The Basics

An auto insurance policy is actually a package of different coverages. Most states require you to purchase a minimum amount of certain kinds of coverage. But if you're interested in protecting yourself from a lawsuit or from wicked repair bills, then it makes sense to buy more than what's required.

Liability Insurance
Liability coverage is the foundation of any auto insurance policy, and is required in most states. If you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to third parties in the accident, including legal bills. Bodily injury expenses include medical bills and lost wages. Property damage expenses pay for the repair or replacement of things you wrecked. The third party may also decide to sue you in order to collect "pain and suffering" damages.

Remember, if you cause a serious accident, minimum insurance may not cover you adequately. That's why it's a good idea to buy more than what your state requires.

Liability Lingo: Insurance types usually refer to liability coverage limits as a series of three numbers. For example, your agent might say that your policy carries liability limits of 20/40/10. That stands for $20,000 in bodily injury coverage per person, $40,000 in bodily injury coverage per accident, and $10,000 in property damage coverage per accident.

Collision And Comprehensive Coverages
Collision
If you cause an accident, collision coverage will pay to repair your vehicle. You usually can't collect any more than the actual cash value of your car, which is not the same as the car's replacement cost. Collision coverage is normally the most expensive component of auto insurance. By choosing a higher deductible, say $250 or even $500, you can keep your premium costs down. However, keep in mind that you must pay the amount of your deductible before the insurance company kicks in any money after an accident.

Insurance companies often will "total" your car if the repairs the company must pay exceed what the car is worth.

Comprehensive
Comprehensive coverage will pay for damages to your car that weren't caused by an auto accident: Damages from theft, fire, vandalism, natural disasters, or hitting a deer all qualify. Comprehensive coverage also comes with a deductible and your insurer will only pay as much as the car was worth when it got wrecked.

Because insurance companies normally will not pay you more than your car's book value, it's helpful if you have a rough idea of this amount. Most insurance adjusters use the Kelley Blue Book. The National Automobile Dealers Association also publishes the Official Used Car Guide, which is updated each month. If your car is worth less than what you're paying for the coverage, you're better off not having it.

Replacement Cost vs. Actual Cash Value: Replacement cost is the amount it would take to replace your vehicle or repair damages with materials of similar kind and quality, without deducting for depreciation. Depreciation is the decrease in vehicle value because of age or wear and tear.

Actual cash value (ACV) is the value of your property when it is damaged or destroyed. Claims adjusters usually figure ACV by taking the replacement cost and subtracting depreciation. For example, an auto that costs $5,000 may have a reasonable "life" of

5 years. If it is destroyed after 10 years, its actual cash value will be substantially less than $5,000 because of depreciation.

Advice: It's usually better to go with replacement cost coverage. Although the cost is higher, in most cases the extra protection may be worth it. Make sure to ask your agent which kind of coverage you have on your auto policy.

Medical Payments, PIP, And No-Fault Coverages

MedPay will pay for your and your passengers' medical expenses after an accident. These expenses can arise from accidents while you're driving your car, someone else's car (with their permission), and injuries you or your family members incur when you're pedestrians. The coverage will pay regardless of who is at fault, but if someone else is liable, your insurer may seek to recoup the expenses from them.

Personal injury protection (PIP) and broader "no-fault" coverages are expanded forms of medical payments protection that may be required in your state. Some states have optional PIP or no fault. Expanded features include lost wages and payments for child care.

Uninsured/Underinsured Motorists Coverages

Uninsured motorists (UM) coverage pays for your injuries if you're struck by a hit-and-run driver or someone who doesn't have auto insurance. It is required in many states.

Underinsured motorists (UIM) coverage will pay out if the driver who hit you causes more damage than his or her liability coverage can cover. In some states, UM or UIM coverage will also pay for property damages.

Add-On Features

Several supplemental auto coverages are available, either as separate premium items or included in augmented policies.

• Rental reimbursement, a common add-on, covers vehicle rentals required because your car is damaged or stolen.

• Coverage for towing and labor charges in case of a road breakdown is also common.

• Auto replacement coverage guarantees car will be completely repaired or replaced, even if these costs exceed its depreciated value.

For more in-depth information on auto, health, home and life insurance, visit insure.com.

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Minimum Levels of Required Auto Insurance

All 50 states have different requirements when it comes to auto insurance. In some states, motorists can't register a car without showing proof that they have liability insurance, while other states use an "honor system" that doesn't ask for proof of insurance until drivers have accidents or tickets on their records.

Only five states do not require motorists to carry liability coverage, but those that do demand that drivers purchase at least the state's minimum. In other words, if you live in a state that requires liability insurance, you can't walk into your insurance agent's office and buy only $2,000 worth of liability coverage. If you're going to buy it, you must purchase at least the minimum amount required.

How to read liability limits

The following information will help you understand the table of liability limits.

First number: bodily injury liability maximum for one person injured in an accident.
Second number: bodily injury liability maximum for all injuries in one accident.
Third number: property damage liability maximum for one accident.

So, looking at the table, you find that in Alabama the minimum liability limits are $20,000 for injury liability for one person in an accident, $40,000 for all injuries in an accident, and $10,000 for property damage in an accident.

