1. Chapter 33 Vehicle Insurance pp. 532-547

2. Introduction to Business, Chapter 33 Slide 2 of 60 Why It’s Important Most states require you to have some form of vehicle insurance. To get the best value, you need to know the choices in coverage and the costs of insurance.

3. Introduction to Business, Chapter 33 Slide 3 of 60 Financial Responsibility Law A financial responsibility law says you must pay for any damage or injury you cause in an accident either with insurance, with savings, or by selling property.

4. Introduction to Business, Chapter 33 Slide 4 of 60 Compulsory Insurance Law A compulsory insurance law legally requires drivers to have a minimum amount of car insurance. If you can’t show proof of insurance, you can have your license or registration taken away from you.

5. Introduction to Business, Chapter 33 Slide 5 of 60 Types of Vehicle Insurance Insurance is paid protection against losses due to injury or property damage. To get insurance, you have to purchase a contract called a policy from an insurance company.

6. Introduction to Business, Chapter 33 Slide 6 of 60 Types of Vehicle Insurance The company that issues the policy is called the insurer. The buyer of the policy is called the policyholder.

7. Introduction to Business, Chapter 33 Slide 7 of 60 Types of Vehicle Insurance Liability insurance protects you from claims of bodily injury or property damage to others in case you’re held responsible for an accident.

8. Introduction to Business, Chapter 33 Slide 8 of 60 Bodily Injury Liability Bodily injury liability insurance covers injuries to someone else that you are held responsible for.

9. Introduction to Business, Chapter 33 Slide 9 of 60 Property Damage Liability Property damage liability insurance covers damage to another person’s vehicle or other property that you are held responsible for. It also covers damage to property, such as telephone poles or street signs.

10. Introduction to Business, Chapter 33 Slide 10 of 60 Collision Insurance Collision insurance covers damages to your own vehicle when you are held responsible.

11. Introduction to Business, Chapter 33 Slide 11 of 60 Comprehensive Coverage Comprehensive insurance covers damage to a your vehicle caused by things other than a car accident. Like WHAT?

12. Introduction to Business, Chapter 33 Slide 12 of 60 Comprehensive Coverage Comprehensive insurance covers losses from falling objects, theft, flood damage, vandalism, and other causes.

13. Introduction to Business, Chapter 33 Slide 13 of 60 Collision/Comprehensive The maximum amount covered is based on the actual cash value of your vehicle, which is the value of the car when it’s new minus depreciation. Depreciation is the decline in value of a vehicle because of use.

14. Introduction to Business, Chapter 33 Slide 14 of 60 Comprehensive Coverage Like collision coverage, comprehensive coverage will not cover more than the actual cash value of your car.

15. Introduction to Business, Chapter 33 Slide 15 of 60 Medical Payments Coverage Medical payments coverage is also called personal injury protection. It covers injuries to you and anyone else in your car when you are held responsible.

16. Introduction to Business, Chapter 33 Slide 16 of 60 Uninsured Motorist Protection Uninsured motorist coverage protects you from people who can’t pay insurance claims. Most states require this coverage.

17. Introduction to Business, Chapter 33 Slide 17 of 60 No-Fault Insurance No-fault insurance requires drivers involved in accidents to collect damages from their own insurance companies no matter who is at fault.

18. Introduction to Business, Chapter 33 Slide 18 of 60 Miscellaneous Coverage Other things insurance will cover are if you purchase it: Rental cars Towing expenses Additional drivers Motorcycles Snowmobiles

19. Introduction to Business, Chapter 33 Slide 19 of 60 The Costs of Insurance The costs of insurance are directly affected by the amount of money insurers pay each year in insurance claims.

20. Introduction to Business, Chapter 33 Slide 20 of 60 The Costs of Insurance A claim is a request for payment from an insurer for any damages covered by a policy.

21. Introduction to Business, Chapter 33 Slide 21 of 60 Insurance Premiums The amount an insurance company charges a policyholder for an insurance policy is called the premium (the cost of the insurance).

22. Introduction to Business, Chapter 33 Slide 22 of 60 Insurance Premiums An insurance company can cancel a policy or refuse coverage for someone with a record of accidents.

23. Introduction to Business, Chapter 33 Slide 23 of 60 Deductible A deductible is an amount in damages a policyholder must pay before the insurance company pays anything.

