AIG

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDEendorsement covers trips of any distance and any length of time. Ask your agent whichendorsements your insurance company offers.Coverage of New or Additional Automobiles If you buy a new or additional car, your policy will automatically cover it, but there arecertain limitations you should be aware of. An additional car automatically has the same coverage as the car with the broadestcoverage provided by your policy. For example, if you have two cars - one with liabilitycoverage only and one with liability, collision, and comprehensive - and you buy a third car,the third car will automatically have liability, collision, and comprehensive coverage. A replacement car automatically has the same coverage as the car it replaced. Forexample, if you trade in an older car that only had liability coverage, the new car willautomatically have only liability coverage. Be sure to notify your insurance company as soon as possible that you have added orreplaced a car and which coverages you want. You could lose coverage on the new car if youwait longer than 30 days.Shopping for Auto Insurance Rates vary widely among companies, so it pays to shop around. Following are some usefultips to help you find the best deal for your money:· Decide before shopping what coverages you need.· Consider choosing a higher deductible. Your deductible is the amount you must pay yourself before the insurance company will pay. Higher deductibles will lower your premium, but remember that you’ll have to pay more out of your own pocket if you have a claim.· Because rates vary, ask several companies and agents for price quotes. Make sure the quotes you get are for the same coverages.· When getting a price quote or applying for insurance, answer questions truthfully. Wrong information could cause you to get an incorrect price quote or could lead to a denial or cancellation of coverage.· Consider factors other than price - including a company’s financial rating and its complaint index. Financial ratings indicate a company’s financial strength and stability, while its complaint index indicates a company’s customer service record. Buy only from licensed companies and agents.· Ask your agent whether you qualify for any discounts the company may offer.Understanding Rates The law requires rates for insurance offered to be reasonable, adequate, not excessiveto the risks for which they apply, and not unfairly discriminatory. Auto insurance companiesset their own rates and then file them for review. Companies do not have to receive priorapproval before putting their rates into effect, but if the state determines that a company’sfiled rates are excessive, the company can be ordered to make refunds to consumers whowere overcharged. 151

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDEFactors that Affect Your Premium Companies may use a number of criteria to establish your individual premium. Theseinclude:· Your age and, for younger drivers, your marital status. Male drivers under 25 and unmarried women under 21 have the highest rates. Drivers over 50 may get discounts.· Your driving record and claims history. A good driving record can save you money. If you have accidents or tickets on your driving record, you’ll likely be placed in a nonstandard company, which charges higher rates. In addition, companies can add penalties - called surcharges - to your premium for major driving offenses and accidents resulting in property damage of $1,000 or more. Surcharges are mandatory for rate- regulated companies and stay on your premium for three years.· The county where you keep your car. Because urban counties have more accidents and auto thefts, their rates tend to be higher than those of rural areas.· The type of car you drive. Collision and comprehensive rates are highest for luxury, high- performance, and sports cars. Rates may also be higher for cars that damage easily or cost more to repair than others.· How you use your car. Rates are higher for cars driven to and from work or used for business.· Your credit score. Companies may consider your credit score when deciding whether to sell you a policy and what to charge you. However, a company cannot refuse to sell you a policy or cancel or nonrenew your policy solely on the basis of your credit. Companies must file their underwriting guidelines with the state and update them eachtime they make a change.Discounts and Surcharges Discounts can help you save money on your premium. Discounts vary by company.Following is a list of some of the discounts commonly available in Texas:· defensive driving and driver education courses for young drivers· airbags and other passive restraints· two or more cars on a policy· your age and annual mileage driven· policy renewal with a good claims and driving record· anti-lock brakes· a parent or family whose young driver is away at school without a car· cars with automatic daytime running lights· students with good grades. If you have a poor driving record, you can expect to pay more for your insurance.Companies may add surcharges to your premium — some as high as 60 percent — for thefollowing:· accidents (the more accidents, the higher the surcharge) 152

