1 Understand options and practices for meeting transportation needs. Personal Finance 6.02

2 ON The GO!!!!!!!!!!!!!! How many hours of a typical weekday do YOU spend at home, and how many are spent “on the go” away from home? How many hours of a typical weekend day do YOU spend at home, and how many are spent “on the go” away from home?

3 Journal Entry Brainstorm and list the modes of transportation options used to get YOU where YOU need to go. Public transit -Public modes of transportation available in cities---bus, subway, trolley Taxicabs Walking, bicycling Motorcycle, moped Carpooling - Grouping with others to share rides to and from work

4 Key Terms Handout Available -- STUDY

5 Introduction Transportation is a part of everyday life. It comprises about % of an individual’s budget. Individuals need to assess and research their transportation needs. If this means purchasing an automobile, it should be well planned. Often, the automobile is the second most expensive durable purchased. The first is a home.

6 Introduction Consumers often make a common mistake, which is purchasing a vehicle based upon what looks good instead of assessing long term costs (gas mileage, insurance, etc.) and practicality. Consumers may feel their vehicle choice is a symbol of prestige and/or importance instead of choosing an affordable and practical vehicle. In order to avoid making this costly mistake, consumers should understand their needs versus wants before purchasing a vehicle.

7 Journal Entry Draw a T-chart in YOUR journal and make a list of YOUR wants and needs for a vehicle of your choice. Share results and discuss why certain things were classed as “needs” and others as “wants.” Do YOU think YOUR list of wants and needs reflect consideration of: What YOU can afford Where and when the vehicle will be used Who will be driving the vehicle Where they live as it relates to the type of heating and cooling system required in the vehicle.

8 Class Discussion Discuss the advantages and disadvantages of owning an automobile as compared with a truck or a van.

9 Researching an Automobile Read the Researching an Automobile information sheet F1 located in your folder.

10 Class Discussion If you could purchase any vehicle, what would you buy? Why do you like the vehicle, its cost, and how they would purchase it. Could you afford the rest of the vehicle’s expenses? REMEMBER what YOU want in a vehicle and what is affordable and realistic may be two different things – needs versus wants.

Researching an Automobile What should I look for?

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 12 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Transportation Part of everyone’s life 15 – 20% of an individual’s budget Automobile is the 2 nd most expensive purchase, only after a home You will be researching an automobile to purchase. Transportation is a part of everyday life.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 13 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Want to Buy a Vehicle? Consumers should plan their vehicle purchase to avoid any costly mistakes Any large purchases should be planned Places to purchase a vehicle: Dealership, private owner, internet Auto superstore – Dealerships with huge inventories of new and used vechicles

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 14 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona What kinds of mistakes can a consumer make when purchasing an automobile? Examples include: They purchase a vehicle on what looks good instead of long term costs (gas mileage, insurance, etc.), affordability, and practicality. Making an impulse buy. Impulse buy – making a purchase without fully considering priorities and alternatives. Not researching the vehicles before going to a dealership. Spending more money than planned.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 15 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Planned Buying Process 1. Prioritizing wants 2. Pre-shopping research 3. Fitting the budget 4. Comparison shopping 5. Negotiating 6. Making the decision 7. Evaluating the decision

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 16 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Considerations Make The brand of a vehicle Model A line of vehicles made by a specific company, such as Ford Taurus Domestic American-made Imported Foreign-mad Options Features available at extra cost or special prices

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 17 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 1 - Prioritizing Wants Assess transportation needs and wants Need: something thought to be a necessity Want: something unnecessary but desired Consider all automobile options as wants Prioritize the wants from low to high priority Prioritizing wants helps the consumer Consider costs and benefits of different vehicle options Consider the “big picture” of the vehicle purchase rather than a specific want (such as heated seats, color, engine size, etc)

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 18 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Prioritizing Wants – Questions to Think About How will the vehicle be used? Where will the buyer be living? How will the vehicle be stored or parked? How much will it be driven? What options would the buyer like in the vehicle?

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 19 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 2 – Pre-shopping Research Research should be based on transportation wants Complete this before visiting a car dealership or salesman Helps the buyer to be informed about: What they are looking for Vehicles in their price range Available options

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 20 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Ways to Perform the Research Family & friends Experiences with different makes and models of different vehicles Likes, dislikes, and recommendations Periodicals Consumer Reports Federal Citizen Information Center Kelley Blue Book Motor Trend Car and Driver Access this information at the public library and/or the internet

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 21 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Periodicals Consumer Reports– Must subscribe to use Web site Federal Citizen Information Center Kelley Blue Book – Motor Trend - Car and Driver –

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 22 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Price Research Price Base price: vehicle price with standard equipment, no extra options MSRP: Manufacturer’s suggested retail price Includes base price, price of options installed by manufacturer, and their transportation charge Sticker Price Dealer’s initial asking price

