2. Earlier this millenium, it became law that every car is required to have at least liability insurance. Liability in legal terms means being responsible for the financial consequences of the accident. *Many drivers were being left to pay the bill when they were victims of an accidents.

3. Bodily Injury Liability: This coverage is protection against claims or lawsuits that are brought against you by pedestrians, riders in your car, and people in other cars whose injuries were caused by an accident for which you are responsible. The amount of protection can vary from $10,000 to $100,000 or more.

4. Property Damage Liability: Coverage for property damage liability is paid for the damage done to other people’s property. This can also range anywhere from $10,000 to $100,000 or more.

5. Medical Payments Coverage: Medical payments insurance covers the person driving the car and others riding it, whether or not that driver is at fault. A family man will his wife and kids covered in case of an accident.

6. Collision: Coverage for collision pays for damage to your car if it is in an accident. *Some choose not to get this option because their car might not be worth much to begin with.

7. Comprehensive Coverage Comprehensive Coverage If your car’s damaged by a storm, vandalism, or “passive object” (such as a tree or a post in a parking garage) which fell and was not caused by collision, Comprehensive can help keep you covered.

8. Underinsured / Uninsured Motorist Coverage Underinsured / Uninsured Motorist Coverage If a driver with little or no insurance damages your car, or injures you or someone riding with you, this coverage option can help cover repairs and expenses. (This is subject to certain limitations, however, so check your individual policy, or talk to your agent for more details.)

9.  Liability – only has the following 1. Bodily injury 2. Property damage  Full Coverage – includes the following 1. Bodily injury 2. Property damage 3. Collision 4. Comprehensive

10. It cost more to insure a car that is worth $40,000 than one that is worth $8,000. In addition to value of a car, insurance companies keep records of all kinds of traffic related accidents  the city you live in may be more expensive  they also look at the driver’s characteristics: ▪ Age, sex, married?, experience, and other things. This is called you Driver Rating Factor

11.  Another factor that affects the cost of insurance is the amount of your deductible. Deductible is the first expenses that are not covered by the insurance company Premium is the amount one pays for the insurance.

12. where p = the annual premium paid r = driver rating b = 6 month basic rate for car

13. Trevor is 17 yrs. Old. He has had driver training. He is single. He is not the owner or the principle operator of the car that he drives. He does errands in the car. He does not use the car to drive to work. What is Trevor’s rating factor?

14. Trevor is driving his family’s car, which has a car class rating of 8. He plans to purchase collision insurance with a deductible of $500. What is Trevor’s annual premium?

15. p= premium e=expense paid out n= # paying premium o=overhead per premium

16. One company wants to start insuring 14 and 15 year olds. The reason is because passengers when 16 and 17 yr. olds are driving are usually 14 and 15 yr. olds. For every 10,000 passengers, 425 result in personal injuries. The average cost is $3800. There is a $35 per policy overhead cover. Find the premium of this new policy?

17. 1. Use the driver rating factor tables to find the rating for a married female, 20 yrs., who owns her car, has not had driver training, and drives the car to work. 2. Use the automobile insurance table to find the annual premium for comprehensive coverage, with a deductible of $250, on a car with class rating of 12.