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE· moving violations (speeding, etc.)· involuntary manslaughter· driving under the influence· criminally negligent driving· driving without a license or with a suspended license. Premium Finance Companies Premium finance companies are specialized lenders that loan consumers money to paytheir insurance premiums, often at high interest rates. Sometimes the only installment plan offered is through a premium finance company, whichmight be owned by the agent selling your policy. The insurance agent must tell you if your installment plan is with a premium financecompany and must give you the premium finance company’s name. If you enter into a premium finance agreement with a premium finance company, you willpay the down payment to the agent, who forwards it to your insurance company. Be sure toget a receipt at the time of payment. The premium finance company pays the balance of your premium directly to the insurancecompany and then collects the amount financed, plus interest, from you in installments. Your loan agreement assigns your power of attorney to the premium finance companyfor payment transactions involving your policy. The premium finance company can go to theinsurer and cancel your policy if you fall behind in your payments. If your policy is canceled for any reason, the premium refund goes to the premium financecompany, which uses it to pay off your note. The premium finance company owes you a refundif any money is left over. The finance company must send your refund to you within 20 daysafter receiving it from the insurance company. A premium finance company must have a license. You can verify its license by calling theConsumer Help Line. When dealing with a premium finance company, it’s a good idea to· Make sure the agent presents your payment plan separately from the sale of insurance so you will understand how your premium is being financed.· Determine the charges (interest plus fees) the company will use. Compare these to installment plans offered by insurance companies. Also compare premium finance company charges to bank or credit card interest rates.· Never buy or finance a policy until all the documents are completely filled out and you understand the charge for each item. Be sure the agreement correctly identifies the financed policy. The agreement should show the policy or binder number, effective date of the policy, and the premium amount.· If there is a premium finance agreement, be sure to sign and date it before leaving the agent’s office.· Insist on getting a copy of the installment agreement. Federal truth-in-lending laws require the lender to give you a copy.153

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE· Make your installment payments only by check or money order payable to the company named on your premium finance notice. Do not pay in cash. Keep a record. If you do pay cash, demand a receipt.· If you or the insurance company cancels your policy, make sure the premium finance company pays any refunds you have coming.Losing Your Insurance Companies may cancel or nonrenew a policy for a variety of reasons. Cancellation meansthe company terminates your policy before it runs out. Nonrenewal means the companyrefuses to renew your policy when it expires. It’s helpful to know your rights regardingcancellation and nonrenewal of your insurance. A company must explain in writing its reasons for declining, canceling, or not renewingyour policy. This explanation must include· the precise incident, circumstance, or risk factor that violated the company’s underwriting guidelines· the insurer’s sources of information about the incident, circumstances, or risk factor. An insurance company may not cancel an auto policy that has been in effect for more than60 days unless· you fail to pay your premium· you file a fraudulent claim· your driver’s license or motor vehicle tags are suspended or revoked. This also applies to other drivers who live with you or customarily use your car. However, during the first 60 days, the company may cancel a policy for any lawful reason,including a ticket or an accident. If the company cancels your policy because of an accident,it still must pay for covered damages resulting from the accident. The company must give youwritten notice at least 10 days before canceling your policy. If either you or the company cancels your policy, the company must refund any premiumspaid in advance that did not buy coverage. This amount is called the “unearned premium.”For example, if you paid a six-month premium of $600 and you cancel your policy after onemonth, the company owes you $500 in unearned premium. A company cannot refuse to renew your policy unless it has been in effect for at least 12months. This means a six-month policy must be renewed to give you a full 12 months ofcoverage. The company must give you 30 days’ notice before not renewing your policy.A company cannot refuse to renew your policy because of· weather-related claims, including damage from hail, floods, tornadoes, high winds, and hurricanes· damage from colliding with animals or birds· damage from gravel and other flying and falling objects (the company can raise your deductible, however, if you have three such claims in 36 months)· towing and labor claims (the company can refuse to renew your towing and labor coverage, however, if you have four such claims in 36 months)154

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE· other claims or accidents that cannot reasonably be blamed on you, unless you have more than one of these claims in a 12-month period. Sometimes an insurer will move you to another company in its company group. If acompany moves you to another company within its group, it must give you 30 days’ noticethat your original policy will not be renewed. If the company fails to give you 30 days’ notice,the state can require the company to renew your policy for another year in your originalcompany. If you get a nonrenewal or cancellation notice, it’s a good idea to start shopping for newinsurance immediately. You’ll need to make sure that you keep your liability coverageuninterrupted to satisfy Texas’ financial responsibility laws. Also, if you still owe money onyour car, your lender will usually require you to maintain collision and comprehensivecoverages without interruption. If you cancel or lose these coverages, your lender will buysingle-interest automobile physical damage coverage and add the cost to your loan payment.It’s expensive and protects only the lender. You may drop collision and comprehensive onceyou have paid off your car loan, but you should keep the coverages as long as you owe moneyon your car.Your Rights Against Unfair Discrimination An insurance company cannot deny, refuse to renew, limit, or charge more for coveragebecause of your race, color, religion, or national origin. A company also cannot deny, refuse to renew, limit, or charge more for coverage becauseof your age, gender, marital status, geographic location, disability, or partial disability unlessthe refusal, limitation, or higher rate is “based on sound underwriting or actuarial principles.”This means the company would have to show valid evidence that you present a greater riskfor a loss than others it is willing to insure. Also, a company cannot nonrenew your policybecause someone in your family has reached driving age. In addition, a company cannot unfairly discriminate between individuals of the same rateor risk class in its rates, policy terms, benefits, or in any other manner unless the refusal,limitation, or higher rate is “based on sound actuarial principles.” You may sue insurance companies for unfair discrimination, including denial of insurance.The suit must be filed in an Austin district court. However, if the court finds the suit groundless,in bad faith, or brought for the purpose of harassment, you may be ordered to pay theinsurance company’s legal expenses.Auto Insurance for “High Risk” Drivers Being labeled “high risk” makes it harder to get car insurance, particularly at favorableprices. Insurance companies often check motor vehicle records for your driving history andcredit reports for your financial history before writing or renewing your policy. Owning a carbuilt for speed also can label you as high risk.After the Accident... What Now?· Move your car, if possible, to avoid blocking traffic and to protect it from further loss or damage. 155

