Insurance & Responsibilities of Owning a Vehicle

Insurance: What is it? Remember: You can’t drive without it – Financial Responsibility Laws Insurance is a legal contract that transfers risk from a policyholder to an insurance company in exchange for a premium.

Insurance: What is it? Risk – The possibility of financial loss Policy Holder – The person who has purchases and owns an insurance policy Insurance Company – A company that provides the insurance coverage for its policyholders Premium – The cost of insurance

How Insurance Works You contact an insurance company and take out a policy with them What you pay on your policy is called your premium If nothing happens, you continue paying your premium If something happens, you have to contact your insurance company for them to pay for damage, which is called filing a claim.

What Are Some Risk Factors? Age of driver Years of driving experience Gender of driver Number of Drivers on Policy Year, make and model of car Special safety features in car Accident / Incident History Number of Traffic Violations (tickets) Address, City, State Where auto is parked Use: personal or business Annual mileage Grades in school Owned or financed Insurance record Coverage Required

What is Auto Insurance An auto insurance policy is comprise of seven different kinds of coverage. – Liability – Medical Payments or Person Injury Protection (PIP) – Collision – Comprehensive – Uninsured and Underinsured Motorist Coverage – Towing and Labor (optional) – Rental Reimbursement (optional)

What is Auto Insurance? Provides property, liability, and medical coverage: – Property coverage pays for damage to or theft of your car – Liability coverage pays for your legal responsibility to others for bodily injury or property damage – Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

Facts on the Declaration Page of Your Policy  The exact name of your insurance company  The policy number  Your coverage and how much it costs  Your deductibles, if any  The vehicles insured on the policy, their vehicle identification numbers and their classifications for rating purposes Virginia Auto Insurance

Liability Insurance Covers Bodily injury to other people Damage to the property of others caused by your negligence – The negligence of someone driving your car with your permission.

Liability Insurance Required in VA Bodily & Property Damage Liability Uninsured Motorist / Underinsured Motorist 25/50/20 required by law – $25,000 per person – $50,000 per accident for bodily injury liability – $10,000 per accident for property damage For example, 25/50/20 means coverage up to $50,000 for all persons injured in an accident, subject to a limit of $25,000 for one individual and $20,000 coverage for property damage

Penalties for Driving without Proof of Financial Responsibility  $500 fine  Suspension of your driver’s license  Suspension of your vehicle registration  Higher insurance premiums for the next 3 years (SR-22)  If you caused the crash, you are responsible for other people’s losses Suspended Virginia Auto Insurance

Collision Coverage Covers damage to your car caused by collision with another vehicle or object by your car turning over. Or even potholes. If you are at fault, you are covered There is almost always a deductible which you must pay if you repair or replace the car – $250 to $1,000 – You can lower your rate by increasing your deductible

Comprehensive Coverage Covers damage to your car other than that caused by collision, including – Theft – Vandalism – Impact with animals or birds – Explosion – Flood – Falling objects – Windstorm – Glass breakage Not required, but is offered by most insurance companies Usually a deductible

Uninsured / Underinsured Motorist Will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss Not required, but often required by your financing company Pays for – Medical expenses – Funeral expenses – Car Repair – Car Rental – Replacement of damaged contents

Medical Payments Pays for the treatment of injuries to the driver and passengers of the policyholder’s car. Can cover – Medical payments – Lost wages – Cost of replacing services normally performed by someone injured in an auto accident – May also cover funeral costs

Towing and Labor Coverage Pays – Towing – Onsite labor charges such as changing a tire – When your car is disabled Covers – Your car Not required by Virginia Law

Rental Reimbursement Pays for a Car Rental while your car is being repaired – After a crash – After comprehensive losses Covers you and your family members It is optional and not required by VA law

Discounts Some companies may offer discounts for – Your age – Annual mileage driven – Grades – full time college or high school students with a 3.0 – Cars with automatic daytime running lights – Policy renewal, no claims – Good driving record – Membership or adult leadership in certain youth organizations – Anti-lock breaks

NOTE: SOME insurance companies offer the following discounts Auto Insurance Discount Savings Defensive driving courses Percent off Percent off Liability, Collision, and Medical Payments Airbags and other passive restraints Percent off Percent off Medical Payments and Bodily Injury Drug / alcohol education Percent off Percent off Liability, Collision, Medical Payments, and Bodily Injury Anti-theft devices May Reduce Comprehensive premium; May Reduce Comprehensive premium; amount varies by device and county Two or more cars on a policy May reduce Liability, Medical Payments and Collision Insurance costs Education and Car Equipment Savings

 High risk drivers (bad driving record) Each company has its own rules for deciding whether to insure high risk drivers (Called “underwriting guidelines”) Tickets and accidents, driving record Usually much harder to get car insurance Must pay higher premiums  Assigned-risk drivers VA Auto Insurance Plan—requires all insurance companies to take some high risk drivers High risk drivers are assigned to an insurance company by the state Surcharges are added for at least 3 years High Risk Drivers

Crashes or ViolationsSurcharges Your premium MAY increase by: One Collision (at-fault) in 36 months 15 % Two Collisions35 % Three Collisions60 % Each moving violation (speeding, etc.) (Surcharges will apply for certain traffic violations) VARIES Involuntary Manslaughter60 % Driving Under the Influence60 % Criminally Negligent Driving60 %

