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3. 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.

4. 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.

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

6. 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

7. 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

8. 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

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

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

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

12. 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.

13. 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

14. 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.

15. 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.

16. Figure 34.1
Vehicle Insurance

17. 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

18. 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

19. 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.

20. 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.

21. 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.

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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.

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

29. 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

30. 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

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

32. 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.

33. 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

34. End of