Introduction to Business

1
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.
2
Types of Vehicle Insurance
The company that issues the policy is called the
insurer.
The buyer of the policy is called the
policyholder.
3
Types of Vehicle Insurance
The six types of vehicle insurance protection are

• Bodily injury liability
• Property damage liability
• Medical payments

continued
4
Types of Vehicle Insurance

• Collision
• Comprehensive coverage
• Uninsured Motorist
• Miscellaneous coverage

5
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?
6
Types of Vehicle Insurance
Liability insurance protects you from claims of
injury or property damage to others in case
youre held responsible for an accident.
Bodily injury liability insurance covers injuries
to someone else.
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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.
8
Property Damage Liability
Property damage liability insurance covers damage
to another persons vehicle or other property.
It also covers damage to property, such as
telephone poles or street signs.
9
Collision Insurance
Collision insurance covers damages to your own
vehicle.
10
Collision Insurance
The maximum amount covered is based on the actual
cash value of your vehicle, which is the value of
the car when its new minus depreciation.
Depreciation is the decline in value of a vehicle
because of use.
11
Medical Payments Coverage
Medical payments coverage is also called personal
injury protection.
It covers injuries to you and anyone else in your
car.
12
Comprehensive Coverage
Comprehensive insurance covers damage to a
policyholders vehicle caused by things other
than a car accident.
13
Comprehensive Coverage
Comprehensive insurance covers losses from
falling objects, theft, flood damage, vandalism,
and other causes.
14
Comprehensive Coverage
Like collision coverage, comprehensive coverage
will not cover more than the actual cash value of
your car.
15
Uninsured Motorist
Uninsured motorist coverage protects you from
people who cant pay insurance claims.
Most states require this coverage.
16
Miscellaneous Coverage
Other things insurance will cover are

• Rental cars
• Towing expenses
• Additional drivers
• Motorcycles
• Snowmobiles

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Graphic Organizer
Graphic Organizer
Automobile Liability Insurance Coverage
100 / 300 / 50
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 300,000 limit that will be paid to all
persons in an accident.
Property Damage Liability
Bodily Injury Liability
18
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.
19
Compulsory Insurance Law
A compulsory insurance law legally requires
drivers to have a minimum amount of car
insurance.
20
Compulsory Insurance Law
If you cant show proof of insurance, you can
have your license or registration taken away from
you.
21
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.
22
The Costs of Insurance
The costs of insurance are directly affected by
the amount of money insurers pay each year in
insurance claims.
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The Costs of Insurance
A claim is a request for payment from an insurer
for any damages covered by a policy.
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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?
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Insurance Premiums
The amount an insurance company charges a
policyholder for an insurance policy is called
the premium.
26
Insurance Premiums
An insurance company can cancel a policy or
refuse coverage for someone with a record of
accidents.
27
Deductible
A deductible is an amount in damages a
policyholder must pay before the insurance
company pays anything.
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Deductible
A deductible makes you responsible for small
losses and the insurance helps pay for the larger
losses.
29
Factors Affecting the Costs of Insurance
There are a variety of specific factors that
affect the cost of your premium.
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Type of Vehicle
The amount of your premium will vary according to
the make, model, and year of the vehicle you
drive.
31
Type of Vehicle
Premiums are higher for cars that are known to
break down or get stolen often.
How a vehicle is used also affects the cost.
32
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.
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Location
City drivers usually pay more than drivers in
rural areas because there is a greater likelihood
of accidents in the city.
Driver Classification
Driver classification includes factors like your
age, gender, and marital status.
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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.
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Driving Record
Drivers with a record of accidents or traffic
violations pay the most in premiums, because they
pose the greatest risk.
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Driving Record
Younger drivers have a problem because they
usually havent been driving long enough to
establish a good driving record.
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Driving Record
You can qualify for a lower premium if you
complete a driver education course or have good
grades.