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Basics of Auto Insurance

What is auto insurance and why do you need it? Please note, this information is not meant to be a substitute for reading your own Automobile Insurance Policy. That policy is your insurance contract. Be sure to read it carefully and ask your agent should you have questions about specific items within your policy.

Table of Contents

How Much Coverage To Buy and What Types of Coverage Do You Need?

Mandatory Coverage

There are several types of compulsory insurance that you are required to purchase under Massachusetts law. These coverages are:

  • Bodily Injury to Others protects you against legal liability for the accidental injury or death of others (but not your passengers) caused by the operation of your car, but only if the accident occurs in Massachusetts. You will be covered up to a basic mandatory limit of $20,000 per person and $40,000 per accident. 
    per accident.
  • Personal Injury Protection (PIP) with a mandatory limit of $8,000 for medical expenses, replacement services and 75% of any lost wages. PIP will pay these expenses to you or anyone you let drive your car, anyone living in your household, passengers and pedestrians, no matter who causes the accident.
  • Bodily Injury Caused by Uninsured Auto protects you, anyone you let drive your car, household members and
    passengers (unless covered by another Massachusetts policy with similar coverage) against losses caused by an uninsured or unidentified ("hit and run") driver. A mandatory minimum limit of $20,000 per person and $40,000 per accident is required.
  • Property Damage pays for damage to another person's property when you, a household member or another authorized driver cause an accident. A mandatory minimum limit of $5,000 is required.

 

Optional Coverages:

For most drivers, the minimum levels of insurance will not provide enough protection. Many people choose to purchase higher limits of property damage and bodily injury coverage. Owners of newer vehicles often purchase collision and comprehensive coverage. Depending on your individual circumstances, you may also wish to purchase additional types of coverage, or increased limits on the types of compulsory insurance listed above.

You should consult with an agent or other insurance professional for help in determining what types and levels of coverage you need. Agents and companies must inform you in simple language of your coverage options when you apply for an automobile insurance policy, or at any time upon your request if you already have a policy. Insurers can require a Pre-Insurance inspection of a used private passenger motor vehicles prior to providing coverage for Collision, Limited Collision or Comprehensive. The inspection may be deferred for ten calendar days - not including legal holidays and Sundays. If your auto is not inspected within the required time, these coverages will be automatically suspended.

All companies will offer the following coverages that you may wish to buy:

  • Increased limits for bodily injury to others and bodily injury to others cause by uninsured or underinsured motorist coverage up to $35,000 per person/$80,000 per accident
  • Personal injury protection benefits up to $8,000 per person/per accident
  • Property damage liability up to $5,000 per accident
  • Comprehensive and Collision coverage subject to a deductible of $500 must be offered unless you have an excessive history of claims
  • Medical payments insurance of at least $5,000

Each of these coverages is subject to important limitations and exclusions.

In addition to the standard options, automobile insurers are allowed to offer additional optional coverages that you may want. Some of the options expand existing coverages or offer benefits that were never available in Massachusetts. You will want to learn more about all of the options available to you from each company in which you are interested. This includes coverages such as 

  • Coverage for bodily injury to others outside of Massachusetts
  • Coverage for guest passengers in your car
  • Collision coverage that pays for damage to your car no matter who causes the accident
  • Comprehensive coverage that pays for damage to your car caused by events such as fire, theft or vandalism
  • Multiple deductible options for Collision and Comprehensive
  • Coverage for substitute transportation while your car is being repaired from a collision or comprehensive claim
  • Coverage for towing and labor when your car breaks down
  • Accident forgiveness
  • Roadside assistance
  • Auto loan/lease coverage
  • Pet coverage

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How To Purchase Auto Insurance?

Once you have decided what you need, you should then get premium quotes for that coverage from several companies. Some companies market insurance through agents, while others sell directly through employee salespersons. Many agents only represent one or two insurers. As you choose agencies for premium quotes, be sure to ask each agent which companies they represent so that you can get quotes from a large number of insurers through a small number of agencies.

To make sure you get the best possible premium for the coverage you need, you should make sure that each of the premium quotes you receive are for the identical coverage you wish to purchase.

Before making your first phone call or visiting your first insurer website for a quote, take a moment to pull together all of the key information you will need to obtain an accurate quote:

  • The year, make and model of each vehicle you want insured. For the most accurate quote, use each vehicle’s VIN number.
  • Tell the agent how much insurance you want. Always ask for the same coverage levels for each quote so you can make an apples-to-apples comparison.
  • The name, license number and date first licensed of each licensed driver in your household.
  • List any special after-market equipment that has been installed in your car.
  • Be ready to answer questions about your vehicle usage such as the number of miles you drive each year. 
  • If you are changing insurers, you will be asked about any gaps in coverage.
  • Think about other insurance you might want to bundle with your auto insurance. Many companies offer significant discounts to customers who also purchase a home or renter’s insurance policy.

