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Commonwealth of Massachusetts Division of Insurance - PDF
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1 Commonwealth of Massachusetts Division of Insurance Joseph G Murphy, Commissioner CONTENTS: PAGE # How to Reach Us D-1 How to File an Insurance Complaint D-1 Frequently Asked Insurance Questions (FAQ s) D-3 Ways to Save on Your Auto Insurance D-6 Insurance Coverages (compulsory) D-7 Insurance Coverages (optional) D-8 Discounts D-11 Facts to Remember D-13 Consumer Brochures D-13 HOW TO REACH US: The Boston office of the Division of Insurance is located at: 1000 Washington Street Suite 810 Boston, Massachusetts Telephone Fax Main: (617) (617) Consumer Information: (617) (617) Springfield Consumer Hotline: (413) n/a Board of Appeals for Surcharge Appeals: (617) (617) Board of Appeals for Registry Appeals: (617) (617) Agents and Brokers Licensing Information: (617) (617) TDD: (617) n/a INSURANCE QUESTIONS & HOW TO FILE A COMPLAINT: The Massachusetts Division of Insurance maintains a Consumer Service Section which is available to help you. The Section provides consumers with general insurance information and advises them of their rights under the provisions of their policies, state laws and regulations. The Consumer Service Section responds to general consumer inquiries over the telephone during the hours of 8:45 a.m. and 5:00 p.m., Monday through Friday. The Consumer Service Section can be reached in Boston at or in Springfield at If a problem arises between you and an insurance company, agent or anyone licensed by the Division, the first step is to discuss the problem with your agent, if you have one. If your agent cannot resolve the problem to your satisfaction you can request assistance from the Consumer Service Section. However, you must file your complaint in writing. We can only help you obtain rights and benefits that you are entitled to under your insurance contract and the laws and regulations of the Commonwealth. We help consumers determine if we have any jurisdiction, and if not, let them know where help might be found. If your situation involves health insurance you should be aware that many health plans such as ERISA plans and self-funded plans are regulated by the federal government. The benefits coordinator at your place of employment can tell you what kind of a health plan you are in and direct you to the appropriate source of help. How to File:
2 In order to assist you, we must have your cooperation. We can discuss your situation over the phone or arrange a time for you to visit our office. Please include the following key information in your written complaint: 1. Your full name, daytime telephone number, and address. 2. If you are represented by an attorney or public adjuster. 3. The name of the insurance company and/or agents involved. 4. The type of insurance and any policy numbers and claim numbers involved. 5. The name, address and phone number of anyone at your insurance company or agency whom you have dealt with in trying to resolve your situation. 6. A brief description of your situation including the date of loss. 7. A brief description of the resolution that you are seeking. If you prefer, you can complete the Consumer Complaint Form provided by the Division. You may submit your complaint by postal mail, fax, or electronic mail. (To submit by electronic mail, log on to our website at: Please mail your request to: Division of Insurance Consumer Service Section 1000 Washington Street Suite 810 Boston, MA or Fax to: (617) or us at: After We Receive Your Inquiry: We will notify you when we receive your letter. We will then forward the material you sent to us to the applicable insurance company (agent, or other parties licensed by the Division), and require them to provide an answer to the questions you have raised. Once we have both your letter and the company s response, we will determine a course of action. Please keep in mind that we cannot intervene between attorneys and their clients, nor can we intervene in situations where another government service has jurisdiction, though we can help you find assistance. We understand that insurance matters can be complex, often confusing, and sometimes lead to frustration. While we cannot resolve all situations, we are happy to help.
