Learning about Insurance

Basics of Auto Insurance

Maryland is a MANDATORY INSURANCE STATE. Maryland Financial Responsibility Laws require you to carry at least a “statutory minimum limits” liability policy of auto insurance in order to legally register (obtain tags) and operate the vehicle on Maryland highways. The cost of auto insurance greatly varies depending upon several factors such as your age, past driving history including prior accidents and moving violations and your garaging location. Additionally, rates may vary from company to company.

Bodily Injury / Property Damage Liability

Bodily Injury coverage provides payments for bodily injury (medical bills and treatment as well as payment for pain and suffering) to persons injured as a result of an auto accident for which an insured is determined to be legally liable. Generally the claimants are the occupants of the other vehicle(s) involved in the accident; however, occupants of the insured vehicle may also avail themselves of this coverage (some limitations may apply).

The minimum statutory Bodily Injury Liability limits are as follows:

Up to $20,000 per injured person / $40,000 per accident maximum.

The maximum amount payable per accident applies regardless of how many persons are injured in any one accident.

Property Damage Liability coverage provides payment for damage which was caused to the property of others as a result of an accident for which you are determined to be legally liable. Generally, these are damages to the other vehicle(s) involved in the accident but is not limited to vehicle damage.

The minimum statutory Property Damage Liability limits are as follows:

Up to $15,000 per accident maximum.

The Maximum amount payable per accident for property damage is regardless of how many vehicles are damaged as the result of any one accident.

The above limits are usually stated in the policy as: BI/PD liability limits 20/40/15.

Uninsured Motorist Coverage

This coverage provides compensatory damages to you and your passengers if you or they are injured and/or incur property damage as the result of an accident for which the other driver is determined to be at-fault. In order to qualify for this coverage, the other driver must be either uninsured, operating an uninsured vehicle or has been denied coverage under their own policy of insurance and you are not considered at-fault or contributory negligent in the accident. Uninsured Motorist Coverage protects you and your passengers for the same types of losses as the BI/PD Liability Coverage. The major difference is that this coverage protects you and your vehicle or property.

The minimum statutory Uninsured Motorist coverage limits are as follows:

$20,000 per person/ $40,000 per accident for Uninsured Motorist Bodily Injury

and $15,000 for Uninsured Motorist Property Damages

Maryland law provides that claims made under the Uninsured Motorist Coverage are subject to a $250.00 deductible.

Personal Injury Protection (P.I.P.)

P.I.P. sometimes called Economic Loss Coverage provides payments for necessary medical expenses, income continuation and payment for essential services sustained by any insured who incurs a Bodily Injury as the result of an auto accident. These expenses must be incurred within three (3) years from the date of the accident. PIP is a NO FAULT coverage and is therefore payable regardless of who is at fault in the auto accident.

P.I.P. may be waived by the policyholder, which means that PIP payments would not be available to the named insured nor any household member of the named insured that is over the age of 16. However, PIP may be available for guest passengers and household member of the named insured that are under the age of 16. In order to elect this LIMITED PIP option, at a lower premium, you will be required to sign an AFFIRMATIVE WAIVER of PIP COVERAGE.

Penalties for driving without Mandatory Auto Insurance

Continuous Auto Liability Insurance must be maintained on all vehicles to be driven on Maryland highways. If insurance coverage is cancelled or expires while tags are still upon the vehicle, the owner will be penalized by a large fine ($150.00 for the first 30 days without coverage and $7.50 per day thereafter) and may also be subject to the following sanctions:

Confiscation of tags by Maryland State Police;
Barred from registering any future vehicles until all fines are paid;
Suspension of vehicle registration and withholding of registration renewal;
Payment of a registration restoration fee once fines are paid;
Five (5) Points on your Motor Vehicle Record upon conviction of driving while uninsured.
Disclaimer: The information contained in this site is intended to be informational only.   Please refer to the actual policy of insurance for specific coverage terms, conditions and provisions.   The actual policy of insurance supercedes all information contained herein.

What factors affect my Auto Insurance Premium?

Your Driving History

Your history of claims and traffic violations for the last three years plays a major role in determining your Premium. Drivers with more accidents and tickets will have higher premiums.

If you just got your license and began driving, an "Inexperience Surcharge" is applied for two years. After that period, the surcharge is removed.

Be a defensive driver, watch out for the other drivers and obey the speed limits. Cautious drivers can afford an extra minute or two, and can pay less in premium dollars.

Your Age, Sex and Marital Status

Statistics show that the frequency of accidents is higher for males than females. Teenagers have more accidents than adults do and single people have more accidents than married people do. Higher accident frequencies mean higher premiums. Your individual insurance rates will vary because of your age, sex and marital status.

Your Residential Location

Congested areas such as cities have heavier traffic and more accidents, thefts and vandalism. Consequently, these areas pay higher premiums than rural areas.

Type of Vehicle and Vehicle Use

Some vehicles cost more to repair than others do and therefore cost more to insure. Higher premiums are also the result of vehicle usage, such as business use and vehicle performance, such as turbo or other high performance engines.

What factors affect Premiums in general?

There are factors that drive up the cost of insurance claims, and raise premiums for everyone.

Theft & Fraud

Motor vehicle theft is the fastest growing crime in the nation. Fraud, a more sophisticated form of theft, is a major problem for insurers. According to the National Insurance Crime Bureau, fraud costs property and casualty insurance companies more than $20 billion a year, that's equal to 10 percent of all property and casualty claims paid industry wide.

Medical Costs

Rising medical costs are contributing to the increases in bodily injury liability claim costs. In general, medical costs have been rising at a 6% rate. On the other hand, advances in medical technology and improved rescue and life saving techniques result in fewer deaths, but this also drives up the cost of medical care.