Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Medical insurance is designed to protect your finances from an unforeseen large medical expenses. Squeal, Crash, Crunch!!! Oops, did I do that?

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Lesson Objective Students will learn what automobile insurance is, how it works, and how much it costs.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 What is Auto Insurance? Auto Insurance is a little-bit like Medical Insurance. It is any agreement whereby an individual pays to the insurance company an amount of money now in exchange for the company paying a portion of the individual’s auto expenses later. It could cover a broken windshield, keys locked in the car, or even flat tire repair. But most often, it is used to financially protect you and your vehicle from the damages caused by an accident.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Insurance Definitions Insurance Policy: The written document of a contract for insurance. Claim: Any request or demand for payment under the insurance policy. Premium: The amount of money an individual pays to the insurance company each month to purchase auto insurance. Ex: $300 per month. Coverage: Benefits specifically provided for under the insurance contract. Ex: Replace windshield, payment for injury or death, towing.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Insurance Definitions Coverage Limit: The maximum amount the insurance company will pay for a particular claim. Ex: $15,000 per person & $30,000 for more than one person. Co-Payment: The amount of money the insured must pay on each loss before the insurance will pay anything for that particular loss. Ex: $250 per loss claim. Liability: Any legal financial responsibility for the injury or damage suffered by another person.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Insurance Definitions Comp & Collision: Optional insurance that pays, to repair your vehicle if it is damaged. Ex: Someone steals your car, or your car gets totaled because you ran a red light. Rental Car: Optional Insurance that provides a rental car should your car become un-drivable. Emergency Road Assistance: Optional Insurance that pays for help which may include, but is not limited to, towing, tire change, or keys locked in car.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Insurance Definitions Medical Coverage: Optional Insurance that covers all medical bills resulting from a claim above and beyond the coverage limits Good Student Discount: A discount on the insurance premium given because the driver is a good student. Ex: 40% off your premium because you maintain a 3.0 gpa Glass Coverage: Optional Insurance that pays to repair or replace your vehicle’s broken windows.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Insurance Definitions Safe Driver Discount: A discount on the insurance premium given because the driver has had no tickets or accidents in recent years Ex: 50% off your premium because you drive safely Deductible: The amount of money the insured must pay on each claim before the insurance company will pay for the remainder of the bills up to the coverage limit Ex: $200 per loss

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 The Law California law states that: “Financial responsibility is required on any vehicle operated or parked on California roadways.” (dmv.ca.gov) What that means is that the owner of any vehicle driven or parked on California roads has to have enough money to compensate someone injured, or something damaged, by that vehicle.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 The Law California defines the minimum financial responsibility as being: $15,000 for injury/death to one person $30,000 for injury/death to more than one person $5,000 for damage to property This is otherwise written as: 15/30/5

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 The Law California defines the minimum financial responsibility as being: $15,000 for injury/death to one person $30,000 for injury/death to more than one person $5,000 for damage to property This is otherwise written as: 15/30/5 All 50 states have a similar law! As of 2011, here are a few others: Alaska 50/100/25Arizona 15/30/10 Texas 30/60/15New York 25/50/10 Ohio 12.5/25/7.5Oklahoma 10/20/10

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 The Law If you live in California, what is the minimum amount of money the law says you need to have sitting in the bank in case you rear-end the car in front of you? California requires 15/30/5 $15,000 for injury/death to one person 30,000 for injury/death to more than one person + 5,000 for damage to property $ 50,000 For a Millionaire, No Problem! For the rest of us, We need Auto Insurance.

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Review: 1.What is Auto Insurance? 2.What does 30/60/15?

Copyright 2014 © W. Seth Hunter ConsumerMath.org L8.1 Automobile Insurance- Part 1 Review: 1.What is Auto Insurance? 2.What does 30/60/15? Any form of insurance that pays for automobile expenses. More precisely, any agreement whereby an individual pays to the insurance company an amount of money now, also known as a premium, in exchange for the company paying a portion of the individual’s auto expenses later. $30,000 for injury/death to one person $60,000 for injury/death to more than one person $15,000 for damage to property