Drivers with a clean driving record and a minimal number of claims filed in their past will usually qualify for standard auto insurance. Standard auto insurance is the basic or lowest level of coverage available from an insurance provider. The regulations in most states require a driver to carry liability insurance and will determine the exact dollar value of coverage needed. Liability insurance will cover bodily injury and property damage claims resulting from an accident that is primarily the fault of the insured individual.
This insurance covers the expenses of only the other driver or property owner who received damage due to the error of the insured driver. Auto liability insurance will not cover the policyholder driver. In addition to standard auto insurance, other types of insurance, such as comprehensive and collision , may be available at an additional charge to the standard policy.
These coverages offer extra protection for the policyholder. Many drivers have this type of insurance as an extension of a standard policy. Also, it is essential to understand that most collision and comprehensive insurance policies have separate deductibles. As with all insurance, a deductible is an amount that the consumer must pay out-of-pocket before the insurance company pays. To qualify for a standard automobile insurance policy, a driver must meet specific basic requirements.
These qualifying requirements often include a clean driving record and a history of limited or no filed claims.
An auto insurance company will rate drivers on different categories of risk, including age, gender and credit history. The ability to accurately estimate the risk in underwriting a new policy is crucial for an insurer as it can make or break the company's profit. If the company prices the insurance policy correctly, understanding the claim risk, it may be profitable, as the premiums will exceed the benefits paid.
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Conversely, if the insurer does not adequately recognize the risk associated with underwriting a particular policy, it can potentially lose money. For example, in California, a DUI remains on the MVR record and counts as an offense for ten years, whereas an accident has a look-back period of three years.
This assessment or selection process includes determining how to classify the applicant e. The best way to assess the applicant is to review their driving history, which typically includes moving violations and accidents, including at-fault and not-at-fault. The insurance company can estimate the level of insurance risk based on the frequency and severity of recent driving violations and collisions.
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If there are several accidents or traffic infractions, the driver is more likely than other drivers to have similar problems in the future, increasing the insurer's liability. For related reading. In addition to accidents and moving violations within the past three years, the MVR also includes information about any criminal convictions associated with the driving record, such as DUIs and any incidents in which the driver failed to appear at a scheduled court hearing related to a driving infraction.
The MVR also supplies the insurance company with information about any license restrictions, such as not being allowed to drive at night due to poor eyesight. Any prior license suspensions or revocations within the look-back period are also included. Luckily, even if you have to pay an increased insurance rate due to a less than favorable MVR, it may not be permanent.
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Once your infractions are older than the look-back period, they drop off the insurance summary and are no longer considered when determining your premium. If you have no new collisions, your insurance rates may decrease at your next policy renewal. Industry at a Glance. Industry Performance. Key External Drivers. Products and Markets. Supply Chain Key Buying Industries.
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