This brochure provides useful information to mature drivers. You will find information that will assist you in discussing your automobile insurance needs, asking informed questions, and understanding your rights and responsibilities.
Automobile insurance is an often-misunderstood insurance product. Since the Department of Motor Vehicles (DMV) requires liability insurance in order to register and operate a vehicle, it is of great importance to purchase and to fully understand your automobile insurance policy.
Whether you live, work, or are retired in a rural, suburban, or major metropolitan area, driving in California presents some unique challenges. Congested freeways, urban sprawl, road construction, and driver inexperience make driving difficult and stressful for everyone. With baby boomers rapidly approaching retirement, the number of mature drivers on the road will increase dramatically in the coming years. This increase will bring its own set of challenges to the aging driving population.
The effects of aging are broad and varied among individuals; however, over time, you can expect sight, hearing, and the ability to judge speed, depth perception and reflexes to diminish, these abilities, which are often taken for granted on a daily basis, change gradually over time. It is sometimes difficult to notice these gradual changes and how they affect your ability to drive until you experience a close call or are involved in an accident.
Fortunately, it is possible to compensate for the effects of aging on your driving ability. Age is a risk that can be minimized by a mature driver through awareness of possible limitations and elimination of more risky driving practices. Physical conditioning, travel planning, vehicle choice, and defensive driving can all play an important role in minimizing risk and assisting the mature driver to feel safer when getting behind the wheel of an automobile.
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While it is necessary to deal with the range of possible limitations brought on by aging, it is important to remember that a mature driver has experience in his/her corner. Years of good driving experience can help you plan how to compensate for specific problems you may develop, as you grow older. Also, years of good driving experience can add to your feeling of well-being behind the wheel, which contributes to your overall driving performance.
Regular doctor visits and preventive screenings for common illnesses become increasingly important as you start to age. If you are experiencing impaired vision or hearing, see your doctor as soon as possible. Special prescription glasses and hearing aids can often help compensate for age-related vision and hearing loss. Since good vision is especially crucial to the act of driving, screenings for cataracts, glaucoma, night blindness, and other vision problems should be scheduled regularly. Recognition and/or treatment of these conditions can be instrumental to safe driving and to your overall quality of life.
Be honest with yourself and with your doctor about any possible health-related limitations, which may interfere with safe driving. Besides impaired vision, hearing, and slower reaction times, other health factors such as ankle rigidity, wrist pain, general weakness, decreased range of motion, and general depression can hamper your ability to drive a car safely. Your doctor can suggest treatments for stiffness, fatigue, and depression. Often, a simple exercise program consisting of regular walking can help increase mobility, fight fatigue, and combat depression. A mild regular exercise program can strengthen your heart, lungs, and muscles while increasing your flexibility and range of motion.
If you are taking medication, make a point to ask your doctor or pharmacist how these drugs can affect your ability to drive. It is unwise to drive unless you have a clear understanding of possible drug interactions and their effect on you. Also, do not ignore any over-the-counter drugs or supplements you are taking. Even over-the-counter drugs or supplements can cause drowsiness, blur vision, slow reaction time, and impair mobility.
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Everyone can benefit from travel planning. Whether it is a short trip to the supermarket, a lunch date across town, or a weekend trip to visit relatives, planning is key to safer driving. Travel planning can assist you in minimizing risk by making simple adjustments to your driving habits. For the mature driver, a little foresight can add to your safety and pleasure in driving. The following planning tips can be used as a starting place to help you stay safer on the road:
- Avoid rush hour traffic if possible. This includes traveling during peak hours over major holidays. Why drive in heavy traffic if it is unnecessary?
- Time your driving for daylight hours only. Poor visibility and fatigue can play a major factor in accidents during the night and twilight hours, especially for mature drivers.
- Alter your travel plans during bad weather or when you experience any adverse driving conditions. It is better to arrive later than planned, or to reschedule your trip entirely, than to get into an accident.
- Choose routes that are well marked and well lighted. Make a note of landmarks and exits that can help you navigate. Also, plan your route to avoid, as many left turns as possible. Going a few blocks out of your way to make a right turn instead of a left turn is a good safe driving strategy.
