AUTO & QUOTE
Auto Insurance
Auto Insurance in NJ
About Automobile Insurance
Liability coverage for your business automobile is compulsory in most states. That means
that the state obligates the owner of a vehicle to carry at least the minimum limits required by the state. In NJ, those limits are expressed as $25,000/ $50,000/$25,000. This means $25,000 in limit for any one person you injure in an automobile accident, $50,000 in total for all the injured occupants of the vehicle, and $25,000 in limit for damage to property for which you are liable.
These are the minimum limits available and are not appropriate for providing the depth of coverage that most businesses need. It is not uncommon to see settlement figures
in excess of a million dollars. To the extent that a business has not purchased sufficient limit to pay for damages, they are self-insuring the difference through the assets of the business or perhaps the owner’s personal assets.
When evaluating their exposure to automobile liability claims, factors to be considered include:
- What is the number of vehicles on the road
- Is there a regular vehicle maintenance schedule in place?
- What is the radius of operations?
- Is there a fleet safety policy in place?
- Is there a distracted driver policy in place?
- How often is training conducted?
- What criteria is in place for hiring driver?
- What is the average tenure of drivers?
- What is the legal environment in the area of operations?
Understanding these factors will help a business to determine their exposure to automobile liability claims and can help provide guidance in the selection of an appropriate limit. The Risk Management professionals at Hardenbergh Insurance Group can work with you to be sure you are implementing industry standard best practices to help you minimize your exposure to automobile liability claims.
Physical damage coverage is an optional coverage unless the vehicle is financed, in which case the financial institution will likely require that the coverage be carried. Physical damage provides both collision and comprehensive coverages. Collision provides coverage for damage caused to your vehicle due to the collision of your vehicle with another vehicle or object. Comprehensive provides coverage for all the other ways in which a vehicle can sustain damage including theft.
Both comprehensive and collision coverages are subject to their own deductible. Deductibles on commercial units typically range between $500 and $5,000. There is an inverse relationship between the deductible amount and the premium charged. Businesses that carry higher deductibles will incur lower premiums. Businesses that opt for a lower deductible will pay a higher premium for this.
When setting deductibles, a business should consider their historical average number of annual physical damage claims, the age of the individual units, the type of vehicle being insured, as well as their financial ability to pay the deductible in the event of a loss.
Automobile Insurance Rating and Underwriting
Rating and Underwriting can be thought of as a quantitative and qualitative analysis of your business. In the rating process, quantitative data is supplied to the underwriter so that they can conduct their initial rating. This includes information such as:
- Make of Vehicle
- Model of Vehicle
- VIN Number of Vehicle
- Weight of Vehicle
- Use of Vehicle
- Radius of Operations of Vehicle
- Desired Physical Damage Deductibles
- Cost of New Vehicle
Once an underwriter has this information they can rate the vehicle to arrive at a base premium. From there, they can move onto the underwriting process which is the qualitative analysis of your business. The objective is for the underwriter to assess your business and determine if the qualities make the business more desirable or less desirable from an insurance perspective. Businesses that are considered more desirable will receive credits and favorable pricing whereas businesses that are not considered desirable will receive unfavorable pricing or the carrier will decline to offer a quotation. Factors that will make your business more desirable include:
- Having a fleet safety program in place
- Annual driver testing
- Having established driver hiring criteria
- Having a vehicle maintenance policy in place
- Pre-hire, post-accident, and random drug testing policy in place
- Mandatory post-accident retraining
- Having daily vehicle safety inspection reports completed
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Having GPS monitoring in place
- Including driver safety as part of the annual review process
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Having long tenured drivers using established routes
Discounts
In general, if it can be demonstrated to an insurance carrier that a business is a better risk than their peers, they can receive preferential pricing. Hardenbergh Insurance Group will actively work with you to ensure that you are implementing the industry standard best practices mentioned above to receive preferential pricing.
In addition to this, carriers will often apply discounts when they write more than one line of coverage for a given business. For example, if in addition to your automobile insurance, you also have your general liability, workers compensation, and umbrella with a carrier you will likely qualify for a multiline discount.
Some carriers will apply modest discounts when payment is made in full or prearranged for automatic withdraw from your financial institution.
Other Coverages
Personal Injury Protection
This is a no-fault coverage that protects occupants in a vehicle for medical expenses sustained in an auto accident. It can also cover lost wages, funeral expenses, and loss of services. It is only available on private passenger type vehicles.
Medical Expense
This pays for medical costs resulting from an auto accident. It covers the insured, their family members, and anyone else in the vehicle at the time of the accident.
Rental Reimbursement Coverage
Rental Reimbursement Coverage pays for rental costs your business incurs for a temporary replacement vehicle following a covered accident. You must specify the amount of coverage you want per day and the maximum amount of days you want covered. For example, $30 a day for 30 days. This coverage is only available on vehicles
covered for physical damage.
