Maryland law requires all owners of registered motor vehicles to purchase and maintain insurance for bodily injury liability, personal injury protection, property damage and uninsured motorists protection at certain minimum levels. See "A Consumer Guide to Automobile Insurance" for the specific details of what is required. Failure to maintain automobile insurance will result in substantial fines being assessed against the owner by the Motor Vehicle Administration.
Comparison shopping is the key to getting the most for your insurance dollar. The best time to shop for insurance is before you purchase a car, trade in a vehicle, add drivers or when your policy is up for renewal. Here are some basic tips to follow when shopping for insurance:
Before buying a new car, determine your insurance costs. High performance vehicles usually come with higher insurance costs.
Know what insurance coverage you are buying. Before you call a producer (also known as an agent) or company for a price quote, familiarize yourself with the insurance coverages you are buying. It is important to know which coverages Maryland law requires you to purchase and what optional coverages you may purchase. For a list of available options, see “A Consumer Guide to Automobile Insurance.”
Comparison-shop. Make certain you provide the same information to each company or producer, and that you compare policies that offer the same coverages and have the same deductible(s) and coverage limits. This way, you can make sure you are comparing “apples to apples” and will be able to tell how much money, if any, you are actually saving. You may want to contact several insurance companies or producers, as well as asking your relatives and friends for recommendations. In addition, some banks, employers and special interest groups offer insurance directly to their members. You can refer to our brochure,
Automobile Insurance: A Comparison Guide for Rates, to get an idea of costs.
Ask for price quotes. When you call an insurance company or producer, typically you will be asked: the make/model/year of vehicle, number of average annual miles, region in which you live, the types of coverages you want and the dollar limit for each of those coverages, and information about your driving record (accidents or violations). Make sure the information you provide is accurate and that you provide the same information to each producer or company that you call. Also, keep in mind that one insurance group often includes many companies (not just the ones listed in our guide), and the rates and/or underwriting requirements may be different for each company within the group. Ask the producer about other companies in the group.
Ask about deductibles. A deductible is the amount you agree to be responsible for in the event of damage to your vehicle (i.e. accident, fire or vandalism) before the insurance company makes any payments. If you select a high deductible, you will pay more out of your own pocket for any damage or loss; however, your premium should be lower.
Ask for discounts. To help keep your premium down, ask what discounts the company offers (i.e. security devices, safety devices, good-driving record, defensive-driving courses, good student, etc.) and if you qualify for any of them.
Understand how the company decides what your policy will cost. When applying for auto insurance, companies evaluate your risk and the likelihood you will file a claim. This is referred to as underwriting. Once your level of risk has been determined, the company will group you with policyholders who have similar risk characteristics. Then, the company will assign a rate based on the claims history for your risk group.
Protect yourself from insurance fraud. It is illegal for unauthorized companies and agents to sell insurance in Maryland. Once you have selected an insurance company, contact us at 800-492-6116, to verify that the agency/company is authorized to sell insurance in Maryland. To learn more about our
Fraud Unit, click here.
Shopping for Automobile Insurance Company/Policy Comparison Worksheet
If you are shopping for automobile insurance, you may use this
worksheet to help gather information about insurance companies and the automobile insurance policies they sell. You may call a producer or the insurance company for a rate quote.
What Factors Impact Rates?
When applying for auto insurance, insurers evaluate your risk and the likelihood you will file a claim. This is referred to as underwriting a risk. Once your level of risk has been determined, the insurer will group you with policyholders who have similar risk characteristics. Then, the insurer will assign a rate based on the claims history for your risk group. The most common factors that impact rates are:
- Driving record. If your driving record is less than perfect, you will be considered a higher risk and will pay a higher premium.
- Geographic area. The number of claims filed by policyholders in your area will also affect the rates charged by insurers.
- Gender and age. Statistics show that males and young adults have a higher incidence of accidents and claims. Therefore, your gender and age will determine your rate.
- Marital status. Married individuals have a lower incidence of accidents and claims so they generally pay lower premiums than single people.
- Prior insurance coverage. Any time period(s) that you did not carry auto insurance will affect your premium.
- Annual mileage. Insurers will calculate your premium based on the average distance you drive on an annual basis.
- Make and model of car. Premiums are also based on your car’s make/model and value.
- Credit history. Some, but not all, insurers use your credit history (good or bad) as a factor in determining your premium.
Check your Credit Report
Under Maryland law, insurers may not use your credit history to decide if they will insure you, cancel you, renew you or increase your premium. However, insurers may use your credit history when you apply for coverage to determine what rate you will be paying for your auto insurance. Not all insurers use credit history and you may obtain auto insurance through insurers that do not use credit. For those insurers that do use credit, they are required to tell you at the time you apply for the insurance that they will consider your credit history. If you ask, an insurer must tell you how much of your premium is as a result of your credit score. For those insurers that use credit history to determine a portion of your premium, they are required to review your credit history every two years, or you can request the insurer to do so once during each policy term. The insurer may decrease your premium if your credit history improves. The insurer cannot use your credit history to increase your premium at renewal even if your credit deteriorates from what it was when you applied for your policy.
Personal Injury Protection (PIP)
PIP coverage will reimburse you (or others named on your policy) for reasonable and necessary medical expenses resulting from an auto accident, as well as lost wages. This reimbursement will be made regardless of who caused the accident. Maryland law requires insurers to offer their policyholders at least $2,500 in Personal Injury Protection (PIP) coverage. You may elect to purchase limited PIP coverage and certain individuals may be able to fully reject PIP coverage. If you currently have full Personal Injury Protection (PIP) coverage and also have health insurance, you may want to give some consideration to whether the duplication of coverage is worth the additional premium you are paying. Consult your insurance producer or insurer for a thorough explanation of all of your options. Also check your health care policy and consult your insurer or insurance producer about this coverage. Keep in mind that PIP pays lost wages and your household members’ medical expenses, which are not covered under health care policies, up to the limit, which is typically $2,500. Your insurer may offer higher PIP limits at an increased cost.
