Things to be Aware of Regarding Auto Insurance

Deductibles

A deductible is the amount of money you pay as part of any loss you suffer. When shopping for collision and comprehensive coverage, you should consider your deductible. For example, if you carry collision coverage with a $200 deductible and you suffer a $500 covered loss, you would receive $300 from your insurance company and you would be responsible for the remaining $200 of the claim.

If you choose a higher deductible on your comprehensive or collision coverage, your premium will be lower. However, you will need to pay more in the event of a claim.

The Alaska Automobile Insurance Plan

If you are unable to obtain automobile insurance from a private insurer, you may be eligible for coverage under the Alaska Automobile Insurance Plan. The plan assigns applicants to private insurance companies doing business in Alaska. For more information, call AIPSO at 1-800-227-4659.

Motor Vehicle Reports

For automobile and boat insurance, most insurance companies order a Motor Vehicle Report ( MVR) from the Division of Motor Vehicles for all drivers listed on your insurance application. The MVR will be used to verify any traffic violations, license suspensions, or revocations. Many auto insurers require you to name all licensed drivers in your household even if you do not intend to allow them to drive your vehicle. Your company may contact your previous insurance carrier and/or commercial reporting agencies. These organizations might contact you, your family members, neighbors, or employer.

Insurance for Rental Vehicles

Alaska Statute 21.89.020(f )(2)-(3) requires that your policy provide liability coverage at the minimum required liability limits when you rent a vehicle. Your policy must also extend your collision and comprehensive coverage to a rental vehicle. If you do not carry collision and comprehensive coverage, the company must provide the option for you to purchase coverage for physical damage to a rental vehicle.

Named Driver Exclusions

Before a company decides to insure you, it must consider the driving records of all members of your household. If one family member has a poor driving record, it could affect the auto insurance premiums for the whole family. Alaska law gives the named insured the right to specifically exclude a family member from coverage under the insurance policy. This is referred to as a named driver exclusion.

While it may be tempting to exclude a driver with a poor driving record from your insurance policy in order to reduce the premium (for example, if the driver is a student away at college for a large portion of the year), it is important that you be aware of the risks associated with the exclusion. Once a driver is specifically excluded from the insurance policy, any damages caused by that driver will not be covered by the insurance company. In the example above where a young driver is away at college, excluding the student from the parents’ insurance policy means that the student could not drive the parents’ car while home on vacation without becoming an uninsured driver. Similarly, the student would run the risk of being uninsured while driving any other car, such as one belonging to a friend. If an excluded driver drives without insurance, they would not only be in violation of the law, they would be exposing themselves and the named insured to a large, uninsured, liability.