Glossary of Insurance Related Terms

Adjuster – A person licensed by the North Carolina Department of Insurance whose job is to evaluate the amount of loss and to recommend the amount of money that the car insurance company will pay for an insurance claim.

Agent – A person licensed by the North Carolina Department of Insurance to sell and service car insurance policies.

At-Fault – Negligent.

Claim – A request to an car insurance company for payment of a loss.

Coverage – The amount of risk covered by an insurance company.

Deductible – The portion of each covered insurance claim you are responsible for paying.

Endorsement – An amendment to an insurance contract, creating a change in the original terms of the contract.

Exclusion – A provision in an insurance contract that removes coverage for certain losses or property.

Experience Period – The three years immediately preceding the date of application or the preparation of renewal.

Family Member – A person related to you by blood, marriage or adoption who is a resident of your household, including a ward or foster child.

Insurer – The insurance company that is underwriting the contract of insurance.

Liability Insurance – This type of insurance provides protection for the insured against loss arising out of legal liability to third parties.

Limits – The maximum amount the car insurance company will pay in the event of a loss.

Insured – The person or persons covered by the insurance contract.

Negligence – The failure to act as a reasonably prudent person would have acted under similar circumstances.

Occupying – Means in; upon; getting in, on, or off.

Premium – The amount paid in consideration for a car insurance policy.

Premium Finance Company – A lending institution approved by the North Carolina Department of Insurance, which finances insurance premiums for a fee.

What are the Basic Types of Car Insurance Coverages?

Car insurance is used to protect you against expenses you may not otherwise be able to afford if you are involved in a car accident. The car insurance policy is a combination of several individual types of insurance coverages. (Review your car insurance policy or contact your agent to identify the limitations and exclusions for the following coverages.)

Liability Coverage (Required By North Carolina Law)

Your Liability coverage will pay for bodily injury and property damage for which any covered individual becomes legally responsible. The Personal Car Policy will cover you or any family member while using any car or trailer, and any person using your covered car with permission. The policy will pay up to the limits listed in your car insurance policy.

Under this coverage you will have separate limits of liability per person injured and limits of liability per accident. This is called split limits. For example, you may have limits of 100/300/50. This would mean your car insurance policy would pay up to a maximum of $100,000 to any one person injured by a covered driver or up to $300,000 for all injured parties combined, as a result of a single accident. Also, this coverage has a single limit of liability for all property damage resulting from any one accident. Using the above example of 100/300/50 limits, you will have a limit of $50,000 Property Damage Liability for each accident.

The liability section can be separated into three parts: Bodily Injury Liability, Property Damage Liability and Supplementary Payments.

Bodily Injury Liability

This type of insurance coverage will pay for damages to other people as a result of an accident caused by you or another covered driver. Examples of damages include medical and funeral expenses, lost wages, disability, rehabilitation, pain and suffering, law suit settlements and legal expenses.

Property Damage Liability

This type of insurance coverage will pay for damages to other people’s property as a result of an accident that is caused by you or another covered driver. Examples of damages include the repair or Actual Cash Value (ACV) of another individual’s car or other property and legal expenses.

Supplementary Payments

This type of insurance coverage is in addition to your stated limits of liability. This section provides payment on accident related expenses involving:

• Bail bonds;
• Costs taxed against an insured and interest accruing after a judgment is entered;
• Expenses for emergency first aid to others at an accident involving a covered auto; and
• Loss of earnings because of attendance at hearings or trials at the car insurance company’s request;
• Premiums on appeal bonds and bonds to release attachments;
• Other reasonable expenses incurred at the car insurance company’s request.

Coverage For Damage To Your Car

This type of insurance coverage is for direct and accidental loss to your covered car, or any non-owned car that meets the following definition:

• Any auto or trailer you do not own while being used as a temporary substitute for your covered auto because of its breakdown, repair, servicing, loss or destruction.
• Any private passenger car or trailer not owned by or furnished or available for the regular use of you or any family member while in the custody of or being operated by you or any family member.

Collision

Collision means physical damage to your covered vehicle caused by an impact with another vehicle or object. This type of insurance coverage pays the lesser of the cost of repair or Actual Cash Value (ACV) of your car.

