Maryland Auto Insurance

Liability Coverage

Section 17-103 of the Maryland Transportation Code mandates that drivers must have automobile liability insurance to operate a vehicle legally. This requirement ensures that all drivers have a minimum financial responsibility in case of accidents. The primary coverage includes:

• A minimum of $30,000 for bodily injury coverage per individual involved in an accident
• A total of $60,000 for bodily injury coverage per accident, regardless of the number of individuals injured
• At least $15,000 in property damage coverage per incident

Bodily Injury Liability Coverage

This coverage comes into play when a policyholder is at fault in an accident resulting in injuries to others. In such cases, the insurance provider will handle claims or lawsuits up to the specified policy limits.

However, it is critical to understand that these limits represent the maximum amount the insurer will pay out. Any costs exceeding these thresholds or claims falling outside the policy's scope become the policyholder's responsibility.

Property Damage Liability Coverage

This coverage protects policyholders when they cause accidents that result in damage to others' property. Insurance providers will handle claims or lawsuits up to the purchased coverage limits. However, if a claim exceeds the policy limits or falls outside the policy's scope, the policyholder may face personal financial liability for the excess amount.

This coverage often extends beyond the policyholder to include family members under specific circumstances. Generally, family members are covered if they are listed on the policy as drivers, operating the insured vehicle occasionally with permission, and not explicitly excluded by the policy terms.

However, coverage details can vary. Hence, policyholders need to understand the extent of their protection.

Uninsured Motorist (UM) Coverage

UM coverage provides protection for individuals when they encounter drivers without insurance who cause property damage or personal injury. It also extends to hit-and-run incidents where the responsible party remains unidentified.

It encompasses a range of compensations, including property repairs, medical expenses, lost wages, and pain and suffering. It also incorporates underinsured motorist (UIM) protection. This additional layer of coverage becomes relevant when an at-fault driver's liability limits are insufficient to cover the injured party's damages.

Personal Injury Protection (PIP)

PIP is an insurance component that covers certain lost income and medical expenses resulting from auto accidents, regardless of who is at fault. In Maryland, the law mandates a minimum PIP coverage of $2,500.

Policyholders have options regarding PIP coverage. Full PIP extends protection to all insured drivers and household residents over 16 years old, while Limited PIP allows individuals to exclude specifically listed drivers and family members from this coverage. Notably, policyholders retain the option to waive this coverage if they choose to do so.

Physical Damage Coverage

This coverage shields vehicle owners from financial losses associated with damage to or theft of their vehicles, including accidents for which they are responsible.

While not mandated by Maryland law, this type of coverage is often required by financial institutions that provide auto loans or leases. This requirement ensures that the vehicle, which serves as collateral for the loan or lease, is protected against a wide range of potential risks, from accidents to theft and vandalism.

Collision Coverage

Collision coverage provides financial protection for vehicle repairs or, in the case of a total loss, reimburses the owner with the vehicle's fair market value before the accident. This coverage applies when a vehicle is involved in a collision or overturns, irrespective of who is at fault.

This type of coverage typically represents the most substantial portion of an auto insurance premium. To manage costs, many policyholders opt for higher deductibles, which generally result in lower premium payments.

Alternatively, choosing a lower or zero deductible would reduce the driver's out-of-pocket expenses for repairs but would correspondingly increase their regular premium payments.

Comprehensive Coverage

Comprehensive coverage, sometimes called "acts of God," safeguards against property damage to the insured vehicle resulting from non-collision incidents. This typically includes protection against events such as floods, theft, vandalism, glass breakage unrelated to accidents, and collisions with animals.

It provides a safety net for various unpredictable circumstances that could damage the vehicle but usually also involves a deductible.

Penalties for Driving Without an Auto Insurance in Maryland

Sections 17-106 and 17-107 of the Maryland Transportation Code outline the state's penalties for driving without auto insurance. The penalties are structured to escalate over time. Initially, vehicle owners face a $200 fine for the first month of non-compliance. Subsequently, a daily charge of $7 is applied, with the total annual penalty capped at $3500 per uninsured vehicle.

The state suspends the vehicle's registration in addition to financial penalties. Driving a vehicle with suspended registration risks impoundment and additional fines or citations. If owners fail to respond to insurance notifications from the MVA, their case is escalated to the Central Collections Unit (CCU).

At this stage, the penalties are subject to a 17% collection fee, and the CCU may intercept the owner's state income tax refund to recover the owed amounts.

Driving Record

Drivers with accidents and moving violations typically face higher insurance premiums than those with clean driving records. For instance, having more than one at-fault accident within three years or being convicted of any moving violation can prompt an insurance company to raise premiums, refuse policy renewal, or exclude the driver from the policy.