What is no-fault?

Some states have "no-fault" laws, meaning your auto policy must pay medical bills for injuries suffered in an auto accident regardless of who caused the accident. The laws were enacted in an attempt to reduce auto-injury fraud and keep insurance cost down.

¹ Low-cost policy minimums for Los Angeles and San Francisco for eligible low-income drivers in the California Automobile Assigned Risk Plan are 10/20/3, effective July 1, 2000, to Jan. 1, 2004.
²Only property-damage liability is compulsory.
³Drivers can choose a standard or basic policy. Basic policy limits are 10/10/5; only property-damage liability is mandatory.
⁴Liability rises to 50/100 if injury results in death.

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What Affects the Price of Auto Insurance?

What you pay for auto insurance varies by company and by:

• What you buy. Coverages are priced individually so how much you'll pay depends upon: 1) How much coverages you buy, and 2) How much each will pay. Deductibles lower the price by shifting part of a loss to you.

• What kind of car you drive affects how much you pay, since coverage on your vehicle depends on its value. Generally, the more expensive the car, the more you pay.

• Where you drive. Drivers tend to have more losses if they live where there's a high rate of accidents or vandalism. Generally, urban drivers pay more for insurance than those in small towns or rural areas.

• How much you drive. The chance of an accident generally increases as driving increases. People who use their car for business and long-distance commuting normally pay more than those who drive less.

• Your age, sex, and marital status. Accident rates are higher for all drivers under age 25, especially young males and single males. Insurance prices in most states reflect these differences.

• Your driving record also affects price. Drivers who cause accidents generally must pay more than those who are accident-free for several years.

What can I do to hold down the cost of my premiums?
 

• If you're shopping for a car, consider how your choice will affect premiums. Some insurers increase premiums for cars more susceptible to damage or occupant injury, and lower rates for those that fare better than the norm.

• Ask about discounts for good students, having more than one car insured, accident-free driving, and others. Please select a state or province to learn more about the specific discounts available in your area.

• Consider joining a car or van pool, or finding other transportation to work. If you reduce your driving mileage enough, you may lower your premiums.

• Drive carefully.

For more in-depth information, visit State Farm.

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Nine Ways to Save on Your Policy

The Insurance Information Institute has nine suggestions to help you save on your auto insurance policies. Auto insurance premiums can vary from company to company and from coverage to coverage, so be sure to shop around.

1. Comparison shop.
Use consumer information provided by your state's insurance department. Where they're available, insure.com has published state insurance department auto rate guides. These guides tell you what coverages you need and show you sample rates, usually from th

e biggest companies. Visit your state's page by choosing your state from the menu at the top of this page.

2. Ask for higher deductibles.
When you file a claim, a deductible is the amount of money you pay before your insurance company kicks in. Higher deductibles mean lower premiums. For example, increasing your deductible from $200 to $500 on collision coverage could reduce your cost by as

much as 30 percent.

3. Drop collision and/or comprehensive coverage on older cars.
If you own a car that's worth less than $1,000, you'll probably pay more for the coverage than you would ever collect on a claim. Your bank can tell you how much your car is worth, or check out the Kelley Blue Book.

4. Buy a "low-profile" car.
Cars that are expensive to repair or that have a high theft rate generally have higher insurance costs.

5. Take advantage of low-mileage discounts.
Some insurance companies offer discounts to drivers who put fewer than a predetermined number of miles on their vehicles each year.

6. Consider insurance cost when making a move.
Costs tend to be lowest in rural communities and highest in cities, where more traffic congestion occurs.

7. Find out about discounts for automatic seatbelts or air bags.
Your insurance agent should let you know about these discounts when you purchase your coverage. Most policies give discounts for air bags and automatic seatbelts.

8. Ask about antilock brakes.
Some states, including Florida, New Jersey, and New York, require insurers to give discounts for cars equipped with antilock brakes. Some insurance companies give the discount no matter where you live.

9. Ask about other discounts.
Some companies offer discounts for insuring more than one car, also insuring your home with them (known as a multiline discount), having no accidents in three years, being a driver over 50, taking driver training courses, and having antitheft devices. Plus, remember good-student discounts when you are insuring a teen driver.

For more in-depth information on auto, health, home and life insurance, visit insure.com.

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What are My Options?

Deductibles
The deductible is the portion of a covered loss that is your responsibility. The deductible, when applicable, applies to each covered loss. Although deductibles vary by state, they are typically available in amounts such as $100, $250, $500, or $1000.

For example, if you had a $500 deductible, you would need to pay $500 of the covered loss.

Generally speaking, higher deductibles lower your premium, but increase the amount you must pay out of your own pocket if a loss occurs. Ask yourself how much you are willing to pay in order to save on premium.

Coverages
Coverages are broken down, according to purpose, but are generally combined into one policy. Coverage descriptions are general information and not statements of contract because policy provisions, endorsements, limits and requirements vary by state. The most common coverages are:

• Liability.. When an insured is legally responsible, liability coverage pays for accidental bodily injury and property damages to others. Bodily injury damages include medical expenses, pain and suffering, lost wages, and other special damages. Property damage includes damaged property and may include loss of use. Liability coverage also pays defense and court costs. State laws usually determine the minimum amounts, but higher amounts are available.