3 Division of Insurance Automobile Insurance Frequently Asked Questions ARE THERE ANY SPECIFIC TIME LIMITS FOR AN INSURANCE COMPANY TO PAY FOR COLLISION OR COMPREHENSIVE CLAIMS? There are no specific time limits for the settlement of claims. Insurance companies are required by law to pay all claims in a prompt and reasonable amount of time. However, what constitutes prompt and reasonable may vary from claim to claim. Claims that require special or extended investigation may take longer to resolve. Inclement weather conditions often cause an increase in the number of claims filed and that can slow the process down as well. MY AUTO WAS DECLARED A TOTAL LOSS BECAUSE OF AN ACCIDENT. IS MY COMPANY REQUIRED TO GIVE ME THE REPLACEMENT COST? When your auto is declared a total loss, unless you made special arrangements and paid an additional premium, your insurance company will only pay you the actual cash value of the auto as of the date of the loss, not the cost to replace it. Your auto s value is determined by the following factors: the retail value for an auto of like kind and quality prior to the accident; the price paid for the auto plus the value of prior improvements to the auto at the time of the accident; the decrease in value of the auto resulting from prior unrelated damage which is detected by the appraiser or for which a claim has been paid; and the actual purchase cost of an available auto of like kind and quality. If your auto has substantial value because of its exceptional condition such as an antique, classic, or restored auto, you should have it appraised and then insure it for the appraised value. DO I HAVE TO PAY AN INSURANCE PREMIUM AFTER MY AUTO IS DECLARED A TOTAL LOSS? Yes, the auto is considered insured until the policyholder returns the license plates to the Registry of Motor Vehicles. If you don t have your license plate because your auto was stolen or because your auto and plates were burned in a fire, then you have to go the nearest Registry of Motor Vehicles office and obtain a lost or stolen plate(s) receipt and use that instead. You must give this receipt to your insurance company in order to cancel your policy and avoid paying any additional premium. MAY I KEEP MY AUTO IF I HAVE A COLLISION, LIMITED COLLISION OR COMPREHENSIVE CLAIM AND MY INSURANCE COMPANY DECLARES IT A TOTAL LOSS? No, your insurance company has the option to take title to your auto because it is entitled to any salvage value your auto may have. You can, of course, negotiate with your company to purchase your auto for the agreed salvage value.
4 THE BODY SHOP IS REPAIRING MY AUTO AFTER AN INSURED LOSS. WILL MY INSURANCE COMPANY PAY FOR USED OR NEW PARTS? If the repair of the damaged part impairs the operational safety of the auto, then the insurance company will pay to replace it with a new part. But, for non-safety parts, unless your claim occurs during the first year after your car was manufactured, you are not entitled to new ones. State regulation allows for the replacement of damaged parts with used or reconditioned parts as long as they are of like kind and quality. This means that a three-year old door will not get replaced by a brand new one. You can insist on new parts, but you will have to pay the difference in cost. AN OBJECT DAMAGED MY WINDSHIELD AND I AM UNABLE TO DETERMINE WHERE IT CAME FROM. AM I COVERED FOR THIS LOSS? Yes, if you have comprehensive insurance you are covered for the full amount of the loss, unless you opted for a $100 deductible for glass breakage. The $300, $500, or $1000 deductible, or whatever you may have selected for comprehensive coverage, does not apply to a glass loss. CAN MY INSURANCE COMPANY DENY A CLAIM FOR DAMAGES TO MY AUTO IF THE PRINCIPAL PLACE OF GARAGING LISTED ON MY APPLICATION IS FALSE? Yes. If you or someone on your behalf gives false, deceptive, misleading or incomplete information in any application and if such information increases the insurance company s risk of loss, then your company may refuse to pay claims under any or all of the Optional Insurance Parts of the policy. Such information includes the description and place of garaging of the vehicles to be insured, the names of the operators required to be listed and the answers given for all listed operators. In the event that you have moved since you filled out your initial application, promptly notify your insurance company and the Registry of Motor Vehicles of your new address. IS MY INSURANCE COMPANY REQUIRED TO NOTIFY ME OF ITS DECISION TO CANCEL MY POLICY? Yes. Your company must send you a notice at least 20 days prior to the effective date of the cancellation. A notice sent by regular mail with a certificate of mailing receipt obtained from the Post Office is considered sufficient. A certified or registered mail with a return receipt is no longer required. WHAT CAN I DO IF I ACTUALLY RECEIVE A CANCELLATION NOTICE? You can pay the exact amount called for on the notice or, if you feel that the cancellation is unjust, you may submit a written complaint to the Board of Appeals at One South Station, Boston, MA This must be done prior to the effective date of cancellation. WHO IS LIABLE FOR THE STORAGE CHARGES ON MY DAMAGED AUTO WHEN THERE IS A DISPUTE AS TO THE AMOUNT OF THE CLAIM PAYMENT? The insurance company is responsible for paying storage charges until it makes a reasonable offer to settle the claim. However, if the consumer disputes the amount offered and the company revises its offer, this does not necessarily mean that the original offer was unreasonable. Disputes over what is reasonable can be resolved with your company through the process described in your insurance policy. You can also submit a written complaint to the Division of Insurance if you are unable to settle the dispute.