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE· Call the police if somebody is injured or killed, if a vehicle can’t be moved, or if the accident involved a hit-and-run driver. Your uninsured motorist coverage pays for a hit-and-run accident only if you report the accident to the police.· Get the other driver’s name, address, telephone number, license plate number, driver’s license number, and insurance information. Give the other driver the same information about you.· Record the insurance company name and the policy number exactly as shown on the other driver’s proof-of-insurance card. Similar company names can cause confusion, so make sure you write down the correct company name.· Get the names, addresses, and telephone numbers of any witnesses to the accident.· Notify your insurance company as soon as possible. Your company probably has a 1-800 number to report claims. If not, call your agent. Some agents have authority to settle small claims. The agent or company will advise you about seeing an adjuster and getting repair estimates. Also, give your agent or company the names and addresses of any witnesses and injured persons.· If you reported your claim by phone, be sure to follow up in writing as soon as possible to protect your rights under prompt payment of claims laws.· Send the company copies of the accident report and any legal papers you receive about the accident.· Cooperate with the company’s investigation. You might have to submit a proof-of-loss form and undergo a medical examination. If the other driver refuses to tell you his or her insurance company, get a copy of the policeaccident report. The accident report will list the other driver’s name and insurance company.If the police did not investigate the accident, you can report the driver’s refusal to the police.This could result in a report identifying the driver’s insurance company. In addition, theDepartment of Public Safety keeps files of forms - called SR-22s - that show the insurancecompanies of people convicted of DWI or driving without insurance. DPS will advise you howto find out if the driver has an SR-22 on file and the name of his or her insurance company.Accidents Caused by Other Drivers If you were in an accident caused by another driver, the other driver’s insurance companyshould pay the following costs, up to the policy’s limits:· repair or replacement of your car· car rental while your automobile is being repaired· your medical and hospital bills· wages lost because of an injury· compensation for pain and suffering if anyone is hurt. If the other driver’s insurance won’t cover all your medical bills, you should file a claimfor the difference against your Personal Injury Protection (PIP) coverage, if you have it. Foramounts over that, you can claim against your uninsured/underinsured motorists (UM/UIM)coverage or your health insurance policy. 156

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE If the other driver’s policy won’t cover all of your auto repairs, file a claim against yourcollision or UM/UIM coverage for the difference (minus your deductible) between the damageto your car and what the other driver’s policy will pay. The other driver’s insurance company may ask you to sign a release to settle your claimand forgo future claims related to the accident. Don’t sign a release until you are satisfiedwith your total settlement. Get a letter from your doctor estimating the cost and length of yourfuture medical treatment. You might want to consult an attorney before accepting asettlement. You have two years after an accident to either settle your claim or file a lawsuit. The law prohibits insurance companies from delaying payment on a claim as a means topressure you to sign a release. If you believe an insurance company is delaying payment toyou so that you will sign a release, you should file a formal complaint. If the other driver denies fault, his or her insurance company may refuse to pay the claim.Independent witnesses could make a difference in getting the company to pay. It’s importantto get names, addresses, and telephone numbers of any witnesses to the accident. Make surethe insurance company knows about the witnesses. If the company continues to refuse to paythe claim, you can file a claim against your own insurance or you may have to go to court toresolve the issue. Before filing a claim against your own company, it’s a good idea to talk to your agent oryour company’s underwriting department about how a claim might affect your rates onrenewal. A company can raise your premium because of at-fault accidents. Also, a companycannot refuse to renew your policy solely because you had one accident that was not yourfault in a 12-month period. However, if the accident affected your Department of Public Safetydriving record, your company may consider that in determining your rates, whether you madea claim on the accident or not.Getting Your Car Repaired Your insurance company will have an adjuster inspect your car and calculate an estimatefor repairs or may ask that you provide repair estimates from mechanics and auto body shops.The insurance company will pay for repairs or replacement only up to the car’s actual cashvalue. Actual cash value is the amount that your car would have sold for before the accident.An insurance company cannot require you to use a particular repair shop. In fact, insurancecompanies are required to notify you of your freedom-of-choice rights regarding auto repairshops and parts. On collision and comprehensive claims, however, your company is obligatedto pay only for parts of “like kind and quality” to those that were damaged. If the repair estimates are more than your car is worth, the insurance company will likely“total” your car rather than pay to fix it. Insurance companies typically value your car by theNational Automobile Dealers Association Used Car Guide or by a “market survey” showingaverage prices of various makes and models. The company’s offer might not recognize yourcar’s condition, special features, value on the local market, or may be less than what you oweon your car loan. In these instances, be prepared to negotiate with the insurance companyto get what you believe is a fair deal. A company is more likely to raise its offer if you canshow that your car would sell for a higher price in your area. Get written price quotes for asimilar automobile from several used car dealers, or look in the classified section of your localnewspaper for used car prices. 157

