Frequently Asked Question

What are some of the different auto insurance coverages?

Auto insurance provides property, liability, medical coverage and additional coverages referred to as “full coverage”: 

Property coverage pays for damage to or theft of your car. 

Liability coverage pays for your legal responsibility to others for bodily injury or property damage. 

Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses

Uninsured or underinsured motorist coverage covers you in the event that you are involved in an incident with someone who does not have insurance, this coverage may also pay up to $3500 for a hit and run.

Comprehensive coverage covers your vehicle in the event of weather damage, theft and vandalism

Collision coverage covers your vehicle when you run into something. 

Car rental coverage covers the expense of renting a vehicle if your car is being repaired due to an accident.

Roadside Assistance covers various events such as gas service, towing, and lock outs.  Each company offers different service to different degrees.

Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements.


What If I Can't Get Approved for Auto Insurance or am being cancelled by my current carrier?

There are a number of reasons you may be denied coverage from a particular company, but there is always at least one option open to you. Some of these options are expensive, so you should find out what the cost of insuring a car will be before you purchase a car in the first place.


Reasons You May Be Turned Down

One common reason is that you have a poor driving record. If you have a high number of points on your record, either for accidents or tickets, it will be difficult for you to find car insurance from any company.

A unique, high performance car is likely to be difficult to insure. The risks of theft, expensive damage, and an accident due to reckless driving are all higher with these vehicles.

You may be turned down if you are a new driver and are applying for insurance on your own. No matter what the age, new drivers tend to have more accidents.

Another possible reason has nothing to do with you, but merely where you live. If vandalism and theft is common in your area, you may not be able to get standard insurance.


Here are some options if these circumstances apply to you.

Shop Around
Don't stop with a denial from one company. What one insurer considers risky may not be a concern for another company. Give several different companies a chance to consider your situation. You may be surprised that you are able to find one without too much trouble.


Look for "High Risk" Insurers
If you are truly unable to get coverage from a standard insurance company, search among the insurance companies who specialize in high-risk clients. Some of these are independent companies, while others are affiliated with larger insurance companies, but are a separate entity specifically designed for taking the high risk business of the company. You should expect to pay higher premiums from these companies and have terms that are less favorable than those found on standard insurance policies.


State Assigned Risk Pools
If you have been turned down by at least 3 insurance companies, you can apply to be included in your state's assigned risk pool. As your avenue of last resort, insurance companies are required to take a certain number of the drivers in the pool. The companies can charge high premiums, however, and they generally do.


Why do you need auto insurance?

IT’S THE LAW but It's really all about protecting yourself financially. If you're in an accident or your car is stolen, it costs money, often a lot of money, to fix or replace it. If you or any passengers are injured in an accident, medical costs can be extremely expensive. 

If you or your car is responsible for damage or injury to others, you may be sued for much more than you're worth. Not only is having insurance a prudent financial decision, many states require you to have at least some coverage.


How are insurance rates determined or why did my rate go up?

The way rates are determined is very complex.  Insurance can’t be priced like most products, by supply and demand, because the money people pay for it is intended to help protect against the cost of unforeseen future happenings-for example a fire, burglary, or an auto accident.

While many factors are considered in fixing rate, but rates are basically dependent on one major factor- the combined cost of all the losses or claims-known as the company’s loss experience.  The loss experience can be defined as losses divided by the premiums collected.  The companies use their loss experience, supplemented by factors reflecting economic trends, as a guide to the amount they can be expected to pay for future claims and still meet the costs of doing business.  

Once the company has determined its estimated future costs, its’ rates are then set base upon a variety of individual factors.  In the case of auto insurance, drivers are categorized into different rating classifications all based on the historical experience of the losses of that group.  For example, young drivers or drivers in certain geographic areas are classified as potentially higher risks because of the historic loss experience of similar drivers in those same classifications. 

If your rate went up it could be due to an overall increase in rates in your area or something that may be rate specific to you, your claims history or things like driving record or change of address.


How is insurance regulated?

Insurance regulation is dominated by state laws since insurance is not a tangible good and therefore not considered commerce which is regulated by federal government.  Each state has a Department of Insurance that essentially makes sure all insurance companies, HMOs, producers selling insurance in Illinois and other regulated entities obey state insurance laws. The Department provides consumer information and investigates complaints about companies and producers.


What do I do if I want to file a complaint?

Contact the California Department of Insurance at or call the consumer hotline at 1-800-927-HELP

Note: This information was developed to provide consumers with general information and guidance about insurance coverage and laws. It is not intended to provide a formal, definitive description or interpretation of such.