Auto Insurance

The replacement cost of an item minus depreciation is called _______.

Actual Cash Value

Which claim settlement method takes into consideration depreciation?

Actual Cash Value

To get the best insurance value, you need to consider:

Amount of coverage Insurance premium factors Ways to reduce insurance premiums

What two categories does coverage for motor vehicle insurance fall under?

Bodily Injury Coverages and Property Damage Coverages

Types of Bodily Injury Coverages

Bodily injury liability Medical payments Uninsured motorist's protection

Two ways in which you can reduce your vehicle insurance costs are by:

Comparing companies Taking advantage of discounts

The set amount that a policyholder must pay per loss on an insurance policy is called a(n) ____

Deductible

Which term refers to loss in value as an item gets older?

Depreciation

A premium is the best kind of insurance

False

Every insurance company has the same insurance rates.

False

If your insurance policy has a low deductible, the premium is low

False

Iowa has a compulsory auto insurance law.

False

Iowa is a No-Fault insurance state.

False

Iowa requires that you have underinsurance/uninsured motorist insurance

False

Comprehensive physical damage insurance covers your vehicle against risks such as

Fire Theft Falling objects Vandalism Hail Floods, tornadoes, earthquakes, and avalanches

To reduce the time and cost of settling vehicle injury cases, some states are trying a number of alternatives, including the no-fault system. In the no-fault system:

It does not matter who caused the accident. Each company pays the insured up to the limits of his or her coverage.

What are some things to consider with your amount of insurance coverage? Property Values?

Just as amounts of medical expenses and legal settlements have increased, so has the cost of vehicles.

What do most of the money that motor vehicle insurance companies pay out in claims goes for?

Legal expenses Medical expenses Other costs that arise when someone is injured

You need enough coverage to protect yourself

Legally Financially

The legal responsibility for the financial cost of another person's loss or injuries is called

Liability

Insurance risks involving losses caused by negligence are called ________.

Liability Risks

Liability risks are insurance risks caused by ______.

Negligence

________ is the failure to take ordinary or reasonable care to prevent accidents from happening

Negligence

In insurance, anything that may possibly cause a loss is known as a _______.

Peril

A person joins an insurance company by purchasing a contract called a ________.

Policy

Other kinds of available motor vehicle insurance include:

Rental reimbursement coverage Wage-loss insurance Emergency road service coverage

The full cost of repairing or replacing an item is called

Replacement Value

Which claim method will cost you a higher premium?

Replacement Value

Penalties for driving without insurance generally include

Stiff fines The suspension of driving privileges

With collision insurance, you will collect money no matter who is at fault.

The amount that you can collect is limited to the actual cash value of your vehicle at the time of the accident.

In Iowa, you only have to show financial responsibility after an accident.

True

You may qualify for reduced insurance rates by getting good grades

True

Three other factors that influence your insurance costs are:

Vehicle type Rating territory Driver classification

Property damage liability coverage extends to:

Vehicles Buildings Equipment such as street signs and telephone poles It also protects you when you are driving another person's vehicle with the owner's permission.

Medical payment coverage also provides medical benefits for you and members of your family:

While riding in another person's vehicle If any of you are hit by a vehicle

Motor Vehicle Property Damage coverage protects you from financial loss if:

You damage someone else's property. Your vehicle is damaged. It includes property damage liability, collision, and comprehensive physical damage.

assigned risk pool

a group of people who cannot get motor vehicle insurance

Accidents may result in

a higher premium

Speeding tickets or accidents may result in _________

a higher premium

What is a financial responsibility law?

a law that requires a driver to prove he or she can pay for damage or injury caused by an automobile accident if he or she is at fault.

A higher deductible results in

a lower premium

How do deductibles work?

a specified amount of money that the insured must pay before an insurance company will pay a claim.

no-fault system

an arrangement whereby drivers who are involved in accidents collect money from their own insurance companies

Explain what the no-fault system is?

an arrangement whereby drivers who are involved in accidents collect money from their own insurance companies.

