Basics of Auto Insurance

What is auto insurance and why do you need it? The following information should be used as a helpful guide to make your decisions but is not intended to replace reading your own policy.

Table of Contents

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

In order to register a car in Massachusetts, you must have automobile insurance.  By law, you must purchase four coverages called Compulsory (or Mandatory) Coverages in, at least, minimum amounts required by law, and in higher amounts if you choose to do so.  You may also buy a variety of Optional Coverages to suit your needs. 

Compulsory Coverage

There are four insurance coverages that are compulsory in Massachusetts:

  • Bodily Injury to Others protects you, or someone you allow to drive your car, from legal liability if you accidentally injure or cause the death of someone else while operating your car.  It only covers losses if the accident occurs in Massachusetts and does not cover the injury or death of a passenger in your car. You must buy at least $20,000 per person and $40,000 if more than one person is hurt. 
  • Personal Injury Protection (also known as PIP) covers medical expenses, up to 75% of lost wages and replacement services up to a limit of $8,000. Massachusetts is a no-fault state which means no matter who causes the accident, PIP will pay these expenses for you or anyone you let drive your car, anyone living in your household, passengers in your vehicle and pedestrians.
  • Bodily Injury Caused by Uninsured Auto protects you, anyone you let drive your car, and household members and passengers (who are not covered under another similar Massachusetts policy) against loses caused by an uninsured or unidentified ("hit and run") driver. You must buy at least $20,000 per person and $40,000 total for all people injured by the uninsured auto in the accident.
  • Damage to Someone Else’s Property, also known as Property Damage, pays for damage to another person's property when you, a household member or another driver you allow to use your car cause accidental damage to another person's property. You must purchase a policy that has a minimum limit of $5,000.

Optional Coverages:

The losses that a person injured in an automobile accident incurs and the damage to property from an accident sometimes may be much greater that the insurance provided by the mandatory coverages. For most drivers, the minimum levels of insurance will not give them enough protection and they may want to insure themselves for other types of losses that may result from automobile accidents.  For those reasons, people choose to purchase higher limits of property damage and bodily injury coverage, to purchase collision and comprehensive coverage, or to purchase other types of coverage.  An insurance agent or other insurance professional can help you determine 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 if you have questions at any time.

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

  • Additional coverage for bodily injury to others, raising the limit to $35,000 for one person and $80,000 for all those hurt in the accident, providing bodily injury coverage for passengers in your car, and covering you if the accident occurs outside Massachusetts.
  • Underinsured motorist coverage provides protection if you’re involved in an accident caused by a driver who doesn’t have enough insurance coverage. This coverage is particularly useful as your insurance can help pay for your or your household member’s bodily injuries if the at-fault party’s liability limits are not high enough to cover your losses (injuries). Any amount collected from the at-fault party’s bodily injury coverage will be deducted from the amount of your coverage.  For example, if you have Underinsured coverage limits of $50,000.00 per person and you collect $20,000.00 per person Bodily Injury limit from the at fault party’s insurance company, then the most you would be able to collect from your Underinsured coverage would be $30,000.00. As these types of claims can be complicated, you should consider seeking legal advice to assist in settling your Underinsured insurance coverage claim.

  • Comprehensive and Collision coverage subject to a deductible of $500 unless you have an excessive history of claims. Collision coverage pays for damage to your auto that is caused by the physical contact of your auto with another object, such as another vehicle or property like a guard rail.  Collision coverage will pay for damage to your car no matter who caused the accident.  Limited collision will pay for such damage in certain circumstances. Comprehensive coverage pays for direct and accidental damage or loss to your vehicle that is caused by something other than a collision, such as vandalism, fire and theft, falling objects, larceny, or contact with a bird or animal.  Comprehensive coverage also covers glass breakage not related to a collision. 
  • Medical payments of at least $5,000. Medical payments  coverage pays for reasonable expenses for necessary bodily injury medical expenses and funeral services to anyone in your auto resulting from an accident, or if you or a household member is struck by an auto or while in someone else’s auto at the time of an accident.

