1. Objective 4.02 Insurance Law
Automobile Insurance
Objective Insurance Law

2. Discussion Why have a Personal Auto Policy(PAP)?
What does it protect you from?

3. Auto Claims
The at fault driver of a vehicle that damages other property or injures other people is liable for the cost of repairs.
North Carolina financial responsibility laws mandate that drivers carry two types of coverage
bodily injury
property liability

4. Bodily Injury Liability Coverage
Bodily Injury liability protects the insured person from liability claims for injury to:
People in other cars
Passengers riding with the insured person
It DOES NOT cover the insured person (driver)

5. Property Damage Liability
Property Damage liability protects the insured person from liability claims for damage to property of others, such as:
Personal property including vehicles, animals
Business property including telephone poles and other utility structures
Government property such as bridges and other road structures
Real property
It DOES NOT cover the insured person’s property

6. Optional Auto Coverage - Collision
Collision protects the vehicle owner against damage from a collision with another object or the vehicle turning over
Covers the cost of:
Repair to insured’s vehicle
Charges points to insurance if claim filed
Points make premiums increase.
Does NOT cover injuries to people

7. Optional Auto Coverage - Collision
Although not required by financial responsibility law, collision is
Usually required by a lienholder if loan on vehicle is not paid in full
A lienholder is a bank, individual or loan company who holds a secured interest in the property until the loan is paid in full.
Example: If car catches fire and loan is still outstanding, the claim dollars are paid to insured and lienholder.

8. Collision Claim Payments
Insurance company may pay either the
Cost to repair insured vehicle less deductible, or
Actual cash value, market value or NADA Bluebook value of a total loss vehicle less deductible
The insurance company does not consider the loan balance when settling a claim! The loan balance is an issue for the owner. Loan balance may be more than a vehicle’s value!

9. Comprehensive Auto Insurance
Comprehensive coverage protects the insured vehicle against damage from almost all damages except collision
Fire
Theft
Vandalism
Hail
Windstorm
Windshield damages
Collision with wild animal including fowl
It DOES NOT charge points when claim is filed

10. Other Auto Coverage
Medical payments(Med Pay) - Covers anyone in vehicle or hurt by vehicle, even if not moving
Ex: Broken finger by closing finger in door or trunk, pedestrians
Towing Expense - Pays tow fees
Rental Reimbursement - Covers cost of rental when vehicle being repaired due to accident

11. Uninsured/Underinsured Motorist Coverage
Required Coverage in North Carolina
Protects policyholder against drivers
Without insurance to cover the loss suffered
Without enough insurance to cover the loss suffered
Examples:
Hit and run drivers
Drivers who let insurance policy lapse
Drivers involved in serious accidents who carry low $ liability limits of coverage

12. Motorcycle Insurance
Liability, Collision, Uninsured/Underinsured and Towing Coverage is identical to a regular automobile policy.
It is important to have a special coverage for a customized motorcycle.
Traditional motorcycle coverage will only cover the “stock value” not any customizations are added equipment.

13. Boat Insurance
Pleasure boat policies or endorsements often state that coverage includes "the boat and all permanently attached equipment". The policy may then list items that are not permanently attached, but are covered as either part of the boat's value, or as a separate limit of insurance. Items that may or may not be considered "permanently attached" under a policy include:
Anchors
Batteries
Bilge pumps
Boat furniture
Boat and motor covers
Cook stoves
Deck chairs
Depth finders
Detachable canopies
Emergency signaling devices
Fire extinguishers
Fittings
Fuel tanks
Horns
Life preservers

14. No Fault Insurance
The insurer of each party involved in accident pays the insured loss regardless of fault
Not required to prove fault of one party over the other
Reduces time delays for claim settlement especially in bodily injury lawsuit cases
Reduces money spent to resolve the claim
NC is NOT a “no fault” insurance state.

15. Cost of Auto Insurance
Insurance companies legally discriminate by using:
Relevant statistical data and
Risk factors related to the insurance type
Underwriters at companies “rate” to determine the premium cost for the coverage requested.
Standard premiums may be rated up for hazards
Points for tickets or accidents on auto insurance
Health issues on life/health insurance

16. Factors Affecting Cost of Auto Insurance
Underwriters at companies “rate” to determine the premium cost for the coverage requested. (cont.)
Type of coverage
$ Limit of coverage
Risk retention -Deductible amount
Experience rating – how long driver has been licensed (AGE IS NOT A FACTOR!!)
At fault Accidents (Points)
Tickets (Points)
Type of Vehicle - Value, reparability, engine size, style
Geographic area- Urban, suburban, rural
Use of Vehicle - Distance driven and purpose
Company
REFERENCE:
Types of Auto Insurance
WORKSHEET:
Auto Ins. – New Truck
WORKSHEET:
Auto Insurance Matching