Ch 2.1 Auto Insurance Automobiles & Risk

In America… 40,000 Americans DIE each year 40,000 Americans DIE each year 3,000,000 Americans are injured each year 3,000,000 Americans are injured each year 6,000,000 accidents are reported in America each year 6,000,000 accidents are reported in America each year In 2000, the cost of those accidents: In 2000, the cost of those accidents:$230,000,000,000 (Yup, thats BILLIONS!!!!)

Purposes of chapter 2.1 What does auto insurance do for me? What does auto insurance do for me? What should I consider when buying auto insurance? (AKA How can I spend less?) What should I consider when buying auto insurance? (AKA How can I spend less?)

What does auto insurance do for me? Financial protection from loss for me AND the other guy Financial protection from loss for me AND the other guy Life Life Health Health PT/rehab PT/rehab Lost wages Lost wages Property Property Legal Legal Negligence Negligence Recklessness Recklessness

How can I spend less? Use seatbelt Use seatbelt Go the speed limit Go the speed limit Know your limits (when in doubt, dont do it) Know your limits (when in doubt, dont do it) Concentrate (no cell phone calls, no texting, no fiddling with the CD player or iPod, no screwing around with your friends in the car!) Concentrate (no cell phone calls, no texting, no fiddling with the CD player or iPod, no screwing around with your friends in the car!)

What do insurance companies consider when they figure my premiums? Rule: Increase risk = Increase premium Age: youngest & oldest have most risk (highest rate of fatalities) Age: youngest & oldest have most risk (highest rate of fatalities) Gender: males drive more miles, engage in riskier behavior (2 out of every 3 teen fatalities are males) Gender: males drive more miles, engage in riskier behavior (2 out of every 3 teen fatalities are males) Type of Vehicle: if its expensive it costs more to replace (damaged or stolen); SUVs cause more damage; if vehicle has safety features (air bags, security system) costs are lower Type of Vehicle: if its expensive it costs more to replace (damaged or stolen); SUVs cause more damage; if vehicle has safety features (air bags, security system) costs are lower

What else do insurance companies consider when they figure my premiums? Geographic Location: Where cost of living is high (i.e. NYC, CA) insurance premiums are higher; longer commutes; more crashes where there are more people; fatalities are more likely to occur in rural areas Geographic Location: Where cost of living is high (i.e. NYC, CA) insurance premiums are higher; longer commutes; more crashes where there are more people; fatalities are more likely to occur in rural areas Driving History: People have habits and patterns of behavior; lotsa tickets or accidents => more tickets & accidents; usual time period to reduce risk is 3-5 years Driving History: People have habits and patterns of behavior; lotsa tickets or accidents => more tickets & accidents; usual time period to reduce risk is 3-5 years

In Case of an accident… 1.Help injured 2.Call police 3.Prevent more accidents 4.Get insurance information 5.Names & addresses of witnesses 6.Cooperate with police

Effects of Filing Claims May produce higher premiums May produce higher premiums Filing a lot may cancel your insurance Filing a lot may cancel your insurance If you are liable and the costs exceed your coverage, you may be sued for the remaining money If you are liable and the costs exceed your coverage, you may be sued for the remaining money