• Personal Injury Protection. Required in some states. Pays medical expenses for covered persons, regardless of fault, for treatment due to an auto accident. It may also pay for rehabilitation, lost earnings, replacement of services (child care if a parent is disabled, for example) and funeral expenses.

• Medical Payments. Available in most states. Pays medical and funeral expenses for covered persons, regardless of fault, when those expenses are related to an auto accident.

• Collision. Pays for damage to a covered vehicle caused by collision with another object or by upset of the car. A deductible is required.

• Comprehensive. Pays for loss of or damage to a covered vehicle, except loss caused by collision or upset. Examples include loss caused by fire, wind, hail, flood, vandalism, theft or impact with an animal. A deductible may apply.

• Uninsured Motorist. Pays damages when a covered person is injured in an auto accident caused by a driver who does not have liability insurance. In some states this coverage may also pay for property damage.

• Underinsured Motorist. Pays damages when a covered person is injured in an auto accident caused by another driver who has insufficient liability insurance. Application of this coverage varies by state and depends upon policy provisions.

• Rental Reimbursement. Pays expenses incurred for renting a car when your auto is disabled due to an auto accident. Daily allowances or limits vary by state or policy provisions.

• Emergency Road Service. Pays expenses incurred for having your auto towed as a result of a breakdown. Towing limits vary by state or policy provisions.

This information is only a general description of the available coverages and is not a statement of contract. All coverages are subject to all policy provisions and applicable endorsements.

Who is covered under an auto policy?
Your policy usually covers you, your spouse, and other relatives who live primarily in your household and others who have permission to drive one of your covered vehicles.

For more in-depth information, visit State Farm.

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The Airbag Controversy - Should You Install an On/Off Switch?

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Aggressive Driving:  Asking for Trouble

Aggressive drivers are becoming more visible, according to a Media and Injury Prevention Program at the University of Southern California. "Aggressive driving is now the most common way of driving," says co-director Sandra Ball-Rokeach. "It's not just a few crazies- - it's a subculture of driving." A recent study by the Automobile Association of America (AAA) revealed that 44 percent of drivers in Washington, DC, worry more about aggressive drivers than about drunken drivers. Stories of aggressive drivers chasing, punching or shooting their victims are common. But you might avoid becoming a victim if you know how to remain calm and avoid acting upon your feelings. Sure, people cut you off, honk their horns or pass you on the right, but reacting angrily only makes matters worse. Results can be deadly.

Are You an Aggressive Driver?

Do you:

• Speed up when someone tries to pass you?

• Tailgate people who are going slower than you?

• Weave in and out of traffic?

• Pass cars on the right?

• Flash your headlights at vehicles?

• Overuse your horn?

• Make obscene gestures?

• Yell out your window at people?

• Race for a position on the highway?

The National Highway Traffic Safety Administration considers some of these behaviors aggressive. So next time, think twice before doing any of these things.

Safety and Preventative Measures

If you encounter an aggressive driver, remember these tips:

• Don't block the passing lane.

• Avoid blocking the right-hand turn lane.

• Don't take more than one parking space.

• Don't tailgate.

• Don't stop in the road to talk with a pedestrian or other drivers.

• If you travel slowly, pull over to allow traffic to pass you.

• Avoid eye contact with an aggressive driver.

• Keep your eyes on the road.

• Keep away from erratic drivers.

• Don't challenge other drivers by speeding up to hold your own in your travel lane.

• Ignore gestures; do not return them.

Aggressive Driving Facts

The National Highway Traffic Safety Administration (NHTSA) says, about 66 percent of all traffic fatalities annually are caused by aggressive driving behaviors, such as passing on the right, running red lights and tailgating.

At least 20 percent of adults have hostility levels serious enough to be a health hazard. (Source: USA TODAY)

Aggressive driving incidents are defined as events in which an angry or impatient driver tries to kill or injure another driver after a traffic dispute. (Source: U.S. News & World Report)

Aggressive driving incidents have risen by 51 percent since 1990. And 37 percent of these incidents involved firearms. (Source: U.S. News & World Report)

The number of drivers on the road is increasing. As of 1990, 91 percent of people drove to work.

Commuters in one-third of the largest cities spent well over 40 hours a year in traffic jams. (Source: U.S. News & World Report)

Aggressive driving may be on the upswing, so remember not to panic and avoid confrontations when possible.

For more in-depth information, visit State Farm.

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Cell Phone Use May Dial Up Crashes

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Tips

It's traumatic enough to be in an automobile accident, but imagine finding out that the accident is no accident.

