1. Objective 08.02 Interpret the nature, theory, and different types of insurance Automobile Insurance AUTOMOBILE INSURANCE

2. 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 bodily injury and property liability insurance coverage.

3. Optional Auto Coverage- 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

4. 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.

5. 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!

6. 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 –DOES NOT cover the insured person (driver)

7. 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 –Does NOT cover the insured person’s property

8. Comprehensive Auto Insurance Protects the insured vehicle against damage from almost all damages except collision –Fire –Theft –Vandalism –Hail –Windstorm –Windshield damages –Collision with wild animal including fowls Does NOT charge points when claim is filed

9. Uninsured/Underinsured Motorist Coverage Protects policyholder against drivers –Without insurance 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

10. Other Auto Coverage Medical payments - 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. 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.

12. Cost of 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

13. Factors Affecting Cost of Auto Insurance –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