Remember to ask for all of the discounts that might be available to you. Some discounts are required by law, such as for passive restraint systems or other safety features, anti-theft devices, and drivers who are 65 years or older. Other discounts are optional; Each insurer offers many different discounts including common ones such as low annual mileage, anti-theft devices, multi-car policies, and good student. Double-check each quote to make sure that the information is accurate and that the coverage levels are the same. Also be sure to check the policy’s term length – if one quote is only half as much as all the others, it might be based on a 6-month policy. There are a variety of discounts insurance companies may offer. 

Once you have a suitable collection of quotes, you can compare prices as well as other important factors such as product features, claims handling reputation, location of the agent or direct writer or the financial health of the company. It might take a few hours to assemble a significant number of quotes, but a small investment of time could save you many dollars in the long run.

Massachusetts law includes strict requirements that insurance advertisements may not include untrue, false or deceptive claims. Since premium calculation is so complex and varies from company to company, no insurer can legitimately claim that every driver will save money by switching to them. Many advertisements say that "customers who switch save an average of…" You should keep in mind that this is not the same as saying that the average customer saves a certain amount by switching to that company. Many companies will ask drivers applying for a premium quote the amount of premium they pay their current insurer. In calculating the savings in the advertisement, the company is only looking at those drivers who actually purchased a new policy - not ones who obtained a quote but declined to purchase insurance. The calculation also does not take into account drivers who do not actively seek a price quote. The group of drivers in this sample cannot be considered an average driver and they may or may not resemble your driving profile.

Companies Writing Private Passenger Automobile Insurance in Massachusetts

Find a list of companies writing private passenger auto insurance policies in Massachusetts below.

 

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How is Your Premium Calculated?

An incident-free driving history always will result in a lower premium. 

Insurance companies group you with other individuals who share your general risk characteristics - such as the number of years driving experience. To calculate your individual premium (how much they will charge you), the company uses a base rate for your group, then adjusts it to reflect your individual risk factors and appropriate discounts for which you are eligible. In determining your actual premium, insurance companies may consider factors such as your years of driving experience, the number and type of your at-fault accidents, the number and type of your traffic violations, the vehicle you drive, and the place where you garage that vehicle. Insurance companies may also consider other risk factors if those factors are relevant to risk and approved by the Commissioner.

Prohibited Underwriting and Rating Factors:

Insurance companies are prohibited from using certain factors for either underwriting or rating in Massachusetts. Underwriting is the company's process for deciding whether or not to voluntarily accept you as a risk (accept your business and write you a policy). Rating is the company's process for determining the amount of your actual premium.

For underwriting, insurers are prohibited from using sex, marital status, race, creed, national origin, religion, age, occupation, income, principal place of garaging, education, and home ownership. For rating, companies are prohibited from using sex, marital status, race, creed, national origin, religion, age (except for drivers who are 65 years or older), occupation, income, education, and home ownership. Insurance companies are also prohibited from using credit information from consumer reporting agencies for either underwriting or rating.

 

Remember, if you or someone on your behalf gives your insurance company false, deceptive, misleading, or incomplete information concerning the description and place of garaging of your car, or the names of those people who drive your car, your insurer may refuse to pay your claims under any or all of the Optional Insurance Parts of your policy.

Lowering Your Premium

Any change to your policy will affect your premium. Changing your vehicle, adding or changing drivers, or changing your cars garaging location may all increase your premium. You should also consider whether you are classified as a high-risk driver, such as one with multiple at-fault accidents and/or traffic violations, or one with less than six years experience. If you are, the increase in your premium may be the result of these factors.

It's smart to contact your agent or your insurance company for an explanation of why your rates have increased. Consumers should also keep in mind that they have every right to shop around for the coverage that works best for them.

Drivers can often lower their premium by thinking about which optional coverages they really need and the level of coverage that best fits their situation:

Collision and Comprehensive

If you have a car of low dollar value, you may not want to buy the Collision or Comprehensive coverage unless your lender requires it.

Medical Payments

You should consider carefully your choice to purchase medical payments insurance if you already have health insurance. Your medical payments insurance may not be necessary if you have health insurance.

Substitute Transportation

If you can afford to take a cab or rent a car when your car is in the shop for collision repairs, you may not need Substitute Transportation coverage.

Towing & Labor

If you belong to a Motor Club, you may not need this coverage since many Motor Clubs' services include towing and labor.

