1. Auto Insurance

2. Objectives Students will identify the factors that affect the cost of automobile insurance Students will identify the various types of automobile insurance

3. Introduction Car accidents cost more than $150 billion in lost wages and medical bills each year Car accidents can destroy people’s lives physically, financially, and in many other ways Buying insurance cannot eliminate the pain and suffering that car wrecks cause, but it can help reduce the financial impact

4. Consequences of Causing an Accident You may be required to pay for the property damage you cause May also have to pay for ▫Medical expenses ▫Lost wages ▫Pain and suffering of any injured person!!!

5. Failure to Have Auto Insurance Loss of ▫Home ▫Savings ▫Future earnings ▫Any other assets

6. Financial Responsibility Laws Minimum liability limits OR Pay an Uninsured Motorist Fee of $500.00, which does not provide insurance, but only allows you to drive an uninsured vehicle

7. Cost of Automobile Insurance Driving Record Includes the number and type of traffic tickets you have received, along with the number of accidents you have been involved in

8. Driving Record Infractions ▫Minor violations ▫Usually only receive a fine ▫Includes things such as  Parking violations  Failure to come to a complete stop at a stop sign  Improper left turn

9. Driving Record Misdemeanors ▫More serious than infractions ▫Can result in fines as well as jail time ▫Includes  Speeding  Driving without a license  Reckless driving  Drunk driving  Hit and run  Leaving the scene of an accident ▫Some of these can cause insurance premiums to rise dramatically

10. Driving Record Insurance companies often use a “point system” to calculate premiums with infractions and misdemeanors adding to a point total which will increase premiums and possibly result in policy cancellation

11. Type of Car Typically the newer and the more expensive cars are the more expensive they will be to repair and replace and therefore the higher the premium Certain types of cars (sports cars) will require a higher premium

12. Statistics Premiums are based on various statistical probabilities ▫Some drivers have a higher probability of having an accident and will therefore pay higher premiums  Young single drivers ▫Sports cars ▫Certain geographic areas have higher accident rates (large cities)

13. Other Factors Distance you drive each year (more miles = higher premiums Who is driving (teens) Number of claims filed (too many claims result in higher premiums)

14. Types of Automobile Insurance Coverage Liability Collision Comprehensive Personal Injury Protection Uninsured/underinsured Motorist

15. Liability Coverage Bodily Injury Liability ▫Pays for claims for bodily injury to other people if the accident was caused by the insured ▫Provides no coverage for the insured’s injuries ▫Minimum limits by law for this coverage is $25,000 for losses to any one victim and $50,000 total if there is more than one victim

16. Liability Coverage Property Damage Liability ▫Pays for any damage caused to the property of others ▫Provides no coverage for the insured’s own property ▫Minimum limits for this coverage is $20,000

17. Liability Coverage Liability insurance coverage is usually described as a series of numbers ▫Example  100/300/50  Covers $100,000 for injury to any one person  Covers $300,000 total for injuries to all people  Covers $50,000 for property damage

18. Collision Coverage Provides coverage for the insured’s own car against damage from accidents or overturning (if the insured is at fault) Usually has a deductible – insured pays the deductible and the insurance comp0any pays the rest ▫$500.00 is a common deductible Higher deductible results in a lower premium

19. Comprehensive Coverage Provides coverage for damage to the insured’s car for damage other than collision or vehicle overturning ▫Fire ▫Theft ▫Tornado ▫Hail ▫Water ▫Falling objects ▫Natural disasters ▫Acts of vandalism Has a deductible (choose a higher one for a lower premium)

20. Personal Injury Protection/Medical Payments ▫ Pays for medical, hospital, and funeral costs of the insured and his or her family and passengers, regardless of fault ▫Also will pay medical costs if the insured is injured as a pedestrian or bicyclist ▫Premiums can be reduced by having a car with safety devices

21. Uninsured/Underinsured Coverage Pays for the insured’s injuries when the other driver is legally liable, but unable to pay (they have no insurance or inadequate insurance to pay the insured’s losses)

22. Miscellaneous Insurance Information No-Fault Insurance ▫Some states have adopted no-fault insurance laws ▫No-Fault insurance has a system of reimbursement that does not require a legal determination of who is at fault ▫Each drivers own insurance pays for their losses regardless of fault

23. Miscellaneous Insurance Information Assigned-Risk Policies ▫A pool of high risk drivers who cannot obtain insurance due to their driving record ▫High drivers are assigned to various companies wh9o must provide coverage at a VERY HIGH PREMIUM!!!

24. Umbrella Liability Insurance Supplements your basic auto and property liability coverage by expanding limits and including additional risks Generally pay up to $1 million or $2 million Protects against extraordinary losses that would not be covered by normal auto liability policies