Automobile Insurance 101

t the nearest dealer, as the cash for clunkers program has passed and is well on its way to helping you get the new car you’ve always wanted. The drive by the federal government to get people to swap their old inefficient cars is a landmark bill that aims to help the auto industry and auto owners themselves who may not be able to purchase new cars in exchange for better ones.
Hybrids even carry more help in terms of tax discounts as people go to dealers, exchange their old cars (that get recycled) for new energy efficient ones, getting tax discounts, what ore can auto owners ask for, it’s a win-win situation.

Many Insurance companies have announced that they are freezing rates for this year at least but a large portion of the total number of providers declined to do so sue to uncertainties with the current economy. People and businesses are both feeling the pinch of the stumbling economy and this might be reflected in the fact that car purchases have dwindled to almost zero, with that, the amount of policies sold are also falling. This is in view of other losses such insurance providers might have incurred and with some of the biggest names in finance and banking going into the red zone, times are getting rough indeed.
The need for adequate auto insurance cannot be emphasized more than with the statistics that show thousands die from auto accidents and millions of dollars in losses as a result if such incidents. Uninsured or underinsured drivers risk jail time for such crimes and with most not being able to afford ample coverage, it is becoming quite common.

Would you be willing to pay additional premiums on your car insurance? According to an article on ajc.com, Georgia Insurance Commissioner John Oxendine said he is considering the addition of fees on car and other forms of insurance to support trauma care services for car accident victims and others. This is because the state is desperately in need of more funding for trauma care services. And Oxendine says it makes sense since most trauma cases are a result of car crashes and work accidents.

There is opposition, of course, since insurance industry advocates argue that this would raise the costs and premiums of their products, as well as add new and unfair taxes to the industry. Since such fees are normally passed on to the consumers, it would be a double whammy for responsible citizens who religiously pay their taxes and get car insurance. Moreover, this fee would not be specific to car insurance, but may also apply to health insurance and worker’s compensation.

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In car insurance as in any other form of insurance coverage, there exists what is commonly called as the doctrine of utmost good faith which forms as the founding principle for the execution of any insurance coverage. This doctrine accentuates the reciprocal faith that exists between the insurer and the insured. This doctrine is based on two principles; Duty of Disclosure and Representations and Warranty.

Duty of Disclosure simply states that the insured is obligated by law to disclose to the insurer any information that will have an influence on the issuance of an insurance contract. Representations and Warranty is a declaration executed by the insured that all information provided to the insurer are true and complete to the best of his knowledge and understanding.