Texas Department of Insurancewww.tdi.state.tx.us - Consumer Helpline 1-800-252-3439
Shopping SmartTips for Texans Purchasing Auto, Homeowners & Renters Insurance(Revised March 2006) It Pays to Shop Around Taking time to shop for insurance can reward you with better prices and better service. One insurance company´s rates could be hundreds of dollars lower than another company´s for policies with similar coverages. This publication provides tips that can help you reduce your premium and get a better deal on automobile, homeowners, and renters insurance. Cost shouldn´t be your only consideration, however. You should choose companies that provide good customer service and are financially stable. It´s also important to buy from licensed insurance agents and companies. Policyholders of licensed companies are protected by guaranty associations, which pay claims if a licensed company becomes insolvent. If you have insurance from an unlicensed company that becomes insolvent, there´s no guaranty association to protect you, and your claims might go unpaid. You can learn information about companies, including their complaint history, financial rating from an independent rating service, and license status by calling TDI´s Consumer Help Line or viewing company information on our website. Know Your Rights! All auto and homeowners policies in Texas must include a "Consumer Bill of Rights," which explains your legal rights and responsibilities. Read it carefully. You can also view the Consumer Bills of Rights for both types of policies on the Office of Public Insurance Counsel website www.opic.state.tx.us Having Trouble Finding Insurance? The following free program may be able to help you if you´re having trouble finding homeowners insurance from licensed companies: Texas FAIR Plan Association The Texas FAIR Plan Association provides residential property insurance to qualified consumers. To be eligible for coverage, you must have been denied insurance by at least two licensed insurance companies actually writing residential property insurance in Texas and may not have received a valid offer of comparable insurance from a company licensed in Texas. Coverage is the standard Texas HO-A policy form. For more information, call the Texas FAIR Plan Association or visit its website 1-800-979-6440 Shopping Smart: Four Quick Tips
Auto InsuranceMost companies writing Texas auto policies fit into one of three categories:
Texas Requires Proof of Financial Responsibility! If you drive in Texas, you must show you can pay for accidents you cause. Most Texas drivers do this by buying auto liability insurance. Types of Automobile Coverages Liability Insurance pays for injuries to the other party and damages to the other vehicle. It covers accidents that are caused by you or anyone covered by your policy, including a driver operating your car with your permission. Your policy must pay at least $20,000 per person for injuries and deaths, up to $40,000 for all victims of an accident, and up to $15,000 for property damage. Uninsured/Underinsured Motorist (UM/UIM) Coverage pays for your injuries and property damage caused by a hit-and-run driver or a motorist without liability insurance. UM/UIM also pays when your medical and car repair bills are higher than the other driver´s liability coverage. Medical Payments & Personal Injury Protection (PIP) both pay limited medical and funeral expenses if you, a family member, or a passenger in your car is injured or killed in a motor vehicle accident. PIP also pays lost-income benefits. Collision Coverage pays for damage to your car without regard to who caused an accident. The company must pay for the repair or up to the actual cash value of your vehicle, minus your deductible. Comprehensive Coverage (Physical Damage Other than Collision) pays for damage to or loss of your automobile from causes other than accidents, such as hail, vandalism, flood, fire, and theft. Towing & Labor Coverage reimburses you for towing charges when your car must be towed to a repair shop or other destination. Rental Reimbursement Coverage pays a set daily amount for a rental car if your car is being repaired because of damage covered by your auto policy. Shopping for Auto InsuranceWhen shopping for an auto policy, remember
If you have a clean driving record, avoid using agents who advertise for high-risk business such as drivers with traffic convictions. The rates you will get through these agents will likely be higher. If a company turns you down, keep shopping. Different companies have different criteria for accepting drivers for coverage. If you can´t find auto insurance from a licensed company, you might be able to buy coverage through the Texas Automobile Insurance Plan Association (TAIPA). TAIPA provides basic liability insurance, personal injury protection, and uninsured/underinsured motorist coverage to drivers rejected by insurance companies. TAIPA does not cover your car against theft, damage, or destruction. TAIPA rates are higher than those of most standard companies, but may be lower than the rates charged by county mutuals for high-risk drivers. Make Sure Your Coverage Fits Your Needs Don´t buy more coverage than you need. Compare the cost of your annual premium against your car´s Blue Book value, minus your deductible. If you´re paying more in premiums than it would cost to replace your car, consider dropping collision and comprehensive coverage. If you still owe money on your car, however, your lender will require you to maintain full coverage. You may be able to drop some coverages and lower your premium. You may not need personal injury protection (PIP) or medical payments coverage if you have health and disability insurance. Remember, though, that PIP and medical payments also cover other people if they are injured while in your car. If you belong to an automobile club, you may already have towing and labor coverage and don´t need it in your policy. Installment Plans Insurance companies and TAIPA must offer installment plans that allow you to pay your premiums over a period of time. Agents and insurers often use premium finance companies, which lend money at high interest rates to pay insurance premiums. Look for companies that offer their own installment plans. If you choose to pay with an installment plan, make sure you understand who is providing the plan, what the interest rate is, and the number and amount of payments you´ll have to make. An insurance agent must tell you if your installment plan is with a premium finance company and tell you the premium finance company´s name. If you buy insurance through TAIPA, an agent who offers a premium finance company loan must provide you a disclosure form comparing it with TAIPA´s installment plan. Lowering Your Premium by Increasing Your Deductible You can also lower your auto premiums by raising your deductible. Be aware, however, that if you raise your deductible, you´ll have to pay more out of pocket before your policy pays. Ask about Discounts You may be eligible for discounts on your auto insurance. The amount will vary by company. Ask your agent if you´re eligible. Following are some of the discounts commonly available in Texas:
