Vehicle Insurance

1. Vehicle Insurance Chapter 33

2. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Collision Insurance Miscellaneous Coverage

3. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Collision Insurance Miscellaneous Coverage

4. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Collision Insurance Miscellaneous Coverage

5. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Miscellaneous Coverage Collision Insurance

6. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Collision Insurance Miscellaneous Coverage

7. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Collision Insurance Miscellaneous Coverage

8. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Collision Insurance Miscellaneous Coverage

9. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Basics • 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 Medical Payments Coverage Bodily Injury Liability Comprehensive Coverage Property Damage Liability Uninsured Motorist Protection Collision Insurance Miscellaneous Coverage

10. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance 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 Financial Responsibility Law Compulsory Insurance Law No-Fault Insurance

11. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance 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 Financial Responsibility Law Compulsory Insurance Law No-Fault Insurance

12. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance 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 Financial Responsibility Law Compulsory Insurance Law No-Fault Insurance

13. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance 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 Financial Responsibility Law Compulsory Insurance Law No-Fault Insurance

14. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • 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 Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Factors Driving Record

15. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • 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 Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Factors Driving Record

16. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • 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 Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Factors Driving Record

17. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Factors that affect the cost of insurance: • Claims paid out • Amount of coverage • Amount of deductible • Type of vehicle • Vehicle usage • Geographic location • Age Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Driving Record Factors

18. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Premium will vary according to: • Make • Model • Year • New cars and cars with expensive parts are more expensive to insure Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Factors Driving Record

19. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Where you live affects your premium • Area w/ high crime rate/vandalism/theft will be higher • City drivers more expensive than rural Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Factors Driving Record

20. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Driver classification includes factors like: • Age • Gender • Marital Status • <25, >70 have more accidents • Young men > young women Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Factors Driving Record

21. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Major factor: driving record • Accidents/traffic violations = higher premiums • Drivers education course/good grades = lower premiums Type Of Vehicle Insurance Premiums Location Deductible Driver Classification Factors Driving Record