Automobile Insurance

These questions and answers are for consumers of financial products seeking answers regarding Automobile Insurance questions. If you are a business, Industry or regulated entity, please check our industry questions.

I don’t have physical damage (collision or comprehensive) coverage on my motor vehicle liability policy. Am I still covered for damages to rental vehicles?

Yes; in New York, rental vehicle coverage is included in motor vehicle liability insurance policies that:

  • insure fewer than five vehicles; and
  • are issued to an individual or a husband and wife. However, policies insuring certain types of vehicles, such as most types of trucks, are not required to include rental vehicle coverage.

Your insurer is required to provide you with information about rental vehicle coverage with your policy materials. This coverage is normally included automatically in your policy, but if a premium is separately charged you have the right to reject this coverage.

I have one motor vehicle policy that insures my five automobiles. Do I have rental vehicle coverage on my policy?

No, rental vehicle coverage is required to be included only in motor vehicle liability policies that insure fewer than five motor vehicles.

I have only $10,000 in property damage liability coverage. What if the rental vehicle is damaged in excess of that amount?

Your rental vehicle coverage is not subject to the limit of property damage liability of your motor vehicle insurance policy. You would be covered for the full amount of damages to the rental vehicle.

What if I don’t have a motor vehicle insurance policy?

If you do not have a New York State motor vehicle liability policy (or if your policy is not required to provide the coverage), rental vehicle coverage may be included as a benefit with your credit card on a group insurance basis, if you use the credit card to rent the vehicle. Check the summary of benefits for the credit card to see if the coverage is available and any applicable limitations.

In addition, a rental vehicle company may now offer "optional vehicle protection" (also called "collision damage waiver") to its renters, at maximum daily rates of up to $9 to $12 (depending on the type of vehicle). The rental vehicle company must also advise renters about credit card insurance and motor vehicle insurance policies under which the renter may have rental vehicle coverage.

I have "Rental Reimbursement" coverage on my policy. Does this cover me for damage to the rental vehicle as well?

No. The "Rental Vehicle Coverage" under your motor vehicle liability policy should not be confused with "Rental Reimbursement," which is also known as "Transportation Reimbursement" or "Extended Transportation" coverage, which many insurers offer as an optional coverage in combination with the purchase of physical damage coverages. This optional coverage is for the cost of renting a vehicle used as substitute transportation if your own vehicle is damaged and is temporarily out of use due to a covered loss, until it is repaired or is declared a total loss. This type of coverage is automatically provided in the case of a theft loss under comprehensive coverage.

What is the difference between "cancellation" and "non-renewal" of a policy?

Under the Insurance Law, a personal automobile insurance policy must remain in effect for a required one year policy period. If an insurer decides not to renew the policy at the expiration of this period, this is a "non-renewal." However, if the insurer terminates the policy at any other time (which can only be done under limited circumstances), this is a "cancellation."

My auto insurance policy has been canceled! Can the company do this?

For any new personal automobile insurance policy, an insurer may cancel for any reason within the first 60 days subject to the insurer’s established underwriting guidelines which are not required to be filed with the Department of Financial Services. Otherwise, a policy can only be canceled in mid-term (after 60 days on a new policy) for a few specific reasons:

  1. suspension or revocation of a driver's license of the named insured or any other person who customarily operates an automobile insured under the policy (not including administrative suspensions);
  2. discovery of fraud or material misrepresentation in obtaining the policy or in making a claim; or
  3. nonpayment of premium. However, policies in the NYAIP (New York Automobile Insurance Plan a/k/a "assigned risk" plan), as discussed further in the section “Trouble Getting Coverage”, may be subject to certain additional criteria for cancellation.

My insurer says it won't renew my policy. What can I do?

Under the Insurance Law, when a non-commercial motor vehicle policy is non-renewed, a notice must be mailed to the policyholder between 45 and 60 days before policy expiration. In this way, the insured has time to take action to obtain other insurance, and may contact other agents, brokers or insurers writing direct business.

An insurer may non-renew (in each rating territory) up to 2% of its non-commercial motor vehicle policies, plus one policy for each two new policies written, during each calendar year. Any non-renewals by an insurer must be made according to the insurer’s established underwriting guidelines, which are not required to be filed with the Department of Financial Services. The Department closely monitors compliance with the aforementioned statutory 2% limitation via an annual report from private passenger automobile insurers.

Why am I in the "assigned-risk" plan, why is it so expensive, and how do I get out of it?

The NYAIP (New York Automobile Insurance Plan) is a mechanism through which consumers are assigned to an insurance company on an involuntary basis, if they cannot find an insurer in the voluntary market who will offer them a policy. The NYAIP consists of those policyholders which an insurer does not believe can be insured at a reasonable profit, generally because of poor driving records, having little or no prior driving experience, or having had a certain "frequency of claims."

