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/property damage • Policy – contract between ins. co. and policyholder that explains amt./types of coverage • Insurer – issues policy • Policyholder – buyer of 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 = orig. value – dep. • 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 - 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, snowmobiles insurance 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/injury you cause in an accident either w/ ins., savings or by selling property • If you can’t pay, you can be sued, lose your license or 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 min. amt. of car ins. • You must show proof of ins. before you can get a license/register your car • Police also ask for ins. 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 Costs • The average annual car ins. cost: $1,200 • Cost of ins. is directly affected by the amt. 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

14. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Premium – amt. an ins. co. charges a policyholder for a 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

15. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Deductible – an amount in damages a policyholder must pay before the ins. co. 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

16. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Costs • Factors that affect the cost of ins.: • 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

17. 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

18. 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

19. 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

20. 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

21. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Laws Required documentsYour insurance company must give you a New Jersey Insurance Identification Card for each vehicle under your policy.You must keep the card in the vehicle and present it: Before an inspection When involved in an accident When stopped for a traffic violation When you are stopped in a spot check by a police officer Failure to present the card may result in fines. Driving an uninsured vehicle may result in fines, community service, license suspension and insurance surcharges. Financial Responsibility Law Compulsory Insurance Law No-Fault Insurance

22. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Laws All vehicles registered in New Jersey require three types of mandatory insurance: Liability insurance pays others for damages that you cause if you are responsible for an accident. It does not cover medical expenses Personal injury protection (PIP) pays medical expenses if you or other persons covered under your policy are injured in an automobile accident. Often called No Fault coverage, it pays your medical expenses if you were or were not at fault Uninsured motorist coverage protects you if you are in an accident with someone who doesn’t have proper insurance coverage . Financial Responsibility Law Compulsory Insurance Law No-Fault Insurance

23. 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 ins. Co. 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

24. Types of Vehicle Insurance Laws on Vehicle Insurance The Costs of Insurance Sue’s new car was stolen only five months after she bought it. It was never found. Since the car was insured for comprehensive coverage, Sue filed a claim for the purchase price of the automobile. The insurance company offered to pay her what they called the actual cash value of the car, which was considerably less than the amount Sue requested. Who is legally correct? Laws Financial Responsibility Law Compulsory Insurance Law No-Fault Insurance

25. Sue’s new car was stolen only five months after she bought it. It was never found. Since the car was insured for comprehensive coverage, Sue filed a claim for the purchase price of the automobile. The insurance company offered to pay her what they called the actual cash value of the car, which was considerably less than the amount Sue requested. Who is legally correct?

26. Joe lost control of his car one night, crashed through the wall of a corner house and landed in the living room. No one was seriously hurt, but there was considerable property damage. What coverage does Joe need to pay the cost of the damage.

27. Randy’s policy lapsed. While on vacation he ran a red light and permanently disabled the motorist in the other car. • Is Randy in trouble?

28. Karen has all six types of coverage on her 10 year old chevy. Should she drop any part of the coverage? And why?

29. Wayne was furious because after moving to another state, his insurance premiums doubled. Wayne had never had an accident in his life, and he did not think this was fair. Can you explain why Wayne’s rates went up?

30. Carolyn was comparing her auto policy with her neighbors. She could not understand why her premiums were so much higher than her neighbor’s since they had identical coverage from the same insurance company. What factors may have accounted for the difference in the costs of the two policies?

31. Tyrone was sued by the Livingston Family because Mr. and Mrs. Livingston were injured in an accident which Tyrone caused. Tyrone’s liability coverage was 25/50/10. The court awarded Mr. Livingston $25,000 and Mrs. Livingston $10,000 for bodily injury. Was Tyrone’s coverage adequate to pay the costs?