- Turn on your headlights and buckle up your seat belt every time you drive your car. Using your headlights in the daytime helps other drivers see you.
- Adjust your seat and mirrors for the best visibility. Make adjustments before you start driving or pull over to the side of the road to make needed adjustments when driving.
- Drive at the posted speed limit, unless weather, traffic, or other adverse driving conditions indicate otherwise. If you must drive more slowly, then stay in the right lane.
- Practice good defensive driving techniques and yield the right-of-way. Never insist on the right-of-way, even if you are correct.
- Stay in the appropriate lane. Do not weave back and forth between lanes, straddle two lanes, or change lanes near intersections.
- Plan on taking a break after driving every 90 minutes. Get out of your vehicle and stretch or take a walk. You can plan driving breaks around meal times as well.
- Do not take unnecessary trips. Map out your errands before you leave home. Cluster errands around one area only, if possible, so you can avoid driving back and forth across town.
- Park in lots or in spaces that have easy access and good visibility. It is better to walk a little farther than to have difficulty parking or backing up when you leave.
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Continued driver training is an excellent investment in your safety. No matter how much experience a mature driver has behind the wheel, a refresher course can reinforce good driving skills, teach new skills, and help eliminate bad habits. Updates on the latest defensive driving techniques for mature drivers can help you redirect your thinking about driving and develop strategies for staying safe behind the wheel as you age.
Investing your time and energy in a mature driver improvement course also has benefits with your auto insurance company. California Insurance Code (CIC) Section 11628.3 states that drivers 55 years of age and older, upon proof of completing a mature driver improvement course approved by the California Department of Motor Vehicles (DMV), are entitled to a discount on their auto insurance. For help in locating an approved mature driver improvement course near you, consult your local DMV office, check the DMV's Web site www.dmv.ca.gov, or call the DMV's toll free consumer line (800) 777-0133.
Insurance companies recognize that mature drivers face unique challenges as they get older and reward those mature drivers who take the initiative to minimize risk by enrolling in approved driver training courses. The more you are aware of and compensate for any driving limitations, the greater your ability to stay safe, drive longer, and avoid accidents.
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Under California's premium rating law, each insurance company is allowed to calculate its own rates based on its past loss experience and expenses. Since each company's experience will differ, even within the same geographic area, the rates will therefore differ. By calling several companies, or brokers/agents for a rate comparison, you can potentially save money.
You will then be able to choose the company with the best available price and coverage to suit your individual needs. There are many sources you can contact to evaluate policies and premiums. Your local telephone directory and the internet can provide names and telephone numbers for the following organizations:
- Independent insurance brokers/agents
- Company agents who represent one company
- Direct writers: insurance companies that sell direct to the public
- Websites
It is important to get quotes from different companies. You may not realize it, but the insurance rates you pay for your car can vary dramatically depending on the insurance company you choose. You should always compare before deciding on a policy.
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It is not the responsibility of the company or agent/broker to determine either the type or amount of coverage is you need. You and the agent/broker should have an open exchange about the coverage's that are available so that you can determine what best fits your needs. The time to discover that you do not have the necessary coverage is before you are involved in an accident, not after. Now that you know what California Law requires, you should determine whether you need coverage above the legal minimum in order to protect your assets. "How much is this going to cost me?" should not be the only question in deciding how much insurance you need. There is a variety of options regarding types of coverage and policy limits so you should shop carefully.
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Since you may be personally responsible for damages above the policy limits, you should consider purchasing liability insurance with higher limits than the minimum required by law. With the increased cost of hospital stays, medical care, and car repair, it may be well worth considering the extra premium to purchase higher limits of coverage.
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Choosing a qualified, professional insurance agent can be as important as choosing your doctor, your accountant, or any other professional upon which you rely. If you are selecting an agent or broker for the first time, your best resources are your relatives, neighbors, co-workers, as well as professional broker-agent associations.
When selecting an agent-broker you may wish to verify if they are licensed to sell insurance in California by checking their license status. You can check their license status in two ways, by either entering their license number or by name search. All agents-brokers are required to include their license number on business cards, premium quotations, and printed advertisements. This will enable you to check the status of their license with our Department.
