Consumer Frequently Asked Auto Insurance Questions
I’ve heard a lot about auto insurance in the news recently. What’s going on?
Beginning April 1, 2008, car insurance companies will begin setting their own rates. This means
that if you request quotes for the same coverage from several different companies, you will
receive different premium quotes from each of them. Even though companies will file their own
rates, the Commissioner of Insurance still must approve those rates.
For the past 30 years, all rates for car insurance were set by the Commissioner of Insurance
under what was known as the “fixed-and-established” system. Under this system, if you
requested a premium quote for the same coverage from different companies, each of those
companies would give you the same price for that coverage, unless you were eligible for a group
discount.
Will My Auto Insurance Coverages Change Under Competition?
The minimum coverages for a basic policy are still mandated by Massachusetts law and will not
change. The types of coverage you are required to purchase by law are called compulsory
insurance. The basic Massachusetts Auto Policy will remain exactly the same; however, many
insurance companies will offer new and additional coverages, higher limits and lower or waived
deductibles under certain circumstances.
A few of the new coverages companies will offer include:
¾ Replacement Cost Coverage – Some companies will pay the cost to replace your car if it is a
new model under a certain number of miles. You may also be able to extend the replacement
cost coverage for a longer period for an additional premium.
¾ Loan/Lease Gap Coverage – Often, consumers with auto loans and leases on new cars can
suffer financially if a loss occurs early on in the loan or lease because they are “upside-down” in
their loan or lease. Being “upside-down” means that, because of depreciation, you owe more in
loan or lease payments than the car is worth. For a modest additional premium, the insurance
company wi