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Vehicle Insurance. Chapter 33. Types of Vehicle Insurance. Laws on Vehicle Insurance. The Costs of Insurance. Basics. Insurance – paid protection against losses due to injury/property damage Policy – contract between ins. co. and policyholder that explains amt./types of coverage

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slide2

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Insurance – paid protection against losses due to injury/property damage
  • Policy – contract between ins. co. and policyholder that explains amt./types of coverage
    • Insurer – issues policy
    • Policyholder – buyer of policy
  • Liability insurance – most basic type of coverage; protects you from claims of injury/property damage to others

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Collision

Insurance

Miscellaneous

Coverage

slide3

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Bodily Injury Liability ins. covers injuries to someone else.
  • Stated in thousands of dollars
  • 1st figure -> injuries to one person
  • 2nd figure -> total for one accident
  • Example:
  • 100/300 bodily injury:
  • $100,000 for injuries to one person
  • $300,000 for all claims

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Collision

Insurance

Miscellaneous

Coverage

slide4

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Property Damage Liability ins. covers damage to another person’s vehicle/property (also covers telephone poles, signs, etc.)
  • Policy might quote all liabilities together
  • Example
  • 100/300/50
  • $100,000 for injuries to one person
  • $300,000 for all claims
  • $50,000 for property damage

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Collision

Insurance

Miscellaneous

Coverage

slide5

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Collision insurance covers damages to your own vehicle
  • Max. amt. covered based on actual cash value of your vehicle, which = orig. value – dep.
  • Depreciation – decline in value of a vehicle because of use

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Miscellaneous

Coverage

Collision

Insurance

slide6

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Medical payments coverage - also called personal injury protection
  • Covers injuries to you or anyone else in your car
  • Typical coverage: $5,000 -$10,000

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Collision

Insurance

Miscellaneous

Coverage

slide7

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Comprehensive coverage covers damage to a policyholder’s vehicle caused by things other than a car accident
  • Examples: falling objects, theft, flood damage, vandalism
  • Will not cover more than the actual value of the car

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Collision

Insurance

Miscellaneous

Coverage

slide8

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Uninsured motorist protection covers you from people who can’t pay insurance claims
  • Anyone riding with you is also protected
  • If you’re hit by a vehicle while walking you are also covered
  • Most states require this

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Collision

Insurance

Miscellaneous

Coverage

slide9

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Basics

  • Other types of protection:
    • Coverage for a rental car
    • Cost of towing
    • Coverage for others who use your car
    • Add a work vehicle to your policy
    • Motorcyclists, motor scooters, snowmobiles insurance

Medical

Payments

Coverage

Bodily Injury Liability

Comprehensive

Coverage

Property Damage Liability

Uninsured

Motorist

Protection

Collision

Insurance

Miscellaneous

Coverage

slide10

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Laws

  • States have laws requiring drivers to show proof that they can pay for any injuries or damages they may cause
  • Also protects you from other drivers
  • Laws vary state to state

Financial

Responsibility

Law

Compulsory

Insurance

Law

No-Fault

Insurance

slide11

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Laws

  • Financial responsibility law – says you must pay for any damage/injury you cause in an accident either w/ ins., savings or by selling property
  • If you can’t pay, you can be sued, lose your license or car

Financial

Responsibility

Law

Compulsory

Insurance

Law

No-Fault

Insurance

slide12

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Laws

  • Compulsory insurance law– legally requires drivers to have a min. amt. of car ins.
  • You must show proof of ins. before you can get a license/register your car
  • Police also ask for ins. when you get pulled over

Financial

Responsibility

Law

Compulsory

Insurance

Law

No-Fault

Insurance

slide13

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • The average annual car ins. cost: $1,200
  • Cost of ins. is directly affected by the amt. insurers pay out in claims
  • Claim – a request for payment from an insurer for any damages covered by a policy
  • The more they pay, the more we pay

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Factors

Driving

Record

slide14

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • Premium – amt. an ins. co. charges a policyholder for a policy
  • Premium covers policyholder for a period, usually a year, and then is renewed
  • Insurer can cancel a policy or refuse coverage

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Factors

Driving

Record

slide15

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • Deductible – an amount in damages a policyholder must pay before the ins. co. pays anything
  • Makes you responsible for small losses and the insurer helps pay for the larger losses