Some of these coverages may be subject to important limitations and exclusions.  For example, if you are insuring a used private passenger automobile, an insurer may require it to be inspected before providing comprehensive insurance. 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. You may also be required to buy collision and comprehensive coverage if you have a loan on the car.

Other Optional Coverages:

Automobile insurers may offer additional optional coverages that you may want. You can 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 substitute transportation such as a rental car 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, also known as Gap insurance. Gap insurance helps pay off your auto loan if your car is totaled or stolen and you owe more than the car's depreciated value.
  • Pet coverage.

Remember, your premium will increase if you choose to purchase higher limits of coverage or optional coverages. You should consult with your agent or insurance company about the coverages and amounts that best fit your financial needs while ensuring that you have the coverage you want should an accident occur.

How To Buy Auto Insurance

Once you have decided what coverage you need, the next step is to obtain information about the cost of that insurance, including the premium, the reductions that insurers offer from the standard premium, and particular provisions in an insurance company’s policy that may affect your decision to buy from that company. 

Because insurance companies are not identical, it is important to obtain information from more than one company. Insurance companies market automobile insurance in two principal ways:  through insurance agents or directly online with their sales staff. Agents may represent one or two or many insurers.  When you contact an agency about buying auto insurance, start by finding out how many and what companies they represent.  You may be able to get cost quotes from several insurers from one or two agencies.  Be sure that each cost quote is for the same coverage, and reflects any discounts for which you may be eligible.

Before making phone calls or visiting insurer websites for a quote, pull together all of the information you need to get an accurate quote. Always ask for the same coverage levels for each quote so you can make an apples-to-apples comparison.

The insurer will ask about:

  • The year, make and model of each vehicle you want insured. For the most accurate quote, use each vehicle’s VIN number.
  • The name, license number and date first licensed of each licensed driver in your household, or a person who will customarily drive the car.
  • Any special after-market equipment that has been installed in your car.
  • Safety systems in your car such as anti-theft devices, seat belts and airbags.
  • Your driving history and 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.

You want to ask the insurer for:

  • An estimate of the cost of each coverages that you want and the limits of that coverage. 
  • Think about other insurance you might want to bundle with your auto insurance. Many companies offer discounts to customers who also buy a home or renter’s insurance policy.
  • Ask for all of the discounts that might be available to you. Some discounts are required by law, such as discounts for passive restraint systems or other safety features, and discounts for drivers who are 65 years or older. Other discounts are optional including common ones such as low annual mileage, multi-car policies, and if you have a driver who is a good student.
  • The policy’s term length – if one quote is much less than the others, it might be based on a 6-month policy. 

It may 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. Once you have a collection of quotes, you can compare prices as well as other important factors such as claims handling reputation, the location of the agent or direct writer or the financial health of the company. 

Sometimes you see or hear advertising that a switch from one automobile insurance company to another can save you money. Massachusetts law prohibits insurance advertisements from including untrue, false or deceptive claims. Since premium calculation is complicated 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…" This is not the same as saying that the average customer saves a certain amount by switching to that company.

Insurers are not identical, and changing companies might reduce the cost of your insurance, but no reliable comparison is possible without a careful review of the products to ensure that they provide identical coverage, offer discounts of equal value, and include policy benefits that are of value to you. 

Companies Writing Private Passenger Automobile Insurance in Massachusetts

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

Additional Resources

How is Your Premium Calculated?

An incident-free driving history (meaning no accidents or traffic violations) will always result in a lower premium. 

Insurance companies group you with other people 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 any discounts for which you are eligible. In figuring out your actual premium, insurance companies may consider factors such as your years of driving experience, the number and type of your accidents, the number and type of your traffic violations, and the vehicle you drive. 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 way a company decides it wants to write you a policy (the company sorts applicants into groups of people that present similar risk and decides to accept, deny or limit coverage). Rating is how a company figures out your actual premium. A rate for each group will be set based on the claims paid by the insurer for the people in that group. The higher the average losses from a group, the higher the rates for that group.