The rates and availability of automobile insurance are established by a competitive insurance industry, based on verifiable loss experience data, and monitored by the Department of Financial Services. The rates for policies written through the NYAIP are generally higher, since the loss experience for these drivers, as a group, is consistently worse than the losses and expenses of those in the voluntary market.

If you are currently insured under the NYAIP, your insurer must continue to insure you for 3 years; however this does not limit you from looking to purchase another policy in the voluntary market at any time. New York State fosters an actively competitive voluntary automobile insurance marketplace, and we always encourage consumers to shop around to obtain the best available coverage and service at the most reasonable price. As insurance rates may vary considerably from one insurer to another, it definitely pays to shop around for automobile insurance if you are in the NYAIP or are not satisfied with your present insurer. You may contact several agents and brokers and those insurers that market their products directly to consumers.

Are my auto insurance rates affected by where I live?

Insurance rates are based upon the company's underlying costs, which include the number of claims and the severity of those claims. New York State is divided into many distinct rating territories filed by individual insurers to reflect differences in claim costs in those territories and other considerations. Traffic patterns, population demographics, and the cost of goods and services contribute to insured cost variations. For example, if Town A's loss experience is more severe than that of Town B, then auto premiums in Town A will be higher than those of Town B.

What discounts can I get on my car insurance?

There are a number of available discounts to help reduce the cost of an individual's auto insurance policy. Some of these are:

  • Accident prevention course.
  • Automatic seat belts or air bags.
  • Factory installed anti-lock braking system (ABS).
  • Anti-theft devices (such as alarm systems or ignition "cutoff" devices, certain electronic-tracking devices, or qualifying identifying window glass etching).
  • Participation in a Combat Auto Theft (CAT) Program.
  • Factory-installed daytime running lamps (DRL).
  • "Careful Driver" or "Accident-Free".
  • A "Multi-Policy" or "Account" discount.
  • Driver Training (for operators under age 21)
  • Multi-Car

Can my insurance company raise my premium due to an accident or traffic ticket?

Such an increase is known as a surcharge. Surcharges are based on the fact that a driver who has previously been at fault in one or more accidents, or has a record of traffic convictions, has an increased likelihood of being involved in future accidents.

Insurers "classify" drivers according to such criteria as age of driver, geographical location, mileage and type of vehicle. To further refine those classifications, many insurers use "merit rating plans," a point system in which increases are applied according to an individual driver's record (traffic convictions and accidents).

Surcharges are applied to liability (bodily injury & property damage), collision and no-fault (PIP) coverages, and are only allowed for:

  • accidents involving bodily injury, or losses to property in excess of $2,000, where the insured driver is at fault, or
  • convictions for certain violations which are chargeable under the Insurance Law.

A surcharge is used as a tool to properly price the exposure the insurer is writing, and not as a means to recoup payment made under a claim. The total dollar amount paid as the result of a claim does not affect the surcharge. An insured being surcharged for a particular accident will pay the same amount regardless if the damages were (for example) $3,000 or $50,000. In addition, a surcharge may apply if you have two or more accidents or minor convictions within a certain period of time (generally within approximately 3 years) which would not otherwise be surchargeable for only one instance as outlined above.

Why are auto insurance rates higher for younger drivers?

Insurance rates are based on the average experience of a group of persons with similar characteristics (classification). Young drivers historically have had poorer loss experience (both in the frequency of accidents and the cost of those accidents) than older drivers. By charging young drivers higher rates, those drivers pay their fair share of insurance costs and older drivers are not asked to subsidize them. In addition, rates are generally higher for males because, consistently, female drivers incur fewer and/or less severe claims than males.

Is my insurance company allowed to automatically include my son/daughter on my policy?

An insurer is permitted to consider all resident operators of an insured vehicle in the rating of an automobile policy, including a child, although he/she may only have a learner's permit. This is because insurers are permitted to use classifications that reflect a possible exposure for liability on the part of the insurer, in the event that bodily injury or property damage occurs due to that child's operation of the vehicle. Such a "limited use" classification, however, reflects the reduced likelihood of an incident due to "occasional" operation by a youthful driver, and is rated lower than if that person were the "principal operator." In addition, children living away at school (over 100 miles) are generally eligible for a reduced rate.

How do I know if I am being charged the right premium?