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 23 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Price Research continued Price continued Determine how much a dealer paid to help decide which vehicles to consider and to negotiate a fair price Consumer Reports, Kiplinger’s Personal Finance magazine, and Edmund’s New Car Prices Used cars Blue book price: dollar value given to the vehicle based on its year and model Used as a guide for car dealers and banks for pricing trade-ins Kelley Blue Book

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 24 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Vehicle Options Research General type of vehicle Car, truck, 2-door, SUV, sporty Make and model Ford Taurus, Honda Accord Safety Braking and emergency handling, airbags Reliability Some specific models have high marks, may be higher priced but will save on repair costs

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 25 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Vehicle Options Research continued Fuel economy Type of gas used, gas mileage Power - A vehicle’s ability to accelerate for speed and Performance - A vehicle’s ability to handle, brake, and accelerate on the road Driving on highways, steep hills, mountains, snow, muddy roads, or in a city Comfort and convenience Size of headroom and legroom, cargo space

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 26 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Vehicle Options Research continued Insurance Chosen vehicle affects the price of insurance; obtain a quote for the vehicles being considered Other options Power steering and brakes, manual or automatic, air conditioner, rear-window defogger, radio/tape/CD player, type of tires, cruise control, sun roof, heated seats, power door locks and windows, etc.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 27 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona New vs. Used Research New Vehicle: Not pre-owned Warranty Manufacturer options Wide selection Expensive Depreciation Loss in the vehicle’s value due to time and use (greatest cost) Used Vehicle: Cost less to buy Cost less to insure Avoid rapid deprecation Wide selection May offer warranty Returned leased cars Have an independent mechanic inspect any used car before purchase

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 28 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Depreciation Depreciation - the loss in the vehicle’s value due to time and use. Greatest cost of owning an auto. Largest automobile fixed expense. Federal tax guidelines assume a vehicle depreciates 52% during the first two years of an expected lifespan of five years.

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 29 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 3 – Fitting the Budget “Can I afford it?” Most important question Amount the buyer can afford in his/her budget dictates the vehicle price All costs must be taken into consideration before choosing a vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 30 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Fitting the Budget continued Fixed expenses Depreciation Insurance costs Loan payment and interest if financed Parking fees Licensing Registration Flexible expenses Maintenance Gas Oil Repairs *Vehicle price is not the only cost involved

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 31 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Buy or Lease? Invoice Price The price the dealer pays the manufacturer up front costs Costs when signing a lease---deposit, taxes, and registration fees Leasing Monthly payments in exchange for exclusive use of vehicle for a time

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 32 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Buy or Lease? capitalized cost Price for a leased car capitalized cost reduction Payment similar to down payment that results in lower monthly payment lease term Length of the lease---usually, 24, 36, or 48 months

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 33 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Buy or Lease? option to purchase At end of lease, the alternative to purchase the leased vehicle residual value The worth of a leased vehicle at the end of the lease installment loan A loan to be repaid in equal payments

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 34 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 4 – Comparison Shopping Comparing services or products to determine the best buy or quality product at a fair price Allows the consumer to build upon the information learned in the pre-shopping research *As the price of a vehicle increases, consumers are often not buying additional safety, capacity, or power, but instead style and prestige

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 35 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Comparison Shopping continued Narrow the choices to a few specific makes and models with desired options Visit the appropriate store to learn more information about each choice to make comparisons Inquire about price, dealer incentives, financing options, leasing, warranties, and service contracts Test drive each potential vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 36 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Comparison Shopping continued Goal of comparison shopping Narrow the choice even further to negotiate for the best deal

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 37 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 5 - Negotiating Process of deciding the actual terms of the purchase and agreement between the seller and buyer Obtain a firm price before discussing any other aspects including a trade-in Compare prices from different dealers Let them know you have done your research and whether their price is high

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 38 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Negotiating continued Keys to all negotiations Be able to say NO Take the purchase to another business

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 39 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 6 – Making the Decision The best place to decide on which vehicle to purchase is NOT the showroom where you are around the dealer Take the information home to compare all options After making the decision, return to the dealer to close the sale

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 40 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Step 7 – Evaluating the Decision Think about the things which went well and what did not This will be helpful the next time a similar purchase is made If the process was successful and you are happy, compliment the seller If you have a complaint, make the complaint known to the seller then move to the supervisor if necessary

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 41 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Lemon Laws Lemon A vehicle in and out of the repair shop with problems monthly An estimated new 150,000 vehicles sold each year are lemons. Money Troubles, 2001, Leonard All states have enacted lemon laws Specifics vary state-to-state and are in place to protect consumers

