Auto Insurance Frequently Asked Questions
Q: Do I need to purchase insurance when I rent a vehicle?
A: Most people do not need to purchase additional auto insurance from a rental car agency when renting a motor vehicle. Your current personal auto insurance policy may cover you and the vehicle you are driving under the liability section of your policy. Also, if the vehicle was rented in New York State, the rental vehicle company must provide the minimum required coverages by law for the vehicles they provide. Make sure you check with your agent to see if you have the correct coverage before renting a vehicle.
Q: How much insurance am I required to have on my car?
A: New York State requires that vehicle owners carry a minimum amount of bodily injury liability insurance of $25,000 per person, $50,000 per occurrence. There is also a $10,000 requirement for property damage liability, as well as a $50,000 minimum for “no-fault” coverage (also known as Personal Injury Protection). We do not recommend anyone carry limits this low. Even if you do not have any assets to risk all New York residents put their future earnings at risk by carrying low liability limits. For more information on this please read our article on auto insurance.
Q: How does where I live affect my auto insurance premium?
A: Auto insurance rates are based on a number of factors including: the company’s overhead and underlying costs, the total exposure to claims or other losses, classification, and other considerations. New York State is divided into a total of 70 territories for the purpose of rating. These territories reflect the differences in claim costs in their respective regions and a number of other factors. Some of these factors include traffic tendencies, population demographics, and the cost of goods and services, all of which contribute to variances in each territory’s auto premium.
For example, an auto repair facility may charge $125 dollar per hour to repair a vehicle in downstate NY because he must cover his own costs of labor, rental of his building, and material costs. While a mechanic in upstate NY may charge $60 per hour due to his own lower overhead costs. Lets also look at accident frequency and severity. Drivers who live in NYC face many more dangers due to overcrowded streets and highways, while drivers in the country are less likely to be involved in an accident due to safer roads and fewer obstacles. For this reason cities dwellers almost always pay higher premiums that rural drivers.
Q: Why does it cost some much to insure my teen driver?
A: In this case insurance rates are based upon the classification on teens in general. This means that the rate is based on the average experience of a segment of the population with similar characteristics (in this case age). Young drivers have historically been the worst drivers on the road. Statistics indicate that young drivers are more frequently involved in accidents and that the cost of those accidents are higher than average. By charging teen drivers more for insurance these drivers pay their fair share of insurance costs and older drivers are not asked to subsidize them.