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE Sometimes the insurance company may want to total your car, but you’d prefer to haveit repaired instead. You can keep your car if you are willing to subtract its salvage value fromthe insurance settlement. First make sure the cost to repair the car will not exceed the car’sactual cash value. To find out the salvage value, contact local salvage yards for estimates.Be sure to record the yard’s telephone numbers and the names of the people you spoke with. If your insurance company totals your car but you can’t reach an agreement on the amountto be paid, you can demand an appraisal. Appraisal allows you and the company to hireseparate damage appraisers. The two appraisers choose a third appraiser to act as an umpire.The appraisers then review your claim, and the umpire rules on any disagreements. Theappraisal decision is binding, but only as to the amount of the loss. If there is a dispute overwhat is covered, you can still pursue a settlement of the coverage issue after the appraisaltakes place. You are required to pay for your appraiser and half of the umpire’s costs. Appraisal is available only in disputes between you and your insurance company. It is notavailable if the other driver was at fault and you disagree with his or her company’s offer.Getting a Rental Car If you have more than basic liability coverage or your accident was caused by anotherdriver, you should be able to get a rental car while yours is being repaired:· If the other driver was to blame, his or her liability insurance will pay for a rental car.· If the accident was hit-and-run or the other driver was uninsured and at fault, your UM/ UIM property damage coverage will pay for a rental car.· If your car was stolen and you have comprehensive insurance, your company will provide a set amount each day, up to your policy’s limit, for a rental car.· If your car is being fixed or replaced for some other reason, your insurance company won’t provide a rental car unless you have rental reimbursement coverage.Filing a Claim Once you have filed a claim, the law sets these deadlines for the insurance company toact:· The company must respond within 15 days after receiving your claim in writing. It probably will ask you to document your loss.· After you submit any requested documentation, the company has 15 business days to accept or reject your claim.· Once the company agrees to pay your claim, it must send your check or draft within five business days. A company that cannot meet these deadlines must send you a notice explaining why. Thecompany then has 45 days to either approve or reject the claim. Note: This law does not apply if another driver’s insurance company is paying the claim.However, the company is required to act in good faith and to make a prompt and fairsettlement. If the insurance company rejects your claim, the law requires it to explain the rejectionin writing. If the company claims that the loss isn’t covered by your policy, ask to see the policy 158

