Auto Insurance Frequently Asked Questions

How can I save money on my auto insurance?
First consider putting all the vehicles you, or you and your spouse own (using the name on the title) on a single policy. NC provides a 30% multi-car discount on all multi-car policies. Second would be to consider a higher deductible on the Collision and Other Than Collision coverages. This change may lead to a lower premium because it requires insurance companies to pay less if you file a claim.

Another discount can be from combining coverage on your home or apartment with the same company you have for your auto coverage (bundling). These credits can be from 5% to 15% depending on the company.

Also, some companies will provide discounts if you take higher limits of liability (BI & PD), as a way of encouraging their insureds to have more protection in case of an accident.

I have an older car whose current market value is very low - do I really need to purchase automobile insurance?
NC has compulsory insurance laws that require drivers to have at least minimum limits of liability coverage (30/60/25). On multi-car policies, all vehicles will have the same liability limits. These laws were enacted to ensure that victims of accidents are compensated when their losses are caused by someone else being negligent. Except for the minimum liability you are required to have, many people with cars over 10 years old decide not to purchase physical damage coverage. Often, the cost of repairing an older car is greater than its value.

The NC Statutes mandate that vehicles that are damaged over 75% of their book value are considered a “total” loss. In these cases, your insurer will usually just give you a check for the car's market value less the deductible and take ownership of your wrecked vehicle, even if the vehicle is still in good operational condition. Many people forgo the Part D coverage because of the relatively low value of their autos, and sustaining a minor amount of damage can easily result in a total loss.

Suppose I lend my car to a friend? Is that covered under my auto insurance policy?
Whenever you knowingly loan your car to a friend or an associate, he or she will be covered under your policy. In fact, even if you don't give explicit permission each time a person borrows your car, someone is still covered under your policy as long he or she had a reasonable belief that you would have given permission to borrow the car.

What does my auto insurance policy cover when I rent a car?
The answer to this question is not simple. The first thing to do is for you to find out what rental car coverage you have under your policy by calling your insurance agent/company. Here are the factors that help determine what coverages may extend to the rental vehicle:
1 – where are you renting the vehicle – in the US or outside
2 – what is the purpose of your rental – business or pleasure
3 – what type of vehicle are you renting – car, truck, van, commercial truck or motorcycle

With the restrictions that exist on the standard auto policy, we always recommend our clients purchase the rental company’s Collision Damage Waiver – regardless of cost. It is simply for peace of mind.

What is the difference between Collision and Other Than Collision physical damage coverage?
Both collision and other than collision (OTC), aka comprehensive coverage, are vehicle specific and provided in the policy by Part D – ONLY if you purchase the coverage. Collision is defined as a loss you incur when your auto collides with another car or stationary object. For example, if you hit a car in a parking lot, damages to your car will be paid under your collision coverage. OTC covers most other direct physical damage losses. For example, damage to your car from a hailstorm or hitting a deer will be covered under OTC coverage. You can buy OTC without collision, but you cannot buy collision by itself. Also keep in mind that deductibles will apply in these two categories and are often different per coverage and per vehicle.

What should I do if I have an accident?
Your responsibilities after you have an accident are proscribed both by state law and by your insurance contract. We recommend that our clients contact us, if possible, and let us make sure they have received all pertinent information and what to expect when filing the claim.

Obviously, the first thing you should do is be sure everyone is all right and call an ambulance if needed. Second, for most accidents in most states, the police should be notified. Third, give the investigating officer your name, address, telephone number, and the name of your insurance company and/or your insurance agent. Get this same information from the other driver(s).

Fourth, as soon as possible, contact either your insurance agent (preferable) or your insurance company to notify them that you have been in an accident.

Finally, there are conditions in the insurance contract you must satisfy to receive compensation from your insurer. For example, you must cooperate with your insurer during any investigation in the claims settlement process. Not completing any of these actions can result in possible nonpayment by your insurance company for losses that otherwise would have been covered.

Why does the premium for my auto insurance go up if I have an accident or get a ticket?
Insurance companies use this information not to necessarily punish people, but to charge them a premium that reflects their likelihood of having another occurrence. In NC, the system of charging points according to the offence is set for all companies and can be completely different than the way other states deal with violations. Contact your agent if you have a traffic violation or accident to find out how it may impact your rates.

What factors affect the cost of my auto insurance?
The type of car you drive, if you use it in your work or to travel to work or school, your driving record, where you live (city and county) and as of the last ten years or so, your insurance credit score. Different than a financial credit score, your insurance credit score is typically used to reduce your rates – the better your score the more credits you can receive. And each company creates their own criteria for their scores.

How much will my auto insurance increase when my child begins to drive?
This is another complicated question that has many factors to consider. First you should understand that in NC, you are rated based on the number of years you have been driving in NC (or the US). If you begin driving at 16 years old or 60 years old – you would be rated exactly the same. For three years from the time you start driving, you are surcharged because statistics show new drivers have more accidents. The surcharge reduces over the three years and then is completely removed after three full years of driving. There is no difference between male or female drivers. New drivers can drive on learner permits without increased costs, but they must be added to the policy when they get their provisional license.

The other considerations for new drivers are:
- use, distance to school, area where you live
- will they have their own car or be sharing a car
- do they drive a newer car that needs collision and OTC (most expensive scenario)
- higher costs possible if their car is a sport model, regardless of the age of the car

It is important to discuss your future drivers with your agent, probably when they are around15, so proper planning can be discussed.

When I purchase a car, should I have the dealer call my agent or do I need to make that call?
Even though your NC Personal Auto policy provides automatic coverage for newly acquired vehicles, you should always contact your agent when you add or change vehicles – do not rely on a dealer to make that call.

Is there any special coverages I should consider when buying a new car?
You have heard about how fast a car depreciates once you drive it off the lot, so wouldn’t you like to buy protection for that? So if you have a total loss accident with your new car, you can buy a new one instead of getting the depreciated value of your car. You can buy Replacement Cost coverage on a new car, but there are considerations:
- you must be the first owner of the car
- you must add the coverage within the first 6 weeks of ownership
- you can keep the coverage for up to five years

My child is buying a car, can I add it to my policy?
We know parents want to help their child whenever they can, but the NC Auto policy specifies that coverage is provided only for the owner of the vehicles on the policy. Ownership means that the title is listed in only the policy holder’s name. So your child’s car will have to be on their own policy. Contact your agent if you are going to be co-signing a title with your child.

I am living with my “significant other” - can I add their car to my policy to save money?
This answer is similar to the above. The NC Personal Auto policy provides coverage for the vehicles that are titled to the Named Insured listed on the policy. Since this situation is becoming more prevalent, some companies are able to compromise on this restriction. Find out from your agent if they have the ability to work with their company in this situation. If not, you may want to ask other agents how they deal with this co-habitation arrangement.