Ask your relatives, neighbors, or co-workers about their agent when shopping for a new agent. Here are a few questions you can ask:
- Have they had a recent claim?
- How did the agent and/or the insurer respond to the claim?
- Has the agent been courteous and prompt in responding to their questions and changes to their policies?
- Did the agent take the time to fully explain the terms and conditions of their policy?
- Does the agent periodically contact them to update coverage?
It is critical that you choose an agent with whom you feel comfortable. You need to be able to have an open exchange about the coverages and services that are available, so you can determine what best fits your needs. It is not the responsibility of the agent-broker to determine the type or amount of coverage you need, so good communication is the key.
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When I apply for Insurance, what kind of information is obtained?
Your insurance company or agent will require that you disclose certain personal information on the application to determine your eligibility for insurance coverage and establish the price of coverage. If you are applying for automobile insurance, the company will collect information such as your driving record, use of automobile, mileage driven, and years of driving experience.
For automobile insurance, most insurance companies will order a Motor Vehicle Report (MVR) for all the drivers listed on the insurance application. The MVR is the state's official record of driving information obtained from the DMV. It is used to verify accidents, traffic violations, and license suspensions for all potential drivers listed on the application.
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Insurance companies will offer the following optional coverage with every automobile policy:
- Underinsured Motorist - covers an insured who is involved in a collision with a driver who does not have sufficient liability insurance to pay for the damages.
- Uninsured Motorist Coverage (UMC) - coverage an insured involved in a collision with a driver who does not have liability insurance. UMC comes in two parts: uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD). UMBI coverage pays for injuries to you or any person in your car when there is a collision with an uninsured driver. UMPD coverage pays for the property damage to your car when there is a collision with an identified uninsured driver. UMC must be offered when you purchase liability coverage for your auto. If you decline UMC, you must sign a declination waiver.
- Medical Payments - Provides for the payment of medical and similar expenses without regard for liability.
- Physical Damage (collision and comprehensive) - Neither of these cover mechanical breakdown or normal wear and tear. Collision covers damage to your vehicle caused by collision with another vehicle or with any other object, regardless of fault. Collision insurance covers vehicle upset (overturn), but does not cover bodily injury or property damage liability. Comprehensive coverage covers damage to your car caused by reason other than collision, such as fire, theft, windstorm, flood, vandalism, etc.
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- Inquire about discounts (such as multi-car, airbags, anti-theft device, etc.) and/or surcharges the company applies. Not all companies will offer the same type of plans, nor have the same underwriting rules (eligibility/acceptability guidelines). Therefore, it is critical to ask for this information.
- Make sure you know the length of the policy term. This can be one month, six months (semi-annual), or one year (annual), depending on the insurance company.
- Many companies have their own payment (installment) plans, which allow you to pay the premium over a period for a service fee. If you decide to buy a policy on an installment plan, find out the applicable finance or service charges. If you use a premium finance company to pay for your insurance, the monthly payments may be easier, but the total of payments will be larger. Moreover, if the policy is cancelled, the insurance company must remit all return premiums to the finance company, who will apply them to your account.
- Check to see if you are responsible for paying any up front fees. Sometimes insurance companies charge policy issuance fees. Once the policy is issued, this fee is generally fully earned. If the policy is canceled later, the fee will not be returned.
- Ask about higher deductibles. By requesting higher deductibles on comprehensive and collision coverage, you can lower your costs. However, remember that the deductible you choose is what you are responsible for paying up front in the event you file a claim against your automobile insurance policy.
- Should you drop comprehensive and/or collision coverage on an older car? It may not be cost-effective to have comprehensive or collision coverage on cars worth less than $1,000 because any claim you make would not substantially exceed the annual premium cost and deductible amounts.
- A broker's fee must be agreed upon in advance. If you choose a broker to place your coverage, ask about the broker's fees. These fees should be disclosed and agreed upon before finalizing the insurance transaction. Remember, broker's fees are in writing, not filed with the state, and are fully negotiable. If the policy is canceled for any reason, the broker's fee is generally not refunded.