The NICB recommends the following tips for consumers to protect themselves from staged vehicle collisions:

• When driving, look beyond the car in front of you. If you see traffic slowing, apply the brake. Do not wait for the car directly ahead of you to brake first.
• Allow ample space between your car and the car ahead of you so there is time to react to a sudden stop. As a rule, your car should be one car length back for every ten miles an hour traveled. For example, a car traveling 60 miles an hour should be six car lengths back.
• Be especially careful when turning into a lane that allows for two vehicles to turn left simultaneously. People committing staged collisions often prey on cars that cross the center line, purposely sideswiping the victim's car.
• If you are in a collision, count the number of passengers in the other car. If possible, get their names, telephone numbers and driver's license numbers. Often more people will file claims than were actually in the car.
• Call the police to the scene and get a police report with the police officer's name, even if the damage is negligible. If the report describes damage to the claimant's car as a nick, it is harder for them to damage the car later and try to collect a larger claim.
• Carry a disposable camera in your glove compartment. Take as many pictures of the other car and its passengers as possible.

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Children and Seatbealts

Do's

• Do restrain your child appropriately for his or her age, weight and height.
• Do follow directions that come with the child safety seat, as well as the child passenger restraint directions in your vehicle's owner's manual.

Don'ts

• Don't put your child in the front seat. Children 12 and under should sit in the back seat appropriately restrained.
• Don't place a child in front of an airbag because they are made to protect adults, not children. Children 12 and under should ride in the back seat, away from air bags.

Until 20 pounds and 1 year old:

• Use rear-facing infant seat or rear-facing convertible seat.
• Put the car seat carrying handles down on the infant seat.
• Route harness straps in lower slots, at or below shoulder level.
• Fasten harness clip at armpit level.
• Never place a rear-facing infant in the front seat with an airbag.
• Keep harness straps snug.
• Install child passenger restraint at no greater than a 45-degree angle.

20 to 40 pounds and more than 1 year old:

• Use forward-facing car seat.
• Route harness straps in upper slots, at or above shoulder level.
• Fasten harness clips at armpit level.
• Keep harness straps snug.

40 to 80 pounds and less than 4 feet 9 inches tall:

• Use a forward-facing, belt positioning booster seat with lap and shoulder seat belt.
• Place shoulder strap over the shoulder and snug across the chest.
• Place lap belt low and tight on hips, NOT over stomach.
• Make sure shoulder strap is never across the neck, face or arm.

More than 80 pounds, more than 4 feet 9 inches tall (once belt-positioning booster seat is outgrown):

• Use a lap and shoulder seat belt.
• Shoulder belt fits over the shoulder and across the chest.
• Lap belt should fit low and tight on hips, NOT over stomach.
• Shoulder belt should NEVER be placed under arms or behind back.

For more in-depth information, visit State Farm.

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What To Do When Your Auto Insurer Totals Your Car

What happens when a traffic accident devastates your car? It's not a scenario most drivers want to think about. Still, it's one you should consider before it happens, especially if you're shopping around for an auto insurance company.

Most of us use the term "total" in casual conversation, as in, "Man, did you hear Dinkins totalled his car driving back from the party last Saturday?" When you total something, you wreck it completely. That's not too far from the insurance industry's definition of a totalled car: When you total your car — or when someone else does — you cause so much damage to the car that it would cost more to fix it than what it's actually worth.

It sounds as though your car would have to suffer some major damage in order for an insurance company to total it, but it's actually a function of the car's worth. Minor damage to a 15-year-old Buick might result in totaling the car, while major damage to a brand-new Saab might not. Auto insurance claims adjusters usually determine a car's actual cash value by using their company's proprietary database of prices. Generally speaking, insurers use the National Auto Dealers Association (NADA) Official Used Car Guide or the Kelley Blue Book as secondary sources only.

But what if you don't agree with your insurance company's assessment of the damages? What if you really love your car and you don't want them to take it away? Do you have any recourse?

Yes and no. When you buy an auto policy, you sign a contract with your insurance company. You can't force your insurer to pay out more than your car is worth: That's part of the contract. But, as Bob Hunter of the Consumer Federation of America says, you're supposed to be "made whole" by your insurer. "You should be put back into relatively the same spot that you were before the accident," Hunter tells insure.com.

Where Are They Taking My Baby?

If the cost of repairing your car exceeds a percentage of the insurance company's estimates of its worth, your car is a total loss. Some company total vehicles at 51 percent of its actual worth; some total at 80 percent. The insurance company will pay you

the car's actual cash value, minus any deductible on your coverage. Then the car goes to a salvage yard, where it's auctioned off to the highest bidder and usually chopped up for parts. The insurance company keeps whatever money it got for the car in salvage.

As another example, State Farm insures about 37 million cars. It estimates that it totals about 500,000 cars a year in auto claims.

If your car is a total loss but you want to have it repaired anyway, you should be able to retain it. Your insurer still has to pay you the car's actual cash value, minus the deductible and minus what the company would have gotten for it at the salvage yard. You should let your claims adjuster know up front that you want to keep the car. You're then going to have to pay for the repairs yourself.

Make sure you think your decision through. If you decide to give up your car but then you change your mind, you're going to have hard time buying it back at auction.

"There's really no need to give the car to the salvage yard and have the insured go through [the auction] process when we can just turn it over to the insured directly," says Mike Treviño, a spokesperson for USAA. However, you may not be so lucky with your company. Sharon Frazier, a spokesperson for State Farm, the nation's largest automobile insurer, says that the company looks at each situation on a case-by-case basis. If your car is a newer model and its parts would fetch a lot on the auction block, your auto insurance company may decide to send it to salvage despite your protests.