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDElanguage that supports denial of your claim. A court usually will order the company to payif the language is unclear and the policy reasonably could be read your way.Automobile Insurance for Young Drivers Young drivers must comply with the state’s financial responsibility laws, just as older driversdo. Most young drivers, however, have the option of satisfying their legal requirements bybeing added to their parents’ auto policy. Adding a young driver to a parents’ policy can beexpensive, but it’s cheaper than taking out a separate auto policy. A parents’ policy covers children living at home or away at school, even when not namedon the policy. Even though children are automatically covered on their parents’ policy, it’simportant that they be listed on the policy as soon as they reach driving age. Insurancecompanies are required to charge the correct rate, based on the classifications of the driversin your family. If you don’t have all of the drivers in your family listed on your policy and thecompany learns about them later - because of an accident claim, for instance - the companywill bill you for the extra premium you should have paid. If you have children attending school away from home, tell your insurance company.Because rates are based on where a car is usually located, the insurance company may needto adjust your premium. If the school is in another state, it’s a good idea to check on the financialresponsibility laws in that state to make sure you have the appropriate coverages. When you add your children to your policy, they may be rated on the most expensive autoin your household. The rules for this are complex and address a variety of situations, however.Generally, if a teen-ager is the “principal driver” of a particular automobile, his or her ratewill be based on that car. If not, the teen-age driver is assigned to the car (usually the mostexpensive) that produces the highest rate.Removing Your Children from Your Policy You may want to remove your children from your policy when they are no longer livingwith you. You’ll probably have to prove to the insurance company that a young driver no longerlives at home, however. You can use documents like a driver’s license, lease agreement, orutility receipts to prove that your child has moved. A remotely possible alternative would bea named driver exclusion added by mutual agreement between you and the insurer. It’s probably not a good idea to remove your children from your policy who have movedbecause they are attending school away from home. An insurance company may require youto keep them on your policy, even if you would like to have them removed. Technically, youcould remove your child from your policy with a “named driver exclusion” endorsement. Fewcompanies will agree to this, however. Besides, it’s risky to drop coverage when your teen-ager might occasionally drive at school or when home on visits. You can sometimes remove a teen-aged driver from your policy by purchasing a non-owner policy. This usually is a bad idea. A non-owner policy merely provides additional liabilityinsurance when driving a non-owned vehicle. If your teen-ager has an accident while drivingyour car, neither your policy nor the non-owner policy will pay for your vehicle’s damage. Youmight also be unprotected financially if held liable for an accident caused by your minor child.Finally, if the non-owner policy is rated properly, your teen-ager’s liability insurance mightcost as much as or more than if he or she was on your policy. 159

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDESaving Money on Insurance for Young Drivers Unfortunately, insuring young drivers is usually expensive. Some young drivers mayqualify for discounts, however. If you are under 18, you must complete a driver training courseapproved by DPS to obtain a Texas driver’s license. Many insurance companies give a 10percent driver training credit for teen-agers who complete driver education. Parent-taughtdrivers are eligible for the discount if the parent used a DPS-approved course. Somecompanies offer discounts to young drivers who make good grades in school or who belongto certain youth groups. Ask your agent about any discounts for young drivers.FREQUENTLY ASKED QUESTIONS 1. What is liability coverage?Liability coverage insures you against the cost of injury and damage you cause to anotherin an automobile accident. It’s made up of two policies, bodily injury liability, and prop-erty damage liability. Auto liability insurance is required in virtually every state. 2. What is bodily injury coverage?It’s the part of liability coverage that insures you against the injury you cause to others inan auto accident. It consists of two figures. One limits the cost of injury coverage perperson injured, and the second limits the total dollar amount of injury coverage (foreveryone injured.) This is a very important policy. 3. What is property damage coverage?It’s the part of liability coverage that insures you against the cost of damage to another’sproperty caused by you in an automobile accident. “Property” includes other cars,houses, fences, telephone poles, etc. 4. What is medical payments coverage?This policy pays the medical bills of the covered driver, family members, and passengerswhen injured in an accident, regardless of who was at fault. This coverage is required insome states, but not in others. 5. What is personal injury protection (PIP)?PIP is similar to medical payments coverage, only it usually covers a broader range ofevents, including medical bills, lost wages, loss of services, etc. It is required in most nofault states. 6. What is uninsured motorist coverageThis policy covers the cost of injury or damage caused by another driver who is not in-sured. It covers the policy holder, authorized drivers, and any passengers. It usuallyconsists of separate limits for bodily injury and property damage. This policy is requiredin some states. 7. What is underinsured motorists coverage?This policy pays for injuries and damage caused to the policy holder by a driver with inadequateinsurance. It typically pays the difference between the at-fault driver’s liability limit and theholder’s policy limit. There are separate limits for property damage and bodily injury liability.This coverage is sometimes combined with uninsured motorist coverage under one policy,and may be required in some states.160