- Review the territorial provisions of your policy with respect to driving in Canada and Mexico. Generally, Mexico does not recognize liability insurance issued in California. If you are involved in an accident in Mexico, you are subject to Mexican legal requirements. Therefore, it is strongly recommended that Mexican insurance be purchased prior to entering that country. Some California issued policies do extend limited physical damage (comprehensive and collision) coverage on vehicles for a limited distance while operating in Mexico.
- Most automobile insurance policies provide coverage for other licensed drivers to drive your vehicle on an occasional basis. As coverage can extend differently to you as compared with an occasional driver, it is critical to read and understand your policy terms and provisions before allowing others to drive your vehicle. Check with your agent/ broker or company for the details. It is a common practice for insurance companies to exclude a driver from your policy for a variety of legitimate reasons under the law. Such driver exclusions must be stated in the policy or by endorsement. Your coverage is not valid while a specifically excluded driver is allowed to drive your vehicle. Be aware of all policy driver restrictions.
- If you anticipate acquiring a new, replacement, or additional vehicle, contact your agent/broker or company prior to taking possession. It is necessary to determine what coverage will be extended and what coverage will have to be added to your existing policy. If the new vehicle is financed, also check with the lender for their insurance requirements.
- When renting a vehicle, the automobile rental companies hold the renter responsible under the rental agreement for damage to their vehicle. They normally offer a Damage Waiver at an additional cost. This is not insurance, but a contractual agreement between the renter and rental company. Therefore, if a waiver is not purchased, review your own automobile policy to determine if any extension of coverage applies. Also, determine how the liability coverage afforded by your policy applies in the event you are at fault in an accident with the rented vehicle.
- Personal effects and equipment such as cellular telephones, compact discs, tape players, and recorders that are not permanently installed in the vehicle by the manufacturer generally are not covered, unless specifically declared and added to the policy.
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The California Low Cost Automobile Insurance program is designed to reduce the high number of uninsured drivers. The program provides low-income good drivers with an affordable auto insurance option, which satisfies California's financial responsibility laws. The program is available to qualified persons living in California.
Briefly, the qualifications are based primarily upon:
- Household income
- Good driving record
- Vehicle value at time of purchase
To find out more about the program and see if you are eligible call:
California Low Cost Automobile Insurance Program
(866) 60-AUTO-1
(866) 602-8861
(This program is brought to you by the California Department of Insurance and administered by the California Automobile Assigned Risk Plan).
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In order to minimize driving risk, you need to be aware of the most common factors that cause accidents involving mature drivers. If you have trouble with any of the following, you need to reevaluate your driving habits to see if you can realistically compensate for these potentially dangerous risk factors:
- Failure to maintain proper speed
- Backing and parking your car
- Improper left turns
- Failure to yield right-of-way
- Confusion in heavy traffic
- Inattention
- Hesitation in responding to new traffic signs, signals, road markings or different traffic patterns and roadway designs
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Very few people have the desire to stop driving voluntarily. Since driving is often viewed as a symbol of freedom and independence, it is very difficult for some mature drivers to be objective about their driving skills. While the convenience of driving is hard to beat, confusing driving skills with your self- worth or independence is not realistic. In fact, it can be dangerous to you and to all the other drivers on the road.
If you are unsure about your driving performance, ask a trusted friend or family member to monitor your driving. If you have made adjustments in your driving habits, have utilized the techniques mentioned throughout this brochure, and are still having difficulty driving, then you may want to consider giving up driving altogether. The decision to stop driving is both personal and difficult, but in the end, you want to make a responsible choice to protect yourself and others.
If you are struggling with the decision of whether or not to stop driving, then ask yourself the following questions that may help you evaluate your current driving situation:
- Have you suffered a stroke, heart attack, or experienced diminished eyesight in the past few months?
- Have you been cited for traffic violations or been involved in traffic accidents lately?
- Have you felt nervous or exhausted after routine driving?
- Have you experienced difficulty in basic driving skills such as parking, backing up, or signaling?
- Have you felt anxiety or panic in heavy traffic situations?
- Have you hesitated over right-of-way decisions that you have always taken for granted?
- Have you received negative feedback from other drivers?
