Motorcycle Insurance FAQ
Answers to frequently asked questions about car insurance.
What is liability insurance?
If you are at fault in a car accident, liability insurance pays for
the damages that you cause to someone else. It does not pay for your own
damages. There are two kinds of liability insurance: bodily injury and
property damage. Bodily injury expenses include medical bills, rehabilitation
expenses, and lost wages. Property damage expenses include the repair or
replacement of any items belonging to another person that you damage or
Every state except Mississippi, New Hampshire, Tennessee and Wisconsin
requires some level of liability coverage. To find out what your state
requires, you can check with your state department of insurance, or you
can refer to http://www.insure.com/auto/. There you can find information
about minimum coverage requirements, along with links to websites maintained
by each state's department of insurance.
Who is usually covered by automobile liability insurance?
Liability insurance usually covers the following people:
Named insured. This is the person or people named in the policy,
no matter what car they are driving.
Spouse. Even if the spouse of the named insured is not named on
a policy, liability insurance almost always covers him or her, unless the
couple does not live together.
Other relative. This refers to anyone living in the household with
the named insured who is related to the insured by blood, marriage or adoption,
usually including a legal ward or foster child.
Which vehicles are normally covered under an auto insurance liability
Anyone driving the insured vehicle with permission. Someone who
steals the car is not covered.
Named vehicles. An accident in a non-named vehicle is covered only
if a named insured (see above) was driving.
Added vehicles. This includes any vehicle with which the named insured
replaces the original named vehicle, and any additional vehicle the named
insured owns during the policy period (you may be required to notify the
company of the new or different vehicle within 30 days after you acquire
What is uninsured or underinsured motorist coverage?
Temporary vehicles. A temporary vehicle is any vehicle, including
a rental vehicle, that substitutes for an insured vehicle that is out of
use because it needs repair or service, or has been destroyed.
Uninsured or underinsured motorist coverage (UM coverage) pays for
your injuries if you are struck by a hit-and-run driver or by someone who
does not have adequate insurance -- either because they have no coverage
or because they do not have enough coverage -- to pay for your injuries.
Normally, this type of coverage is limited to bodily injury, and it will
not pay for damage to your vehicle or for other types of property damage.
To get that kind of coverage, you will have to add collision coverage to
Who is usually included in my uninsured/underinsured motorist coverage?
Most UM coverage will pay up to your policy's UM limits for injuries
What are the limits on my ability to collect under an uninsured/underinsured
you or a relative who lives with you, while a driver or passenger in the
vehicle named in your UM insurance policy or any other vehicle, or while
anyone else driving your insured vehicle with your permission, and
anyone else riding in the vehicle named in your insurance policy, or in
any other vehicle you are driving but which you do not own.
UM coverage usually limits your ability to collect -- and the amount
you receive -- as follows:
What is collision coverage?
If your accident involves a hit-and-run driver, you must notify the police
within 24 hours of the accident.
If your accident involves a hit-and-run driver, the driver's car must have
actually hit you -- being forced off the road by a driver who disappears
is not sufficient.
Your UM coverage will be reduced by any amounts you receive under other
insurance coverage, such as your personal medical insurance or any applicable
workers' compensation coverage.
If you or a relative are injured by an uninsured motorist while you are
in someone else's car, your UM coverage will be secondary to the UM coverage
of that other car's owner.
Collision coverage will pay for the repairs to your own vehicle if
you are the one who is at fault in the accident. (Ideally, if the other
party is at fault in the accident, their property damage liability insurance
will pay for the repairs to your car.) Collision coverage is usually the
most expensive type of auto insurance. Before choosing this kind of coverage,
assess the value of your car to make sure it is worth the amount you will
be paying in premiums. The insurance company will usually give you only
the actual cash value of your car and not the amount that you will have
to spend to replace your car. If you have an older car that does not have
a very high actual value, it will probably not be worth it for you to carry
this kind of coverage.
What is comprehensive coverage?
