How Strong is Your Auto Insurance Company Financially

When you are shopping around for auto insurance quotes, one important thing to keep in mind is the financial strength of your auto insurance company. How would you like to pay your premiums diligently, like a good auto insurance customer, then get in an accident only to find out that your company wasn't in a financial position to pay you what you're owed? This is especially important in the case of natural disasters, which can cause a tremendous amount of damage, and result in a lot of claims at the same time. If your auto insurance company isn't in good financial health, they may not be able to bear this additional strain. Therefore, it's best to check out the auto insurance carriers financial health before you buy.

So, how do you do this? Well, there are two easy to find resources at your disposal:

1. A.M. Best is a company that publishes insurance companies financial strength ratings. The purpose of these ratings it to let the consumer know the insurance companies ability to actually pay a claim. A.M. Best's ratings range from A++, which is the best, to D. Ratings of E indicate regulatory action, F indicate that the company is in liquidation, and S means the company is suspended. Only choose companies with B+ ratings and above.
2. Another company that provides ratings on insurance companies financial health is Standard & Poor's. Their ratings go from a top rating of AAA down to the bottom which is CC. A rating of R indicates that the company is under regulatory supervision, and NR means that the company is not rated. You should only look at companies with a BBB rating or above.

You may be able to find this information on companies websites. If they are in good financial shape you would think they would want to advertise it. If not, you can also search at the A.M. Best or the Standard & Poor's website.

As always, do your homework and shop around for auto insurance quotes before you buy. Be sure to check out the companies financial strength, and remember that this rating has nothing to do with customer service, simply the companies financial strength.

Read Your Auto Insurance Contract and Look For These Clauses BEFORE You Sign

Alright, let's say you've followed our advice and shopped around for auto insurance quotes. You've got the lowest auto insurance quote in front of you and you're ready to sign. BUT WAIT. There are two clauses that you must look for in your auto insurance contract.

1. Your right to sue - Some companies will throw a clause into the agreement where you will be forced into arbitration in the case of a disagreement, instead of being able to take the case to court. If at all possible you don't want to give up this right. Doing so will make it easier for the insurance company to take advantage of you. Since contracts are mutual agreements, it may be possible to cross out this part of the contract. If the insurance company will not agree to this, it may be best to start looking elsewhere.
2. Aftermarket parts requirements - if you see statements such as "new factory", "like kind and quality", or "aftermarket parts" in the contract regarding the parts the repair shop will be able to use in the event of an accident, move on to the next auto insurance company. Aftermarket parts aren't well regulated at this point, and are considered by many to be substantially inferior to the factory parts. It is much easier to just research auto insurance companies that will provide factory parts, then to haggle with a company over the parts to be used after there is an accident.

After you shop around for auto insurance quotes, make sure that you follow through and read the contracts. Yes, I know it is boring, but the time you spend in the beginning will save you a lot of time and frustration later on. Happy shopping!

Accident Auto Insurance: California

All 50 states in the U.S. require some form of auto insurance (also called accident auto insurance, motor insurance, or vehicle insurance), but different states have different minimum requirements and different penalties for failing to provide the minimum auto insurance coverage. It is important that you know your state's auto insurance minimum requirements and your options above and beyond what the state requires.

Types of auto insurance coverage:

Liability
In the event of an auto accident, liability auto insurance pays for bodily injuries as well as property damages to the other (injured) party or parties. Included in bodily injuries are the medical expenses, compensation for pain and suffering, in addition to compensation for lost wages due to the accident. Included in property damages are both damages to the other vehicle in the auto accident as well as damages to any other property involved. Liability auto insurance also pays for court costs and defense attorney costs.
Collision
In the event of an auto accident (between your car and either another car or an object), collision auto insurance pays for damages to your vehicle caused by the incident.

Comprehensive
In an event other than an auto accident, such as flood, wind, fire, hail, theft, vandalism, comprehensive auto insurance pays for loss or damages to your insured vehicle.

Medical Coverage
In the event of an auto accident, regardless of who is at fault, medical coverage auto insurance pays for the medical expenses.
PIP (Personal Injury Protection)
In the event of an auto accident, regardless of who is at fault, PIP auto insurance pays for your (as the injured party) medical expenses incurred from the accident.

Uninsured Motorist
In the event of an auto accident with an uninsured motorist, uninsured motorist auto insurance pays for your insured car's damages from the accident.
Underinsured Motorist
In the event of an auto accident, underinsured motorist auto insurance pays for your insured car's damages when the other motorist has insufficient liability insurance to pay for the damages from the accident. Rental Reimbursement
In the event of an auto accident, rental reimbursement auto insurance pays for a rental car due to the damages of your insured car (usually with a daily price limit).

California Law Minimum Requirements for Accident Auto Insurance
Liability Insurance: $15,000 for bodily injuries to and/or death of one person caused by an auto accident; $30,000 for bodily injuries to and/or death of all persons caused by an auto accident; $5,000 for property damages caused by an auto accident. Insurance policy must be obtained by a ligitimate auto insurance provider recognized by California. In the case of an auto lien (or car loan) more insurance will probably be required by the lienholder, as in other states, to cover the entire cost of the lien in addition to the state's minimum auto insurance requirements. In order to register or renew registration on a motor vehicle in California, you must show the DMV (Department of Motor Vehicles) proof of financial responsibility in one of four possible ways.

California's Proof of Auto Insurance (Financial Responsibility)
Show your liability insurance card.
Give the DMV a $35,000 cash deposit.
Show some kind of proof of a surety bond from a legitimate California company.
Get self-insurance certificate issued by the DMV.
If you drive a motor vehicle in California, you are required to carry proof of liability insurance with you in the car. If you are pulled over for any reason, the officer will ask you for your proof of insurance. In the event of an auto accident, California law requires you to show your proof of insurance to the other driver(s), regardless of who is at fault.
California Law Auto Insurance Penalties
If you do not produce your proof of insurance when asked to by the officer who pulled you over, you may be fined an amount not less than $500 in addition to possible court costs, and your vehicle is subject to being impounded. If you do not have valid insurance at the time that you are involved in an auto accident, your driver's license will be suspended.

California Auto Insurance Exceptions
Trailers, off-road vehicles, special equipment vehicles, and registered PNO (planned nonoperation) motor vehicles do not require auto insurance - check with the DMV.

As always it is important to shop around for auto insurance quotes, as rates can vary greatly between companies. Also, when you get auto insurance quotes, be sure to ask about special discounts which are often given based on age, marrital status, location, etc.