License To Buy
In most states, your car is gone for good once it goes to auction. Regulations vary, but in many places you won't even be able to attend the auction without a special license for auto salvagers or auto dealers. It's good to call the auction house beforehand to see if you will need a license in order to bid on your car.

If you do get your car back from your insurer, you'll be left with a badly damaged car and only a fraction of the money needed to repair it. "You could do it that way but you've got to be realistic," says Hunter. If the car is really beyond repair, you'll be left with a carcass of a car and a check that's not quite enough to buy you a new one.

If the car is repairable, make sure you have all the necessary work done. Insurers can refuse to completely cover a car that's been totaled if it hasn't passed a department of motor vehicle inspection — often a necessary step in getting your car back on the road. As long as it passes DMV inspection, however, you should have no problem buying liability insurance. Physical damage coverage — comprehensive and collision insurance — is a different story. Some insurers won't sell you physical damage coverage if you're driving a previously totalled car. (For more about the inspection process, turn to "Inside the insurance auto-auction pipeline" at insure.com.)

David Smolensky of the National Association of Independent Insurers offers this sage advice: "Move on. The car's been totaled."

The Price Is Wrong
Hunter says the majority of the complaints he hears are not from people who want their old, crashed cars back, but from people whose insurance companies didn't give them enough money to buy a similar car. "If I had a five-year-old Toyota Cressida, I have a right to get a five-year-old Toyota Cressida with comparable miles and comparable options," Hunter explains. However, your insurance company's estimate of what that comparable car will cost may differ from the realities of the marketplace.

If you don't agree with your insurer's estimate of your car's actual cash value, you can choose to bring in an independent appraiser — probably at your own expense. "It could be that two or three appraisers are brought in," says Frazier of State Farm. "If one appraiser is $2,000 apart from the other, you'll need another one to come in to settle the matter."

Bring In The Lawyers

If negotiating with the insurance company brings no results, you do have two more options: arbitration and litigation. Arbitration is a process for settling complaints that's less of a hassle than actual litigation. It can be binding or nonbinding; with nonbinding arbitration, you can still take the matter to court if you're not satisfied.

Hunter cautions that arbitration — while less costly and time-consuming than a lawsuit — is more likely to go in favor of the insurance company. "You're always at a disadvantage when you take it to arbitration because [the insurance companies] have more practice with it," he says. Arbiters have to deal with these insurance companies all the time, so they're not likely to want to get the companies steamed, he adds. You can bring an attorney with you to arbitration, which may increase the odds of a satisfactory outcome for you.

While landing in a courtroom over a totaled-vehicle settlement isn't very likely, knowing your options is an advantage that consumer advocates continually stress: "An informed consumer is the best defense against unfair settlement practices."

For more in-depth information on auto, health, home and life insurance, visit insure.com.

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Vehicle Fraud:  The Schemes

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Vehicle Theft Prevention Devices

Protecting Your Vehicle
Professional car thieves can steal any car, but make them work for yours. The National Insurance Crime Bureau recommends common sense and a layered combination of anti-theft devices to thwart thieves.

All vehicle theft prevention equipment helps deter criminals. Many anti-theft devices are also effective in protecting your vehicle from burglaries and vandalism.

Steering Wheel Lock: A long metal bar with a lock that fits on the steering wheel and is designed to prevent the steering wheel from being turned. Also acts as a visual deterrent for thieves looking in car windows.

Average Cost: $25 to $100

Benefits: Inexpensive way to keep would-be thieves away. Especially good device to use when layering protection.

Car Alarms: The typical car alarm is equipped with motion sensors, impact sensors and a loud siren or series of tones in the 120-decibel range.

Average Cost: $150 to $1,000

Benefits: The best alarms arm themselves automatically when you leave the vehicle and include an automatic kill switch. The best models also flash the headlights and honk the horn in addition to sounding a siren.

Kill Switches: Kill switches prevent the flow of electricity or fuel to the engine until the switch is activated. Starter disablers are also growing in popularity.

Average Cost: $10 to $125

Benefits: It's a hidden switch that needs to be flipped on for the car to start. For their effectiveness as a security device, kill switches are for the most part inexpensive and easy to install.

Electronic Tracking Devices: An electronic transmitter hidden in the vehicle which emits a signal that is picked up by the police or a monitoring station.

Average Cost: $400 to $1,500

Benefits: Very effective in helping authorities recover vehicles before they can be stripped or chopped up.

Electronic Keys: Some car manufacturers have pre-installed electronic anti-theft systems that allow the vehicle to operate only with a correctly coded key.

Average Cost: Standard item in some models.

Benefits: Systems are virtually invisible to thieves, easy to use and reliable.

Steering Column Armored Collars: Collars prevent thieves from breaking into the steering column to hot-wire the vehicle. Some are installed permanently and others must be installed manually each time the driver leaves the vehicle.

Average Cost: $100 to $200 installed

Benefits: The collar provides an excellent line of defense for vehicles which can be easily stolen by breaking open the steering wheel column.

Tire Locks: Similar to the circular steel "boots" used by many larger city police departments, tire locks make the car nearly impossible to move. The tire locks are also effective in deterring would-be thieves.