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 42 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Lemon Laws continued To fall under the lemon law New vehicle must have a substantial defect which cannot be fixed in a reasonable time Defect remains unfixed after four repair attempts or the vehicle remains in the repair shop for a total of 30 days This allows the consumer the right to a refund or a new vehicle

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 43 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Lemon Laws continued What should you do if you feel you have purchased a lemon? Contact the state’s attorney general office to request information on the state’s lemon laws and how to use them if they have purchased a lemon

G1 © Family Economics & Financial Education – Revised December 2004 – Transportation Unit – Researching an Automobile – Slide 44 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Conclusion Before purchasing a vehicle, follow the planned buying process to avoid a costly mistake 1. Prioritize wants 2. Pre-shopping research 3. Fit the budget 4. Comparison shop 5. Negotiate 6. Make the decision 7. Evaluate the decision

activity What Do I Want/Need In A Vehicle?

activity Researching an Automobile

activity Check It Out, Do the Math, Buy the Vehicle Review Meeting Transportation NeedsMeeting Transportation Needs

48 Resources Auto Buying Tips – This site has many vehicle lists including the top 10 vehicle lists for cars, trucks, best selling, used cars, etc. Also lists fuel efficient vehicles. Autobytel – This site allows a consumer to search for a vehicle by make, category, price, or payment. It will categorize the vehicles by compact cars, sports cars, trucks, SUVs, etc. When searching by payment, the consumer can change the loan variables and down payment amount to fit their personal needs.

49 Resources Bankrate – This site has a variety of automobile information including a list on APRs for each state and loan calculators. Car and Driver – The magazine’s Web site with current vehicle information. Information is not guaranteed to be unbiased.

50 Resources Cars Direct – This site offers a “What Can I Afford?” calculator. The consumer enters the monthly payment amount they can afford, the down payment, credit rating, length of the loan, and sales tax. It will calculate the highest price of a vehicle affordable for a loan or a lease. It also allows the consumer to enter their annual gross income and then it automatically calculates a monthly payment amount and the highest price of a vehicle affordable. The consumer can then click on a button which will show them a list of vehicles in the price range.

51 Resources Car Prices – This site allows consumers to build a new car and give price estimates, research the vehicle, and compare it to other vehicles. While building the vehicle, the price is listed for the available options. (dream vehicle)

52 Resources Cascade Bank – This site offers loan calculators and a loan application. Consumer Reports – Unbiased information; the most recent April issue is dedicated to automobiles. Edmunds – A site with a variety of automobile information including prices, review, advice, etc.

53 Resources Federal Citizen Information Center - This site has many informational and fact sheets on a variety of automobile topics. Kelley Blue Book – This site lists the blue book values, vehicle reviews, tips and advice, etc. Motor Trend - The magazine’s Web site with current vehicle information. Information is not guaranteed to be unbiased

54 Resources Yahoo! Auto Loan Center – This site has many different loan calculators to find and compare options to fit one’s budget. The “What Can I Afford?” link allows consumers to enter their down payment amount with loan variables to give an affordable vehicle price for consumers to use as an estimate when looking for a vehicle.

Automobile Insurance Managing the Risk

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 56 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Did You Know?  There are 35 million automobile accidents annually! Insurance Information Institute  Motor vehicle crashes are the leading cause of death in the United States! Consumer Education & Economics

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 57 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona What is Risk?  Risk – Uncertainty about a situation’s outcome Unpredictable events which can lead to loss or damage

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 58 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona What is automobile Insurance?  Automobile Insurance Arrangement between an individual (consumer) and an insurer (insurance company) Protects individuals against risk from automobile accidents

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 59 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Purpose of Automobile Insurance  To help individuals limit financial loss when an automobile accident occurs  When people buy automobile insurance, they transfer part of the financial risk to the insurance company

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 60 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona What About Your Insurance?  This video clip from YouTube discusses the following: How teen drivers can stay safe on the road What effect teen drives have on insurance policies What teenagers can do to help keep insurance costs low 

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 61 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona What is a Policy?  Policy - Contract between the individual and insurer specifying terms of the insurance including: Premium – fee paid to the insurance company to be covered under the specified terms Deductible – amount paid by the policy holder (consumer) for the initial portion of a loss before the insurance coverage begins

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 62 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Four Types of Coverage 1. Liability Insurance 2. Medical Payment Insurance 3. Uninsured/Underinsured Motorists Insurance 4. Physical Damage Insurance Comprehensive Collision

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 63 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Liability Insurance  Liability Insurance Covers injuries or damage caused to other people or their property  Two types of liability occur from owning and operating a vehicle: 1. Bodily Injury – driver or car owner is held legally responsible for injuries suffered by another person 2. Property Damage – driver or car owner is held legally responsible for damaging another’s property

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 64 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Liability Insurance continued  Liability insurance is the minimum amount of insurance required by law  Does not cover losses suffered by the insured or property damage to that driver’s car if he or she caused the accident  Must have at least the state minimum for liability insurance