24. Introduction to Business, Chapter 33 Slide 24 of 60 Deductible A deductible makes you responsible for small losses and the insurance helps pay for the larger losses. Self-Insure for smaller damages. The higher your deductible, the lower your premium.

25. Introduction to Business, Chapter 33 Slide 25 of 60 Factors Affecting the Costs of Insurance There are a variety of specific factors that affect the cost of your premium.

26. Introduction to Business, Chapter 33 Slide 26 of 60 Type of Vehicle The amount of your premium will vary according to the make, model, and year of the vehicle you drive. Premiums are higher for cars that are known to break down or get stolen often. How a vehicle is used also affects the cost.

27. Introduction to Business, Chapter 33 Slide 27 of 60 Location The area where you live has an affect on your insurance premium. If you live in an area with a high crime rate, your premium will be higher than in areas with a lower crime rate. City drivers usually pay more than drivers in rural areas because there is a greater likelihood of accidents in the city.

28. Introduction to Business, Chapter 33 Slide 28 of 60 Driver Classification Drivers under the age of 25 or over the age of 70 have accidents more often so they pay more in insurance premiums. Middle-aged drivers with families are generally considered less of a risk.

29. Introduction to Business, Chapter 33 Slide 29 of 60 Driving Record Drivers with a record of accidents or traffic violations pay the most in premiums, because they pose the greatest risk.

30. Introduction to Business, Chapter 33 Slide 30 of 60 Driving Record Younger drivers have a problem because they usually haven’t been driving long enough to establish a good driving record.

31. Introduction to Business, Chapter 33 Slide 31 of 60 Driving Record You can qualify for a lower premium if you complete a driver education course or have good grades.

32. Introduction to Business, Chapter 33 Slide 32 of 60 Figure 33.1 TYPES OF VEHICLE INSURANCE COVERAGE The kinds of vehicle insurance coverage listed here are often included in a single policy or package policy. Which types cover injuries, and which types cover only property damage?

33. Introduction to Business, Chapter 33 Slide 33 of 60 Graphic Organizer Automobile Liability Insurance Coverage Graphic Organizer Indicates $100,000 limit that will be paid to one person in an accident. Indicates $100,000 limit that will be paid to one person in an accident. Indicates $50,000 limit for payment for damage to the property of others. Indicates $50,000 limit for payment for damage to the property of others. Indicates $300,000 limit that will be paid to all persons in an accident. Indicates $300,000 limit that will be paid to all persons in an accident. 100 / 300 / 50 Bodily Injury Liability Property Damage Liability

34. Introduction to Business, Chapter 33 Slide 34 of 60 Why do you think teenagers’ vehicle insurance is expensive? continued

35. Introduction to Business, Chapter 33 Slide 35 of 60 Should there be a law to improve the safety of teenage drivers? continued

36. Introduction to Business, Chapter 33 Slide 36 of 60 Has your state adopted a version of the Graduated Drivers License Law?

37. Introduction to Business, Chapter 33 Slide 37 of 60 Figure 33.2 SPECIFICS OF AN INSURANCE POLICY The amount of coverage you want and the amount of your deductible determines the basic cost of your premium. If the policyholder has a claim under comprehensive coverage, how much must he or she pay before the insurance company pays? How much must the policyholder pay first in case of a collision?

38. Introduction to Business, Chapter 33 Slide 38 of 60 Bodily Injury Liability For 100/300 bodily injury coverage, the insurance pays up to $100,000 for injuries to one person. For one accident, it pays up to $300,000 for all claims.

39. Introduction to Business, Chapter 33 Slide 39 of 60 Fast Review 1.What is the difference between a financial responsibility law and a compulsory insurance law? 2.What can happen if you can’t show proof of financial responsibility or insurance? continued

40. Introduction to Business, Chapter 33 Slide 40 of 60 Fast Review 1.What does liability insurance cover? 2.What is the maximum amount an insurance company will cover in damages to a vehicle? 3.What types of losses will comprehensive insurance cover? continued

41. Introduction to Business, Chapter 33 Slide 41 of 60 Fast Review 1.How does a deductible affect the cost of a premium? 3.How can younger drivers qualify for lower premiums?