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Read to Learn Describe types of vehicle insurance. Identify laws that make vehicle insurance protection a necessity. Give examples of factors that affect the cost of vehicle insurance.

The Main Idea With so many vehicles on our streets and highways, vehicle insurance is a necessity. Drivers must decide what types of coverage they need and can afford, and they have many decisions to make about their insurance needs.

Key Concepts Insuring Your Vehicle Laws on Vehicle Insurance The Costs of Insurance

Key Terms actual cash value the value of an asset when it was new minus depreciation the decline in the value of an asset, such as a house, equipment, or a vehicle, because of use depreciation

Key Terms financial responsibility law a law that requires drivers to pay for any damages or injuries they cause in an accident compulsory insurance law a law that requires drivers to have a minimum amount of car insurance

Key Terms when drivers involved in accidents collect damages from their own insurer no matter who is at fault no-fault insurance a request for payment from an insurer for any damages covered by a policy claim

Key Terms an amount in damages a policyholder must pay before the insurance company pays a claim deductible

Insuring Your Vehicle The company that issues an insurance policy is the insurer. The buyer of an insurance policy is the policyholder.

Insuring Your Vehicle Having vehicle insurance protects you against losses due to injury or property damage.

Types of Vehicle Insurance Liability insurance protects vehicle owners from claims of injury or property damage to others in a case they are held responsible for an accident. Liability insurance is required by law in most states.

Graphic Organizer Types of Vehicle Insurance Bodily Injury Liability Coverage Property Damage Liability Coverage Collision Insurance Coverage Medical Payments Coverage Comprehensive Coverage Uninsured/Underinsured Motorist Protection Miscellaneous Coverage

Types of Vehicle Insurance Bodily Injury Liability Coverage Types of Vehicle Insurance Bodily injury liability coverage covers injuries to someone else. Example 100/300 coverage: The insurer pays up to $100,000 for injuries to one person. For one accident, insurance pays claims up to a total of $300,000.

Types of Vehicle Insurance Property Damage Liability Coverage Types of Vehicle Insurance Property damage liability insurance coverage covers damage to another person’s vehicle or other property caused by the insured. Example 100/300/50 coverage: The insurer will pay $100,000 for injuries to one person. The insurer will pay $300,000 for one accident. The insurer will pay $50,000 for property damage.

Figure 34.1 Vehicle Insurance

Types of Vehicle Insurance Collision Insurance Coverage Types of Vehicle Insurance Collision insurance coverage is based on the actual cash value of the policyholder’s vehicle. actual cash value the value of an asset when it was new minus depreciation

Types of Vehicle Insurance Collision Insurance Coverage Types of Vehicle Insurance Depreciation is taken into account when determining the actual cash value of a vehicle. depreciation the decline in value of an asset, such a house, equipment, or a vehicle, because of use

Types of Vehicle Insurance Medical Payments Coverage Types of Vehicle Insurance Medical payments coverage covers injuries to drivers and anyone else in their vehicle to pay medical bills.

Types of Vehicle Insurance Comprehensive Coverage Types of Vehicle Insurance Comprehensive insurance covers damage to a policyholder’s vehicle caused by things other than an auto accident. This type of coverage cannot exceed the actual cash value of the vehicle.

Types of Vehicle Insurance Uninsured/Underinsured Motorists Protection Types of Vehicle Insurance Uninsured/underinsured insurance protects drivers from people who cause accidents but cannot pay for the damages. This coverage also covers you if you are hit by a vehicle while walking.

Types of Vehicle Insurance Miscellaneous Coverage Types of Vehicle Insurance Miscellaneous coverage can include: Additional drivers Driving a vehicle for work Motorcycles, scooters, or snowmobiles

Laws on Vehicle Insurance All states have some form of financial responsibility law. financial responsibility law a law that requires drivers to pay for any damages or injuries they cause in an accident

Laws on Vehicle Insurance Most states have some form of compulsory insurance law. compulsory insurance law a law that requires drivers to have a minimum amount of car insurance

Laws on Vehicle Insurance Some accidents may be covered with no-fault insurance. no-fault insurance when drivers involved in accidents collect damages from their own insurer no matter who is at fault

The Costs of Insurance The more money insurance companies pay in claims, the more money they charge for insurance to make up for it. claim a request for payment from an insurer for any damages covered by a policy

Insurance Premiums The premium an insurance company charges a policyholder covers the policyholder for a limited period of time. At the end of the period, the policy can usually be renewed.

Insurance Premiums An insurance company may cancel a policy or refuse coverage for someone with a record of accidents.

Deductibles The deductible on an insurance policy makes drivers responsible for small losses. deductible an amount in damages a policyholder must pay before the insurance company pays a claim

Factors that affect the cost of insurance include: Insurance Costs Factors that affect the cost of insurance include: Amount of insurance claims paid The deductible Type of vehicle Uses of the vehicle Location of the vehicle The driver’s age The driver’s record

Identify seven types of vehicle insurance coverage. personal liability, medical expense, uninsured/underinsured motorist, comprehensive, collision, towing, rental reimbursement

List and describe three types of laws that affect vehicle insurance. Financial responsibility: drivers pay for damages or injuries they cause. Compulsory insurance: drivers have a minimum amount of car insurance. No-fault insurance: drivers involved in accidents collect damages from their own insurance companies.

What factors affect the cost of vehicle insurance? amounts and types of coverage, amount of deductible, type of vehicle, use of and where vehicle is driven, driver’s age and driving record

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