Average Cost: $80 to $200

Benefits: Greatly hampers thieves who are looking to make a quick getaway. Not only is the tire lock a strong visual deterrent, but it also provides a formidable challenge for would-be car thieves.

Window Etching: Etching the vehicle identification number onto the window as well as other parts of the car discourages thieves from taking the vehicle and also aids in recovering the vehicle if it is stolen.

Average Cost: $20 to $100 (Some vehicle theft prevention groups provide etching for free.)

Benefits: Chop shop rings thrive on vehicles that have easily removable VINs or none etched on at all. By etching the VIN on important parts of the vehicle, you make your vehicle less attractive to thieves.

Theft-Deterrent Decals: Typical decals identify the vehicle is protected by either an alarm system or national theft prevention company.

Average Cost: $2 to $5

Benefits: Inexpensive way to bluff a car thief.

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Vehicle Theft Prevention: Consumer Habits

Report: According to a NICB/Gallup study, 1 in 10 Americans surveyed have been victimized by vehicle theft.

Don't Become a Statistic
 

• Close your windows, lock your doors and take the keys with you.
• Park with front wheels turned sharply toward the curb and apply your emergency brake to discourage towing.
• Activate any anti-theft devices you may have. Better yet, install a device that is passive, automatically activating itself a short time after the key is removed.
• Put all packages and personal items out of sight. Items left in the open invite theft.
• Drive in the center lane when on highways. This reduces your chances on becoming a bump-and-run theft victim.
• Use your garage at home. Lock both your vehicle and the garage.
• Don't park on the outskirts of a shopping center, motel or other parking lots. Park near the entrance, especially if you will be leaving your car unattended for an extended period.
• Etch your vehicle identification number in hard-to-find spots, using an engraver or dye marker. Hide business cards or address labels on the bottom of floor mats and under the seat, and drop them down window channels into the door interior.

presented by the National Insurance Crime Bureau (NICB)

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Glossary Index By Letter

Additional Insured or Additional Interest
A person or an organization, other than the named insured or covered person, who is protected under the named insured's auto policy. If an auto is leased, the leasing company may want to be listed as an Additional Insured as well as a lien holder or loss payee. This protects the leasing company if it's named in a lawsuit for an accident caused by a policyholder.

Anti-Theft Device
Devices designed either to reduce the chance an auto will be vandalized or stolen, or assist in its recovery. Examples include car alarms, keyless entry, starter disablers, motion detectors, parts of the vehicle etched with the Vehicle Identification Number, and recovery systems.

Assigned Risk
A risk not ordinarily acceptable to insurers which is, according to state law, assigned to insurers participating in a plan in which the insurers agree to accept their share of these risks.

Automobile Insurance
A form of insurance that protects against losses involving autos. Different types are available depending on the needs and wants of those buying policies. Examples of coverage types include: bodily injury liability, property damage liability, medical payments, and collision and comprehensive coverage for physical damage to the insured's vehicle.

Automobile Insurance Plans
The name for "assigned risk" plans. These are plans set up and monitored by the state to help people who are unable to secure auto insurance through standard insurance carriers. See Assigned Risk.

Choose a Letter

Basic Auto Policy
Although still used today to insure substandard risks, two-wheel motorized vehicles, and commercial autos, the Basic Auto Policy has been primarily replaced by the Personal Auto Policy, which combines both physical damage coverage and liability insurance for claims arising out of the ownership or use of a vehicle.

Basic Limits of Liability
The least amount of liability coverage that can be purchased, which is generally equivalent to the minimum amount required by state law. In determining rates, a carrier will use the basic limits to develop the base rates. If an insured person wants higher limits, the carrier applies an increased limits factor to the base rate in calculating the new premium for the increased coverage.

Bodily Injury Liability
Legal liability for causing physical injury or death to another.

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Collision Insurance
This covers loss to the insured person's own auto caused by its collision with another vehicle or object.

Combined Single Limit
Bodily Injury and Property Damage coverage expressed as one single amount of coverage.

Commission
That portion of the premium paid to the agent as compensation for the agent's services.

Comprehensive Coverage
Covers damage to a vehicle caused by an event other than a collision or overturn. Examples include fire, theft, vandalism, and falling objects.

Continuous Coverage or Continuous Liability Insurance
Continuous coverage refers to the length of time you have maintained insurance on your vehicle.

Covered Person
This refers to the individuals (named insured, spouse, resident relatives, etc.) insured under a policy contract.

Customized Equipment/Special Equipment
Items not included in standard insurance options available for cars. These may include extra electronic equipment, special paint or exterior items, or amenities added to the inside of a van or truck.

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Deductible
The amount an insured person must pay before the insurance company pays the remainder of each covered loss, up to the policy limits.

Defensive Driver Course
These are classes either offered through or approved by Departments of Motor Vehicles to enhance driving skills. These courses may make drivers eligible for discounts on their premiums. Courses taken for traffic school because of a moving violation are not eligible.

Drive-Other-Car Endorsement
Optional coverage that broadens the definition of a covered auto to include non-owned vehicles the insured person operates.