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Factors

Driving

Record

slide16

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • Factors that affect the cost of ins.:
    • Claims paid out
    • Amount of coverage
    • Amount of deductible
    • Type of vehicle
    • Vehicle usage
    • Geographic location
    • Age

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Driving

Record

Factors

slide17

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • Premium will vary according to:
    • Make
    • Model
    • Year
  • New cars and cars with expensive parts are more expensive to insure

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Factors

Driving

Record

slide18

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • Where you live affects your premium
  • Area w/ high crime rate/vandalism/theft will be higher
  • City drivers more expensive than rural

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Factors

Driving

Record

slide19

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • Driver classification includes factors like:
    • Age
    • Gender
    • Marital Status
  • <25, >70 have more accidents
  • Young men > young women

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Factors

Driving

Record

slide20

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Costs

  • Major factor: driving record
  • Accidents/traffic violations = higher premiums
  • Drivers education course/good grades = lower premiums

Type

Of

Vehicle

Insurance

Premiums

Location

Deductible

Driver

Classification

Factors

Driving

Record

slide21

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Laws

Required documentsYour insurance company must give you a New Jersey Insurance Identification Card for each vehicle under your policy.You must keep the card in the vehicle and present it:

Before an inspection

When involved in an accident

When stopped for a traffic violation

When you are stopped in a spot check by a police officer

Failure to present the card may result in fines. Driving an uninsured vehicle may result in fines, community service, license suspension and insurance surcharges.

Financial

Responsibility

Law

Compulsory

Insurance

Law

No-Fault

Insurance

slide22

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Laws

All vehicles registered in New Jersey require three types of mandatory insurance:

Liability insurance pays others for damages that you cause if you are responsible for an accident. It does not cover medical expenses

Personal injury protection (PIP) pays medical expenses if you or other persons covered under your policy are injured in an automobile accident. Often called No Fault coverage, it pays your medical expenses if you were or were not at fault

Uninsured motorist coverage protects you if you are in an accident with someone who doesn’t have proper insurance coverage

.

Financial

Responsibility

Law

Compulsory

Insurance

Law

No-Fault

Insurance

slide23

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Laws

  • No-fault insurance – law that requires drivers involved in accidents to collect damages from their own ins. Co. no matter who is at fault
  • When there is a dispute about who is at fault

Financial

Responsibility

Law

Compulsory

Insurance

Law

No-Fault

Insurance

slide24

Types of Vehicle Insurance

Laws on Vehicle Insurance

The Costs of Insurance

Sue’s new car was stolen only five months after she bought it. It was never found. Since the car was insured for comprehensive coverage, Sue filed a claim for the purchase price of the automobile. The insurance company offered to pay her what they called the actual cash value of the car, which was considerably less than the amount Sue requested. Who is legally correct?

Laws

Financial

Responsibility

Law

Compulsory

Insurance

Law

No-Fault

Insurance

slide25

Sue’s new car was stolen only five months after she bought it. It was never found. Since the car was insured for comprehensive coverage, Sue filed a claim for the purchase price of the automobile. The insurance company offered to pay her what they called the actual cash value of the car, which was considerably less than the amount Sue requested. Who is legally correct?

slide26

Joe lost control of his car one night, crashed through the wall of a corner house and landed in the living room. No one was seriously hurt, but there was considerable property damage. What coverage does Joe need to pay the cost of the damage.

slide27

Randy’s policy lapsed. While on vacation he ran a red light and permanently disabled the motorist in the other car.

  • Is Randy in trouble?
slide28

Karen has all six types of coverage on her 10 year old chevy. Should she drop any part of the coverage? And why?

slide29

Wayne was furious because after moving to another state, his insurance premiums doubled. Wayne had never had an accident in his life, and he did not think this was fair. Can you explain why Wayne’s rates went up?

slide30

Carolyn was comparing her auto policy with her neighbors. She could not understand why her premiums were so much higher than her neighbor’s since they had identical coverage from the same insurance company. What factors may have accounted for the difference in the costs of the two policies?

slide31

Tyrone was sued by the Livingston Family because Mr. and Mrs. Livingston were injured in an accident which Tyrone caused. Tyrone’s liability coverage was 25/50/10. The court awarded Mr. Livingston $25,000 and Mrs. Livingston $10,000 for bodily injury. Was Tyrone’s coverage adequate to pay the costs?