Other Than Collision (Comprehensive)

This type of insurance coverage pays the cost of repair or Actual Cash Value (ACV) of your car less any deductible. Losses caused by the following are considered comprehensive claims:

• Breakage of glass.
• Contact with a bird or animal; or
• Explosive or earthquake;
• Fire;
• Hail, water or flood;
• Malicious mischief or vandalism;
• Missiles or falling objects;
• Riot or civil commotion;
• Theft or larceny;
• Windstorm;

Medical Payments Coverage

This type of insurance coverage pays for reasonable and necessary medical and funeral expenses due to a car accident. Individuals covered under this coverage include:

• You or any family member while occupying any car, or as a pedestrian when struck by a motor vehicle; or
• Any other person while occupying your covered car or any vehicle (private passenger car or trailer licensed for road use) driven by you or a family member.

The policy will pay up to the limits listed in your car insurance policy for each individual injured. The Medical Payments coverage will not provide coverage for any expenses if the injuries occur while occupying a motorized vehicle with less than four wheels.

Uninsured / Underinsured Motorists (UM/UIM) Coverage

Uninsured Motorists (UM) Coverage

Your Uninsured Motorist coverage will provide protection when an uninsured driver, who is at-fault, injures you or another covered individual. It also provides property damage coverage.

Underinsured Motorists (UIM) Coverage

This type of insurance coverage will provide protection when an underinsured driver, who is at-fault, causes injury to a covered individual. An underinsured driver is one whose limits of liability are less than your Underinsured Motorists (UIM) limits, and not enough to cover the losses of the people the underinsured driver injures in an at-fault accident.

Underinsured Motorists (UIM) coverage does not provide protection against property damage. The Underinsured Motorists (UIM) coverage will pay a maximum of the difference between the other driver’s Liability limits and your Underinsured Motorists (UIM) limits.

Caution: Your insurance company will not provide coverage if you or your legal representative settles the bodily injury or property damage without the car insurance company’s written consent.

What are the Main Types of Car Insurance Coverages?

Liability Coverage

What does liability coverage pay for?

Bodily injury and property damage for which a covered driver becomes legally liable

Who (or what) is covered by liability coverage?

You and your family, or anyone driving your covered car with permission are covered by your liability insurance coverage.

Is liability coverage required?

Yes, state law requires minimum limits of liability coverage.

Collision Coverage

What collision coverage pay for?

Damage to your covered car Your covered car or non-owned car

Who (or what) is covered by collision coverage?

Your covered car or non-owned car.

Is collision coverage required?

No collision coverage is not required by North Carolina law, but it may well be required by lender.

Comprehensive Coverage

What does comprehensive coverage pay for?

Damage to your covered car, caused by: missiles or falling objects, fire, theft or larceny, explosion or earthquake, windstorm, hail, water or flood, malicious mischief or civil commotion, contact with a bird or animal or breakage of glass

Who (or what) is covered by comprehensive coverage?

Your covered car or non-owned car.

Is comprehensive coverage required?

No comprehensive coverage is not required by North Carolina law, but it may well be required by lender

Medical Payment Coverage

What does medical payment coverage pay for?

Necessary and reasonable medical and funeral services are paid for by this type of insurance.

Who (or what) is covered by medical payment coverage?

You and your family, or anyone occupying your covered car are covered by medical payment insurance coverage.

Is medical payment coverage required?

No, medial payment coverage is not required by North Carolina law

Uninsured / Underinsured Motorist (UM/UIM) Coverage

What does Uninsured / Underinsured Motorist (UM/UIM) coverage pay for?

Bodily injury and property damage for which another driver becomes legally liable

Who (or what) is covered by this kind of coverage?

You and your family, or anyone occupying your covered car.

Is this kind of coverage required?

Yes. Uninsured / Underinsured Motorist (UM/UIM) limits must be at least equal to your liability limits. (For insurance policies issued/ renewed on or after February 1, 2010, you may purchase Uninsured / Underinsured Motorist (UM/UIM) coverage with lower limits, not less than the minimum Bodily Injury and Property Damage limits required for your vehicle.)

Miscellaneous Car Insurance Coverages

These types of car insurance coverages may be purchased in addition to your basic car coverages. You will be charged an additional premium for electing the following coverages. (Review your car insurance policy or contact your agent to identify any applicable limitations and exclusions.)

Car Death Indemnity | Specific Disability | Total Disability Benefits Coverage

This type of endorsement will provide a benefit for death, dismemberment, specific disability and total disability resulting from a car accident.

Miscellaneous Vehicle Type Endorsement

Motorcycles, golf carts, travel trailers and other similar type vehicles are afforded coverage by this endorsement. If your covered vehicle is a motorcycle, the endorsement will extend the medical payments coverage to motor vehicles with fewer than four wheels.