- Have you been surprised or startled by the sudden appearance of another vehicle or a pedestrian?
- Have you become lost on familiar routes?
If you answered yes to some of these questions, then it may be time to stop driving. While driving may be liberating and fun, it can also be great to experience driving as a passenger without the worries and cares of driving. The ride is good from the passenger seat!
Before giving up your license, you may want to consider contacting the DMV for a voluntary driver reexamination. The DMV can suggest options on how to keep your license on a restricted basis depending on your current driving performance. The proper restriction can help keep you driving while looking out for your safety and the safety of other drivers and pedestrians.
The following list contains some of the most common driving restrictions issued by the DMV:
- No freeway driving
- Driving only from sunrise to sunset (no night driving)
- Driving only in a particular area or by a specific route
- Driving only a vehicle with a knob attachment on the steering wheel
- Wearing a leg prosthesis when driving
Often it is possible for drivers to still drive safely within a clearly defined, but very restricted area. The DMV offers an Area Driving Performance Evaluation (ADPE) that is administered by taking a driving test in the vicinity of the driver's residence. This test can set restrictions for drivers to maintain safe driving in well-known places. A restriction of this nature can allow you to drive to such places as the grocery store, department store, doctor, bank, church, golf course, hair stylist, or any other place within the restricted area that can be reached on surface roads only.
Also, friends, family, and neighbors who are concerned about unsafe driving practices of any driver can fill out a DMV Request for Driver Reexamination form. Immediate family members can make the request on an anonymous basis, and the DMV tries to honor confidentiality whenever possible.
Remember that after age 70 the DMV will not automatically renew your license by mail; however, this does not mean that you will necessarily have to take a written test or driving test to renew your license. Often you will only have to pass a standard eye exam. If you have been experiencing recent problems with driving, it is a good idea to discuss the issues candidly with the DMV. The DMV is aware of the issues facing mature drivers, and their goal is to keep all drivers licensed for as long as it is safe to do so.
Sometimes part of the difficulty in giving up driving is the notion that you will not be able to get around once you do. Depending on where you live, there is a variety of methods to get around when you no longer drive. For instance, you can catch a bus or other form of public transportation, take a taxi, ask a friend to drive, keep your car, and pay someone to drive, or call Dial-A-Ride or other subsidized transportation programs for senior citizens.
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Some insurance companies specialize in the non-standard auto market for what they consider high-risk drivers. Should you decide to buy in one of these markets, be sure to shop carefully because eligibility requirements and rates vary.
If you cannot find a company that will insure you, you can get liability coverage through the California Automobile Assigned Risk Plan (CAARP). This plan is designed for drivers who do not qualify as good drivers and are unsuccessful in obtaining insurance from non-standard or approved surplus lines insurance companies. To apply for the plan, find a CAARP certified insurance agent or call CAARP direct at
800-622-0954
The plan works by taking your application and assigning it to an insurance company. All insurance companies licensed in the state must accept CAARP applicants. The amount of CAARP assignments is based on insurance company market share. The more automobile policies an insurance company issues, the larger the portion of CAARP assignments they are required to take.
The rates used by the plan are the same no matter what insurance company issues the policy. The plan also offers installment options. After three years with a clean driving record, consumers underwritten through CAARP can move from the program to a standard lines insurance company. No broker's fee can be charged in connection with a CAARP policy.
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- Provide the drivers license numbers for all drivers in the household.
- Have vehicle registration numbers available for all vehicles in the household.
- Furnish updated driver safety records for all drivers in the household, including past accident and claim information.
- Put together insurance information in order to compare coverage's, provide names of insurance companies, and give policy numbers. Ask if a broker's fee is included or if one will be charged.
- Be prepared to pay the premium in full, make a down payment, or arrange premium financing.
- Do not sign blank documents or documents you do not understand.
- Keep notes of the conversation for your records. Mark down who you talked to and what was said.
- Provide complete, accurate information.
- Find out the complete name of the underwriting insurance company in which your coverage is to be placed.
- Ask for copies of all documents for your records before you leave the office.
