Auto insurance is something everyone has to face at some point in life. Whether you are a beginner or you have had several...
How your driving license status affects your insurance
The status of your driving license has a huge bearing on your car insurance. It determines whether you can get an insurance or not and how much your insurance costs will be. The ideal situation is having a full valid license which allows you to get car insurance at affordable rates from a range of companies.
Why do insurance companies need a driver's license?
A driver's license helps the insurance company conduct a background check and determine the risk posed by the driver or the likelihood for him or her to be involved in an accident. This is determined by the details of your driving license which are used to profile your driving record. When you are charged or ticketed for traffic violations and involved in accidents and DUI cases, all these are captured in your driving record. The more incidents you have recorded the higher the likelihood for you to have an accident. The insurance company is therefore in a position to evaluate your risk and the rates to charge you.
Individuals with a valid driving license only have to worry about their insurance cost if they have a poor driving record. However, for people with suspended or expired licenses, there is a risk of being denied insurance.
A suspended license and car insurance
Your driving license can be suspended for a number of reasons especially violation of traffic codes. For example, driving under influence or when intoxicated, accumulation of unpaid parking tickets and reckless driving charges, late insurance coverage can easily see your license suspended.
Once your driving license is suspended you cannot access insurance as before. This is because you will lose your current cover as soon as it is reviewed or when you inform the company. The reasons for you losing your driving license at the end result in you being categorized as a high risk and unless the company has provided for such, you will have to look for another provider. Without a driver's license, you cannot get an insurance cover so for most of the time, you will have to wait and meet the requirements to get the license reinstated.
However, in some cases, you will need to drive which means you have to apply for a restricted or hardship driving license. Depending on your state and circumstances which led to the suspension of your driving license, you can be given one which means you have to start the search for an insurance provider who has services for high-risk drivers.
Provisional license and learning permits
For first time drivers, having a provisional license or a learner's will be sufficient for one to get a car insurance. The main challenge will be the high insurance rates charged. Learners and those who have just finished training are viewed as lacking the experience to make them competent drivers. Their risk is further increased by their young age which makes them prone to misjudgment while on the road increasing the risk of accidents. Other insurance companies may require someone with a learner's permit to be guaranteed a valid license within 30-45 days for them to provide insurance coverage.
Only individuals with suspended or expired licenses risk losing coverage and that could mean no more driving.
History of Auto Insurance
The history of car insurance goes back to ancient times when the idea of pooling together resources to safeguard hazards was first practiced in China, Greece, Babylon and a couple of other ancient civilizations. The main area that was insured was their marine interests and merchants would pool together to protect their merchandise from the dangers in the seas that ranged from pirates to storms and rough seas.
Later the practice would move through the Renaissance period and the idea of premiums was introduced and practiced in Venice and Florence and other cities that flourished in trade. The first official company to handle marine insurance was Lloyd's based in London back in the 1700's. In America, the idea of insurance can be traced back to an initiative started by Benjamin Franklin. In 1751, he got together a band of men who would pay money in a pool for security against fire on either their houses or businesses. About 143 policies were issued in the first year alone, and as more people joined business the demand and practice of insurance spread across the states.
However, car insurance would wait until after the invention of the gas-powered car in 1893 by Frank Duryea and Charles Duryea. While there were other cars before it and even for the years after its discovery, people found themselves covering the losses from accidents. And it was worse then than now as there were no licensing and traffic signs same as traffic cops.
In 1897, the first car insurance was issued by Travellers Insurance. Even then, there were no minimum insurance requirements by law, there was no driver training nor license tests. As result, the fatalities were high. In 1930 for example, about 110 people were killed daily due to road accidents. Compared to the figure in 2000 which had double the population, the fatalities increased only by 4. That means the fatalities per registered vehicle were almost ten times more in 1930. Massachusetts and Missouri had by this time established licensing laws only that all you had to do is show up at the local licensing office and pay a couple of cents for you to walk out the owner of a valid driving license. It was not until the 1950's that states began administering driving tests in order to grant a driving license.
The first state to establish a liability insurance minimum was Massachusetts which was some sort of a pioneer in the regulation of automobile industry. Soon, other states followed and the industry was revolutionized to its present state every year. Currently, only New Hampshire does not have a liability insurance minimum requirement.
The auto insurance policies moved from simply handwritten agreements to the complex booklets with several clauses one has to grasp and a lot of criteria used to decide qualification and the rates charged. The range of risks covered has also increased and more importantly, the ease with which one can get quotes and coverage.
The internet has changed the service and also introduced companies that are completely online based. One can calculate expected costs and get quotes from different companies in just a few clicks. Further, the automobile insurance has gone on to influence other insurance sectors with just about every asset being insured from a range of risks. The one unchanging aspect of insurance since ancient times has been the principle of pooling together resources to regularly as a cover against a risk to any member.
Auto Insurance Differences by State
Similarities and Differences in Car Insurance Laws by State Auto insurance in the US is largely influenced by the state laws. If you are planning to move states or if you will be making trips across different states People should understand how the laws in the various states are similar or different from your own. This allows you to make the necessary adjustments and avoid being on the wrong side of the law in a new state. Here are the major areas where the different states have similar or different approaches to auto insurance.
1.The requirement of compulsory car insurance
All states with the exception of New Hampshire require one to have car insurance and they set out the minimum amount required. While New Hampshire does not have a mandatory car insurance requirement, should you be found to be in the wrong, you will be charged liability for up to $50,000 and property damage for up to $25,000. Should you not be able to meet the charged damages in case you or your car causes an accident you can risk losing your registration or license suspended.
The state of Virginia offers the option of paying the state $500 annually if you want to opt out of having mandatory insurance. This will however not act as coverage of any kind and one is still required to meet caused damages should he or she be held responsible for an accident. However, for many drivers in these two states opt to have car insurance as it is cheaper than the risk of paying up liability suits.
2. Proof Financial Responsibility as Alternative to Insurance
Proof of financial responsibility is an option used as an alternative to insurance. It allows an individual to show the ability to meet the minimum liability costs as required by the state in another form than car insurance, this could be in the purchase of a bond or deposit the cash with the state. Should there be an accident, this amount will cater for the expenses and then you have to pay back the money in full plus interest in the case of a bond to get a new proof. States which allow you to have proof of responsibility option include; -Alabama -Massachusetts -Virginia -Arizona -Mississipi -Wyoming -California - Missouri -Wisconsin -Colorado -Montana -Deleware -Nebraska -Idaho - New Mexico -Indiana -New York -Idaho North Carolina -Indiana -Ohio Iowa -Oklahoma -Louisiana -Rhode Island -Maine -South Carolina -Maryland -South Dakota -Tennessee -Texas -Utah - Vermont
3. Tort and No-fault insurance States
There are two main car insurance systems used to categorize approaches by different states. These are Tort and No-fault insurance systems. A tort state is one which insists on finding the party responsible for the accident and penalizing the party for the damages suffered by the other party. In this type of States, parties in an accident are paid for sustained damages by regardless of the person at fault. In return for the guaranteed compensations, the parties forfeit a portion of their rights to sue the other driver in the accident. This is very important to note.