5 MAY AN INSURANCE COMPANY REQUEST A DOWN PAYMENT IN ADVANCE WHEN I PURCHASE OR RENEW AN AUTO INSURANCE POLICY? AND IS IT POSSIBLE TO PAY MY PREMIUM MONTHLY? Your insurance company may request up to a 30 percent down payment of the annual premium prior to the renewal or issuance of your policy. Most companies do offer a monthly type payment plan for the balance of the premium or something similar. You should check with your company to see what options are available to you. IF I OWN AN AUTO WITH COLLISION AND COMPREHENSIVE COVERAGE, WILL MY INSURANCE APPLY TO THE RENTAL OF ANOTHER PRIVATE PASSENGER AUTO? Yes. Your collision and comprehensive insurance are transferable to a substitute rented or borrowed private passenger auto that is damaged while it is being operated by you and by members of your household. There is no coverage under your policy for family friends or significant others. You should be aware that your coverage is available only if you rent or borrow a private passenger auto in the United States or Canada. You should also be aware that your policy does not provide coverage for borrowed or rented trucks. If you are renting a truck, you should check with the rental company regarding the purchase of collision and comprehensive insurance. If you are borrowing a truck, make sure you determine whether or not the owner has purchased collision or comprehensive coverage. If the owner does not have insurance, you may be personally liable for any damage to that truck which is the result of your negligent operation. Last, if the use is for business rather than pleasure, call your agent first. Business use is usually not automatically covered. In any event, remember that the coverage is for what is basically a substitute vehicle, not an additional one. The Automobile Insurance Questions & Answers were compiled to help consumers answer some of the most frequently asked questions about automobile insurance. Additional questions or comments should be made to: The Commonwealth of Massachusetts, Division of Insurance, Consumer Service Section, 1000 Washington, Street Boston, MA Consumer Service Line-Boston: (617) ; Springfield (413)
6 Division of Insurance Ways to Save on Automobile Insurance Massachusetts drivers can save money and minimize their risk of financial loss by evaluating their coverage needs before buying or renewing their automobile insurance policies. This guide is offered as one tool to help you decide how much insurance you need to buy, and how you can save money. It is designed to correspond to the Coverage Selections Page provided by your insurance company. Follow along to decide the amounts of compulsory coverage and which optional coverages are best for you. Your insurance company or agent can also provide assistance with further questions you may have regarding coverages. The Division of Insurance is open from 8:45 a.m. to 5:00 p.m. to provide assistance to you whenever you have consumer concerns. CONTENTS: COVERAGES Compulsory Insurance 1. Bodily Injury to Others 2. Personal Injury Protection 3. Bodily Injury Caused By An Uninsured Auto 4. Damage to Someone Else s Property Optional Insurance 1. Optional Bodily Injury to Others 2. Medical Payments 3. Collision 4. Limited Collision 5. Comprehensive 6. Substitute Transportation 7. Towing and Labor 8. Bodily Injury Caused By An Underinsured Auto Safe Driver Insurance Plan Calculating Your SDIP Step Save With Credit Points Surcharge Points Costs You Money and Increase Your Premium More Than One Car or Driver on a Single Policy Application of At-Fault Accident Surcharges to Your Record Appealing an At-Fault Accident Surcharge
7 Discounts Age 65 or Older Passive Restraint Annual Mileage Anti-theft Multiple Cars Drivers Education Public Transit Rate Deviation Group Discounts FACTS TO REMEMBER Coverages Coverages You Must Buy: Compulsory Insurance 1. Bodily Injury to Others Pays for damages (e.g. medical expenses, pain and suffering) to anyone injured or killed by your car only in an accident that occurs in Massachusetts, up to a basic limit of $20,000 per person and $40,000 per accident. Injuries to the driver or passengers in your car are not covered under this Part; please refer to Personal Injury Protection (Part 2) for information about that coverage. If you drive outside of Massachusetts or in places where the public has no right of access, or if you drive with passengers in your car, please see Optional Bodily Injury to Others (Part 5), for coverage that will protect you in such situations. You could be sued for much more than the required ($20,000/$40,000) limits for Bodily Injury to Others. Buying higher limits under the Optional Bodily Injury to Others (Part 5) coverage may protect you from large losses. The limits you select will depend on your personal financial situation; limits of $100,000 per person, $300,000 per accident are commonly selected. 