auto insurance narrated show

15
Automobile Insurance: The Basics

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Page 2: Auto insurance narrated show

Automobile Insurance: The Basics

What is the likelihood you will be in an What is the likelihood you will be in an automobile accident?automobile accident?

There are more than 12 million motor vehicle accidents There are more than 12 million motor vehicle accidents annuallyannually

The typical driver will have a near automobile accident one or The typical driver will have a near automobile accident one or two times per monthtwo times per month

The typical driver will be in a collision of some type on average The typical driver will be in a collision of some type on average of every 6 yearsof every 6 years

Crashes are the leading cause of death for ages 3-33Crashes are the leading cause of death for ages 3-33

Page 3: Auto insurance narrated show

Automobile Insurance: The Basics

Even a minor accident can result in thousands of Even a minor accident can result in thousands of dollars in damagesdollars in damages

•Damage to your carDamage to your car

•Damage to other cars involvedDamage to other cars involved

•Medical BillsMedical Bills

•Lost wagesLost wages

•Pain and sufferingPain and suffering

•ProsecutionProsecution

•Legal FeesLegal Fees

•FinesFines

Page 4: Auto insurance narrated show

Automobile Insurance: The Basics

What is Automobile Insurance?What is Automobile Insurance?

An auto insurance policy is a contract between you An auto insurance policy is a contract between you and an insurance company. and an insurance company.

You pay a premium, and in exchange, the insurance You pay a premium, and in exchange, the insurance company promises to pay for specific car-related company promises to pay for specific car-related financial losses during the term of the policy. financial losses during the term of the policy.

Page 5: Auto insurance narrated show

Automobile Insurance: The Basics

If you are in an accident how do If you are in an accident how do you pay for it?you pay for it?

Bank Account?Bank Account?

Parents?Parents?

Rich Uncle?Rich Uncle?

Best Friend?Best Friend?

Insurance?Insurance?

Page 6: Auto insurance narrated show

Why do I need auto insurance

• It’s the law!It’s the law!

• There are risks you can’t afford to takeThere are risks you can’t afford to take • What happens if…What happens if…

– You’re involved in a crash that causes property You’re involved in a crash that causes property damage?damage?

– You hurt yourself or someone else?You hurt yourself or someone else?– Your car is damaged when you’re not driving it? Your car is damaged when you’re not driving it?

(by weather, vandalism or a hit-and-run)(by weather, vandalism or a hit-and-run)– Your car is stolen?Your car is stolen?– Your car breaks down and needs to be towed?Your car breaks down and needs to be towed?

Page 7: Auto insurance narrated show

Automobile Insurance: The Basics

Are you a risk to the insurance Are you a risk to the insurance company?company?

To keep premiums as low as possible to the insured, To keep premiums as low as possible to the insured, a screening process is completed before an a screening process is completed before an insurance contract is completedinsurance contract is completed

Page 8: Auto insurance narrated show

Automobile Insurance: The Basics

What is the insurance company What is the insurance company looking for?looking for?

Some vehicles, and some drivers, carry more risk Some vehicles, and some drivers, carry more risk than othersthan others

•Low risks will be charged a lower premiumLow risks will be charged a lower premium

•High risks will be charged a higher premiumHigh risks will be charged a higher premium

Page 9: Auto insurance narrated show

Automobile Insurance: The Basics

What determines your premium?What determines your premium?

AgeAge

GenderGender

Vehicle TypeVehicle Type

Driving RecordDriving Record

Geographic LocationGeographic Location

Page 10: Auto insurance narrated show

What is a Deductible?

This is the amount per accident that you pay out This is the amount per accident that you pay out of pocket before insurance starts to payof pocket before insurance starts to pay

Common deductible amounts are usually $250, Common deductible amounts are usually $250, $500, and $1000$500, and $1000

The higher the deductible amount you pay the The higher the deductible amount you pay the lower your premiums arelower your premiums are

Page 11: Auto insurance narrated show

Automobile Insurance: The Policy

A common mistake when shopping for A common mistake when shopping for automobile insurance is looking only at the automobile insurance is looking only at the price between two policiesprice between two policies

Policies differ from policy to policy and Policies differ from policy to policy and company to companycompany to company

Page 12: Auto insurance narrated show

Five parts to an insurance policyFive parts to an insurance policy

DeclarationsDeclarations: Summarizes the policy.: Summarizes the policy.

Coverage'sCoverage's: Listing of what the insurance covers – the more it covers, : Listing of what the insurance covers – the more it covers, the more it will cost.the more it will cost.

ExclusionsExclusions: Instances when your policy won’t provide coverage.: Instances when your policy won’t provide coverage.

Conditions: Conditions: The manner in which the contract is valid. Such as in The manner in which the contract is valid. Such as in order for the policy/contract to be maintained the car must be in road order for the policy/contract to be maintained the car must be in road worthy condition or the contract is breached.worthy condition or the contract is breached.

Definitions: Definitions: Each policy defines what your coverage entails. This can Each policy defines what your coverage entails. This can vary policy to policy.vary policy to policy.

Automobile Insurance: The Policy

Page 13: Auto insurance narrated show

Automobile Insurance: The Basics

What can you do to reduce risk and What can you do to reduce risk and lower premiums?lower premiums?

Use your seatbeltUse your seatbelt

Observe Speed LimitsObserve Speed Limits

Know your own limitsKnow your own limits

Concentrate on drivingConcentrate on driving

Be PatientBe Patient

Don’t Drink and DriveDon’t Drink and Drive

Get good gradesGet good grades

Page 14: Auto insurance narrated show

KEY TERMS• Bodily Injury Liability: In auto

insurance, liability coverage that pays for physical injury to people in other vehicles

• Collision: The act or process of colliding; a crash or conflict.

• Comprehensive Coverage: Insurance designed to pay for the repair or replacement of the policy owner's car in the event of damage not resulting from an accident.

• Medical Payments: Auto insurance coverage can help to provide medical payment for treatment of bodily injury.

• Peril: A cause of loss

• Policyholder: The owner of an insurance policy

• Premium: Payment made by the insured to the insurer

Page 15: Auto insurance narrated show

KEY TERMS• Insurance Policy: A contract

written to protect individuals named in the policy against specific future losses

• Insured: An individual, usually but not always the buyer, covered by an insurance policy

• Insurer: The company or agency that writes an insurance policy

• Liability: Legal responsibility .

• Risk: A situation in which some kind of loss is possible

• Deductible: The amount the insured pays on a claim before the insurer pays the remainder

• Coverage: Coverage against a specific type of loss

• Replacement Cost: What it would cost to replace a piece of property, or rebuild a structure