Rental Car Coverage

This type of endorsement provides coverage for you or a family member who rents a rental vehicle on a daily basis for less than 22 consecutive days.

Coverage For Damage To Your Auto

Through this type of endorsement, the limits of liability are increased for custom furnishings and custom equipment, and for additional permanently installed electronic accessories.

Towing And Labor Costs Coverage

This type of insurance coverage pays for towing and labor costs each time your covered car or any non-owned car is disabled or the keys are lost, broken or accidentally locked in the car.

Rental Reimbursement

This type of insurance coverage will pay, up to a specified rate and maximum total amount, transportation expenses incurred by you or loss of use expenses for a non-owned vehicle for which you become legally responsible.

How Are NC Car Insurance Rates are Determined?

Underwriting is the process by which a car insurance company considers your application and evaluates your driving record and other indicators to see if you meet their car insurance coverage guidelines.

Insurance companies use a variety of factors to determine the level of risk each applicant presents. Each car insurance company will use its own underwriting guidelines to decide whether or not to insure a driver voluntarily. Some of the most common factors are: your driving record, where you live, type of car and use of car.

Your Personal Driving Record

Your driving record will have the largest impact on your insurance premium. North Carolina insurance points are charged for at-fault accidents and convictions for moving violations that occur within the experience period. The experience period is the three years immediately preceding the date of application or the preparation of the policy renewal.

Where You Reside

The area you live in will also affect your rate. Insurers will consider vehicle and population density, road conditions, repair rates, hospital and medical costs, and the number of accidents and other claims in a particular area. Normally, urban areas have higher rates than rural areas.

The Type of Car You Drive

The likelihood of theft, cost of repair and replacement, and the style of vehicle (SUV, sports car, station wagon, etc.) will influence your premium. For example, a sports car will normally have a higher premium than a family sedan.

Car Use

The more you use your vehicle the more you may pay in premium. A vehicle you drive 20 miles to work everyday is considered a greater risk than a vehicle only used occasionally.

Safe Driver Incentive Plan (SDIP)

Maintaining a clean driving record can pay off. To reward safe drivers with the lowest possible insurance rates, the General Assembly enacted the North Carolina Safe Driver Incentive Plan (SDIP).

Drivers who are convicted of moving traffic violations and/or cause accidents will be charged higher premiums in accordance with their driving records.

North Carolina insurance points are charged as follows for convictions and at-fault accidents occurring during the Experience Period:

12 Insurance Points For These Types of Convictions And At-Fault Accidents

• Driving commercial vehicle with a blood-alcohol level of .04 or more
• Driving while impaired
• Driving with a blood-alcohol level of .08 or more
• Hit-and-run resulting in bodily injury or death
• Manslaughter or negligent homicide
• Prearranged highway racing or lending a car for prearranged highway racing
• Transporting illegal intoxicating liquor for sale

10 Insurance Points For These Types of Convictions And At-Fault Accidents

• Highway racing or lending a car for highway racing
• Speeding to elude arrest

8 Insurance Points For These Types of Convictions And At-Fault Accidents

• Aggressive driving
• Driving during revocation or suspension of license or registration

4 Insurance Points For These Types of Convictions And At-Fault Accidents

• Driving by a person less than age 21 after consuming alcohol or drugs
• Hit-and-run resulting in property damage only
• Passing a stopped school bus
• Reckless driving
• Speeding in excess of 75 mph when the speed limit is less than 70 mph
• Speeding in excess of 80 mph when the speed limit is 70 mph or greater

3 Insurance Points For These Types of Convictions And At-Fault Accidents

• At-fault accident resulting in death, or total bodily injury* (to all persons) in excess of $1,800; OR resulting in total property damage (including damage to insured’s own property) of $3,000 or more.

2 Insurance Points For These Types of Convictions And At-Fault Accidents

• At-fault accident resulting in total property damage (including damage to Insured’s own property) in excess of $1,800 but less than $3,000
• Driving on wrong side of the road
• Following too closely
• Illegal passing
• Speeding 10 mph or less in excess of speed zone of 55 mph or greater
• Speeding more than 10 mph over the speed limit provided the total speed is in excess of 55 mph, but less than 76 mph

1 Insurance Point For These Types of Convictions And At-Fault Accidents

• All other moving violations
• At-fault accident resulting in bodily injury* (to all persons) of $1,800 or less; OR resulting in property damage (including damage to insured’s own
  property) of $1,800 or less
• Speeding 10 mph or less in excess of speed limit of less than 55 mph

* No Insurance points will apply for bodily injury if the insured furnishes proof that the medical costs were incurred solely for diagnostic purposes.

