Types of Insurance Automobile Health Life Disability Homeowners/ Renters

What Covers This Risk? After losing her husband to a heart attack, a wife is left alone to care for 2 children Life!

What Covers This Risk? You need a cast after breaking an ankle while roller-blading Health!

What Covers This Risk? Your rented apartment is broken into and your computer is stolen Renters!

What Covers This Risk? You are injured in an automobile accident and are unable to work for 2 months Disability!

What Covers This Risk? Your garage was destroyed by a fire which started by a lightning bolt hitting your home Homeowners!

What Covers This Risk? Sick at home from food poisoning after eating a carnival corndog Nothing!

What Covers This Risk? While driving, you have brake failure. You hit a telephone pole and cause damage to the front of the car Automobile!

What Covers This Risk? While driving to the mall, you are pulled over and receive a speeding ticket Nothing!

What Covers This Risk? A daughter, who is financially responsible for her mother’s nursing home bills, dies from an undetected heart defect Life!

What Covers This Risk? A doctor diagnoses a child with tonsillitis during a visit to a clinic Health!

Applying What would result if you had an automobile accident and did not have automobile insurance?

Automobile Insurance: The Basics

What is the likelihood you will be in an automobile accident? There are more than 12 million motor vehicle accidents annually The typical driver will have a near automobile accident one or two times per month The typical driver will be in a collision of some type on average of every 6 years Crashes are the leading cause of death for ages 3-33

Automobile Insurance: The Basics Even a minor accident can result in thousands of dollars in damages Damage to your carDamage to your car Damage to other cars involvedDamage to other cars involved Medical BillsMedical Bills Lost wagesLost wages Pain and sufferingPain and suffering ProsecutionProsecution Legal FeesLegal Fees FinesFines

Automobile Insurance: The Basics If you are in an accident how do you pay for it? Bank Account? Parents? Rich Uncle? Best Friend? Insurance?

Automobile Insurance: The Basics What is Automobile Insurance? An auto insurance policy is a contract between you and an insurance company. You pay a premium, and in exchange, the insurance company promises to pay for specific car-related financial losses during the term of the policy.

Why do I need auto insurance It’s the law!It’s the law! There are risks you can’t afford to takeThere are risks you can’t afford to take What happens if…What happens if… –You’re involved in a crash that causes property damage? –You hurt yourself or someone else? –Your car is damaged when you’re not driving it? (by weather, vandalism or a hit-and-run) –Your car is stolen? –Your car breaks down and needs to be towed?

Automobile Insurance: The Basics Are you a risk to the insurance company? To keep premiums as low as possible to the insured, a screening process is completed before an insurance contract is completed

Automobile Insurance: The Basics What is the insurance company looking for? Some vehicles, and some drivers, carry more risk than others Low risks will be charged a lower premiumLow risks will be charged a lower premium High risks will be charged a higher premiumHigh risks will be charged a higher premium

Automobile Insurance: The Basics What determines your premium? AgeGender Vehicle Type Driving Record Geographic Location

Types of Automobile Insurance Coverages Three Questions 1.What are third-party coverages? 2.What are first-party injury coverages? 3.What are first-party property coverages?

What are third-party coverages? Bodily Injury Liability People costs (medical expenses, lost wages, pain and suffering) Property Damage Liability Things (other cars and property) Both are types of coverage required by law in most states Types of Automobile Insurance Coverages

What are first-party injury coverages? Medical Payments (MedPay) Covers medical and funeral expenses resulting from accidents with your vehicle Personal Injury Protection (PIP) Extends MedPay to include lost wages Uninsured Motorists Covers expenses if the at fault driver does not have coverage Underinsured Motorists Covers expenses when the at fault driver does not have enough coverage Types of Automobile Insurance Coverages

What are first-party property coverages? Comprehensive Compensates you for physical damage to your car, including theft, vandalism, natural disasters Collision Pays for damage to your vehicle in case of collision Both Coverages require you to pay a deductible Types of Automobile Insurance Coverages