Loan/Lease Gap Coverage
For Physical Damage claims carriers make settlement based on the Actual Cash Value of the vehicle. Actual Cash Value includes depreciation. If a vehicle is destroyed shortly after purchasing it, it is possible that the Actual Cash Value of the vehicle is less than the balance on the loan. Loan/ Lease Gap Coverage will fill the gap between the depreciated value of the vehicle and the balance due on the loan.
Uninsured or Underinsured Motorists’ Coverage
These coverages will provide protection to your business in the event you are involved in a not at fault accident and the at fault party does not carry liability insurance or the at fault party carries liability insurance but at a limit that is not sufficient to cover the damages they caused.
Hired Automobile Liability
This coverage provides protection to your business for claims involving a vehicle that is hired by your business. For example, on a business trip a vehicle is rented by an employee in the company name. While driving the rented vehicle, they cause an accident, and your business is sued.
Non-Owned Automobile Liability
This coverage provides protection to your business for claims involving a vehicle that is not owned by your business. For example, an employee uses their own vehicle to make daily business deposits at your bank. While driving their own vehicle, they cause an accident, and your business is sued.
Employee Hired Autos
This provides coverage to your individual employees similar to the Hired Automobile Liability mentioned above for circumstances in which the employee rents a vehicle to conduct company business in their individual name rather than the business name. Without this endorsement, the employee would only be able to rely on any coverage available to them in their personal auto policy.
Employees as Insureds
This provides coverage to your individual employees should they be named in a law suit arising out of their use of their own personal vehicle that they used for business purposes. Without this endorsement, the employee would only be able to rely on any coverage available to them in their personal auto policy.
Hired Car Physical Damage
This provides coverage for physical damage to a vehicle rented by the insured for business purposes. It is typically subject to a deductible as well a maximum limit for any one claim.
Pollution Liability – Broadened Coverage for Covered Autos
This provides coverage when you are liable for the monitoring, cleaning up, removing, containing, treating, destroying, neutralizing, or responding to the effects of pollutants.
MCS 90 Endorsement
This endorsement must be attached to the auto liability policy of certain regulated motor carriers to ensure that federally mandated coverage is in place. The MCS-90 form is a required filing for insureds that offer for-hire interstate transport of goods or passengers. This requirement was created by the Motor Carrier Act of 1980.
What to Do After an Accident
When accidents happen in NJ, the law requires that you report it if it involves injury, death, or over $500 worth of damage to vehicles or property. Be sure to exchange information with all parties involved, including names, addresses, phone numbers, driver’s license numbers, car tag numbers, vehicle descriptions, and insurance information. If there were any witnesses, get their information as well.
In NJ and PA, we have a threshold and a limited and unlimited right to sue in every policy. There are two systems: Tort system OR No-fault system. Every state operates on either a tort system or is using a no-fault system. The system implemented by a state where the car got damaged would determine the kind of insurance required and available. There are three basic coverages required to be sold under the tort system – physical injury liability insurance, uninsured or underinsured motorists’ coverage and property damage liability insurance. Whereas, in a no-fault state, the applicable coverages will vary. Point to note is that, under a no-fault system the victim driver’s insurance company has to pay the person directly for the losses incurred as injuries sustained in accidents, without any consideration for who was at fault. Full tort says you can sue no matter what the injury but can be expensive. Limited tort gives you the right to sue but is limited to specific criteria.
Personal vs Commercial Auto Insurance
If you drive a vehicle for work purposes, a commercial policy is what you need. Even if you do not own your own business, a commercial policy may still apply. If you are unsure of whether you need personal or commercial auto insurance policy, here are a few things to consider when deciding what kind of insurance policy you need.
Owner and Driver of Vehicle
If the vehicle is owned by a business, then you are eligible for commercial auto insurance. If you are the sole proprietor of your car, and use it specifically for work, you may still be able to receive commercial auto insurance.
Use of Vehicle
There is a fine line between personal and commercial coverage. It’s not about where you drive, but more so the purpose. Some examples include delivering pizzas to paying customers, being an Uber or Lyft driver, regularly driving long distances to meet with clients, or hauling tools to construction sites.
Type and Weight of Vehicle
If your vehicle weighs more than the average pickup or SUV, you may be eligible for commercial auto insurance. This may include garbage trucks, tow trucks, or commercial trailers.
Business Liability Limits
If your business vehicle requires higher liability limits, you will probably need a commercial auto insurance policy, because it typically offer higher limits than personal auto insurance policies.
Auto Insurance Terms
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Deductible
The amount the insured must pay in a loss before any payment is due from the company. -
Full Coverage
It refers to liability, collision, and comprehensive coverage, but may vary in definition depending on the insurance company. It does not usually include additional policies, such as medical insurance or uninsured motorist coverage. -
Named Insured
The first person in whose name the insurance policy is issued. -
Occasional Driver
This is the person who is not the primary or principal driver of the vehicle. -
Principal Driver
The person who drives the car most often. -
Salvage Titles
The vehicle has been damaged and/or deemed a total loss by an insurance company that paid a claim on it. Determining when a salvage title is issued varies by each state, province or territory. -
Principal Driver
The person who drives the car most often. -
SR-22
This is a vehicle liability insurance document required by most state Department of Motor Vehicles (DMV) offices for "high-risk" insurance policies.