Homeowners InsuranceInsurance companies may sell several types of homeowners policies in Texas, each with a different level of coverage. Three of the policy forms available -HO-A, HO-B, and HO-C- are standardized. This means the policy language and coverages are the same, regardless of the company writing the policy. Keep in mind, however, that although an HO-B policy written by one company will provide exactly the same coverages as an HO-B policy written by another, the two companies may charge widely different rates. Companies may also offer alternative policy forms. These policies are not standardized and usually provide varying coverages. Read your policy carefully to know exactly what coverages are included. If a company offers you a policy with less coverage than you´d like, ask if other policy forms are available. You also may be able to add additional coverage by buying endorsements to the base policy. Following is a brief description of the types of homeowners policies sold in Texas:
Generally, HO-B policies provide the most coverage for the price, but some companies do not offer them. For a comparison of the policy forms approved for sale in Texas, visit the Office of Public Insurance Counsel´s website. Shopping for Homeowners Insurance When shopping for a homeowners policy, remember that your premium will be based on several factors, including where you live, the level of fire protection available, the construction type of your home (brick or frame), the type of policy you purchase, and the amount of coverage you buy. If a company turns you down, keep shopping. Different companies have different criteria. If you can´t find homeowners insurance from a licensed company, you may be able to find insurance through the Texas FAIR Plan Association. If you´re still unable to find insurance, your last resort might be an out-of-state company not licensed in Texas, but legally eligible to sell insurance on a surplus lines basis. Surplus lines companies generally charge more than licensed companies and often offer less coverage. In addition, there is no guaranty association to cover their policies if they become unable to pay their claims. Before you buy a surplus lines policy, make sure there are no other options. Agents must make a "diligent effort" to find coverage with a licensed company before offering you a surplus lines policy. Ask which licensed companies turned you down, and why. Companies must explain rejections. Make Sure Your Coverage Fits Your Needs Buy enough coverage to avoid a major financial loss if your home is badly damaged or destroyed. This means keeping a realistic dollar amount of coverage on your house. Replacement Cost Coverage Insure your home´s replacement cost, not its market value. The market value may be higher or lower than the cost to rebuild your home. With replacement cost coverage, you can rebuild your home on the same lot at current local construction costs if it is destroyed. HO-A does not provide replacement cost coverage, but you may be able to add it with an endorsement for additional premium. Companies use various methods to determine the estimated replacement cost of your home. Be prepared to answer questions about your home´s square footage, number of bedrooms, and number of bathrooms. Inform the agent of any custom features that are part of the dwelling. When calculating your home´s replacement cost, deduct the value of the land, foundations that are below the surface of the ground, and other items such as landscaping and lawn sprinkler systems. Construction costs change, so it´s wise to update your coverage amounts annually. What about My Furniture? Household contents are automatically covered only for their actual cash value. Actual cash value is the replacement cost minus depreciation. You can buy replacement cost coverage for your possessions as an endorsement. Homeowners policies offer very limited coverage for valuables like jewelry, furs, cash, and stamp and coin collections. You can buy separate endorsements to increase your coverage. Lowering Your Premium by Increasing Your Deductible Texas homeowners policies generally carry a basic deductible of 1 percent of the insured value of the dwelling. Deductibles are available as high as 5 percent and as low as $100, although not all companies offer deductibles that low. Keep in mind that if you raise your deductible, you´ll have to pay more out of pocket for repairs and replacement before your policy pays. Ask about Discounts Companies may offer premium discounts if you take steps to reduce the chances of a loss. Each company sets the amount of the discounts it offers. Following are some of the more common discounts available:
Tips for Renters Your landlord´s insurance will not cover your personal belongings in the event of a fire or theft. Renters insurance covers stolen, damaged, or destroyed household goods and personal property and also provides liability coverage. There are two standard renters insurance policies:
When shopping for renters insurance, keep in mind that renters policies
Consumer ComplaintsIf you believe an insurance company has treated you unfairly, you may file a complaint with TDI´s Consumer Protection Division. Before you contact TDI, however, contact your company. Most companies operating in Texas are required to have a toll-free telephone number to provide customer assistance. The number should be listed in your policy. Your Rights Against Unfair Discrimination An insurance company may not deny, refuse to renew, limit, or charge more for coverage because of your race, color, religion, or national origin. A company also may not deny, refuse to renew, limit, or charge more for coverage because of your age, gender, marital status, geographic location, disability or partial disability, unless the refusal, limitation, or higher rate is "based on sound underwriting or actuarial principles." This means the company must show valid evidence that you present a greater risk for a loss than others it is willing to insure. In addition, a company may not discriminate between individuals of the same rate class and essentially the same risk in its rates, policy terms, benefits, or in any other manner unless the refusal, limitation, or higher rate is "based on sound actuarial principles." If you think you have been a victim of unfair discrimination, file a complaint with TDI. The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company. For More Information or AssistanceFor answers to general insurance questions or for information about filing an insurance-related complaint, visit our website or call the Consumer Help Line between 8 a.m. and 5 p.m., Central time, Monday-Friday www.tdi.state.tx.us For printed copies of consumer publications, call the 24-hour Publications Order Line 1-800-599-SHOP (7467) Help us prevent insurance fraud. To report suspected fraud, call our toll-free Fraud Hot Line 1-888-327-8818 To report suspected arson or suspicious activity involving fires, call the State Fire Marshal´s 24-hour Arson Hot Line 1-877-4FIRE45 (434-7345) The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company. For more information contact: ConsumerProtection@tdi.state.tx.us Last updated: 03/09/2006 |
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