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Why do we need car insurance? Video

Learn about the different types of car insurance coverage, compute insurance costs, and calculate payments on insurance claims. Topics include premium, bodily injury liability, property damage liability, comprehensive insurance, deductible, and more.

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Why do we need car insurance? Video

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  1. Warmup Why do we need car insurance? Video

  2. 5-4AUTOMOBILE INSURANCE OBJECTIVES Learnabout different types of auto insurance coverage. Computeinsurance costs. Computepayments on insurance claims.

  3. Premium Claim bodily injury liability (BI) property damage liability (PI) uninsured/underinsured motorist protection (UMP) no-fault insurance comprehensive insurance collision insurance car-rental insurance deductible Key Terms

  4. Example 1 Kwan’s annual premium is $1,284. If he pays quarterly, there is a $1 per payment surcharge (extra fee). What is the quarterly payment? Leon’s annual premium is $1,520. If he pays monthly, there is a $2 per payment surcharge. What is the monthly payment? Example 2

  5. Example 3 Stan DeMille has $25,000 worth of property damage liability insurance. He caused an accident that damaged a $2,000 fire hydrant and did $5,600 worth of damage to another car. How much of the damage must Stan pay? Keith has $50,000 worth of uninsured motorist liability insurance. He caused an accident that injured two passengers in his car. Their combined medical bills were $70,000. How much must Keith pay? Example 4

  6. EXAMPLE 5 Peter has $1,000 deductible collision insurance. Peter backs his car into his garage and causes $4,300 worth of damage to the car. How much will his insurance company have to pay? Manuel has $500 deductible comprehensive insurance. His car is stolen and never recovered. If the book value is $4,200, how much will his insurance company have to pay? EXAMPLE 6

  7. Bodily injury liability insurance is usually shown by 2 numbers (for example 50/100). The first number is the maximum for one person and the second is the maximum for all injuries. EXAMPLE 7 Bob was in an auto accident caused by his negligence. He has 100/300 bodily injury insurance. The three people injured in the accident sued. One person was awarded $140,000, and each of the other two was awarded $75,000. How much does the insurance company pay?

  8. EXAMPLE 8 Joan has 50/100 BI liability insurance. She hurts 28 children riding a school bus, and each child is awarded $10,000 as a result of a lawsuit. How much will the insurance company pay in total for this lawsuit?

  9. PIP (no-fault insurance) pays up to the limit for each person hurt in the vehicle, no matter who is responsible. EXAMPLE 9 Desmond has a policy with 50/150 BI, $50,000 PD, and $50,000 PIP. He causes an accident in which he hurts 7 people in a minivan and 4 people in his own car, including himself. The eleven people who are hurt have minor injuries and do not sue Desmond. The total medical bill for all involved is $53,233. How much does the insurance company pay?

  10. EXAMPLE 10 Pat has 50/100 BI liability insurance and $100,000 PIP insurance. She hurts 28 children in a school bus and is not sued. However, if each child needs $10,000 for medical care, how much will the insurance company pay in total for these medical claims?

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