Agribusiness Library LESSON L060084: VEHICLE INSURANCE

Objectives 1. Explain the function of vehicle insurance, and define common vehicle insurance terms. 2. Distinguish between the types of vehicle insurance coverage. 3. Compare vehicle insurance plans and rates from various companies, and demonstrate how to file a claim.

Terms Adjuster Anti-theft device Bodily injury liability Claim Collision coverage Comprehensive coverage Deductible Drivers Insured Peril

Terms Personal injury protection coverage Property damage liability Subrogation Underinsured motorist bodily injury Underinsured motorist property damage Underwriting Uninsured motorist bodily injury Uninsured motorist property damage Vehicle insurance policy Vehicle insurance score

 The function of vehicle insurance is to protect individuals from losses that could occur during an accident.  Every state requires a minimum of insurance coverage on all vehicles.  Vehicle insurance is a contract between the policyholder and the insurance company in which the insured agrees to pay premiums and the provider agrees to pay for losses due to an accident.

 A. An adjuster is a person engaged by an insurance company to investigate the damage following an accident.  The adjuster conducts a physical inspection of all vehicles and property, examines documents, interviews the people involved, and settles the claim.  B. An anti-theft device is a device such as a steering wheel lock, alarm, or fuel cutoff value that helps to prevent vehicle theft.  Other devices can be used to track and find a vehicle.

 C. A claim is a request made by the policyholder to the insurance company for payment of a loss.  D. A deductible is the amount the insured agrees to pay out of pocket in the event of a claim.  E. Drivers are the licensed operators who are listed as rated drivers on the policy and who drive the insured vehicle.  F. The insured is the person(s) named on the policy to whom the coverage may be applied.  G. Peril is the cause of a possible accident or loss.

 H. Subrogation is the process of recovering funds to settle a claim for damage caused by another driver.  I. Underwriting is evaluating the insurability of an applicant for coverage.  J. A vehicle insurance policy is a policy providing protection against losses and liability that may result from traffic accidents.  K. A vehicle insurance score is a score derived from consumer information to help insurers establish policy prices.

 Vehicle insurance policies offer a wide range of benefits.  Some individuals may pay high rates either because of their driving records or because they want very thorough coverage.  Others may choose lower rates and obtain less thorough coverage or even just the state-mandated minimum.  The following are among the types of coverage that may be included in a policy.  A. Bodily injury liability is coverage that will pay for the injuries or death of other people if the policyholder is legally liable in an accident.  B. Property damage liability is coverage that will pay for another person’s property (e.g., another vehicle, a fence, a house) damaged because of an accident.

 C. Collision coverage will pay for damage to the insured vehicle if the vehicle is hit by another vehicle or some other object.  This coverage will pay the costs of fixing the insured vehicle after the deductible has been met.

 D. Comprehensive coverage will pay for damage to the insured vehicle resulting from events other than collision (e.g., theft; damage by flood, fire, or animals).  E. Uninsured motorist bodily injury is coverage in the event of an accident due to the negligence of a person with no insurance.  It applies to bodily injuries or death of the insured person and the occupants of the insured vehicle.

 F. Uninsured motorist property damage is coverage that applies only if the insured is involved in an accident caused by a driver without insurance.  It pays for property damage but does not replace collision coverage.  G. Underinsured motorist bodily injury is coverage in the event of an accident due to the negligence of a person with insufficient insurance.  It applies to bodily injuries or death of the insured person and the occupants of the insured vehicle.

 H. Underinsured motorist property damage is coverage that applies only if the insured is involved in an accident caused by a driver with insufficient insurance.  It pays for property damage and does not replace collision coverage.  I. Personal injury protection coverage will cover medical, hospital, and funeral expenses of the insured and others within the insured vehicle, as well as pedestrians struck by the vehicle.  This type of coverage is available only in certain states.  The people who benefit from this type of coverage are those who do not have health or other insurance that would adequately cover expenses.  This is also important coverage for people who carpool or regularly drive with passengers.

 Getting quotes is easy.  Several factors should be considered when comparing vehicle insurance plans and rates.  In addition, it is necessary to know the proper steps in filing a claim.  A. Comparing vehicle plans and rates  1. It is necessary to decide what type of coverage is needed.

 2. It is best to shop around and compare insurance companies to see what they have to offer.  Many insurance companies have online comparison tools for viewing rates.  3. A deductible amount must be selected.  A higher deductible results in a lower premium.  4. The financial strength and the complaint index of a possible insurer can be investigated.  Knowing how stable the company is and its overall customer service performance provides further confidence in choosing the right company and policy.

 B. Filing a claim—In the event of an accident in which a vehicle needs to be repaired or someone is injured, there are a few important steps to remember when filing a vehicle insurance claim.  1. The insurance agent should be called immediately, regardless of the severity of the accident.  The insurance agent should guide the insured through the claim procedure.  2. Detailed records should be kept through the entire process.

 3. After an accident, the following general information should be shared with all individuals involved and is required when filing a claim:  a. Name of claimant  b. Address of claimant  c. Insurance policy number  d. Home and work phone numbers  e. Makes and models of vehicles involved in accident  f. Names of drivers and passengers involved  g. Names of insurance companies of involved drivers  h. Details about the accident  i. Description of loss/injury  j. Police report information

REVIEW What is the function of vehicle insurance? What are common vehicle insurance terms? What are the types of vehicle insurance coverage? What methods can be used to compare vehicle plans and rates from various companies? What are the proper steps in filing a claim?