This Department responds to numerous requests annually by individual insureds regarding the amount of premium charged for their private passenger automobile insurance policies. In the overwhelming majority of cases, we have found that insurers have rated the policy correctly, assuming that the information on which the policy is being rated is correct. Therefore, it is important that you review your policy declarations page(s), to ensure that the information is correct. By law, an insurer is required to include a Rating Information Form with your policy, explaining the items shown on your declarations. The dollar amount of all discounts and surcharges must be shown on the policy declarations page as well.

My insurance company is rating me based on something (an accident or traffic ticket) that didn't happen. Where does this information come from and how can I correct any errors?

In addition to driving records from the Department of Motor Vehicles, automobile insurers may obtain information about your insurance and driving history from other sources. One such source is CLUE (Comprehensive Loss Underwriting Exchange), an information database used by insurers. This system, which functions similar to a credit reporting agency, gathers data from insurers regarding their past and present insureds' claim histories. When an insurer writes and/or rates a policy, it may request a report on an applicant/insured from this system. The insurer does have the right to pertinent information regarding any risk they may consider accepting, which includes information on accidents and/or traffic violations.

An insurer must notify you whenever CLUE has been used in making any decision or change regarding your policy. The insurer should also verify any information on which it bases its underwriting decisions, regardless of the source. In any case, if information in a CLUE report has been used against you, you may ask your insurer for more information on how to obtain a copy of your CLUE report.

What is a "deductible"?

A deductible is an amount that you agree to be responsible for in the event of a loss under the physical damage (collision or comprehensive) coverages of your policy. Deductibles are offered on some coverages to give insureds flexibility in the cost of insurance and the amounts they wish to be responsible for. You may reduce your auto insurance costs by raising the deductibles on physical damage coverages. You should review the amount of the deductibles you now carry on these coverages to determine whether it makes sense for you to absorb a larger portion of your loss in the event of an accident, in return for a lower premium charge. Under the law, your insurer is required to furnish you with information about how much you may save by adjusting your deductibles.

Am I protected by my insurance when I drive a rental car?

Your motor vehicle liability insurance policy covers you for bodily injury and property damage liability, as well as no-fault, when you drive a rental vehicle. However, this coverage is provided on an "excess" basis, which means that your policy will cover you if the amount of damage or loss exceeds the insurance coverage provided by the rental vehicle company. If the vehicle was rented in New York State, the rental vehicle company must provide the minimum required coverages (see above "How much insurance must I carry?").

A rental vehicle company may hold a renter responsible for damage to, or loss of, rental vehicles, including loss of use. However, your motor vehicle liability policy may provide this coverage, subject to certain exclusions in the policy and certain other exceptions (See Collision Damage Waivers (or Optional Vehicle Protection) and Rental Vehicle Coverage: Some Questions and Answers.). It is important to know that you as a renter may be held fully responsible for damage to a rental vehicle, unless "optional vehicle protection" coverage is purchased from the rental vehicle company, or you have insurance coverage under your motor vehicle insurance policy or through your credit card.

What if I don’t have a motor vehicle insurance policy when I rent a motor vehicle?

Rental vehicle companies in New York are required to maintain insurance or self-insure in the amount of the minimum liability limits specified in the law. However, people who frequently use vehicles that they do not own, such as for business use, or who rent cars often, may want to consider purchasing liability coverage above the minimum limits. Some insurers offer "Non-Owned Automobile Liability Coverage" policies, which provide bodily injury and property damage liability coverages to the insured individual.

Some rental vehicle companies are licensed as insurance agents to sell supplemental liability coverage, at higher limits than the amount provided by the rental vehicle company. In addition, other coverages may also be offered through the rental agency, such as accident and health and personal effects coverages.

What happens if I am injured by an uninsured vehicle?

Uninsured Motorists Coverage protects you, your family members who live with you, and occupants of your car, in the event they are injured as the result of negligent actions by an uninsured vehicle or hit-and-run motorist, in accidents occurring in New York State.

A claim may be filed with your auto insurance company under this coverage if anyone in your car is injured by the driver of an uninsured vehicle or a hit-and-run motorist, or if you or a member of your family is injured while in an uninsured vehicle, or injured as a pedestrian by an uninsured or hit-and-run motorist. If you do not own a car, but a relative in your household does, you may be covered under that policy. If no other coverage is available when injured as a pedestrian by an uninsured vehicle or hit-and-run driver or as an occupant of an uninsured vehicle in New York State, you may still be eligible for uninsured motorist protection from the Motor Vehicle Accident Indemnification Corporation (MVAIC).

You may also wish to consider purchasing SUM coverage in order to protect against out-of-state accidents, or the possibility of an accident involving another motor vehicle whose owner or operator was negligent and who may be insured for third-party bodily injury, but only at relatively low liability limits, in comparison to your own.