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 65 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Liability Insurance continued  Policy limits for liability are usually quoted with three figures such as 25/50/10 Each figure represents a multiple of $1,000  25 = $25,000 Per-person bodily injury limit $25,000 is the most which will be paid for any one person’s bodily injury liability losses from an accident

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 66 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Liability Insurance continued  50 = $50,000 Per-accident bodily injury limit $50,000 is the most which will be paid for all bodily injury losses from an accident  10 = $10,000 Per-accident property damage liability limit $10,000 is the most which will be paid in property damage liability from an accident

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 67 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Medical Payment Insurance  Medical Payment Insurance Covers injuries sustained by the driver of the insured vehicle or any passenger regardless of fault Covers insured family members injured as passengers in a car or injured while on foot or bicycle  Pays for hospital and medical bills Some pay for funeral expenses  Not required in all states

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 68 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Uninsured/Underinsured Motorists Insurance  Uninsured/Underinsured Covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficient insurance  Situations where this is needed: Hit-and-run accidents (unidentified driver) Accident with an uninsured driver Accident with someone with insufficient insurance to cover the losses  Not required in all states

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 69 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Physical Damage Insurance  Physical Damage Insurance Provides protection for damages caused to the vehicle  Two types of coverage are available: 1. Comprehensive Coverage – includes all physical damage losses except collision and other specified losses. Usually includes deductible. Losses covered include:  Theft, vandalism  Fire, ice, windstorm, or hail  Glass breakage  Contact with animal

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 70 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Physical Damage Insurance continued 2. Collision Coverage – covers a collision with another object, car, or from a rollover  Paid regardless of fault  Generally covered when driving someone else’s car with their permission

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 71 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Optional Protection  Towing Coverage Pays the cost of having a vehicle towed to receive repairs  Rental Reimbursement Provides a rental car when the insured’s vehicle is being repaired after an accident or if the vehicle was stolen May provide only part of the funds

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 72 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Insurance Rate Influences  Insurance rates are determined for each individual:  Age People under age 25 pay higher premiums  Gender Men have more accidents, rates may be higher  Marital status Married drivers have fewer accidents, so rates are lower

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 73 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Influences continued  Driving record Safe drivers have lower rates Number and type of tickets will increase rates Number and severity of accidents will increase rates  Type and age of vehicle Newer, more expensive, and higher repair cost vehicles have higher rates Frequently stolen vehicles have higher rates Color of vehicle does not matter

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 74 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Influences continued  Vehicle use Rates are usually higher when driving more than 7,500 miles a year The more one drives, the greater the chance of an accident  Place of Residence Rates vary among states  People in large cities usually pay more than in rural or suburban areas Weather conditions may affect rates

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 75 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Influences continued  Number of drivers on the policy Additional drivers raise the premium It costs a driver under the age of 25 less to be added to his/her parents’ policy than to purchase a separate policy  Driver training May receive a discount for having taken a driver’s education course

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 76 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Influences continued  Good student discount May receive a discount for good grades in school  Multiple car discount May receive a discount for having two or more vehicles on the same policy  Anti-theft systems May receive a discount for anti-theft devices such as car alarms

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 77 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Influences continued  Multiple policies with the same company Having both automobile and home insurance  Long-time customers Some companies might offer discounts to long- time customers

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 78 Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona Save Money on automobile Insurance  Shop around  Select appropriate coverage and limits  Avoid expensive or high-performance vehicles  Take advantage of discounts

79 REVIEW Automobile Insurance

80 Options for Automobile Insurance Basic types of auto insurance Liability insurance covers when liable for an accident where others are injured or killed Collision insurance pays for loss or damages to insured person’s car due to accident Comprehensive physical damage insurance pays for losses due to fire, theft, falling objects Medical payments coverage pays insured’s medical expenses resulting from accident No-fault auto insurance pays claims regardless of who is at fault Underinsured motorist insurance covers difference between liability coverage and underinsured motorist and the amount of losses Rental reimbursement covers costs of renting a car while yours is being repaired

81 Options for Automobile Insurance Premiums vary according to Amount of coverage – the more you buy, the higher the premium Driver classification – age, sex, marital status of driver Driving record and habits---high-risk drivers find it harder to buy insurance Marriage status State of residence Number of cars insured Cost of vehicle---higher rates for luxury cars Whether young driver has completed a driver’s education course Amount of deductible---amount insured pays before insurance company pays on claim

82 Activity Automobile Insurance – use may PowerPoint 6.02 to complete. Factors which Influence Insurance Rates Automobile Insurance Review Factors Affecting Automobile Insurance Crossword

83 Journal Entry What I learned about buying an automobile. What I learned about Auto Insurance.