Special Exemptions: No NC Insurance Points Will Be Charged For:

An accident provided all of the following are true:

• There is property damage only;
• The amount of damage is $1,800 or less;
• There is no conviction for a moving violation in connection with the accident; and
• No licensed operators in the household have convictions or at-fault accidents during the experience period. (An insurance company may require that the insured be covered by that company for six continuous months.)

Speeding 10 mph or less over the posted speed limit; provided all of the following are true:

• The violation did not occur in a school zone; and
• There is not another moving traffic violation for the experience period (an isolated Prayer for Judgement Continued will not count as a prior conviction for the purpose of this exception).

One Prayer for Judgement Continued for each household every three years; however:

• A second Prayer for Judgement Continued may cause points to be charged according to the underlying convictions.

NC Car Insurance for High Risk Drivers

What Is A High-Risk Driver?

You a high-risk driver, it will be harder to obtain insurance, especially at better rates. Usually drivers are considered a high risk because of tickets or accidents, reckless or drunk driving history or being an inexperienced operator.

What Is An Inexperienced Operator?

An inexperienced operator is a licensed driver who has less than three years driving experience. Adding an inexperienced operator will cause a significant increase in your premium.

Reinsurance Facility

Since the financial responsibility laws require individuals to be covered for Bodily Injury Liability and Property Damage Liability up to the minimum limits, insurance companies cannot refuse to write those coverages. If they do not want to bear the risk, insurance companies will place high-risk drivers in the reinsurance facility. The purpose of the facility is to assure the availability of motor vehicle liability insurance to all eligible risks. The types of insurance coverage offered are:

• Bodily Injury Liability from the minimum limits required to a maximum of $100,000 each person, $300,000 each accident;
• Property Damage Liability from the minimum limits required to a maximum of $50,000 each accident;
• Medical Payments Coverage from $1,000 to a maximum of $2,000 each person; (This type of insurance coverage is not available for motorcycles.)
• Underinsured Motorist Coverage to a maximum $1,000,000 each person and each accident for Bodily Injury Liability; and
• Uninsured Motorist Coverage from the minimum limits required of Bodily Injury Liability and Property Damage Liability to a maximum of $1,000,000 each person and each accident for Bodily Injury Liability, and $50,000 for property damage (with a $100 deductible).

Options For High-Risk Drivers

It may be difficult for a high-risk driver to obtain Collision, Comprehensive and other coverages that are not offered through the reinsurance facility. The most common method is through an insurance company that writes non-standard business.

Your car insurance company may ask you to sign a “consent to rate” form. This would mean that you agree to pay rates higher than what has been filed with the North Carolina Department of Insurance in order for the car insurance company to write the coverage.

NC Car Insurance Tips

Examples Of Discounts, Deviations And Credits

You may want to ask your agent or company if you are eligible for any discounts. Following are some examples of discounts being offered:

• You agree to an automatic draft payment plan (electronic funds transfer).
• You are considered a mature driver (normally age 55, but ages for eligibility can vary by company).
• You are renewing your car insurance policy and did not have a loss or conviction during the last policy period.
• You have insurance on your home and car with the same insurance company.
• You have more than one car on the same insurance policy.
• Your car has a passive restraint system (air bags, automatic seat belts and other safety equipment may qualify).
• Your car has an anti-theft device.
• Your car has anti-lock brakes.
• Your car has daytime running lights.

Increase Car Insurance Deductibles

You can lower your premium by increasing your deductibles. You can choose the deductibles on your comprehensive and collision coverages. In doing this you will want to consider how much of a loss you can afford to absorb if you have a claim.

Shop Around For Better Car Insurance Rates

Shop around, you may find substantial differences between quotes. Make sure you are comparing identical coverages when comparing companies. Make sure you are dealing with licensed agents and companies. You can check this by contacting the North Carolina Department of Insurance at 1-800-546-5664.

You can also check an insurance company’s ratings. Some examples of organizations that rate insurance companies are A.M. Best, Moody’s Investors Service, Standard and Poor’s Corporation (S&P) and Weiss Research. You can typically find information offered by these organizations at your local library or on the Internet.