Driver Education
State accredited educational course that consist of at least 30 hours of professional classroom instruction.

Driver Training
State accredited training course that consists of at least six hours of behind-the-wheel professional instruction.

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Earned Premium
The portion of a premium that has been "used up" during a policy term. With a one-year policy, half of the total premium has been earned after six months.

Effective Date/Inception Date
The date that coverage begins on an insurance policy.

Expiration Date
The date your coverage ends. There is usually a time of day associated with this date, for example, an expiration date of 5/1/2002 at 12:01am. This means your coverage ends one minute after midnight on the date listed.

Extended Non-Owner Liability
An endorsement that provides broader liability coverage for specifically named people operating any non-owned automobile or trailer. It covers non-owned autos, use of autos to carry people or property for a fee, and individuals driving employer-furnished cars who do not own vehicles themselves.

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Family Automobile Policy
Now replaced by the Personal Auto Policy, the Family Auto Policy was a package policy in which both liability and physical damage protection to an insured's vehicle was offered under one policy.

Financial Ratings
Financial ratings reflect a rating organization's opinion on the financial strength and ability to meet ongoing obligations to policyholders. The ratings organizations most commonly identified with the insurance industry are AM Best, Standard & Poor's and Moody's.

Financial Responsibility Laws
Financial responsibility laws require owners and operators of autos to maintain enough money to compensate those they injure. Liability insurance is the most common way to satisfy these requirements.

First Party Benefits
This pays policyholders and others covered by the policy in the event of injury, no matter who caused the accident. The benefits can include medical expenses, loss of income, funeral and death benefits. This may also be called Personal Injury Protection.

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Gap Insurance
If you are making lease or loan payments and you experience a total loss, there may be a difference (gap) between the market value of your vehicle and what you still owe on it. This optional coverage pays the difference.

Good Student Discount
A premium discount for students with high scholastic grades. Some statistical research has shown a relationship between good grades and safe driving.

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Hit and Run
An accident caused by someone who does not stop to assist or provide information.

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ID Card
An identification card issued by your insurance company that provides evidence of liability insurance. Such evidence is required in most states.

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Lapse in Coverage/Policy Lapse
A point in time when a policy has been canceled or terminated for failure to pay the premium, or when the policy contract is void for other reasons.

Lender/Lessor
Your lender is the institution to which you make car payments.
Your lessor is the institution to which you make your lease payments.

Loss Payee/Lien holder
A person or entity with a legally secured insurable interest in another's property, usually a financial institution that loaned money to buy a car. The car is the loan collateral. If the auto is damaged in an accident, loss payments will be made to you and to the loss payee on your policy.

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Medical Payments
This pays for medical and funeral expenses incurred in an auto accident, regardless of fault. It will also cover injuries sustained by passengers in your car, or while you're operating someone else's car (with their permission), in addition to injuries you or your family members incur when you're pedestrians.

Multi-car discount
A discount offered by some insurance companies for those with more than one vehicle insured on the same policy. In some cases, if you drive a company car insured by your company, your own insurance company may give you the multi-car discount.

MVR - Motor Vehicle Record
A motor vehicle record, also referred to as DL printout, or MVR, contains information obtained from an individual's driver license application, abstracts of convictions and accidents.

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Named Insured
Any person, firm or corporation designated by name as the insured person(s) in a policy. Others may be protected by policy definition even though their names aren't on the policy, such as other drivers operating (with consent) the named insured's covered auto.

Named Non-Owner Policy
A policy endorsement for one who operates any non-owned automobile on a regular basis, such as driving a car provided by one's employer.

No-Fault Insurance
Many states have enacted auto accident compensation laws permitting auto accident victims to collect directly from their own insurance companies for medical and hospital expenses regardless of who was at fault in the accident. Although there are many legal variations of no-fault insurance, most states still allow people to sue the negligent party if the amount of damages exceeds a certain state-determined threshold. (see "Threshold Level.")

Non-Owned Auto
Any vehicle that is not owned, borrowed, or leased by the insured, and which is used primarily for a business purpose.

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Per Occurrence Limit
This refers to the cap amount an insurance company will pay for all claims arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by all parties. When Bodily Injury coverage is purchased in split limits, the second limit is the "per occurrence" limit: e.g. $100,000(per person)/$300,000(per occurrence)

Per Person Limit
This refers to the cap amount an insurance company will pay for any one person's injuries arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by each person. When Bodily Injury is purchased in split limits, the first limit is the "per person" limit: e.g. $100,000(per person)/$300,000(per occurrence)

Personal Auto Policy
The most common auto insurance policy sold today. Often referred to as "PAP," this policy is written in simple wording and provides coverage for liability, medical payments, uninsured/underinsured motorist coverage, and physical damage protection.

Personal Injury Protection
The name usually given to no-fault benefits in states that have enacted mandatory or optional no-fault auto insurance laws. Personal Injury Protection (PIP) usually includes benefits for medical expenses, loss of income from work, essential services, accidental death, funeral expenses, and survivor benefits.

Physical Damage
Damage to your covered vehicle from perils including (but not limited to) collision or upset with another vehicle object, fire, vandalism and theft.