It is very important to be familiar with your automobile insurance policy before you need it. Read the policy thoroughly so you know what is covered and what is excluded. Call your company or agent/broker if you do not understand any item in your policy. If you feel you have been treated unfairly by an agent/broker or a company when purchasing insurance, then contact us.
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Red Flags
Automobile insurance fraud in California has historically taken several forms. The most common fraud schemes involve automobile property and automobile accidents.
Automobile Property - This type of fraud most often involves dishonest auto body and repair shops and/or insureds who may employ a variety of illegal or questionable techniques including:
- Reporting parts of vehicles as damaged or lost when in fact they were not damaged or lost prior to the shop receiving the vehicle.
- Making final cost in excess of the original estimate of damage.
- Billing for repairs that were not authorized.
- Charging for genuine parts when after-market or used parts from junkyard were used.
- Pounding out dents or using bondo when charging for brand new auto parts.
- Falsely reporting stolen vehicles or vandalism of vehicles in order to collect insurance monies. It is always very important for the consumer to review carefully all paper work from auto body and repair shops in order to protect against potential fraud. Also, consumers should be cautious of any auto body or repair facility that makes referrals to medical or legal offices. This practice may be an indicator of "capping." Capping (a felony in California) is the illegal referral of clients to legal offices for a fee.
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While safe driving is a challenge for all drivers, mature drivers need to particularly pay attention to any driving limitations brought on by aging. Identifying possible limitations and making adjustments to your driving habits can significantly minimize the risk of driving for mature drivers. Practicing good driving strategies combined with physical conditioning, travel planning, vehicle choice, and defensive driving can allow you to drive safer and enjoy driving for a longer period of time.
The California Department of Insurance (CDI) is dedicated to the issues facing mature drivers. The CDI also has a full range of auto insurance brochures as well as other brochures that specifically deal with senior insurance issues. If you are experiencing problems or have questions regarding auto insurance, then please contact the CDI by using the information located in the "Talk to Us" section of this brochure.
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Terms Commonly Used in Private Passenger Automobile Policies
- Actual Cash Value (ACV) - Unless otherwise defined in the policy, actual cash value in California means fair market value. The fair market value of an item is the dollar amount that a knowledgeable buyer (under no unusual pressure) is willing to pay, and a knowledgeable seller (under no unusual pressure) is willing to accept.
- Additional Equipment Endorsement - Provides coverage for certain parts and equipment that are not installed by the manufacturer. Coverage is subject to a maximum limit listed on the endorsement.
- Adjuster - The person who evaluates the damage caused by an accident or other covered loss and determines the amount to be paid under the policy terms.
- Agent - A licensed individual or organization authorized to sell and service insurance policies for an insurance company.
- Assigned Risk - A driver who is not acceptable to a standard lines insurance company due to a poor driving record and is assigned to an insurance company participating in the assigned risk pool. All insurance companies licensed to sell auto insurance in California agree to accept a share of high-risk drivers based on the percentage of auto policies they issue in the state. (See CAARP)
- Automobile Insurance - A type of insurance that protects against losses involving automobiles. Auto policies contain a variety of coverages that can be purchased depending upon the needs and wants of the policyholder. Liability for bodily injury and property damage, medical payments, uninsured motorist, comprehensive, and collision are some of the common coverages offered under an auto insurance policy.
- Binder - A short-term agreement that provides temporary insurance coverage until the policy can be issued or delivered.
- Broker - A licensed individual or organization who, on your behalf, sells and services insurance policies.
- Broker-Agent - A licensed individual who can act as an agent representing one or more insurance companies and also as a broker dealing with one or more insurance companies representing your interests.
- Broker Fee - Any fee charged by an insurance broker to provide services that arise out of the transaction of insurance.
- Broker Fee Agreement - The contract between the policyholder and the broker, which also specifies the charges for the services rendered by the broker.
- California Automobile Assigned Risk Plan (CAARP) - This plan is available when a driver is unable to purchase private passenger or commercial liability auto coverage because of a poor driving record. (See Assigned Risk)
- Cancellation - The termination of an insurance policy before its normal expiration date.
- Claim - Notice to an insurance company that a loss has occurred which may be covered under the terms and conditions of the policy.