Gender, Age, and Marital Status

Insurance companies use demographic patterns to assess risk and adjust premiums accordingly. Age and gender are vital considerations, with young adults and males typically facing higher rates due to their statistically higher likelihood of being involved in accidents.

However, this trend is not static; rates often decrease around age 25 and may begin to rise again as drivers approach their 50s or mid-50s. Marital status also influences premiums, as married individuals generally benefit from lower rates. This is attributed to their tendency to file fewer claims and have a lower incidence of accidents compared to their single counterparts.

Geographic Area

Location within Maryland significantly affects auto insurance rates due to various factors. Areas with higher population densities typically see more traffic accidents, leading to higher insurance premiums.

Additionally, regions prone to severe weather, such as coastal areas vulnerable to tropical storms and flooding, may experience higher insurance costs to account for the increased risk of weather-related claims.

Crime rates in different areas play a role, too; neighborhoods with higher instances of car theft or vandalism can drive up insurance costs. Road conditions and local unemployment levels, which might influence the number of uninsured drivers, further contribute to the variation in rates across Maryland.

Vehicle Type

Vehicle characteristics significantly influence insurance costs. High-performance cars and those prone to theft or expensive repairs often command higher premiums. Conversely, vehicles with advanced safety and security features like airbags, anti-lock brakes, automatic seatbelts, and anti-theft systems may qualify for discounts.

A vehicle's age also determines premiums, make, model, and value. Certain makes and models tend to cause or allow more bodily injury, incur more damage, and are more challenging and costly to repair when involved in accidents. As a result, insurers charge higher premiums to cover these types of vehicles.

Additionally, insurers consider the annual average distance driven when calculating premiums. Higher annual mileage is regarded as a greater risk, resulting in higher premiums.

Credit Scores

Credit scores significantly impact auto insurance costs in Maryland. Insurers use credit-based insurance scores to set premium rates. Higher credit scores typically result in lower premiums. Factors such as bankruptcies, late payments, and the number of credit cards can lead to higher premiums.

For instance, Maryland drivers with excellent credit pay an average of $805 annually for auto insurance, whereas those with fair credit pay around $1,116, and those with poor credit pay approximately $1,422.

This means drivers with poor credit could see their premiums increase by 77% compared to those with excellent credit. The rationale behind this practice is that individuals with lower credit scores are perceived as higher risk, potentially leading to more claims.

Prior Insurance Coverage

Insurance providers typically inquire about an applicant's insurance history as part of their risk assessment process. This includes questions about current coverage status and any past cancellations or non-renewals. A lapse in coverage may result in higher premiums with some insurers, as they view this as a potential indicator of increased risk.

However, there are legal protections in place for consumers. Section 27-501 of the Maryland Insurance Code outlines that insurance companies are legally barred from refusing coverage to applicants solely because they were previously insured by the Maryland Automobile Insurance Fund.

Strategies to Lower Auto Insurance Premiums

Maryland drivers can employ several tactics to lower their auto insurance costs. Maintaining a clean driving record is crucial, often leading to safe driver discounts. Bundling policies (like auto and home insurance) and insuring multiple vehicles under one policy typically offer savings. Installing safety features such as anti-lock brakes and airbags can also reduce premiums.

Students may qualify for good grade discounts while completing defensive driving courses can demonstrate safe habits. Additional cost-saving measures include usage-based insurance programs, opting for higher deductibles, and exploring loyalty discounts.

Regularly comparing quotes from different insurers helps ensure competitive rates. For unexpected premium increases, consulting MIA's Insurance FAQs can provide valuable guidance on understanding and managing insurance costs.

Impact of Deductibles on Insurance Costs

A deductible represents the policyholder's financial responsibility when filing a comprehensive or collision claim. This predetermined amount is subtracted from the insurance payout that effectively shares the claim cost between the insurer and the insured.

Policyholders have the flexibility to select their deductible amount during the initial policy purchase and can modify it later if desired. Opting for a higher deductible typically results in lower premium payments, as it shifts more financial risk to the policyholder.

This arrangement serves a dual purpose: it reduces the insurer's potential payout in the event of a claim and discourages policyholders from filing claims for minor damages where repair costs only marginally exceed the deductible.

Consequently, this approach often leads to more judicious use of insurance coverage, reserve claims for more significant incidents, and potentially reduce overall insurance costs for the policyholder.

Exploring Car Insurance Discounts

In Maryland, there are several programs and discounts available to help drivers save money on auto insurance:

• Good driver discount
• Defensive driving courses completer discount
• Good student discount
• Safety feature discount
• Multi-policy discount
• Loyalty discount
• Affinity group discount
• Telematics discount