Policy
The written documents of a contract for insurance between the insurance company and the insured. Such documents include forms, endorsements, riders and attachments.

Policy Period
The period of time in which a policy is in effect. (For example, six months or one year).

Policyholder
One who maintains ownership in an insurance policy. This may refer to the policy owner or those covered under the policy. See also Named Insured.

Preferred Risk
Any risk considered to be better than the standard risk on which the premium rate was calculated.

Premium
The price of insurance an insured person pays for a specified risk for a specified period of time.

Private Passenger Automobile
A four-wheeled motor vehicle that is subject to motor vehicle registration and used for private personal use.

Pro Rata Cancellation
Termination of an insurance contract before the policy expiration date on which the premium returned to the insured person is adjusted in proportion to the amount of time the policy was in effect.

Property Damage Liability Insurance
Protection against liability for damage to another's tangible property, including loss of use. Although this coverage is different than liability for bodily injury to another person, Bodily Injury and Property Damage Liability protection are generally written together.

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Renewal
The process of keeping an active policy in force through the issuance of a renewal policy.

Rental Reimbursement
This optional coverage will reimburse you for a rental car if your vehicle is disabled due to a covered loss. This coverage will pay all or part of your rental car costs.

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Safe Driver Plan
A rating system that assigns points for traffic convictions and certain accidents. Similar to a merit-rating plan, each point increases the surcharge percentage to the baseline rates.

Short Rate Cancellation
A policy termination in which the refunded premium is not proportional to the amount of time remaining in the policy period due to the fixed expenses incurred by the company. The insured will generally pay more for each day of coverage than if the policy had remained in force throughout the entire policy period.

Split Limit
Any insurance coverage with separately stated limits for different types of coverage. Example: an automobile liability policy of 100/300/50 provides a maximum of $100,000 bodily injury coverage per person, $300,000 bodily injury coverage per accident, and a property damage limit of $50,000 per accident.

Stacking of Limits
The application of more than one policy limit to the same loss or occurrence. In some jurisdictions, courts have required stacking of limits when multiple policies, or multiple policy periods, cover an occurrence. For example, Uninsured motorist bodily injury limits of $100,000/300,000 on two policies owned by the same person may be added together to pay a loss. In this event, the total amount of coverage available for an accident would be $200,000/600,000.

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Term
The length of time for which a policy or bond is in force.

Threshold Level
Under some no-fault insurance laws, the threshold level represents the degree of injury a claimant must establish before being allowed to sue the negligent party. The threshold may be verbal (regarding the severity of the injuries) or a dollar amount ($10,000), or both. For example, with a threshold of $5,000, an injured person may sue if his/her injuries and other economic damages (rehabilitation expenses, loss of income, etc.) exceed $5,000.

Tort
A private wrong or harm (other than a breach of contract) committed against another, resulting in legal liability. A tort is either intentional or accidental (negligent). Automobile liability insurance is purchased to protect one from suits arising from unintentional torts.

Tort Feasor
One who commits a tort.

Towing and Labor Costs
This endorsement, which is added to the physical damage coverage, provides reimbursement up to a specified limit to tow your vehicle or pay for on-site labor costs.

Transportation Expenses
Subject to a daily and maximum dollar limit, this coverage (under the physical damage portion of an automobile policy) pays for transportation expenses incurred by the named insured only in the event of theft of an entire covered auto. Coverage generally begins after a stated minimum waiting period.

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Uninsured Motorists Bodily Injury
Uninsured motorists bodily injury coverage (which must be offered in most states) pays for a covered person's bodily injuries of which an uninsured or hit-and-run motorist is legally liable, but unable to pay.

Underinsured Motorists Bodily Injury
Underinsured motorists bodily injury coverage (which must be offered in most states) pays for a covered person's bodily injuries of which a person with not enough insurance is legally liable.

Uninsured Motorists Property Damage
Uninsured Motorist Property Damage Liability coverage pays for property damages caused by uninsured drivers.

Unearned Premium
The portion of your premium remaining on your policy term. For example, with a six-month premium, at the end of the first month of the premium period, five-sixths of the premium is unearned by the insurance company.

Unsatisfied Judgment Fund
Some states have established laws to reimburse those injured in auto accidents that have been unable to collect from the responsible party.

Usage
This refers to the primary function or purpose in which you intend to operate your vehicle. For example, if you primarily drive your car to and from work, the usage is considered "commute; "if you're self-employed and you primarily drive to see customers, the usage is considered "business;" if you're retired, your usage is considered "pleasure."

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VIN Vehicle Identification Number
A Vehicle Identification Number is a 17-digit alpha-numeric code that provides valuable information concerning the vehicle's serial number, make, model, options, and year in official records (like a Social Security number for your car).

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Waiver of Collision Deductible
This option pays your collision deductible when you carry collision coverage on a vehicle that is damaged by an uninsured or hit-and-run motorist who is at fault. Coverage applies only when there is actual physical contact and when you can identify the uninsured driver or vehicle.

Whole Dollar Premium
Generally, insurance premiums are rounded to the nearest dollar; an amount of 51 cents or more being rounded up to the next dollar, and any amount less than that being dropped

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