What is a Deductible? This is the amount per accident that you pay out of pocket before insurance starts to pay Common deductible amounts are usually $250, $500, and $1000 The higher the deductible amount you pay the lower your premiums are

Automobile Insurance: The Policy A common mistake when shopping for automobile insurance is looking only at the price between two policies Policies differ from policy to policy and company to company 5 parts to an insurance policy: DeclarationsCoveragesExclusionsConditionsDefinitions

Declarations Lists important personal policy information and is unique to each individual insured Contains personal information: nameaddress vehicle make and model vehicle identification number types of coverages policy limits deductible amounts

Coverage Parts/Insuring Agreement Outlines the coverage options and coverage limits purchased In short, what your insurance company promises to provide in return for your payment, based on the coverages and coverage limits selected

Exclusions Details what is not covered by the policy Examples: Intentional damage to your own vehicle Damages caused while vehicle is used as a delivery vehicle

Conditions Define the insured’s and the insurer’s duties that, under the terms of the policy, must be fulfilled Includes: premium payment obligations steps to filing a claim procedures for resolving a claim

Definitions Explains specific terms used throughout the policy Examples: “You” or “Your” refers to the “Named Insured” “We” or “Us” or “Our” refers to the insurance company “Family Member” refers to a resident of your household

Automobile Insurance: Accidents Chances are even if you are never in an accident you will witness one What should you do if you are involved in an accident?

Steps to take after an accident Help anyone who is injuredHelp anyone who is injured You have an ethical and legal responsibilityYou have an ethical and legal responsibility Notify the policeNotify the police Prevent further accidentsPrevent further accidents Protect the accident sceneProtect the accident scene Record informationRecord information Exchange information with the parties involvedExchange information with the parties involved Take note of time, location, weather, and road conditionsTake note of time, location, weather, and road conditions

It is important that the accident is reported promptly to the insurance agent or company The policy will guide the insured on the correct steps to take to report the claim The company will guide the insured through the process Filing a Claim

When you are liable for an accident The insurance company covers the loss up to the policy limitsThe insurance company covers the loss up to the policy limits Your insurer represents you if you are suedYour insurer represents you if you are sued Your insurer has the right to settle any legal action without your permissionYour insurer has the right to settle any legal action without your permission Your premium may riseYour premium may rise Insurer has the right to cancel your policyInsurer has the right to cancel your policy If the losses exceed the policy provisions, the insured is responsible to cover the excessIf the losses exceed the policy provisions, the insured is responsible to cover the excess Filing a Claim

Automobile Insurance: The Basics What can you do to reduce risk and lower premiums? Use your seatbelt Observe Speed Limits Know your own limits Concentrate on driving Be Patient Don’t Drink and Drive Get good grades

Analyzing Can you identify the different parts of automobile insurance coverage?

Situation 1 Jose was driving to Streamwood High School. As he was turning into school he was rear-ended by Robert. Jose’s head hit the steering wheel and he was transported directly to the hospital by ambulance. Robert failed to pay his insurance premium for several months and his policy was cancelled. What type of automobile insurance coverage(s) is needed in this situation?

Situation 2 Kathy was leaving Hotdog.com when she backed into Mr. Durbach’s Ferrari. Only the automobiles suffered physical damage. What type of automobile coverage(s) is needed in this situation?

Situations 3 Matthew went fishing at The Fox River. While his car was unattended, someone stole Matthew’s hubcaps. What type of coverage(s) is needed?

Situation 4 Gabby has an “old junker” worth $300. As she left Saturday School she hit the Sabre Rock. What type of coverage(s) is needed?

Situation 5 Angelina, Sam and Miguel were driving to Carmelita’s for dinner. Angelina was talking on her cell phone and totaled her car. Both passengers were not seriously injured but did require medical attention. What type of coverage(s) is needed?

Situation 6 Russell swerved to avoid hitting a cat and struck a tree. What type of coverage(s) is needed?