Paying Your Car Insurance Premium

Pay your premium in full. Also, pay on or before the due date to avoid the risk of cancellation. There is no grace period for car insurance. Use a check or money order. If you use cash, request a receipt, and keep it in a safe place.

Pay your premiums even if you disagree with your insurance company. Failure to make premium payments may cause cancellation of your car insurance policy.

Some consumers choose to finance their premium. The method most commonly used is by way of a premium finance company.

When dealing with a premium finance company you should note the following.

• You are reaching a separate agreement with the finance company. Your insurance company is not lending you the money.
• The finance charges and fees associated with the loan will increase your total cost of insurance.
• The finance agreement must be in writing, dated and signed by you. Before the first due date of the first installment, the finance company must deliver a copy of the agreement to you or mail to your address as shown on the agreement.
• You should ask your agent for an explanation of the charges and fees associated with the agreement.

Before You Buy A Car

Before you buy your car ask about the cost of insurance. Some makes and models are higher risks than others and could result in a higher premium. With a few models, you may have trouble finding companies willing to provide Comprehensive and Collision coverages.

Driving Record

Maintain a clean driving record. A key element in determining your rates is your driving record. Remember that insurance points will remain on your record for three years.

Parents Of Teenagers

If your child does not own a car, make sure the insurer knows which car the teen will be driving and whether it will be primary or occasional use.

Types of Car Insurance Coverage

If you have an older model vehicle and it is not financed, the benefit from the purchase of Comprehensive and Collision coverages might not be worth the cost.

Read Your Car Insurance Policy

Read your car insurance policy and make sure that it lists all coverages you have requested.

Insurance Identification Cards

Make sure you have an insurance identification card. This will provide the necessary insurance information required from you at the time of an accident.

Losing Your Car Insurance

Insurance companies have the right to terminate your coverage; however, they must follow the guidelines listed in your car insurance policy to do so. The three ways your car insurance policy can be terminated are cancellation, nonrenewal and automatic termination.

Cancellation

Cancellation is when your car insurance policy is terminated during the policy period. You may cancel your car insurance policy by returning the policy to the car insurance company or agent or giving the car insurance company advanced written notice of the date you wish to cancel the policy.

Liability, Medical Payments and Uninsured Motorists or Combined Uninsured/ Underinsured Motorists Coverages Your car insurance company may cancel your Liability, Medical Payments and Uninsured Motorists or Combined Uninsured / Underinsured Motorists (UM/UIM) coverages by mailing to your last known address:

• At least 15 days notice, if cancellation is for non-payment of premium; or
• At least 60 days notice for all other cases.

There are certain reasons your car insurance company may cancel your Liability, Medical Payments, and Uninsured Motorist or Combined Uninsured/ Underinsured Motorist coverages:

• Non-payment of premium;
• You are no longer a resident of North Carolina and are not eligible for a policy through the reinsurance facility.
• The insurance company terminates its contract with your insurance agent;
• Your premium finance company cancels the policy according to the finance contract;
• If you knowingly make a material misrepresentation of:
• The years of driving experience; or
• The driving record of you or any other driver who lives with you and customarily uses your covered car.

Collision, Comprehensive, and Coverages Other Than Those Previously Listed

Your insurance company may cancel any coverage other than your Liability, Medical Payments and Uninsured Motorists or Combined Uninsured / Underinsured Motorists (UM/UIM) by mailing to your last known address at least 10 days advance notice.

Insurance companies review many different factors to determine whether the policy continues to meet their underwriting criteria. Some of the factors that may lead to cancellation or nonrenewal are:

• Non-payment of premium. Remember there is no grace period for car insurance;
• Excessive claims or accidents;
• Traffic violations;
• And no longer meeting company guidelines (Examples include adding a sports car or adding an inexperienced operator).

Nonrenewal

Nonrenewal denotes your car insurance company’s refusal to renew your car insurance policy. An insurance company can nonrenew your Liability, Medical Payments and Uninsured Motorist or Combined Uninsured / Underinsured Motorist (UM/UIM) coverages by mailing to your last known address at least 60 days notice before the end of the policy period. Any other coverage may be nonrenewed by mailing to you at least 10 days notice before the end of the policy period.

Automatic Termination

If the car insurance company offers to renew or continue your coverage and you do not accept, the policy will automatically terminate at the end of the current policy period. Failure to pay the required premium to renew or continue your car insurance policy will mean you do not accept the offer.

