Today’s Agenda  Targets : State what factors affect insurance rates Apply insurance concepts and terminology to traffic accident cases

Insurance Lingo  Indemnity Places you back into the same (financial) position you were in 1 second before the loss  Deductible A set amount the insured must pay before the insurance company will pay benefits  Collision & Comprehensive Insurance

Insurance Lingo  Insured The person or persons covered by X Insurance Company  Claimant The other individual involved in the loss, not insured by X Insurance Company  Arbitration Settling a claim through a neutral party

Automobile Insurance  Why do we need it? Auto crashes - leading cause of death Teens account for 20% of all accidents Economic Cost - $150 billion/year  It’s required! Liability insurance required in most states

What affects insurance rates?  What group of individuals pays the highest rates? UNMARRIED MALE DRIVERS, AGES 16-25

What affects insurance rates?  Marital Status: Singles pay more  Grades: Good Grades= Lower Premiums  Driving Record Many accidents = Higher Premium ASSIGNED RISK POOL- these drivers pay VERY high rates (Bad Risk)  Sport cars= Higher rates Color not a factor  Age: Older drivers (over 25) get better rates  Residence/Commute- city or suburbs, distance

What affects insurance rates?  Higher deductibles = Lower Premium You take on more of the risk  Older cars: Can drop Collision and Comprehensive Coverage  Multi-car Discounts  Increase amount of coverage = increased rates, BUT NOT PROPORTIONALLY! Doubling amount of coverage will not double your premium

MI is ‘No Fault’ Auto Insurance  What does that mean to me?  If insured in MI = Unlimited medical & rehabilitation benefits Wage loss benefits $20 per day for replacement services for up to 3 years REGARDLESS who is at fault

Why do I need insurance?  MI law Misdemeanor $200 to $300 fine And / or 1 year in jail Suspended license for 30 days  Sued and held personally liable Liable for all damages when in an accident

Required Automobile Coverage LIABILITY INSURANCE – 3 TYPES  Personal Injury Protection (PIP) Medical costs if hurt in auto accident  Property Protection (PPI) Up to $1 million for damage your car does in MI to other people’s property (buildings, fences, etc) OOPS! SORRY!

Required Coverage Continued  Residual Bodily Injury and Property Damage Liability (BI / PD) Defense and damages if liable for auto accident Min. limits 20/40/10  $20,000 max per person hurt or killed  $40,000 max payout per accident for hurt / killed  $10,000 max property damage in another state

Available Automobile Coverage  Collision – 3 types Protects against damage to YOUR vehicle due to a traffic accident  Not required by states, BUT required by your lender! Insurance will only pay for damages up to current value of your car  TOTAL LOSS

3 Types of Collision 1. Limited: If >50% at fault, pays nothing If not at fault, pays except deductible 2. Standard: Regardless of fault pays except for the deductible  Mini-tort allows you to get $500 from at fault driver 3. Broad Form: If >50% at fault, same as Standard If not at fault, insurance pays all

Available Automobile Coverage  Comprehensive Coverage Protects against loss to your vehicle (physical damage) due to:  Theft  Vandalism  Fire  Falling objects  Flood  Collides with an animal

Available Automobile Coverage  Uninsured / Underinsured Motorists: Compensate you for pain and suffering and wage loss if injured in hit and run or uninsured motorist hits you Also covers you as a pedestrian  Residual Liability Insurance Increase Buy more than basic limit of 20/40/10  “Mini-Tort” coverage Cover $500, other person, deductible if you cause an accident