Liability Insurance coverage provides a fixed dollar amount of coverage for damages that an insured driver becomes legally liable to pay due to an accident or other negligence. For example, if an insured driver drives into a telephone pole and damages the pole, liability coverage pays for the damage to the pole. In this example, the drivers insured may also become liable for other expenses related to damaging the telephone pole, such as loss of service claims (by the telephone company).

Liability Insurance coverage is available either as a combined single limit policy, or as a split limit policy:

Combined Single Limit

A combined single limit combines property damage liability insurance coverage and bodily injury coverage under one single combined limit. For example, an insured driver with a combine single liability limit strikes another vehicle and injures the driver and the passenger. Payments for the damages to the other driver’s car, as well as payments for injury claims for the driver and passenger, would be paid out under this same coverage.

Split Limits

A split limit liability insurance coverage policy splits the coverages into property damage coverage and bodily injury coverage. In the example given above, payments for the other driver’s vehicle would be paid out under property damage coverage, and payments for the injuries would be paid out under bodily injury coverage.

Bodily injury liability insurance coverage is also usually split as well into a maximum payment per person and a maximum payment per accident.

The consumer may be protected with different coverage types depending on what coverage the insured purchases. Every state requires that motorists carry minimum levels of auto insurance coverage in order to ensure that its drivers can cover the cost of damages to people or property in the event of an automobile accident.

In the United States, liability insurance covers claims against the policy holder and generally, any other operator of the insured vehicles provided, do not live at the same address as the policy holder, and are not specifically excluded on the policy. In the case of those living at the same address, they must specifically be covered on the policy. Thus it is necessary for example, when a family member comes of driving age they must be added on to the policy. Liability insurance sometimes does not protect the policy holder if they operate any vehicles other than their own. When you drive a vehicle owned by another party, you are covered under that party’s policy. Non-owners policies may be offered that would cover an insured on any vehicle they drive. This coverage is available only to those who do not own their own vehicle and is sometimes required by the government for drivers who have previously been found at fault in an accident.

Generally, liability coverage extends when you rent a car. Comprehensive policies (”full coverage“) usually also apply to the rental vehicle, although this should be verified beforehand. Full coverage premiums are based on, among other factors, the value of the insured’s vehicle. This coverage, however, cannot apply to rental cars because the insurance company does not want to assume responsibility for a claim greater than the value of the insured’s vehicle, assuming that a rental car may be worth more than the insured’s vehicle. Most rental car companies offer insurance to cover damage to the rental vehicle. These policies may be unnecessary for many customers as credit card companies, such as Visa and MasterCard, now provide supplemental collision damage coverage to rental cars if the transaction is processed using one of their cards. These benefits are restrictive in terms of the types of vehicles covered.

From Wikipedia, the free encyclopedia

Auto insurance risk selection is the process by which vehicle insurers determine whether or not to insure an individual and what insurance premium to charge. Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company in accordance to a framework of regulations set by the government. Often, the insurer will have more freedom to set the price on physical damage coverages than on mandatory liability coverages.

When the premium is not mandated by the government, it is usually derived from the calculations of an actuary based on statistical data. The premium can vary depending on many factors that are believed to have an impact on the expected cost of future claims. Those factors can include the car characteristics, the coverage selected (deductible, limit, covered perils), the profile of the driver (age, gender, driving history) and the usage of the car (commute to work or not, predicted annual distance driven).

History 

Conventional methods for determining costs of motor vehicle insurance involve gathering relevant historical data from a personal interview with, or a written application completed by, the applicant for the insurance and by referencing the applicant’s public motor vehicle driving record that is maintained by a governmental agency, such as a Bureau of Motor Vehicles. Such data results in a classification of the applicant to a broad actuarial class for which insurance rates are assigned based upon the empirical experience of the insurer. Many factors are deemed relevant to such classification in a particular actuarial class or risk level, such as age, sex, marital status, location of residence and driving record.

The current system of insurance creates groupings of vehicles and drivers (actuarial classes) based on the following types of classifications.

• Vehicle: Age; manufacturer, model; and value.
• Driver: Age; sex; marital status; driving record (based on government reports), violations (citations); at fault accidents; and place of residence.
• Coverage: Types of losses covered, liability, uninsured or underinsured motorist, comprehensive, and collision; liability limits; and deductibles.

The classifications, such as age, are further broken into actuarial classes, such as 21 to 24 year olds, to develop a unique vehicle insurance cost based on the specific combination of attributes for a particular risk. For example, the following information would produce a unique vehicle insurance cost:

• Vehicle: Age - 7 years old; manufacturer, model - Ford, Explorer XLT; value $ 18,000
• Driver: Age - 38 years old; gender - male; marital status - single; driving record (based on government reports) violations - 1 point (speeding); at fault accidents - 3 points (one at fault accident); place of residence 33619 (zip code)
• Coverage: Types of losses covered; liability - yes; uninsured or underinsured - no; motorist comprehensive - yes; collision - yes; liability limits - $100,000/$300,000/$50,000; deductibles - $500/$500.