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE 8. What is collision coverage?This policy helps pay for repairs or fair market replacement cost if your car is damaged inan accident caused by you or an authorized driver. This policy is always optional. 9. What is comprehensive coverage?This policy covers the cost of repairs to or replacement of your vehicle should it be stolen,vandalized, struck in a hit-and-run, or damaged by an “act of God.” Covered events varyfrom policy to policy but usually include fire, flood, and falling objects. This policy isalways optional. 10. What is a deductible?It’s the amount of money that you agree to pay before a certain auto insurance policy kicksin. Deductibles are designed to cut down on insurance costs by eliminating small or frivolousclaims. The higher the deductible you’re willing to pay, the lower the premium you earn.Collision and comprehensive policies almost always carry deductibles, and sometimes PIP andmedical payments policies do too. 11. What is rental car reimbursement coverage?It’s an optional policy endorsement that helps pay the cost of renting a car while your autois being repaired for a covered event. (This means you usually need to carry collision andcomprehensive to qualify.) Your premium is decided by the amount of reimbursement youwant per day. 12. What is emergency roadside assistance insurance?It’s an optional policy that covers the cost of towing or immediate roadside repair (like fixinga flat or jump-starting the battery). It does not cover the costs of any repairs done at a garageor service station, however. 13. What is SR-22 insurance?The SR-22 is actually a form that high-risk drivers may be required to file with the statebefore they purchase car insurance. It requires the provider to notify the state should thepolicy be terminated or canceled. DUIs, multiple speeding tickets, and driving withoutinsurance or valid license are all reasons a SR-22 may need to be filed. The requirementusually lasts for three years after the initial event. 14. What are split limits and combined single limits of liability?Split limits of liability provide for separate coverage limits for bodily injury and propertydamage. A combined single limit policy has one coverage limit for the total cost of injuriesand damage. Split limits of liability are much more common. 15. What is an umbrella policy?It is additional liability coverage that goes “over” your auto liability limits. An umbrellapolicy may also increases other coverages, like homeowners’s liability or boat liability.Carrying an umbrella policy is a good idea for drivers with considerable assets to protect. 16. What is gap insurance?This optional policy insures the driver of a new car for the difference between the car’sfinanced value and its fair market value. Should the car be “totalled” during the first fewyears after purchase, the owner will be covered for the amount still owed on the car,rather than it’s market value (which is often much lower). Because it covers only the161

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDEdifference in value, this is a relatively inexpensive policy. Learn more about auto gapinsurance. 17. What is no fault insurance?No fault insurance covers the injury-related expenses of the policy holder in the event ofan accident, regardless of who was at fault. Thirteen states currently impose no faultinsurance laws.COMMON TERMS Accidental death coverage: This optional coverage pays an amount up to a selectedlimit in the event of a fatality suffered by an insured person. The fatality must occur as a directresult of a motor vehicle accident and benefits are subject to the conditions of your policy. Amount of comprehensive loss: This is the amount of any comprehensive coverageclaim you have recently reported. If you cannot remember the exact amount of this claim,that’s ok. Please insert your best estimate and (where possible) we will verify this figurethrough consumer reports. Limits of Bodily Injury & Property Damage coverage Bodily injury limit: This is the maximum amount your insurance policy will pay when aninsured person becomes legally liable for bodily injury or death caused by the insured personin an auto accident. Property damage limit: This is the maximum amount your insurance policy will paywhen an insured person becomes legally liable for damage the insured person causes in anauto accident to the property of other people (e.g. light poles, fences, another vehicle, etc.). Limits represent thousands of dollars and are expressed in the following format: Example #1: ”100/300/100\" That is: A maximum of $100,000 for bodily injury to one person, $300,000 for bodily injury sustained by two or more persons in a single accident, and $100,000 for property damage that results from one accident. Example #2: 500 CSL (Combined Single Limits) That is: A maximum of $500,000 for all covered bodily injuries and/or covered property damage that results from one accident. Common Exclusions: Bodily injury and property damage coverages apply to injury anddamage from normal use of the insured vehicle. Coverages are limited by your policy andthere may be some circumstances in which coverage does not apply. For example, in somepolicies coverage does not apply to: -Bodily injury or property damage arising out of the use of your vehicle while trans-porting people or property for a fee. -injury or damage caused by an intentional act. -injury or damage as a result of operating a vehicle owned by a person covered by your policy, where the vehicle is not listed on your policy.162

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDEinjury or death of you or a family member.property owned by, rented by or in the control of an insured person. Collision coverage: Collision coverage pays for damage to a covered vehicle (up to theactual cash value) when it overturns or strikes another vehicle or object (e.g. a fence). Note:If you select collision, you must also select comprehensive coverage. Deductible: The amount of a claim you agree to pay per incident. This amount is deductedfrom the total payment by your insurance company. In general, choosing a higher deductiblewill lower your rate.Example: Your covered vehicle hits a fence causing $1,200 of damage to your vehicleand you have chosen a $250 deductible. You will pay $250 directly to the body shopand your insurance company will pay the balance of $950. Common Exclusions: Coverage is limited by your policy, which may exclude some of thefollowing common instances or items:carrying persons or property for a fee.intentional acts or racing.custom equipment in excess of the declared value on your application.CD’s, tapes or other audio/video media. Comprehensive coverage: This coverage pays for damage to a covered vehicle (up tothe actual cash value) caused by covered events other than a collision. Examples of coveredevents include:firetheftflood, windstorm or hailcollision with an animalvandalism Deductible: The amount of a claim you agree to pay per incident. This amount is deductedfrom the total payment by your insurance company. In general, choosing a higher deductiblewill lower your rate.Example: A tree falls causing $2,000 of damage to your vehicle and you have chosena $250 deductible. You will pay $250 directly to the body shop and your insurancecompany will pay the balance of $1,750. Common Exclusions: Coverage is limited by your policy, which may exclude some of thefollowing common instances or items:carrying persons or property for a fee.intentional acts.custom equipment in excess of the declared value on your application.CD’s, tapes or other audio/video media.Amount of comprehensive loss163