2. Personal Injury Protection (PIP) Pays up to $8,000 to you or anyone you let drive your car, anyone living in your household, passengers and pedestrians, no matter who causes the accident. Personal Injury Protection pays for medical expenses, replacement services, and 75% of any lost wages. You can save on your premium by excluding yourself, or yourself and household members, from some or all of this coverage. You should consider this option if you have a medical and disability income plan. The portion of each claim you have agreed not to be covered for is called a deductible. Your health insurance may not cover all of your medical expenses from an auto accident such as cosmetic and dental services, co-payments and deductibles. Also, your disability policy may have long waiting periods. The small savings from the larger deductible may not be worth it. The driver and passengers, while riding a motorcycle, are not covered by PIP. However, the owner of the motorcycle must purchase this coverage to protect other people who may be injured by the motorcycle. Note: PIP covers owners of cars and motorcycles, and members of their households, if they are injured while occupying or struck by a car that does not have Massachusetts Compulsory Insurance.
8 3. Bodily Injury Caused By An Uninsured Auto Protects you, anyone you let drive your car, household members, and passengers (unless covered by a Massachusetts auto policy of another household member with similar coverage) against losses caused by an uninsured or unidentified ( hit and run ) driver. A minimum limit of $20,000 per person and $40,000 per accident is required. This coverage does not pay for property damage or damage to your car. 4. Damage to Someone Else s Property Pays for damage to another person s property and costs associated with the loss of use of that property when you, a household member, or another authorized driver cause an accident. A minimum limit of $5,000 is required. With the rising costs of automobile and property repair, it may make sense to purchase more than the required $5,000 minimum limit. This can be done at minimal cost. Limits of $50,000 or $100,000 are frequently purchased. Note that only 3% of all drivers purchase the $5,000 minimum. Coverages You Can Buy: Optional Insurance 1. Optional Bodily Injury to Others Extends your liability protection (the basic $20,000/$40,000 limits under Bodily Injury to Others) up to the amount you purchase under this part. This option provides coverage for accidents beyond Massachusetts to anywhere in the United States, its territories or possessions, and Canada. This coverage also pays for damages suffered by guests in your auto. Your car is only covered in the U.S. and Canada. Your car is not covered in any other country. You could be sued and may be liable for much more than the $20,000 per person and $40,000 per accident limits required under Bodily Injury to Others. Buying higher limits under the Optional Bodily Injury to Others coverage may make good sense if you have assets you wish to protect. Limits of $100,000/$300,000 are commonly selected. 2. Medical Payments Covers medical expenses for you, your household members and passengers, over and above amounts covered by Personal Injury Protection no matter who caused the accident. The minimum amount you can buy is $5,000 if insuring an automobile and $500 if insuring a motorcycle. 3. Collision Pays for collision damage to your car, less any applicable deductible, no matter who causes the accident. If your car is financed, your lender may require you to buy this coverage and may even require a particular deductible amount. Your deductible will be set at $500 unless you select a different amount. You can always save on your premium by choosing a larger deductible where one is offered. In determining the amount of deductible that is right for you, decide how much you can afford to pay out of your own pocket in the event of an accident or loss in which you are at fault, or the other driver is unidentified. The deductible you choose is the amount you should expect to pay if you use this coverage option. Information regarding Selecting Your Deductible also applies to Limited Collision coverage (Part 8) and Comprehensive coverage (Part 9). Waiver of Deductible: Buying Collision coverage with a waiver of deductible means that the collision deductible you choose will not apply when an accident is caused by another identifiable driver. This is most helpful when there is an uninsured, identifiable driver. If you are in an accident caused by another identifiable driver who is insured,