A change to any of this information might result in a different premium being charged if the change resulted in a different actuarial class or risk level for that variable. For instance, a change in the drivers’ age from 38 to 39 may not result in a different actuarial class because 38 and 39 year old people may be in the same actuarial class. However, a change in driver age from 38 to 45 may result in a different premium because the records of the insurer indicate a difference in risk associated with those ages and, therefore, the age difference results in a change in actuarial class or assigned risk level.

Current insurance rating systems also provide discounts and surcharges for some types of use of the vehicle, equipment on the vehicle and type of driver. Common surcharges and discounts include:

• Surcharges: Business use.
• Discounts: Safety equipment on the vehicle airbags, and antilock brakes; theft control devices passive systems (e.g. The Club), and alarm system; and driver type - good student, and safe driver (accident free); group - senior drivers fleet drivers .

From Wikipedia, the free encyclopedia

SR22 Insurance Terms & Glossary

Financial Responsibility Insurance (SR-22 Insurance) is the mechanism in Illinois to monitor the insurance of problem drivers and authorize the Secretary of State to suspend upon cancellation (SR-26) or expiration. Through the SR-22 Insurance and SR-26 process, mandatory insurance is enforced in the most efficient way. Through the S&FR law, Illinois citizens are protected from uninsured motorists.

Financial Responsibility Insurance is required in Illinois by individuals with safety responsibility suspensions (Type Action 04), unsatisfied judgment suspensions (Type Action 06), revocations (Type Action 01 and 02) mandatory insurance supervisions and individuals who receive three or more convictions for mandatory insurance violations.

The insurance must be submitted on a Financial Responsibility Certificate (SR-22 Insurance) from the home office of the insurance company. The issuing insurance company must be authorized to write financial responsibility insurance in Illinois and have a “power of attorney” on file in Illinois. Our office maintains a listing of authorized agents and companies.

What is the SR-22 Insurance?

An SR-22 Insurance is a certificate of insurance filed by the home office of an insurance company directly to the Secretary of State. The SR-22 Insurance certificate is issued in one of the following forms:

1. Operator’s Certificate - This policy covers the motorist in the operation of any non-owned vehicle. If the motorist does not own a vehicle, the financial responsibility requirement can be met through the Operator’s Certificate.
2. Owner’s Certificate - This policy covers vehicles owned by the driver. The type of vehicle must be listed on the SR-22 Insurance or may be issued for “All owned vehicles”.
3. Operators-Owners Certificate - This certificate covers all vehicles owned or non-owned by the driver.

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Minimum Liability Limits

The SR-22 Insurance policy must meet the minimum liability requirement for Illinois. The minimum amount of coverage must be issued for at least $20,000 for one person killed or injured, $40,000 for two or more persons killed or injured and $15,000 for property damage.

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How The SR-22 Insurance Process Works

An SR-22 Insurance may be obtained by contacting an insurance company that is authorized to write SR-22 Insurance policies for Illinois. When payment is made to an insurance agency, the agent will submit a request for an SR-22 Insurance certificate to the central office. The SR-22 Insurance certificate will then be sent directly to the Secretary of State in Springfield. This process may take up to 30 days. Upon acceptance, the individual will receive a copy of the SR-22 Insurance from the insurance company and a letter from the Secretary of State.

Once the insurance is accepted, it must be maintained for a period of 36 months. If the SR-22 Insurance expires or is cancelled, the insurance company is required by law to notify the Safety and Financial Responsibility Section by a SR-26 Cancellation Certificate. Upon receipt, S&FR will then load a Type Action 05 suspension on the driving record. This suspension cannot be removed until the insurance filing has been reinstated.

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Avoiding Future SR-22 Insurance Cancellation Suspensions

Future insurance related suspensions could be avoided if SR-22 Insurance is renewed a minimum of 45 days in advance. If the insurance agency does not receive a renewal 15 days before the insurance expiration, they are required by law to notify the Secretary of State. At that time, we will start the suspension process. By renewing early, the insurance company will have time to notify our office of your renewal and the suspension is avoided.

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Out-of-State Requirements

Prior to January 1, 2006: Out-of-state residents may submit evidence of insurance coverage in lieu of an Illinois SR-22 Insurance certificate. Acceptable proof of insurance coverage may include copies of the insurance policy, insurance card, or a letter from the insurance company or agent. However, the company must have a “power of attorney” on file with our office before the insurance can be accepted.

After January 1, 2006: Under Public Act 94-0224 out-of-state residents may request that their proof of financial responsibility for Illinois be waived. An Affidavit must be completed to request the waiver. Please note that the Affidavit will only waive the SR-22 Insurance requirement for Illinois. You will be subject to the insurance requirements of your new home state once you become a resident. All other Illinois reinstatement requirements must be met prior to license reinstatement. In the event you move back to Illinois within three years from acceptance of the insurance waiver, your SR-22 Insurance requirement for Illinois would be reinstated.

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Alternate Methods of Filing Proof

Alternate methods of filing proof of financial responsibility are available. Instead of the SR-22 Insurance Certificate, the individual may deposit $55,000 in cash or securities with the State Treasurer, file a surety bond, or file a real estate bond approved by a court of record.

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