Automobile Insurance: The Basics

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Automobile Insurance The Basics
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Automobile Insurance The Basics
What is the likelihood you will be in an
automobile accident? There are more than 12
million motor vehicle accidents annually The
typical driver will have a near automobile
accident one or two times per month The typical
driver will be in a collision of some type on
average of every 6 years Crashes are the leading
cause of death for ages 3-33
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Automobile Insurance The Basics

• Even a minor accident can result in thousands of
  dollars in damages
• Damage to your car
• Damage to other cars involved
• Medical Bills
• Lost wages
• Pain and suffering
• Prosecution
• Legal Fees
• Fines

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Automobile Insurance The Basics
If you are in an accident how do you pay for
it? Bank Account? Parents? Rich Uncle? Best
Friend? Insurance?
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Automobile Insurance The Basics

• What is Automobile Insurance?
• An auto insurance policy is a contract between
  you and an insurance company.
• You pay a premium, and in exchange, the insurance
  company promises to pay for specific car-related
  financial losses during the term of the policy.

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Why do I need auto insurance

• Its the law!
• There are risks you cant afford to take
• What happens if
• Youre involved in a crash that causes property
  damage?
• You hurt yourself or someone else?
• Your car is damaged when youre not driving it?
  (by weather, vandalism or a hit-and-run)
• Your car is stolen?
• Your car breaks down and needs to be towed?

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Automobile Insurance The Basics
Are you a risk to the insurance company? To keep
premiums as low as possible to the insured, a
screening process is completed before an
insurance contract is completed
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Automobile Insurance The Basics

• What is the insurance company looking for?
• Some vehicles, and some drivers, carry more risk
  than others
• Low risks will be charged a lower premium
• High risks will be charged a higher premium

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Automobile Insurance The Basics
What determines your premium? Age Gender Vehicl
e Type Driving Record Geographic Location
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What is a Deductible?
This is the amount per accident that you pay out
of pocket before insurance starts to pay Common
deductible amounts are usually 250, 500, and
1000 The higher the deductible amount you pay
the lower your premiums are
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Automobile Insurance The Policy
A common mistake when shopping for automobile
insurance is looking only at the price between
two policies Policies differ from policy to
policy and company to company
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Automobile Insurance The Policy
Five parts to an insurance policy Declarations C
overages Exclusions Conditions Definitions

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Automobile Insurance The Basics
What can you do to reduce risk and lower
premiums? Use your seatbelt Observe Speed
Limits Know your own limits Concentrate on
driving
Be Patient Dont Drink and Drive Get good
grades