If you purchase other insurance on your covered car, any similar insurance provided by the initial policy will terminate. The termination will occur on the effective date of the other insurance.

Refunds

There are two ways of calculating your refund after cancellation, pro-rata cancellation and short rate cancellation.

• Pro-Rata Cancellation: This type of calculation is used when the car insurance company cancels your car insurance policy. It will generate your refund, without any penalty, for canceling during the policy period.
• Short Rate Cancellation: This type of cancellation may be used when you cancel the policy. It will generate your refund including a penalty for canceling during the policy period. The penalty amount varies according to the total premium and the amount of time left in the policy period.

After the Accident

Accident Checklist

• Stop your car in a safe place.
• Move your car, if needed, to protect against further damage and keep from blocking traffic.
• Call the police, especially when there are injuries or hit and run accidents.
• Get the other driver’s name, address, phone number, license plate number, driver’s license number and insurance information.
• Record the name of the car insurance company and policy number exactly as it appears on the other driver’s proof of insurance card.
• Get the names of any witnesses as well as their address and telephone number.
• Do not agree to forget about the accident. You may have hidden damages, unknown injuries or later find that a lawsuit has been filed against you.
• Call your agent if you have any questions or concerns with the claims process. Your insurance agent could be of assistance when filling out forms and documents required to proceed with your claim.

Who Do I Call To File A Car Insurance Claim?

• Your insurance agent or insurance company.
• If another individual is responsible for your damages, you need to contact their insurance agent or company.
• The adjuster you are assigned will inform you of any additional steps needed.

How Will A Company Determine Who Is At-Fault?

The insurance adjuster investigating the accident will attempt to determine who is negligent or at-fault. The Car Liability coverage will pay for bodily injury and/or property damage for which any insured becomes legally responsible due to negligence.

North Carolina Contributory Negligence Law bars a driver from collecting damages if determined to be partially at fault. In essence, if you contribute to an accident, you may not be able to collect on a liability claim. Any disagreement will ultimately have to be resolved in a court of law.

If Your Car Can Be Repaired

The insurance company is responsible for the cost to repair your vehicle. This does not necessarily mean the estimated amount by the repair facility of your choice. If the car insurance company can have the same repairs completed at a lower cost from another shop, you may be required to pay the difference.

No insurance company can require the use of after market parts in the repair of your vehicle unless the part is equal to the original part in terms of fit, quality, performance, and warranty. Any modifications made necessary because of the use of after market parts shall be included in the estimates. You can choose not to have after market parts placed on your car, but you may be responsible for any additional cost.

The insurance company may deduct for depreciation when they allow for an entire paint job or when such items as tires and batteries are replaced. Depreciation is the decrease in value of the vehicle or part because of age or wear and tear.

If Your Car Must Be Totaled

If a motor vehicle is damaged, to the extent that the total cost of repair is equal to or exceeds 75 percent of the pre-accident Actual Cash Value (ACV), the insurer shall consider the vehicle a total loss.

When your car is totaled, the car insurance company is responsible for its Actual Cash Value (ACV). Actual Cash Value (ACV) represents the local market value of the totaled vehicle.

There are two methods to determine local market value:

1. By using the local market price of a comparable vehicle; or
2. If no comparable vehicle can be located, dollar estimates from at least two qualified dealers within the local market area are normally used.

If You Are Injured

Medical Payments coverage, if purchased, can provide some assistance for your doctor and hospital bills, regardless of fault.

Bodily injury claims can include doctor and hospital bills, laboratory fees, lost wages and pain and suffering that are a direct result of the accident.

The General Statutes of North Carolina establish no guidelines pertaining to the determination or calculation of any amount owed to you for pain and suffering. Therefore, if you and the car insurance company cannot agree on the value of your claim you may wish to seek legal advice.

Car Insurance Frequently Asked Questions (FAQ)

Car Insurance Basics – Frequently Asked Questions

What happens if I have a lapse of liability insurance?

Whenever your liability coverage is cancelled or nonrenewed, your insurance company is required to notify the North Carolina Division of Motor Vehicles (DMV). The DMV is required to notify you when they receive the notification. If there is a penalty, the DMV will advise you of such and what action, if any, that you need to take.

Will my car insurance policy provide the required liability coverage when traveling to other states?

Yes, your car insurance policy will automatically meet the minimum requirements of other states in which you are traveling.

What about driving in Canada and Mexico?

