Expert: Doctor Settlement - 6/29/2006

Question
i am a complete novice when it comes to auto insurance. i have some very basic questions.

why do i have to pay a deductable if it's his fault? i.e. why must i pay money for something i did not cause? if i dont have collision, then this issue doesn't even come up? so if i am not hurt, i gain no benefit, but if i still report it, what happens to the other guy, he doesnt pay me anything, but his premium will go up?

if i get liability insurance coverage for 2 million dollars, that means if it's my fault, and he's hurt, my insurance will pay him up to 2 million dollars towards his injuries, and obviously my premiums will go sky high?

what happens if we get into an accident and we both have the same insurance company?

why must a person pay more for insurance for a newer car, and for a car that's loaded? because it costs more to repair for the insurance company? but if i dont have collision for myself, does my liability insurance go down?

i am really confused.

thank you

sk


Answer

Dear SK,

Don't worry about being confused about auto insurance: sometimes we all are that way, and I suppose the insurance industry might like that so they can keep us in the dark a little bit.  I will answer your questions in the order you asked them.

1. You do not have to pay deductible if you are using his insurance.  If you are using your insurance, you pay the deductible, and his insurance will reimburse you, since they are responsible for the entire bill.

2. I cannot make much of this question.  Please re-try with verbs in each sentence so I can figure out your point.

3. In the first place, no company is going to write you liability insurance in that amount.  Secondly, the rest of the sentence is basically correct.  If you injure someone he gets an award based upon the severity of the injuries, reduced some if it is partially his fault.  Your company will charge you with an "at-fault" accident, but I have no idea how much your premiums would go up.

4. No problem with the same company.  They open two different files and it should not make a lot of difference in how they value his claim, irrespective of whether or not their side is paying out.

5. You answered this question yourself pretty well.  Yes, newer cars that are loaded will not only cost more to repair.  If "loaded" also could refer to horsepower, then that will increase your premiums.

6. Collision is only for repair of your own car, not his.  THAT is under Liability PD (property damage).  So your liability bill will not be affected one way or the other if you drop collision.  Of course the total bill for the insurance will be reduced.

Feel free to answer the question I could not figure out.  

Here are a couple of pages that should give you all of the answers you are looking for.

The Smartest Way to Buy Auto Insurance http://www.settlementcentral.com/page8006.htm


How to buy Motor Vehicle Insurance http://www.settlementcentral.com/page8008.htm

Best Wishes,

Dr. Settlement, J.D. (Juris Doctor)
Http://www.SettlementCentral.Com