9 their (Part 4) coverage damage to Someone Else s Property will pay your automobile s damages to the limit they purchased. You will not have to pay the deductible. Find out what your car is worth today. If you have a car of low dollar value, it may be a wise economic choice not to buy the Collision and Comprehensive coverage unless a lender requires it. However, if your automobile has substantial value because of its exceptional condition, such as an antique, classic or restored automobile, you should have it appraised and then consider insurance coverage in light of the appraised value. 4. Limited Collision Pays for collision damage to your car. You must not be more than 50% at fault, and the owner of the other vehicle must be identifiable. 5. Comprehensive Pays for damage to or loss of your car, less any applicable deductible resulting from perils such as fire, theft and vandalism, but not collision. This coverage includes up to $30 a day (up to a limit of $900) for substitute transportation (car rental or other transportation costs including taxi, bus and train fare) until your stolen auto is recovered. Personal property is not covered unless it is permanently installed in your car, such as a tape deck. If your car is financed, your lender may require this coverage. If your automobile is stolen, you must report it to the Police and your insurance company. You will be reimbursed for transportation costs after the first 48 hours following the report. You may be denied Comprehensive coverage or required to pay a higher extra risk rate if you own a high theft vehicle which does not have a qualifying anti theft or recovery device. Coverage may be denied or priced higher under certain other conditions. Your Collision, Limited Collision, and Comprehensive coverage will apply to any other car you rent or use with the consent of the owner, except a vehicle owned or regularly used by your spouse or a household member. 6. Substitute Transportation Reimburses up to $30 a day for car rental or transportation costs including taxi, bus and train fare (up to $900), while your car is undergoing collision or covered repairs. Coverage of $45 a day (up to a limit of $1,350) is available for an additional cost. Even if you have this coverage, some car rental agencies may refuse to rent to you if you are under a certain age, are a poor credit risk, do not have an acceptable credit card, or have an unacceptable driving record. If you can afford to take a cab or rent a car when your car is in the shop for collision repairs, you may not need Substitute Transportation coverage. 7. Towing and Labor Pays up to $25 for towing and labor charges each time your car breaks down whether or not there is an accident involved. You are covered only for the on site labor costs at the breakdown site (not any parts) needed to get your car running again. Coverage of up to $50 per disablement is available for additional cost. If you belong to a Motor Club, you probably do not need this coverage since many Motor Clubs services include towing and labor. 8. Bodily Injury caused by An Underinsured Auto Pays for bodily injury damages to you, household members and passengers, unless they have a policy of their own, or are covered by a Massachusetts auto policy of another household member with similar coverage. The accident must be caused by someone without enough bodily injury coverage. It pays you up to the difference between the total amount collected from the bodily injury liability insurance covering the owner and driver of the other car, and the limits you purchased for this coverage.
10 Many people buy only minimum required amounts for Bodily Injury to Others, selecting higher limits may protect you from incurring high personal injury expenses. You may purchase coverage up to, but not more than, the limits of the Bodily Injury to Others coverage you carry. This coverage will not pay for damage to property.