For underwriting, insurers are may not use sex, marital status, race, creed, national origin, religion, age, occupation, income, principal place of garaging, education, home ownership, sexual identification and gender identity. For rating, companies may not use sex, marital status, race, creed, national origin, religion, age (except for drivers who are 65 years or older), occupation, income, education, home ownership, sexual orientation and gender identity. 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 the autos you insure, adding or changing drivers, or changing your auto’s garaging location may all increase your premium. You should also consider whether you or one of your household members are classified as a high-risk driver, such as one with multiple accidents and/or traffic violations, or one with less than six years of driving experience. If you are, your premium might be higher.

If your rates increase, it's smart to contact your agent or your insurance company for an explanation. You should also keep in mind that you have every right to shop around for the coverage that works best for you.

You can often lower their premium by thinking about which optional coverages you really need and the level of coverage that best fits your 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. But, without this coverage, the insurance company may not pay for a claim arising from an accident.

Medical Payments

You should consider carefully your choice to purchase medical payments coverage if you already have health insurance. Medical payments coverage 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 Club services include towing and labor.

Selecting Your Deductible

Your deductible will be set at $500 unless you choose a different amount. You can always save on your premium by choosing a higher deductible where one is offered. To figure out the right deductible for you, decide how much you can pay yourself if you have an accident or loss in which you are at fault, or you can’t identify the other driver.

Group Marketing Programs

Many insurers offer 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 Your Driving Record Affects Your Premium

Your driving record will always be a big factor in determining how much you pay. Driving safely and keeping a clean driving record will 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 affects your premium. These plans lower your premium based on years of incident-free driving, or raise your premium based on accidents and traffic violations. Merit rating plans are subject to approval by the Commissioner of Insurance.

An insurance company's Merit Rating Plan cannot:

  • Use any accident or traffic violation that is greater than 6 years old from the policy effective date, or
  • Increase premium for 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 accident, comprehensive and insurance claim records and out-of-state records.  Insurers are required to report all at-fault accidents to the Merit Rating Board (MRB). An insurance company may get at-fault accident and insurance claim information from the MRB to use for its merit rating plan.  An insurance company may also get information from another reporting company and is not required to use the MRB’s information.

Appealing Information on Your Record

Insurers are required to determine if a driver is more than 50% at fault for an accident by applying what are known as standards of fault. These standards are for common accident types for 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 Notice of At-Fault Accident Determination. If you receive a Notice of At-Fault Accident Determination naming the wrong operator, call your insurance company. Your insurer will take back the incorrect notice and issue a new notice to the right operator.

If you believe that you were not more than 50% responsible for causing the accident, follow the instructions on the Notice of At-Fault Accident Determination to appeal the determination to the Board of Appeal. There is a $50 fee to file this appeal. You must file your appeal within 30 days from receiving the Notice of At-Fault Accident Determination. If you do not appeal in time you may lose your right to appeal.

If your insurance company increases your auto insurance premium because of an accident, 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. 

Appealing Traffic Violations

If you receive a traffic ticket - known as a civil traffic citation - that causes your premium to go up, 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 charged an increased premium because of the violation. 

List of Traffic Violations that Could Affect Your Premium

Additional Resources

Cancelling Your Policy

If you find coverage from another insurer that better suits your needs, you have the right to cancel your policy at any time. If you do cancel your policy before its normal expiration date, you may receive only a partial refund of any premium you already paid. It’s a good idea to check with your agent or current insurer before doing cancelling. 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 your policy, once you receive an invoice reflecting your new (not estimated) premium and any applicable new deviations or discounts, you have 30 days to change insurance companies without paying a penalty. If you make a change within this 30 day period, you will pay your former insurance company on a pro-rata basis of the new premium until the date 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 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.

Additional Resources

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