- Commission - A portion of the policy premium that is paid to an agent by the insurance company as compensation for the agent's work.
- Commissioner of Insurance - This is the title of the head of the California Department of Insurance.
- Comparative Negligence - The percentage of fault shared by each driver in an accident in which both contribute to causing the collision.
- Comprehensive Coverage - Pays for damage to your car caused by reason other than collision, such as fire, theft, vandalism, windstorm, flood, et cetera.
- Collision - Pays for damage to your car caused by physical contact with another vehicle or with another object, such as a tree, boulder, guardrail, structure, or person.
- Claim - The protection extended under an insurance policy.
- Declarations (DEC) Page - Usually the first page of an insurance policy that contains the full legal name of your insurance company, your name and address, the policy number, effective and expiration dates, premium payable, the amount and types of coverage, deductibles, the vehicle(s) insured, and the vehicle identification numbers (VIN).
- Deductible - The amount of the loss that the policyholder is responsible to pay up-front before covered benefits from the insurance company are payable. This is applicable to comprehensive or collision coverage only.
- Endorsement - A written agreement that changes the terms of an insurance policy by adding or subtracting coverage.
- Exclusion - A contractual provision in an insurance policy that denies or restricts coverage for certain perils, persons, property, or locations.
- First Party - The policyholder (insured) in an insurance contract.
- Insured - The policyholder(s) entitled to covered benefits in case of an accident or loss.
- Insurer - The insurance company who issues the insurance and agrees to pay for losses and provide covered benefits.
- Liability Insurance - Coverage for a policyholder's legal liability resulting from injuries to other persons or damage to their property.
- License - A certificate of authority issued by the Department of Insurance to an insurer, agent, broker, or broker-agent to transact insurance business.
- Limits - The maximum amount of benefits the insurance company agrees to pay in the event of a loss.
- Loan Gap Coverage - This coverage pays the difference between the fair market value of your vehicle and the loan balance owed to your lender. This coverage is available on new vehicles only.
- Low Cost Auto - A pilot program for the residents of eligible counties only, who meet specific lower income requirements. (Administered by CAARP)
- Medical Payments Coverage - Covers the medical costs (up to the specified limit) resulting from an auto accident for you, your family, or others in your car. This coverage pays regardless of fault.
- Non-Renewal - The termination of an insurance policy at its normal expiration date.
- Personal Lines - This term is used to refer to insurance for individuals and families, such as private passenger automobile and homeowner policies.
- Policy - A contract that states the rights and duties of the insurance company and the insured.
- Premium - The price of insurance paid to the insurance company for a policy.
- Premium Finance Company - A lending institution that finances automobile insurance premium for a fee.
- Private Passenger Automobile - Four-wheeled motor vehicles of the private passenger, station wagon, or van type. Private passenger automobiles are designed for use on public highways and subject to motor vehicle registration.
- Producer - A term used by the insurance industry to refer to agents and brokers.
- Quotation - An estimate of the cost of insurance based on the information supplied to the agent, broker, or insurance company.
- Recision - The cancellation of a policy back to its effective date resulting in a return of all premiums charged.
- Rental Reimbursement Coverage - This coverage pays your expenses to rent an auto if you have a loss covered under Comprehensive or Collision benefits. Coverage is sold based on a daily amount of expense subject to a maximum limit.
- Replacement Cost - The amount that it costs to replace lost or damaged property with new property of like kind or quality in the local market.
- Salvage - Damaged policyholder property that is legally signed over to an insurer in a loss settlement. Insurance companies sell salvaged property in order to reduce their overall monetary loss.
- Second Party - The insurance company in an insurance contract.
- Subrogation - The process of recovering the amount of claims damages paid out to a policyholder from the legally liable party. When a company pursues the legally liable third party, they are required to include the policyholder's deductible in the recovery process.
- Surcharge - An extra charge applied to the premium by an insurance company, usually applied to an at-fault accident or moving violation.
- Third Party - An individual other than the policyholder or the insurance company who has suffered a loss and may be able to collect compensation under the policy due to the negligent acts or omissions of the policyholder.
