Automobile Insurance: The Basics

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Presentation transcript:

Automobile Insurance: The Basics

What is the likelihood you will be in an automobile accident? Automobile Insurance: The Basics What is the likelihood you will be in an automobile accident? There are more than 12 million motor vehicle accidents annually The typical driver will have a near automobile accident one or two times per month The typical driver will be in a collision of some type on average of every 6 years Crashes are the leading cause of death for ages 3-33

Automobile Insurance: The Basics Even a minor accident can result in thousands of dollars in damages Damage to your car Damage to other cars involved Medical Bills Lost wages Pain and suffering Prosecution Legal Fees Fines

Automobile Insurance: The Basics If you are in an accident how do you pay for it? Bank Account? Parents? Rich Uncle? Best Friend? Insurance?

Automobile Insurance: The Basics What is Automobile Insurance? An auto insurance policy is a contract between you and an insurance company. You pay a premium, and in exchange, the insurance company promises to pay for specific car-related financial losses during the term of the policy.

Why do I need auto insurance It’s the law! There are risks you can’t afford to take What happens if… You’re involved in a crash that causes property damage? You hurt yourself or someone else? Your car is damaged when you’re not driving it? (by weather, vandalism or a hit-and-run) Your car is stolen? Your car breaks down and needs to be towed?

Are you a risk to the insurance company? Automobile Insurance: The Basics Are you a risk to the insurance company? To keep premiums as low as possible to the insured, a screening process is completed before an insurance contract is completed

What is the insurance company looking for? Automobile Insurance: The Basics What is the insurance company looking for? Some vehicles, and some drivers, carry more risk than others Low risks will be charged a lower premium High risks will be charged a higher premium

What determines your premium? Automobile Insurance: The Basics What determines your premium? Age Gender Vehicle Type Driving Record Geographic Location

What is a Deductible? This is the amount per accident that you pay out of pocket before insurance starts to pay Common deductible amounts are usually $250, $500, and $1000 The higher the deductible amount you pay the lower your premiums are

Automobile Insurance: The Policy A common mistake when shopping for automobile insurance is looking only at the price between two policies Policies differ from policy to policy and company to company

Automobile Insurance: The Policy Five parts to an insurance policy Declarations Coverages Exclusions Conditions Definitions

What can you do to reduce risk and lower premiums? Automobile Insurance: The Basics What can you do to reduce risk and lower premiums? Use your seatbelt Observe Speed Limits Know your own limits Concentrate on driving Be Patient Don’t Drink and Drive Get good grades

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