Vehicle Insurance Chapter 33. Types of Vehicle InsuranceLaws on Vehicle InsuranceThe Costs of Insurance Basics Bodily Injury Liability Property Damage.

Vehicle Insurance

Chapter 33

Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance

Basics

Bodily Injury Liability

Property Damage Liability

CollisionInsurance

MedicalPaymentsCoverage

Comprehensive Coverage

UninsuredMotorist

Protection

MiscellaneousCoverage

• Insurance – paid protection against losses due to injury or property damage

• Policy – contract between ins co and policyholder that explains amt/types of coverage• Insurer – issues the policy• Policyholder – buyer of the policy

• Liability insurance – most basic type of coverage; protects you from claims of injury/property damage to others


Basics



CollisionInsurance



UninsuredMotorist

Protection


• Bodily Injury Liability ins covers injuries to someone else.

• Stated in thousands of dollars• 1st figure -> injuries to one person• 2nd figure -> total for one accident• Example: 100/300 bodily injury: $100,000 for injuries to one person $300,000 for all claims


Basics



CollisionInsurance



UninsuredMotorist

Protection


• Property Damage Liability ins covers damage to another person’s vehicle/property (also covers telephone poles, signs, etc.)

• Policy might quote all liabilities together• Example 100/300/50 $100,000 for injuries to one person $300,000 for all claims $50,000 for property damage


Basics



CollisionInsurance



UninsuredMotorist

Protection


• Collision insurance covers damages to your own vehicle

• Max amt covered based on actual cash value of your vehicle, which is orig value minus depreciation

• Depreciation – decline in value of a vehicle because of use


Basics



CollisionInsurance



UninsuredMotorist

Protection


• Medical payments coverage is also called personal injury protection

• Covers injuries to you or anyone else in your car

• Typical coverage: $5,000 -$10,000


Basics



CollisionInsurance



UninsuredMotorist

Protection


• Comprehensive coverage covers damage to a policyholder’s vehicle caused by things other than a car accident

• Examples: falling objects, theft, flood damage, vandalism

• Will not cover more than the actual value of the car


Basics



CollisionInsurance



UninsuredMotorist

Protection


• Uninsured motorist protection covers you from people who can’t pay insurance claims

• Anyone riding with you is also protected• If you’re hit by a vehicle while walking you are

also covered• Most states require this


Basics



CollisionInsurance



UninsuredMotorist

Protection


• Other types of protection:• Coverage for a rental car• Cost of towing• Coverage for others who use your car• Add a work vehicle to your policy• Motorcyclists, motor scooters, and

snowmobiles need insurance too


FinancialResponsibilityLaw

CompulsoryInsuranceLaw

No-FaultInsurance

Laws • States have laws requiring drivers to show proof that they can pay for any injuries or damages they may cause

• Also protects you from other drivers• Laws vary state to state


Laws • Financial responsibility law – says you must pay for any damage or injury you cause in an accident either with insurance, savings or by selling property

• If you can’t pay, you can be sued, lose your license, or lose your car



No-FaultInsurance


Laws • Compulsory insurance law – legally requires drivers to have a minimum amt of car ins

• You must show proof of insurance before you can get a license or register your car

• Police also ask for insurance when you get pulled over



No-FaultInsurance


Laws • No-fault insurance – law that requires drivers involved in accidents to collect damages from their own insurance companies no matter who is at fault

• When there is a dispute about who is at fault



No-FaultInsurance


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location

DriverClassification

DrivingRecord

• The average annual car insurance cost: $1,200• Cost of insurance is directly affected by the

amount insurers pay out in claims• Claim – a request for payment from an insurer

for any damages covered by a policy• The more they pay, the more we pay


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location


DrivingRecord

• Premium – amt an insurance company charges a policyholder for an insurance policy

• Premium covers policyholder for a period, usually a year, and then is renewed

• Insurer can cancel a policy or refuse coverage


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location


DrivingRecord

• Deductible – an amount in damages a policyholder must pay before the insurance company pays anything

• Makes you responsible for small losses and the insurer helps pay for the larger losses


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location


DrivingRecord

• Factors that affect the cost of insurance:• Claims paid out• Amount of coverage• Amount of deductible• Type of vehicle• Vehicle usage• Geographic location• Age


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location


DrivingRecord

• Premium will vary according to:• Make• Model• Year

• New cars and cars with expensive parts are more expensive to insure


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location


DrivingRecord

• Where you live affects your premium• Area w/ high crime rate/vandalism/theft will

be higher• City drivers more expensive than rural


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location


DrivingRecord

• Driver classification includes factors like:• Age• Gender• Marital Status

• <25, >70 have more accidents• Young men > young women


Costs

InsurancePremiums

Deductible

Factors

Type Of

Vehicle

Location


DrivingRecord

• Major factor: driving record• Accidents/traffic violations = higher premiums• Drivers education course/good grades = lower

premiums

Vehicle Insurance Chapter 33. Types of Vehicle InsuranceLaws on Vehicle InsuranceThe Costs of Insurance Basics Bodily Injury Liability Property Damage.

Documents