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Overview of Automobile Coverages 1. Automobile liability coverage 2. Medical payments coverage 3. Physical damage coverage, comprehensive and collision 4. Uninsured motorists coverage Vicarious Liability and the Automobile 1. Agency-principal relationships 2. Family purpose doctrine

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Overview of Automobile Coverages


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overview of automobile coverages
Overview of Automobile Coverages
  • 1. Automobile liability coverage
  • 2. Medical payments coverage
  • 3. Physical damage coverage, comprehensive and collision
  • 4. Uninsured motorists coverage
vicarious liability and the automobile
Vicarious Liability and the Automobile
  • 1. Agency-principal relationships
  • 2. Family purpose doctrine
  • 3. Parents who sign application for license
  • 4. Permissive use statues
guest hazard laws
Guest Hazard Laws
  • 1. At one time, most states had guest laws, which restricted the right of passengers to sue the driver of an auto they occupied.
  • 2. Injured guest can collect from a negligent driver only if the driver was operating in a grossly negligent manner.
  • 3. No jurisdiction has adopted a guest law for many years and the laws in many states have been repealed or declared unconstitutional.
auto liability insurance requirements
Auto Liability Insurance Requirements
  • 1. As late as 1971, only three states had compulsory auto liability insurance laws.
  • 2. Currently, 40 states and the District of Columbia have compulsory auto liability insurance laws.
  • 3. The remainder of the states have Financial Responsibility Laws.
financial responsibility laws
Financial Responsibility Laws
  • 1. Despite widespread enactment of compulsory auto insurance laws, most states retained financial responsibility laws.
  • 2. The laws require all parties involved in an accident causing bodily injury or property damage above a specified amount to show proof of financial responsibility.
  • 3. Sometimes called “free-bite” laws, because proof of financial responsibility is required only after an accident.
financial responsibility laws6
Financial Responsibility Laws
  • 4. Financial responsibility is proved by a certificate of insurance (SR-21) or by depositing cash or securities with the state.
  • 5. If proof cannot be provided, the individual’s license will be revoked until proof of future financial responsibility (SR-22) is provided.
insurance for high risk drivers
Insurance for High Risk Drivers
  • Drivers who cannot obtain auto liability insurance through normal market channels may obtain coverage from an assigned risk plan or alternate “shared market” mechanism:
    • automobile insurance (assigned risk) plan
    • reinsurance pool
    • joint underwriting association
    • Maryland State Auto Insurance Fund
criticisms of the tort system as it relates to automobiles
Criticisms of the Tort System as It Relates to Automobiles
  • 1. Many persons who are injured remain uncompensated.
  • 2. Amount of compensation depends on attorney’s skill.
  • 3. Traditional system is inequitable, overpaying and underpaying.
  • 4. Traditional system is too expensive.
no fault concept
No-Fault Concept
  • 1. Under the no-fault concept, no attempt is made to fix blame.
  • 2. Each party collects for injuries sustained from his or her own insurance company.
  • 3. Under a pure no-fault system, the right to sue would be abolished.
types of auto reform laws
Types of Auto Reform Laws
  • 1. Pure no-fault
  • 2. Modified no-fault
  • 3. Expanded first party
typical no fault benefits
Typical No-Fault Benefits
  • 1. Medical Expenses up to specified maximum.
  • 2. Loss wages up to specified dollar maximum.
  • 3. Loss of services (e.g., by homemaker) up to specified dollar maximum.
automobile insurance rating plans
Automobile Insurance Rating Plans
  • Most automobile insurance rating systems begin with three basic factors
  • 1. Age and sex of the driver
  • 2. Use of the auto
  • 3. Driver’s record
automobile rating system operator classification
Automobile Rating SystemOperator Classification
  • Adult Classifications
  • 1. Principal operator age 75 or over
  • 2. Principal operator age 65 to 74
  • 3. Principal operator age 50 to 64
  • 4. Only operator female, age 30 to 49
  • 5. All other adult operators
automobile rating system operator classification14
Automobile Rating SystemOperator Classification
  • Youthful Operator Classifications
  • 6. Female under 25, not married, owner or principal operator
  • 7. Male under 25, married
  • 8. Female under 25, not married, not owner or principal operator
  • 9. Male under 25, not married, not owner or principal operator
  • 10. Male under 30, not married, but is owner or principal operator
automobile rating system use classification
Automobile Rating SystemUse classification
  • 1. Pleasure use
  • 2. To and from work less than 15 miles
  • 3. To and from work over 15 miles
  • 4. Business use
  • 5. Farm use
driver and use rating factors
Driver and Use Rating Factors
  • Pleasure Under Over BusinessFarmPrincipal Operator Use 15 mi. 15 mi. Use Use
  • Age 75 & Over 1.00 1.05 1.15 1.20 .85
  • Age 65 to 74 .85 .90 1.00 1.05 .70
  • Age 50 to 64 .80 .85 .95 1.00 .65
  • Female, age 30 to 49 1.00 1.05 1.15 1.20 .85
  • Other Adult Operator 1.00 1.05 1.15 1.20 .85
automobile rating system
Automobile Rating System
  • Youthful operator discounts
    • 1. Drivers training credit
    • 2. Good student discount
sample youthful driver rating factors
Sample: Youthful Driver Rating Factors
  • Pleasure or To Work or SchoolYouthful Operator Age Farm Useor Business Use
  • Unmarried F (Not O/PO) Under 21 2.10 2.25
  • Unmarried F (Not O/PO) 21 - 24 1.30 1.45
  • Unmarried F (O/PO) Under 21 2.60 2.75
  • Unmarried F (O/PO) 21 - 24 1.60 1.75
  • Unmarried M (Not O/PO)Under 21 2.50 2.65
  • Unmarried M (Not O/PO) 21 - 24 1.35 1.50
  • Unmarried M (O/PO)Under 213.30 3.45
  • Unmarried M (O/PO) 21 - 241.75 1.90
  • Married Male Under 211.55 1.70
  • Married Male 21 - 24 1.25 1.40
safe driver rating system
Safe Driver Rating System
  • Safe driver rating plan charges points for violations and accidents
    • 1. 40 point surcharge for 1 point
    • 2. 50 additional point surcharge for second point (+ 90 total)
    • 3. 60 additional point surcharge for third point (+150 total)
    • 4. 70 additional point surcharge for fourth point (+220 total)