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Auto Insurance

Auto Insurance. Financial Planning – Mr. Yates. Objectives. Why do auto insurance rates differ among applicants of similar age? Define risk factors used to determine rates by insurance companies. Evaluate insurance application information from an underwriter’s perspective?

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Auto Insurance

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  1. Auto Insurance Financial Planning – Mr. Yates

  2. Objectives • Why do auto insurance rates differ among applicants of similar age? • Define risk factors used to determine rates by insurance companies. • Evaluate insurance application information from an underwriter’s perspective? • Make recommendations for how to reduce auto insurance premiums. • Why do I pay more than my friends?

  3. Why do I pay more? • If you have automobile insurance you may be at a loss to explain the discrepancy between insurance costs for your own coverage and other students you know. • Although you may have some idea what leads to higher premium payments (such as a drunk driving arrest on a driver’s record), you will probably be surprised to learn about the host of criteria insurers use in making underwriting decisions.

  4. Why do I pay more? • You will be pleased to learn that many factors affecting the cost of your insurance are under your control and that discounts can be earned for specific behaviors (such as avoiding traffic violations and getting a "good student” discount.

  5. Auto Insurance Varies • Insurance companies use the personal information they collect from clients to help them place individuals into certain risk groups or statistical categories. • Do you think teenagers should be considered a high-risk group? Why or why not? Explain.

  6. Let’s take the quiz! • Teen Driving Statistics Quiz (on my website) • Take the quiz and we’ll go over the answers!

  7. Quiz Answers • Answers: 1. C; 2. C; 3. B; 4. C; 5. A; 6. C These statistics seem to reflect poorly on teen drivers. However, facts and figures are not a personal reflection on every teen's judgment. Simply being a teenager does not mean that you are irresponsible or that you personally are reckless driver. What do these statistics mean?

  8. Teen Driving Statistics • Teens have the lowest seat belt use rate of all drivers.This rate becomes worse when there are other teens in the car. • During the first year of licensed driving, 1-in-5 male and about 1-in-10 female 16-year old drivers will have a crash. • Males are more than twice as likely to have serious crashes as females. But while the crash total for males has been declining over the past 20 years, the total for females has been rising.

  9. More Teen Driving Stats • Teens are involved in three times as many fatal crashes as other drivers. • 65% of all teen passenger deaths occur when another teen is driving. • Car crashes are the #1 cause of death for 15 to 20-year olds. • More than any age group, teens are likely to be involved in a single-vehicle crash.

  10. Requirements: • Let's take a look at the kinds of information an insurance company requires in order to determine • A) whether or not to provide insurance to an individual, and • B) how much the company will charge in order to provide insurance protection

  11. Auto insurance provides six primary types of protection summarized in the table below

  12. Definitions Continued • Medical Payments pay for hospital and treatment costs for injuries that you, members of your immediate family, or relatives living with you suffer in an automobile accident, regardless of fault. It covers family members whether they are riding in your car or someone else’s or if they are struck by a car while walking. It also covers any passengers in your car. • Comprehensive Physical Damage pays for damage to your car except when caused by a collision. It protects your car against fire, theft, glass breakage, flood, falling objects, missiles, explosions, earthquake, windstorm, hail, water, vandalism or malicious mischief, riot or civil commotion, and collision with a bird or animal. • Collision pays for the repair or replacement of your car after an accident.

  13. Definitions of Basic Auto Insurance Coverage: • Bodily Injury and Property Damage Liability pays for bodily injuries to other people or damage to their property, if you are liable. Pays whether your car is driven by you, a qualified family member, or another driver using your permission. In most cases, protects you in a car you borrow or rent temporarily. • Uninsured or Underinsured Motorist Liability pays for bodily injuries to you, qualified family members, and any other person occupying your covered auto, caused by an uninsured or underinsured motorist or a hit-and -run driver, if that driver is liable.

  14. Insurance Factors • Type of Vehicle (station wagon, van, sport utility vehicle, sedan), including the make, model, and manufacturer • Vehicle performance capabilities, including changes made to the vehicle after the original purchase from manufacturer’s outlet • Type of use of vehicle (leisure, commute, business, farm, commute mileage, etc.) • Vehicle characteristics, including engine size, safety and protective devices, damageability, repair ability, and theft deterrent devices • Percentage use of the vehicle by the primary driver • Number of vehicles used by people living in household • Academic standing of the primary driver • Completion of driver training or defensive driving courses by the primary driver • Gender of the primary driver • Marital status of the primary driver • Status as a Smoker or Non-smoker • Number of other policies owned with the insurance company. • The ZIP code where the vehicle is garaged or kept.

  15. Anti-Theft • A number of anti-theft devices are available in the market place, which can bring down your insurance rates! • Alarms • Club-like devices attached to the steering wheel. • Another device is a big, hinged collar designed to cover the ignition lock cylinder. • Theboot. The driver, once again, must apply the device to the tire and wheel in order to prevent a thief from driving away. • Tracking devices. Hidden transmitters send out signals to police departments, which enable the car to be located when reported stolen. With these devices, the driver must notify the police. The time delay in reporting benefits the thief, particularly if the thief intends to sell the car for its parts.

  16. Auto Insurance Assignment 1 • FP Auto Insurance Worksheet 3 • Complete on your own.

  17. Auto Insurance Project / Assignment: • Using the internet, obtain an insurance quote for yourself for auto insurance. If you do not have a car, please choose a realistic car for yourself and use this information to complete the online form. Use the following website, http://secure1.insweb.com/ • It will give you an online application to fill out and submit. It will get quotes from many different insurance companies for you. When they ask for your address and other personal information, accurately provide your email address and request that the info. be sent via email. If I were you, I would consider putting a fake street name in the address line. That will protect you from receiving junk mail at your residence. • Each email should be printed up as a quote. You'll need three of them. • You can also access individual websites to obtain your quotes. It is up to you.

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