Motor Vehicle Insurance

Insurance Unit

Vocabulary• Insurance- Protection against possible financial

loss• Policy- legal contract between a person

(policyholder) buying insurance and the insurance company

• Premium- what the policyholder pays the company for the insurance

• Deductible- the portion of the loss that you pay before the insurance company pays anything

• Claim- an oral or written notice to the insurance company

Vocabulary

• Liability- legal responsibility for the financial cost of another person’s losses or injuries– It is the law that you have to carry automobile

insurance (liability) in Illinois (minimum 20/40/15)

Bodily Injury CoverageBodily Injury Coverage

Bodily Injury Liability(people in other car)

Uninsured Motorist’s Protection

Medical Payments Coverage

Medical Payments Coverage- is insurance for medical expenses of anyone injured in your vehicle, including you.

Uninsured Motorist’s Protection- is insurance that covers you and your family members if you are involved in an accident with an uninsured or hit-and-run driver.

Property Damage Liability

• Is motor vehicle insurance that applies when you damage the property of others.

• Protects you when you are driving another person’s vehicle with the owner’s permission.

Liability

• Insurance that covers physical injuries and property damage caused by an accident for which YOUYOU are responsible

100 / 300 / 50100 / 300 / 50

Indicates $100,000 limit that will be paid to one person in an accident.

Indicates $300,000 limit that will be paid to all other people injured in an accident.

Indicates $50,000 limit for payment for damage to the property of others.

Bodily Injury Liability

Bodily Injury Liability

Property Damage Liability

Other Coverages for YOUR car Property Damage Coverage

Comprehensive Physical DamageCollision

Collision- insurance that covers damage to your vehicle when it is involved in an accident. (You do NOT have to have this coverage.)

Comprehensive Physical Damage- protects you if your vehicle is damaged in a non-accident situation (You do NOT have to have this coverage.)

Other Coverages

• Rental reimbursement coverage- pays for a rental car if your vehicle is stolen or being repaired

• Wage-loss insurance- pays for any salary or income you might have lost due to being injured in a car accident

• Emergency road service coverage

Driver Classification

• Assigned Risk Pool-Assigned Risk Pool- a group of people who cannot get motor vehicle insurance who are assigned to each insurance company operating in the state.

Insurance Premium Factors

• Vehicle Type– Year, Make, and Model of vehicle

• Rating Territory (owner’s place of residence)– Location– Cost more if you lived in the city due to more

accidents and theft

Insurance Premium Factors

• Driver Classification– Based on age, sex, marital status, driving

record, & driving habits– Under 25 yrs. and over 70 yrs. old have more

frequent & serious accidents– Cost and number of claims you file with your

company also affect your premium

Insurance Premium Factors

• Discounts– Discounts for good students…A/B average

will earn you a 5% to 10% discount (about $100 savings a year)

– Living outside the city limits or in a safe neighborhood can save you 5% to 10%

Insurance Problem

Jamal breaks his arm in a car accident and has to go to the emergency room. His total bill is $740.37. His insurance pays 85% of the bill. How much is Jamal responsible for paying?

$111.06

Home/Renter’s Insurance

Home Insurance

• Renter’s Insurance– Protects your

belongings to a set amount

• Homeowner’s Insurance– Protects your house and

it’s contents

The Centrino’s have homeowner’s insurance that pays 60% after a $600 deductible is met. After a recent storm, the Centrino’s filed a claim to replace their roof. The roof costs $2,000.00 to replace. What was the insurance company’s payment in this case?

$840.00

Health & Life Insurance

Major Medical Coverage• It covers:

– Hospital and surgical expenses– Doctor visits– Prescription drugs– Medical tests

• Requires deductible and coinsurance

• You choose any hospital and physician you prefer

Tim recently stayed in the hospital. His health insurance policy pays 70% of his hospital bills after a $700.00 deductible is met. The total of the hospital costs were $21,500.00. What were Tim’s total payments after the deductible?

– $6,240.00

Health Maintenance Organization (HMO)

• No deductibles

• Small co-payment

• Check-ups and well-baby care are covered

• Choice of physicians is limited

Preferred Provider Organization (PPO)

• More freedom of choice of doctors

• Higher premiums

• Higher co-payments than with an HMO

Types of Plans

• Group Plans– Offered through employers– Keep premium costs down (spreading risk over

large number of people)– Have deductible, coinsurance, major medical

coverage

• Individual Plans– Students, self-employed, retirees– Can be expensive!

Disability Coverage

• Pays you a percentage of your salary if you can not work

• Short-term disability=few months

• Long-term disability can pay for a lifetime of missed work

Types of Life Insurance

• Term Life Insurance– Protects your dependents if you die– No cash value– Provide coverage for a set number of years– The beneficiary receives the face value of the

policy if you die

Buying Life Insurance

• You purchase a policy and pay premiums

• The company pays a benefit to your beneficiary if you die

• Should you buy life insurance?

• How much life insurance do you need?

• What are some tips on buying life insurance?