Comprehensive coverage pays for damage to your car that was caused
by events other than a car accident. Covered events can include theft,
fire, vandalism, natural disasters -- even hitting a deer. Comprehensive
coverage, like collision coverage, usually insures only the actual value
of your car and not the replacement value. Before choosing this kind of
coverage, check the value of your car. If your car has an extremely low
value, paying the high premiums of comprehensive coverage may not be the
most fiscally responsible thing to do. You'd be better off taking that
money and putting it into a savings account or mutual fund in case of car
How do I determine the actual value of my car?
The actual value of your car is the amount that your car was worth
at the time that it was damaged or destroyed. Unless your car is brand
new or a collector's item, this value is usually less than the replacement
value -- that is, what it would cost to repair damages to your vehicle
with materials of similar kind and quality. You can find the actual value
of your car by going to a library or bookstore and referring to a Kelley
Blue Book. You can also find the value online at the Kelley website at
What is no-fault automobile insurance?
About half the states have some form of no-fault law that requires
drivers to carry insurance that will pay for their medical bills and lost
wages -- up to certain dollar amounts -- regardless of who was at fault
in an accident. The intent of no-fault laws is to eliminate injury liability
claims and lawsuits in small accidents. The advantage of no-fault insurance
is prompt payment of medical bills and lost wages without any arguments
about who caused the accident. But most no-fault insurance -- which is
often referred to in policies as Personal Injury Protection (PIP) -- provides
extremely limited coverage:
To find out whether your state is a no-fault state, you can check with
your state department of insurance, or you can refer to http://www.insure.com/auto/,
which has state-by-state explanations of insurance requirements in addition
to links to websites maintained by each state's department of insurance.
No-fault pays benefits for medical bills and lost income only. It provides
no compensation for pain, suffering, emotional distress, inconvenience
or lost opportunities.
No-fault coverage does not pay for medical bills and lost income higher
than the PIP limits of each person's policy. PIP benefits often fail to
reimburse fully for medical bills and lost income.
No-fault often does not apply to vehicle damage; those claims are paid
under the liability insurance of the person at fault, or by your own collision
insurance if you carry it.
When No-Fault Benefits Aren't Enough
All no-fault laws permit an injured driver to file a liability claim,
and lawsuit if necessary, against another driver who was at fault in an
accident. The liability claim permits an injured driver to obtain compensation
for medical and income losses above what the PIP benefits have paid, as
well as compensation for pain, suffering and other general damages.
Whether and when you can file a liability claim for further damages
against the person at fault in your accident depends on the specifics of
the no-fault law in your state. Some states have "add-on" no-fault laws
that put no restrictions on your right to file a liability claim in addition
to your PIP claim. In these states, you can always file a liability claim
against the person at fault for all damages in excess of your PIP benefits.
Other no-fault states have different types of thresholds that an injured
person must reach before being permitted to file a claim for full compensation
against those at fault for an accident. Some states have a monetary threshold
only, some a serious injury threshold only, and still others have both.
States with both requirements permit a liability claim if an injured person
meets either one.
My auto insurance rates seem to keep going up. How can I cut some
of the cost?
Here are a few suggestions for ways to reduce your premiums:
Shop around for insurance. Just because your current company once offered
you the best deal doesn't mean it's still competitive.
Increase your deductibles.
Reduce your collision or comprehensive coverage on older cars.
Find out what discounts are available from your company (or from a different
company). Discounts are often given to people who:
use public transit or carpool to work
take a class in defensive driving (especially if you are older)
own a car with safety features such as airbags or anti-lock brakes
install anti-theft devices
are students with good academic records, or
have no accidents or moving violations.
Find out which vehicles cost more to insure. If you're looking to buy a
new car, call your insurance agent and find out which cars are expensive
to repair, targeted by thieves or involved in a higher rate of accidents.
These vehicles all have higher insurance rates.
Consolidate your policies. Most of the time you will pay less if all owners
or drivers who live in the same household are on one policy or at least
are insured with the same company.