   • Leave a note with your name, address, and phone number if the accident involves a parked car or other property.
     
   • Call your agent at the earliest opportunity.
   CLAIMS HANDLING
   Companies handle claims in different ways. Some of the larger companies have drive-in claim centers where you can take your car, have the damage assessed, and receive a check for the repair the same day. This process is handled by adjusters. Other companies use appraisers. They look at the damage and send their estimate to the company and the company later tells you what they will pay on your claim. A third way is for you to take your vehicle to three different repair shops and get estimates. The company then decides which one to accept for your claim.

   If you disagree with the decision of the company, you can appeal to them at various levels. You can also involve your state insurance commissioner's office. They may intervene for you. Finally, if you fail to get satisfaction, you can hire a lawyer and sue. State laws vary also in regard to blame for an accident. Some states have what is called "pure comparative negligence" to determine who was at fault and who should be reimbursed. A second approach is "modified comparative negligence," in which you are reimbursed to the same extent as you are determined not to be responsible for the accident. The third approach is called "contributory negligence" in which you receive no payment if you are even 1% at fault for the accident!

   CANCELLATION AND NONRENEWAL
   State laws vary about what a company can do if they don't want to have your business any longer. Usually they cannot cancel unless there are unusual circumstances. It is easier for them just to not renew your policy at the anniversary date. You may appeal such decisions to your state insurance commissioner. Usually there are laws that govern when the company can raise your rates because of bad accident or law observance history.

   There is one more source of information about insurance that you may turn to. That is the office of the Insurance Information Institute. You can call them at 800-221-4954.

   Good driving!

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