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE Conviction date: This is the date that the individual was found guilty of the violation.The conviction date is usually between the violation date and today’s date. If available, enterthe court date as the date of conviction. If the individual did not go to court for the violation, enter the date the ticket was paid. Cost New: This is the “sticker” price of the vehicle when first purchased from the newcar dealer. This is not the cost you paid if the vehicle was previously used at the time of yourpurchase. If you are not certain of this price, please approximate the cost to the nearest thousanddollars. Driver Exclusion: Signing a driver exclusion form allows you to not include a driver inyour household on your policy. In the event that the excluded driver uses an insured vehicle,there would be no insurance coverage for damage to your vehicle, damage to the propertyof others, or any sort of injury. In short, this would nullify any insurance under your policy. Note: The applicant cannot be an excluded driver. There are valid reasons, however, for excluding a driver from the policy. Example: If you have a roommate who does not have access to your vehicle and has multiple accidents and tickets, you may want to exclude that individual from your policy. This would help you avoid paying more for your insurance than necessary. Driver’s occupation: Our companies use general occupation categories to helpdetermine rates. As a result, we list general categories that you may choose from. Select theoccupation that is most similar to yours. Existing policy liability limits (bodily injury coverage): This is the maximum amountyour current insurance policy will pay when an insured person becomes legally liable for bodilyinjury or death to another person caused by an insured person in an auto accident. Limits can be found on your policy’s “declarations” page (cover page). Limits representthousands of dollars and are expressed in one of the following formats: Example #1 ”100/300\" That is: A maximum of $100,000 for bodily injury to one person and $300,000 for bodily injury sustained by two or more persons in a single accident. Example #2 While the prior example focuses on bodily injury coverage, your policy declarations page may show bodily injury and property damage liability together, for example: “100/300/100” That is: A maximum of $100,000 for bodily injury to one person, $300,000 for bodily injury sustained by two or more persons in a single accident, and $100,000 for property damage that results from one accident. Example #3 500 CSL (Combined Single Limits) That is: A maximum of $500,000 for all covered bodily injuries and/or covered property damage per accident.164

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE Extraordinary Medical coverage: This coverage provides for catastrophic medicalexpenses from injuries sustained while occupying your vehicle that are the direct result of anaccident. Depending upon your policy, this coverage can provide payments for medicalexpenses up to $1 million dollars and carries a deductible of $100,000. Because of this deductible, you may wish to select sufficient medical expense coverageto cover any deductible associated with your Extraordinary Medical Coverage selection. Funeral Coverage: This optional coverage pays expenses, up to the selected limit,incurred from the funeral and burial (or cremation) of a covered person. Coverage appliesif death occurs within 24 months of a covered motor vehicle accident directly causing the death. Garaging location: This is the address of the location where your vehicle is primarilykept while not in use. In most instances, this would be your primary residence. How long have you been continuously insured? This is required information to obtaina quote. Coverage is considered to be ‘continuous’ if your insurance has been uninterrupted.Interruption examples include failing to renew a policy and canceling your policy without anew policy in place. Income loss coverage: This optional coverage pays 80% of the gross income of aninsured person (up to the selected limit) while the individual is prevented from working, asa result of a motor vehicle accident. Your policy may also pay for reasonable expenses actually incurred hiring:special help, that enables the insured person to work.a substitute to perform the duties a self-employed insured person would have performed. Medical expense coverage/Medical Payments Coverage: This coverage paysreasonable and necessary medical expenses up to the selected limits, directly resulting froman auto accident. This may include medical care, recovery, rehabilitation and remedial care,as outlined in your policy. Coverage varies by state and by company. Number of licensed drivers in your household: This is the total number of individualsin your home who hold (or have ever held) a valid driver’s license, and must include driverswith suspended or revoked licenses. Number of accidents and claims in the last five years Accident (at fault/not at fault): Any sudden, unplanned occurrence causing vehicledamage, property damage or personal injury (bodily injury). Include the total number ofaccidents whether or not you were determined to be at fault. Please be as accurate as possible in answering this question, as inaccurate responses mayaffect your premium and/or insurability. Various reports including motor vehicle reports,consumer claims reports, etc. may be ordered to confirm the accuracy of this information.165