- Total Loss - Damage or destruction to real or personal property to such extent that it cannot be rebuilt or repaired to its condition prior to the loss or when it would be cost prohibitive to repair or rebuild in comparison to the value of the property prior to the loss.
- Towing Coverage - Addition to an automobile policy that pays a specified amount for towing and related labor costs.
- Underinsured Motorist Endorsement - Addition to a Personal Automobile Policy (PAP) that covers an insured who is involved in a collision with a driver who does not have sufficient liability insurance to pay for the damages.
- Uninsured Motorist Coverage (UMC) - Provides coverage for a policyholder involved in a collision with a driver who does not have liability insurance or who does not have sufficient liability limits to pay for damages. UMC comes in two parts: uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD). UMBI coverage pays for injuries to you or any person in your car when there is a collision with an uninsured driver. UMPD coverage pays for the property damage to your car when there is a collision with an identified uninsured driver. UMC must be offered when you purchase liability coverage for your auto. If you decline UMC, you must sign a declination waiver.
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We are required by law to disclose the following:
- This brochure is for informational purposes only.
- The actual terms of an insurance policy and related law prevail over the information provided in this brochure.
- In the case of a dispute, the insurance policy is controlling and a court of law will rely on the policy as it is written to resolve the dispute.
- The policy is the only document that describes what the insurance company will pay.
- The information contained in this brochure does not create rights or obligations on the part of the insured, the insurer, the agent, the broker, or the state.
- This brochure is not intended to be a substitute for the actual insurance policy.
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Resource information
- California Low Cost Automobile Insurance Program
For more information about this state-sponsored plan for low-income drivers, call (866) 602- 8861
- California Automobile Assigned Risk Plan (CAARP)
For more information about the State's insurance plan for high-risk drivers, call (800) 622- 0954
- Department of Motor Vehicle (DMV)
For more information about safe driving, see DMV publication: Senior Guide for Safe Driving (FF DL 625)
www.dmv.ca.gov or 1800 777-0133
Web Sites
- Independent Insurance Agents of America
For information on auto insurance and where to find an independent agent near you, access their Web site at www.iiaa.com
- Insurance Information Institute
For information about auto insurance and links to other sites related to auto insurance, access their Web site at www.iii.org
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To charge a broker fee, a broker must have you sign a broker fee agreement, and must give you a special broker fee disclosure. Be sure to read and obtain copies of both of these documents
This disclosure was prepared by the California Insurance Commissioner.
Please read it carefully!
- Do not sign any broker fee agreement unless all of its blank lines and spaces have been filled-in and you have read this entire document and the agreement carefully.
- Your insurance broker represents you, the consumer, and is entitled to charge a broker fee if he/she chooses. This fee is not set by law, and may be negotiable between you and the broker.
- It is illegal or improper for an insurance broker to charge you a fee for placing coverage solely with the California Automobile Assigned Risk Plan or the California FAIR Plan. Fees may be charged for placement of other coverages.
- Broker fees are often non-refundable even if you cancel your coverage. Refer to your broker fee agreement to see if your broker fee is non-refundable. However, you may be entitled to a full refund of a broker fee if your broker acted incompetently or dishonestly. Unresolved disputes over non-refunded broker fees can be forwarded to the Department of Insurance for review.
- You are entitled to obtain and keep a completed copy of this disclosure and any broker fee agreement you sign.
- Your broker may receive commission from insurance company (ies) for placing your insurance. This commission may be paid to your broker by the insurance company (ies) in addition to any broker fee you pay.
- If you will be paying your premium in installments to a finance company, by law you must receive a copy of a premium finance disclosure and agreement. Be sure to obtain and read those documents before signing a premium finance agreement. Also, ask the broker if the insurer offers its own installment payment plan. Insurer installment plans are often cheaper than premium financing through a separate premium finance company.
- If your broker is placing automobile coverage, your broker must provide you with a copy of the current Department of Insurance pamphlet Automobile Insurance. If your broker is placing residential coverage, your broker must provide you with a copy of the current Department of Insurance pamphlet Residential Insurance.
By signing this disclosure you acknowledge receipt of the appropriate pamphlet(s).
Client initials: _____
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