Your car insurance policy will cover you and meet the requirements of Canada. Your car insurance policy will not cover you in Mexico. In the border states, you can purchase Mexican liability policies from agents who specialize in it.

Are family members covered by my car insurance policy?

Yes, family members are insured under your car insurance policy. Family member is defined in your car insurance policy as a person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child.

Do I need to purchase coverage when I rent a car?

Under certain conditions your car insurance policy may provide coverage while using a rental vehicle. However, contact your agent for specifics.

Is flood damage covered?

Yes, if you have purchased the Comprehensive coverage.

Are cell phones and stereo equipment covered?

Stereo equipment, cell phones, televisions, scanners and other media may be covered under certain conditions. You should check with your agent to make sure you are properly covered.

When I buy an additional car or replace a car, is the new car covered automatically?

Yes, as long as you notify the car insurance company within 30 days after acquiring a new vehicle. Additional vehicles will have the broadest coverage of any vehicle listed on your car insurance policy. Replacement vehicles will have the same insurance coverage as the vehicle it replaced. If you do not notify the car insurance company within 30 days, there will be no automatic coverage.

What happens if I drop coverage on a financed vehicle?

First, it is a violation of your finance contract and may put your loan in jeopardy. Second, the lender could place single interest coverage on the vehicle and add the premium to the loan. The coverage is expensive and does not provide any coverage for you.

What if I buy a motorcycle?

The car insurance policy, if not amended, does not provide any coverage. You can endorse your car insurance policy so that it will extend the coverages to your motorcycle.

Insurance For Young Drivers – Frequently Asked Questions

I am going to college in another state, and my car is still registered in North Carolina. Will my (or my parents’) North Carolina policy cover me?

Yes, coverage would still apply. Your premium may be adjusted because of where the vehicle is now located.

My son is going away to college. Can my company force me to keep her on the policy if I want to remove her?

Yes, your car insurance company still must cover her as long as her permanent residence is your home. Even if she does not have a vehicle with her, your car insurance policy covers her for liability when she may borrow a vehicle at school and when at home on visits.

I am enlisting in the military. Does my car insurance policy still cover me if I am stationed in another state?

Your car insurance policy will automatically meet the other state’s liability requirement. When it is time to renew your car insurance policy you may be required to purchase insurance in the state where you are stationed.

My child has received his driver’s license. Do I have to add him to my car insurance policy if he drops his own insurance policy?

Yes, as long as he is a resident of your household. However, you must notify your agent or company. Failure to do so could jeopardize your coverage.

My 19-year-old son no longer lives with me. What can I do to remove him from my car insurance policy if the car insurance company wants to keep him on my car insurance policy?

Showing proof of insurance with another company can help you remove him. Also, show the car insurance company any documents that will help prove that a change of address has taken place. Examples of these documents can include lease agreements, utility billings or receipts, and a current driver’s license.

Does my child have to be rated on the most expensive vehicle?

No, the rates should apply to the vehicle your child principally operates. If the child is an occasional operator, the rates would apply to the vehicle your child most frequently operates.

NC Car Insurance Rates – Frequently Asked Questions

Why does my car insurance cost more than my agent said it would?

A quote is an estimate of your premium. It does not offer a firm price or contract. If your agent misquoted the premium, your car insurance company must correct it by billing you for the correct premium or refunding the overpaid amount. Being accurate with your driving information is the best way to assure correct premium charges.

Why is it harder to get insurance if drivers in my household have bad driving records?

When the individuals residing in your house have bad driving records, the car insurance company knows it has an increased risk. Your car insurance company will consider that risk when underwriting the policy. According to the Liability Coverage section of your car insurance policy, any family member is considered an insured. Anyone driving your covered vehicle with permission is also covered by your car insurance policy.

Losing Your Car Insurance – Frequently Asked Questions

Does an insurance company have to tell me why it cancelled my car insurance policy?

Yes, an insurance company must give the reason(s) why your car insurance policy was cancelled and the date termination is effective.

Can an insurance company refuse to renew my car insurance policy because of claims that were not my fault?

Your car insurance company can nonrenew your Comprehensive and Collision coverages if you do not meet its underwriting criteria, as long as the car insurance company gives proper notification. Many insurance companies will use frequency of claims, taking into account at-fault as well as fault-free claims, as one of their criteria.

My company renewed my car insurance policy with another company in the same group. Can they do that?

Yes, if it gives you proper notification that your original policy will be nonrenewed.