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE Number of violations in the last five years Violation: Any breach of motor vehicle laws (e.g. speeding, running a red light, drivingwhile intoxicated, expired license plates, etc.) Please be as accurate as possible in answering this question, as inaccurate responses mayaffect your premium and/or insurability. Various reports including motor vehicle reports,consumer claims reports, etc. may be ordered to confirm the accuracy of this information. Program limitations: We strive to meet your auto insurance needs and can provideaccess to insurance for: All private passenger autos manufactured since 1985. Up to four drivers and four vehicles per policy (We can insure additional vehicles througha second policy). Some specialty needs we cannot address, including:Vehicles designed and used for racing.Vehicles used for commercial delivery or livery services (e.g. taxi or limousine). Rental coverage: This coverage pays for rental expenses, up to the selected limits, fora substitute vehicle in the event of a loss covered by your collision or comprehensive coverage.(Note: You must also select comprehensive and collision to obtain this coverage). Example: Limits represent actual dollars and are expressed in the following format: “15/450” That is: A maximum of $15 per day, $450 per incident.Residence type: If you do not live in a home that you own, please choose “renter.” Stacked Uninsured Motorist (UM) and Stacked Underinsured Motorist (UIM) “Stacking” uninsured motorist coverage allows you to combine limits of uninsured motoristcoverage for all vehicles on the policy. This option is only available on all policies with morethan one vehicle. The same “stacking” of coverage may be available on underinsured motoristcoverage. Example: Limits represent thousands of dollars and are expressed in the following format: “100/300” That is: A maximum of $100,000 for bodily injury to one person and $300,000 in aggregate for bodily injury sustained by two or more persons in a single accident. If you have selected 100/300 limits and you are insuring three vehicles on one policy, your stacked limits would total 300/900. That is: A maximum of $300,000 for bodily injury to one person and $900,000 in aggregate for bodily injury sustained by two or more persons in a single accident.166

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE Tort options: A tort is a civil wrong causing a legal liability. This is the direct result ofthe negligence of another driver. You have two coverage options. You may choose one of thefollowing: Limited Tort Option: In return for a lower rate, you may waive the right for you and themembers of your household to sue, in certain situations, for non-economic damages (e.g. painand suffering). As specifically defined by your policy, this limited tort option does not waiveyour right to sue in a number of the cases, such as situations where you have suffered “seriousinjury and/or death.” Full Tort Option: You and covered members of your household retain the unrestrictedright to sue for non-economic damages in exchange for a higher rate. Towing: This coverage pays up to the selected limit for towing of your covered vehiclewhen it is disabled, whether or not there is an accident involved. (Note: You must also selectcomprehensive coverage to obtain this coverage). Limits of Uninsured Motorist (UM) coverage and Underinsured Motorist (UIM)coverage Uninsured Motorist coverage limit: This is the maximum amount your insurance policywill pay for bodily injury or death to you, covered family members, and/or the occupants ofyour insured vehicle caused by a motorist who is legally liable but does not have insurance. Underinsured Motorist coverage limit: This is the maximum amount your insurancepolicy will pay in excess of the amount of Liability Bodily Injury insurance carried by an at faultmotorist for bodily injury or death to you, covered family members, and/or the occupants ofyour insured vehicle caused by the at-fault motorist, who is legally liable but does not haveenough insurance. Limits represent thousands of dollars and are expressed in the following format: Example: ”100/300\" That is: A maximum of $100,000 for bodily injury to one person and $300,000 for bodily injury sustained by two or more persons in a single accident. Note: UM coverage and UIM coverage are separate coverages and neither coverage limit may exceed the amount selected for bodily injury coverage. Common Exclusions: There are some circumstances in which these coverages may notapply. For example:when your vehicle is being used to transport people or property for a fee.when a covered vehicle is used without the permission of you or a relative.use of a non-owned vehicle by you without permission of the owner. Who drives this vehicle? Primary driver: The individual who drives the covered vehicle more than any otherperson in the household.167

Noble Continuing Education All rights reserved. AUTO INSURANCE GUIDE Occasional driver: Any person in the household who drives the covered vehicle,regardless of frequency. Never: Just what it says. If a person may drive the covered vehicle at any time, they arean occasional driver.Note: Every driver must be associated with at least one vehicle. Years in occupation: Insert the number of years you have been with your currentemployer. If you are retired, please insert that number of years you had been with your mostrecent employer. (Garaging) Zip Code: This is the zip code where your vehicle is parked/garaged whennot in use, usually your residence.168