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Auto Insurance
Auto Insurance is one of the most important responsibilities a person must act, in order to protect themselves from various risk factors, compliance with laws, regulations, and poor drivers. Having an auto carrier that you can trust, will ensure peace of mind for you and your family. Driving is so important and with more people on the road than ever before, having the right coverage is important. Here is a quick snapshot and an inside look on what you need to know about auto insurance.
Things You Must-Know:
- Insurance pricing through Underwriting and Rating: Similar to every other types of insurance, auto insurance policies also go through the process of Underwriting and Rating at the insurer’s office.
- Underwriting determines the insurability of the car depending on the driver profile such as his age, sex, past driving records, claims history etc. and the car’s profile like the make & model, age, condition etc. Once the insurer is sure about the insurability and the insured is identified with a certain risk patter = according to their internal strategy and guidelines, there comes the Rating part.
- Here the insurer places the insured in groups of other policies having similar risk patterns and determines the exact rate of premium required to carry out the risk. Point to note is that almost every insurer uses a different factor or formula or clause beyond the required minimum standard by laws and regulations while calculating the premiums. So, the rate may really vary quite a bit, from insurer to insurer.
Rate Factors
- The driving record: records of previous traffic violations and/or accidents are regarded as higher risk.
- Driver’s gender and age: Statistically, men show higher accident tendencies than women. Also, drivers belonging to certain age groups tend to have more claims than others.
- Driver’s marital status: married people typically show lower rates of claims.
- Geographic territory: generally, urban areas tend to have more claims filed than in rural areas.
- Prior insurance coverage: Records of rejection(s) by other insurers for previous coverage are considered as almost sure shots for greater risks associated with the driver or the car and hence an obvious higher rate may get triggered. Failing to provide accurate or honest information, a criminal record involving the vehicle etc. are potential reasons of such rejection.
- Usage of the car: A higher annual mileage translates to a higher cost of maintenance in general and may result in higher category of risk.
- Make & model of the car: Cars under the banner of luxury and sports cars are always considered as bigger liabilities from insurance perspective as they mostly advocate a higher number of claims on costly repairs and accidents.
Important Coverages Information:
- There are a few optional coverages available that may come out very handy in times of need, but will obviously increase the base premium rate. Such as:
- Collision coverage – to protect the car from the damages incurred in an accident
- Comprehensive coverage – to protect the car from damages caused by other misfortunes but an accident
- Uninsured or underinsured Motorists’ coverage – to provide for when the other party involved in collision does not have adequate insurance coverage to take care of the damages
- Rental Reimbursement coverage
- Medical Payments coverage etc.
Additional Information
- Tort system OR No-fault system: Every state operates on either a tort system or using a no-fault system. The system implemented by a state where the car got damaged, would determine the kind of insurance required and available there.
- There are three basic coverages required to be sold under the tort system – physical injury liability insurance, uninsured or underinsured motorists’ coverage and property damage liability insurance. Whereas, in a no-fault state, the applicable coverages will vary. Point to note is that, under a no-fault system the victim driver’s insurance company has to pay the person directly for the losses incurred as injuries sustained in accidents, without any consideration for who was at fault.
- Research before Buying: In order to rip the maximum benefit from the competitiveness of the market for auto insurance, one must look around, gather quotes and collect references and/or recommendations from trusted friends and neighbors on multiple insurers in that locality. Then only the policy owner would have a comprehensive knowledge of the available options and make an informed decision. At the same time, after selecting a certain plan, one should carefully read the entire policy document to make sure that all the terms, clauses and conditions are clearly mentioned in the document, as discussed and agreed before with the agent/insurer.
- Carry the Proof of Insurance – at all times on road: Most states to require auto insurance also require that a proof of the insurance policy )like an ID card issued by the insurer) is always present in the car or with the driver at all times. Penalty could be severe if the same is not presented when requested by a traffic patrol officer or the police on road.
Final Pointers:
- Discounts: Insurance companies often extend promotional offers and discounts depending on the market competitiveness and the drivers’ statistics. Reach out to the insurance agents for finding out more about such possibilities before signing up for the policy and/or during its renewals. Also, keep an eye open for employer sponsored plans, if applicable, to get the extra benefits (corporate discounts, loyalty benefits etc.) too.
- Higher Deductibles: Having higher deductible amount of the policy would lower the premium rates. But one must decide this amount very judiciously, in order to avoid forking out a huge sum of money is and when a claim is filed.
- Impact of policy lapses: Getting a new policy after the previous one got lapsed or reinstating it may impact the rates unfavorably to the policy owner.
- Insurance bundles – Auto and Home: Applying for a combination of insurances (like home insurance and auto insurance) from the same insurer may give the policy owner some brownie points and level the premium rates a little southwards.
- Review with time: It is a good practice to review the policy coverages with time. As the car gets older, the requirements and the market changes. Also, there may be new rules/regulations issued to alter current coverage. So, keeping up with the current situation may directly result into some happy savings.