Objective 4.02 Insurance Law Automobile Insurance Objective 4.02 Insurance Law

Discussion Why have a Personal Auto Policy(PAP)? What does it protect you from?

Auto Claims The at fault driver of a vehicle that damages other property or injures other people is liable for the cost of repairs. North Carolina financial responsibility laws mandate that drivers carry two types of coverage bodily injury property liability

Bodily Injury Liability Coverage Bodily Injury liability protects the insured person from liability claims for injury to: People in other cars Passengers riding with the insured person It DOES NOT cover the insured person (driver)

Property Damage Liability Property Damage liability protects the insured person from liability claims for damage to property of others, such as: Personal property including vehicles, animals Business property including telephone poles and other utility structures Government property such as bridges and other road structures Real property It DOES NOT cover the insured person’s property

Optional Auto Coverage - Collision Collision protects the vehicle owner against damage from a collision with another object or the vehicle turning over Covers the cost of: Repair to insured’s vehicle Charges points to insurance if claim filed Points make premiums increase. Does NOT cover injuries to people

Optional Auto Coverage - Collision Although not required by financial responsibility law, collision is Usually required by a lienholder if loan on vehicle is not paid in full A lienholder is a bank, individual or loan company who holds a secured interest in the property until the loan is paid in full. Example: If car catches fire and loan is still outstanding, the claim dollars are paid to insured and lienholder.

Collision Claim Payments Insurance company may pay either the Cost to repair insured vehicle less deductible, or Actual cash value, market value or NADA Bluebook value of a total loss vehicle less deductible The insurance company does not consider the loan balance when settling a claim! The loan balance is an issue for the owner. Loan balance may be more than a vehicle’s value!

Comprehensive Auto Insurance Comprehensive coverage protects the insured vehicle against damage from almost all damages except collision Fire Theft Vandalism Hail Windstorm Windshield damages Collision with wild animal including fowl It DOES NOT charge points when claim is filed

Other Auto Coverage Medical payments(Med Pay) - Covers anyone in vehicle or hurt by vehicle, even if not moving Ex: Broken finger by closing finger in door or trunk, pedestrians Towing Expense - Pays tow fees Rental Reimbursement - Covers cost of rental when vehicle being repaired due to accident

Uninsured/Underinsured Motorist Coverage Required Coverage in North Carolina Protects policyholder against drivers Without insurance to cover the loss suffered Without enough insurance to cover the loss suffered Examples: Hit and run drivers Drivers who let insurance policy lapse Drivers involved in serious accidents who carry low $ liability limits of coverage

Motorcycle Insurance Liability, Collision, Uninsured/Underinsured and Towing Coverage is identical to a regular automobile policy. It is important to have a special coverage for a customized motorcycle. Traditional motorcycle coverage will only cover the “stock value” not any customizations are added equipment.

Boat Insurance Pleasure boat policies or endorsements often state that coverage includes "the boat and all permanently attached equipment". The policy may then list items that are not permanently attached, but are covered as either part of the boat's value, or as a separate limit of insurance. Items that may or may not be considered "permanently attached" under a policy include: Anchors Batteries Bilge pumps Boat furniture Boat and motor covers Cook stoves Deck chairs Depth finders Detachable canopies Emergency signaling devices Fire extinguishers Fittings Fuel tanks Horns Life preservers

No Fault Insurance The insurer of each party involved in accident pays the insured loss regardless of fault Not required to prove fault of one party over the other Reduces time delays for claim settlement especially in bodily injury lawsuit cases Reduces money spent to resolve the claim NC is NOT a “no fault” insurance state.

Cost of Auto Insurance Insurance companies legally discriminate by using: Relevant statistical data and Risk factors related to the insurance type Underwriters at companies “rate” to determine the premium cost for the coverage requested. Standard premiums may be rated up for hazards Points for tickets or accidents on auto insurance Health issues on life/health insurance

Factors Affecting Cost of Auto Insurance Underwriters at companies “rate” to determine the premium cost for the coverage requested. (cont.) Type of coverage $ Limit of coverage Risk retention -Deductible amount Experience rating – how long driver has been licensed (AGE IS NOT A FACTOR!!) At fault Accidents (Points) Tickets (Points) Type of Vehicle - Value, reparability, engine size, style Geographic area- Urban, suburban, rural Use of Vehicle - Distance driven and purpose Company REFERENCE: Types of Auto Insurance WORKSHEET: Auto Ins. – New Truck WORKSHEET: Auto Insurance Matching