Selecting Your Deductible

Your deductible will be set at $500 unless you select a different amount. You can always save on your premium by choosing a larger deductible where one is offered. In determining the right deductible for you, decide how much you can afford to pay out of your own pocket in the event of an accident or loss in which you are at fault, or the other driver is unidentified.

Group Marketing Programs

In recent years, many insurers have been offering reduced rates to members of certain groups. In addition, many group plans do not charge interest or require an initial deposit.
Groups can be sponsored by an employer, civic organization, motor club, association, trade union, credit union, etc. You may want to check with agents of several different insurers to learn which groups the insurer has been approved to offer discounts to and the size of the discounts. Any member of an approved group is eligible for the group savings.

How Does Your Driving Record Affect Your Premium?

Your driving record will always be a significant factor in determining how much you will pay. Driving safely and maintaining a clean driving record will almost certainly reduce your automobile insurance premium regardless of what company you choose.

Companies have their own rules, known as Merit Rating Plans, to determine how your driving record will affect your premium. These plans lower your premium based on years of incident-free driving, or raise your premium based on
at-fault accidents and traffic violations. Insurers are required to report all at-fault accidents to the Merit Rating Board (MRB).  Merit rating plans are subject to approval by the Commissioner of Insurance. Companies may also choose to use the existing Safe Driver Insurance Plan (SDIP) for a merit rating plan.

An insurance company's Merit Rating Plan cannot:

  • Use any at-fault accident or traffic violation that is greater than 6 years old from the policy effective date, or
  • Increase premium for at-fault accidents or traffic violations for more than 5 years.

For more information on individual insurance company Merit Rating Plans, contact the insurance company or insurance agent directly.

Merit Rating Board
The Merit Rating Board (MRB) is a section within the Massachusetts Department of Transportation (MassDOT) - RMV Division. The MRB maintains operator driving records consisting of traffic law violations, at-fault and comprehensive insurance claim records and out-of-state records.  The MRB reports this information to Massachusetts auto insurance companies for application of the Safe Driver Insurance Plan (SDIP) or a merit rating plan.


Appealing Information on Your Record:

Insurers are required to determine if a driver is more than 50% at fault for an accident by applying specific standards of fault. These standards are common accident types under which you are presumed to be at fault. For example, drivers are presumed to be more than 50% at fault when operating a vehicle that collides with the rear section of another vehicle.

If your company determines that you are at fault for an accident, it will send you a Surcharge Notice. This notice includes instructions for appealing the surcharge to the Board of Appeal. If you receive a Surcharge Notice naming the wrong operator, call your insurance company. Your insurer will rescind the incorrect notice and reissue the notice to the correct operator.

If you believe that you were not more than 50% responsible for causing the accident, follow the instructions on the Surcharge Notice to appeal the surcharge to the Board of Appeal. There is a $50 fee to file this appeal. You must file your appeal within 30 days from receiving your Surcharge Notice; otherwise, you may lose your right to appeal.

If a surcharge is applied to your auto insurance premium, you must pay the additional premium while your appeal is pending or your policy will be cancelled. If you win your appeal, you will receive a refund or credit from your insurer for any increased premium you paid as a result of the surcharge. 
 

Appealing Traffic Violations

If you receive a traffic ticket - known as a civil traffic citation - that increases your premium, you can challenge the ticket in court. The rules for contesting the ticket will be found on the back of the ticket. Typically, you will have a hearing before a clerk-magistrate or judge. If the court finds in your favor, you will not be surcharged for the violation. 

 

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Cancelling Your Policy

You have the right to cancel your policy at any time. If you find coverage from another insurer that better suits your needs, you may cancel your policy. If you do cancel your policy before its normal expiration date, you may receive only a partial refund of your unused premium. It’s a good idea to check with your agent or current insurer before doing so. It's also worth noting that no refund will be issued until your insurance company receives a receipt showing the vehicle's registration/license plates have been cancelled or notice that your coverage has been transferred to another carrier

If you were planning to renew a policy, once you receive an invoice reflecting new (not estimated) rates and any applicable new deviations or discounts, you have 30 days to change insurance companies without paying a "short rate" penalty. If you make a change within this 30 day period, you will pay your former insurance company on a pro-rata basis at its newly established rates until the date the coverage with your new insurance company begins. If you choose to switch insurance companies after the 30 day period, you may be subject to a short rate penalty which decreases as your policy year progresses depending on the insurance company to which you transferred your coverage. You should ask your new insurance company whether it will reimburse you for these penalties.

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Address

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Suite 810
Boston, MA 02118
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