1. Automobile Insurance: The Basics

2. What is the likelihood you will be in an automobile accident?
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

3. Automobile Insurance: The Basics
Even a minor accident can result in thousands of dollars in damages
Damage to your car
Damage to other cars involved
Medical Bills
Lost wages
Pain and suffering
Prosecution
Legal Fees
Fines

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

5. 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.

6. Are you a risk to the insurance company?
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

7. What is the insurance company looking for?
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 premium
High risks will be charged a higher premium

8. What determines your premium?
Automobile Insurance: The Basics
What determines your premium?
Age
Youngest and oldest drivers are the highest risk
Driver inexperience is a major factor in accidents
Teenagers are also more likely to engage in dangerous behavior
Older drivers experience diminished eyesight and slower reflexes

9. What determines your premium?
Automobile Insurance: The Basics
What determines your premium?
Gender
Men tend to drive more miles
Men are more likely to engage in risky road behaviors
Two-thirds of teenagers killed in auto accidents are male
The gender gap continues to narrow

10. What determines your premium?
Automobile Insurance: The Basics
What determines your premium?
Vehicle Type
Type of vehicle
Expensive, high-performance always cost more to insure
Crashworthiness
How well does it protect the passengers
Some models incur less damage
Safety Features
Seatbelts and airbags are now standard
Side airbags and anti-lock brakes can lower premium

11. What determines your premium?
Automobile Insurance: The Basics
What determines your premium?
Driving Record
Statistics show that people follow patterns of established behavior
If you are cited for tickets your premiums will increase
If you are cited for an accident your premiums will also increase
It usually takes 3-5 years for a reduction in premiums after a violation

12. What determines your premium?
Automobile Insurance: The Basics
What determines your premium?
Geographic Location
Where the cost of living is high, the cost of insurance is higher
Urban areas are almost always higher in accidents than rural areas
Fatal accidents are more likely to happen in rural areas due to increased speeds

13. What can you do to reduce risk and lower premiums?
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