How to Handle a Collision CALL THE POLICE!! Complete an accident report Exchange contact and insurance information with the other driver; DO NOT ADMIT FAULT!! Be read to describe the incident and provide the other driver’s information Report the claim to your insurance provider Send your insurance provider any paperwork you receive regarding the accident

Many people can’t afford to pay their car insurance premium in one installment Insurance companies must offer installment plans Agents and insurers may use finance companies that will - lend you money at high interest rates to pay insurance premiums Look for insurance companies that offer installment plans with low interest and fees Installment Plan Number of Months_____ Interest Rate_____% ________________________ Client ________________________ Company Representative Installment Plan Paying for Insurance

Cancellation and Non-Renewal Cancellation First 60 days, company can cancel for any reason, including a ticket or a collision After policy is in effect more than 60 days, can cancel but: - must give 10 days' notice before canceling -Must refund unearned premium Note: Cancellation for non-payment is effective immediately.Non-renewal Company will not offer a new contract Request Reasons in Writing Why company canceled the policy Why company will not renew the policy

What should you do when you are involved in a crash and have a claim? If the company rejects your claim or pays only part of it, you should be given an explanation for that decision. Notify your insurance company promptly Your agent can help you file the claim correctly and completely fill out any forms needed to verify your claim Keep a copy of the forms for your records After the Collision

Do You Really Need a Car? Can you afford a car? – Purchase price, maintenance, oil & gas, repairs, insurance and license, property tax How will the car affect your schedule? – Do you have to work to support your car? Are you mature enough for the responsibilities? Can you deal with the social pressures of ownership? – Remember the risk of driving

Personal Factors How will your car be used? How many passengers will you have? What age are your passengers? – Two or four door model? How far will you drive each day, month? Will you tow a trailer? Heavy load? Car + insurance = cost of ownership

Factors in Selecting a Car Safety – Air bags – Crash test stats – ABS antilock brakes – Size – Death rates Comfort Fuel Efficiency: many factors determine this

Crashworthiness Features that reduce the risk of death or serious injury when a crash occurs You can get a rating of crashworthiness from the Insurance Institute for Highway Safety’s Website –

Buying a Used Car Be very careful Many people can have problems No warranty Check the blue book value Bring the car to your mechanic to check out Give it a test drive on side streets and highway Make sharp turns at a slow speed Slow down to 15 mpg and jam on gas: blue smoke is a problem

Financing Be careful about the fine print – Watch out when purchasing from a dealer – You may get a better deal from your bank Leasing can seem inexpensive but be expensive in long term You will have to pay for mileage above the contract Examine monthly payments and add to insurance, operating and tax costs

Vehicle Price Formula Purchase Price x Interest Rate x Length of Finance Purchase Price - $10,000 Interest Rate - 8 percent Interest Rate - 8 percent Length of Finance - 24 months Length of Finance - 24 months Purchase Price + Sales Taxes + Interest = Total Price Approximately 11, What is your monthly payment? Your Monthly Payment

Vehicle Price Monthly Payment Formula Price + taxes + interest # of months = Monthly payment Cost of Vehicle $10, % Titling Tax 8% Interest on Loan (based on unpaid balance) Loan is over 24 Months. $10, $ $ * 24 = $ * 1 st year interest = $10,000 x.08 = $800 *2 nd year interest = $5,000 x.08 = $400 Your Monthly Payment

Responsibilities of Owning a Vehicle Performing under the hood checks Performing weekly self checks to ensure vehicle safety

Engine Coolant Reservoir 2. Windshield Washer Fluid Reservoir 3. Engine Oil Filler Cap 4. Transmission Fluid Dipstick (Automatic Transmission) 5. Engine Oil Dipstick 6. Brake Fluid Reservoir 7. Clutch Fluid Reservoir (Manual Transmission) 8. Battery 9. Power Steering Fluid Reservoir 10. Drive Belts 11. Air Filter Assembly Under the Hood Checks

Self-Check Check every 1-2 Months All interior and exterior lights Engine oil level, brake fluid level, and engine coolant level Lap/shoulder belts and seat latches for wear and smooth function Check Twice Per Year Air pressure in spare tire Power steering fluid level Parking brake for proper operation Hinges, latches, door weather strips, and outside locks (check and lubricate) Body and door drain holes (check and clean) Cooling system coolant strength Battery connections (clean if necessary) Transmission fluid level Professional Service Every 3, ,000 Miles Oil change/filter replacement Tire rotation/balance Every 15,000 Miles Automatic transmission fluid level Brake pads/shoes/rotors/drums, brake lines, hoses, and parking brake system Engine cooling system Steering linkage, suspension and, if equipped, drive shaft and ball joints Cabin air filter replacement, if equipped Every 30,000 Miles Exhaust system and heat shield Engine air filter and fuel filter replacement Accessory drive belts Automatic transmission/transaxle service, if equipped Under the Hood Checks

Weekly Self-Checks Tires Tire pressure – Check recommendation in owner’s manual Tread wear, damage, or bars showing Cuffing (uneven wear on inside or outside tread areas) Bald spots Cuts, stones, metal fragments, or other damage Vehicle Safety, Communication Devices & Accessories Headlights, tail lights, and turn signals Emergency lights and markers Emergency kit Windshield wiper blades, operation, and washer fluid HVAC Safety warning lamps (brake, ABS, air bag, safety belts)