11 Discounts Age 65 or Older Discount A 25% discount off of the premium for all coverages will be applied after all other discounts and rating factors but prior to the application of the Safe Driver Insurance Plan rating step if 1) the principle operator is 65 years or older and 2) there are no inexperienced drivers (0-6 years of driving experience), and 3) the automobile is not customarily used in business. Passive Restraint Discount A 25% discount off of the premium paid for Parts 2, 3, 6 and 12 is available if your automobile is equipped with an air bag or automatic seat belts. Annual Mileage A 10% discount off of the premium paid for Parts 1-8 and Part 12 is available if your estimated annual mileage falls between miles. A 5% discount off of the premium paid for Parts 1-8 and Part 12 is available if your estimated annual mileage falls between miles. Note: Antiques are not eligible for this discount. Anti-theft Discount Anti Theft Discounts of up to 35% off of the premium paid for Part 9 are available for automobiles with various types of qualifying anti theft devices. Your insurance company or agent can provide you with a list of the qualifying anti theft devices and the corresponding discounts available. Multiple Cars Discount A 5% discount off of the premium paid for Parts 7 & 8 is available if: 1. an individual or married couple own two or more automobiles insured by the same company; and 2. there are no inexperienced operators. The discount applies only to automobiles that: 1. have no listed inexperienced operators; and 2. are not customarily used in business Drivers Education A 10% discount off of the premium paid for Part 1, 2, 4, 5, and 7 is available for the first 3 years after an inexperienced driver has completed an approved training course. Public Transit A 10% public discount off the premium paid for Parts 4 and 7 (up to a maximum of $75 per eligible vehicle) is available if: 1. you provide your insurer with evidence of purchase of 11 months of commuter passes from qualified transit systems; and 2. you do not drive your automobile to work or school more than 10 days or more per month. Your insurance company or agent can provide you with a list of the qualified transit systems. Rate Deviation Many insurance companies have been offering discounts to their existing policy holders by filing requests with the Commissioner of Insurance to deviate from the basic insurance rate. These discounts have been offered primarily to the Commonwealth s safe drivers, particularly to those at SDIP steps nine through twelve.
12 Check with your agent to see if your insurance company has been approved to offer discounts to its safest drivers. If you are eligible for both a group discount and a safe drivers discount, you can take advantage of both! Group Discounts In recent years insurers have been offering more and more group discounts. Consumers should consider the following: 1. Group plans are not guaranteed to be renewed, or to be renewed at the current discount level. 2. Groups may be discontinued if after one year of operation the group does not have 35% of the eligible members participating, or after three years has a loss and expense ration that makes the group non-profitable. 3. Consumers buying personal umbrellas need to be sure the insurer of the group auto plan is acceptable to the umbrella insurer. 4. If a group is discontinued by either the insurer, the group sponsor, or the Division of Insurance, policies will usually remain in force until the expiration date. An exception would be rare such as the insolvency of the insurer.
13 Facts to Remember Massachusetts law required a Mandatory Pre-Insurance Inspection of used private passenger motor vehicles prior to providing coverage for Collision, Limited Collision, or Comprehensive (Parts 7, 8 or 9). In some cases, the required inspection may be deferred for seven calendar days (not including legal holidays). If your auto is not inspected within the required time period, these coverages will be automatically suspended. Your premium will be adjusted if the suspension lasts for more than ten days. If you cancel your insurance policy, no refund will be issued until your insurance company receives a receipt showing that your license plates have been returned to the Registry of Motor Vehicles. It is your responsibility to make sure that your safety inspection sticker and your registration plates are current. If you fail to renew on time, you may be fined and surcharged. You must pay your premium to avoid cancellation of your insurance. On the effective date, cancellations are electronically reported to the Registry of Motor Vehicles. If you travel outside of Massachusetts to another state or to Canada, it is a good idea to have your insurance policy or proof of insurance with you. Your agent or insurance company can provide these forms. If any of your children who are household members obtain a driver s license you must notify your company within 60 days of that date. You must list all licensed household members and any other licensed person who will customarily operate your auto. If you or someone on your behalf gives your insurance company false, deceptive, misleading or incomplete information concerning the description and place of garaging of the vehicles to be insured, the names of operators required to be listed and the answers given for all listed operators, your insurance company may refuse to pay your claims under any and all of the Optional Insurance Parts of your policy. Division of Insurance Consumer Brochures & Special Listings Consumer Brochures If you would like copies of our brochures, please our consumer mailbox. In your request, please be sure to include your name, address, and the name of the brochure that you wish to receive. Below is a list of brochures that are available to you. The Ways to Save on Your Massachusetts Automobile Insurance and Appealing Your Motor Vehicle Accident SDIP Surcharge brochures are available online. Title Ways to Save on Your Massachusetts Automobile Insurance Appealing Your Motor Vehicle Accident SDIP Surcharge The Massachusetts Guide To Health Insurance For People With Medicare The New Nongroup Health Insurance Plans in Massachusetts