Why did not I get a notice that my car insurance policy was cancelled?

If canceling your Liability, Medical Payments and Uninsured Motorist or Uninsured / Underinsured Motorist (UM/UIM) Coverages for non-payment of premium, your car insurance company must mail a notice to your last known address at least 15 days in advance. Sixty days notice is required for all other reasons.

The insurance company is responsible for showing proof that the notice of cancellation was mailed, not proof that you did or did not receive it.

If canceling any coverage other than Liability, Medical Payments and Uninsured Motorists or Uninsured / Underinsured Motorists (UM/UIM), your car insurance company must mail a notice to your last known address at least 10 days in advance.

What to do After a NC Car Accident – Frequently Asked Questions

What does my car insurance policy require me to do after an accident?

Notify the car insurance company of how, when and where the accident or loss happened. This should include the names and addresses of anyone who is injured and any witnesses. Cooperate with the investigation. Obtain or authorize the car insurance company to obtain appropriate documents, medical information and other pertinent records.

When should I notify my car insurance company?

As soon as reasonably possible, while the details are still fresh in your mind.

What if the other driver’s insurance is not enough to pay my bills?

Medical – Your Underinsured Motorists (UIM) coverage will provide protection for the difference between the other driver’s Liability Coverage and the limits under your Underinsured Motorists (UIM) coverage. You can find additional coverage under the Medical Payments coverage portion of your car insurance policy. Check with your agent and review your car insurance policy to make sure you are adequately covered.

Property Damage – The difference can be covered by your Collision coverage. Again, check with your agent and review your car insurance policy to make sure you are adequately covered.

If my only coverage is liability insurance, does my car insurance policy cover my medical and car repair bills?

No, liability insurance only pays for other people’s injuries and property damage for which an insured driver becomes legally responsible.

The insurance company wants to total my car; I want to fix it. What can I do?

You have the right to keep the salvage vehicle. When you do, the car insurance company will deduct the salvage value from the actual cash value. If requested, the car insurance company must furnish you with the name and address of a salvage dealer who will purchase the salvage for the amount deducted.

What if the car insurance company and I cannot agree on the amount to be paid by my collision coverage?

You can elect to use the appraisal provision of your car insurance policy. According to the provision, you and the car insurance company will each choose a competent appraiser. The two appraisers will then select an umpire. The appraisers will state separately the Actual Cash Value (ACV) and the amount of loss. If they do not agree, they will submit their differences to the umpire. A decision by any two will be binding.

The insurance company and the insured will pay its chosen appraiser and bear the expenses of the appraisal and umpire equally.

How can my loan balance be more than my automobile insurance company says my car is worth?

This can occur for many reasons including low down payments, high interest rates and poor maintenance. You may be able to purchase a type of insurance called Guaranteed Car Protection (GAP). GAP insurance covers the difference between Actual Cash Value (ACV) and your loan balance. This is typically only available for new vehicles. Otherwise, you can be held responsible for the difference.

Can an insurance company tell me where to get my car fixed?

No. An insurance company cannot require you to go to a particular repair shop. An insurer can suggest a repair shop. If the car insurance company can have the same repairs completed at a lower cost from a different shop, you may be required to pay the difference.

I do not want to file a claim against my company because it might raise my rates or refuse to renew my car insurance policy, but I am getting nowhere with the other driver’s insurer. Any advice?

An insurance company cannot charge insurance points for an accident that was not your fault. Your insurance agent can give you advice about your car insurance company’s underwriting and how the claim may affect your car insurance policy.

If I am in an accident and someone else is at fault, do I get a rental car while mine is being fixed?

It is common practice for insurance companies to allow a rental vehicle while your car is being repaired. However, there are no statutes or administrative codes that require an insurance company to offer a rental vehicle.

Can the other driver’s insurance company delay paying for my car repairs to pressure me into signing a release on my injury claim?

No. If this situation were to arise, you can file a formal complaint with the North Carolina Department of Insurance.

How long can an insurance company take to pay my claim?

After receiving a claim an insurance company has 30 days to acknowledge the claim. The acknowledgment shall be one of the following, make an offer of settlement, deny the claim, make payment of the claim, or advise the claimant that the investigation of the claim is ongoing. Loss and claim payments should be mailed or delivered within 10 business days after the claim is settled.

Is the car insurance company required to give me an explanation of why it denied my claim?

Yes. The insurance company must provide a reasonable explanation of why your claim was denied in relation to the policy language or applicable law.