What are the main types of bodily injury coverages?

bodily injury liability, medical payments, and uninsured motorist's protection.

What are some things you can do to keep your auto insurance costs down?

by comparing companies and by taking advantage of discounts.

How can you guard yourself and your passengers against the risk of getting into an accident with someone who has no insurance?

by having uninsured motorist's protection.

What are some things to consider with your amount of insurance coverage? Legal concerns?

cannot afford to pay an expensive court settlement with their own money. For this reason, most drivers buy liability insurance. Many basic insurance policies provide 10/20 coverage for bodily injury liability.

Liability coverage pays for

damage or injury for which you are responsible

Collision insurance covers _________.

damage to the insured person's vehicle no matter who's fault

To deal with driver classification problems

every state has an assigned risk pool. These policyholders pay several times the normal rates.

What does bodily injury liability coverage pays for?

expenses related to a crash if pedestrians, people in other vehicles, or passengers in your vehicle are injured or killed

What does property damage coverage protect you from?

from financial loss if you damage someone else's property or if your vehicle is damaged.

What does the 50 stand for?

indicates the limit for payment for damage to the property of others.

Medical payments coverage

insurance for medical expenses of anyone injured in your vehicle, including you

What is medical payment coverage?

insurance for medical expenses of anyone injured in your vehicle, including you.

Collision insurance

insurance that covers damage to your vehicle when it is involved in an accident

What is collision coverage?

insurance that covers damage to your vehicle when it is involved in an accident.

What is bodily injury liability?

insurance that covers physical injuries caused by a vehicle accident for which you are responsible.

Bodily Injury Liability

insurance that covers physical injuries caused by a vehicle accident for which you were responsible

Uninsured motorist's protection

insurance that covers you and your family members if you are involved in an accident with an uninsured or hit-and-run driver

What is uninsured motorist's protection?

insurance that covers you and your family members if you are involved in an accident with an uninsured or hit-and-run driver.

What does most of the money that insurance companies pay out in claims go for?

legal and medical expenses, and other costs that occur if someone is injured.

Safety features such as anti-theft devices and automatic seat belts may result in

lower premium

Taking drivers education classes may result in a ________

lower premium

No matter what coverage you choose,

motor vehicle insurance is a valuable and mandatory protection to include in any personal finance plan.

property damage liability

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

What is property damage liability?

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

If you are in an accident, your vehicle insurance medical coverage handles _____.

only people injured in your vehicle

If you are in an accident, your vehicle insurance medical coverage handles_____

only people injured in your vehicle

What three things does property damage include?

property damage liability, collision, and comprehensive physical damage

What is underinsured motorist's protection?

protects a driver by financially compensating him for his injury in the event that he is injured in an accident by someone else

Comprehensive physical damage insurance

protects you if your vehicle is damaged in a non-accident situation.

What is comprehensive coverage?

protects you if your vehicle is damaged in a non-accident situation.

A driver's insurance premium rates will probably increase if he or she _____.

receives several traffic tickets

What are some other types of coverage that you need to understand?

rental reimbursement coverage pays for a rental car if your vehicle is stolen or is being repaired. Wage-loss insurance pays for any salary or income you might have lost due to being injured in a vehicle accident. States that have adopted a no-fault insurance system usually require auto owners to carry wage-loss insurance. Home and Motor Vehicle Insurance. Property damage liability covers damage to the property of others, including cars, buildings, and equipment. Towing and emergency road service coverage pays for mechanical assistance in the event that your vehicle breaks down. Rental reimbursement coverage pays for a rental car if your vehicle is stolen or being repaired.

Buying an insurance policy is an example of risk....

shifting

Collision coverage pays for....

the accident related cost of repairing or replacing your vehicle

Collision coverage pays for

the accident-related cost of repairing or replacing your car

The amount that you will pay for insurance depends on...?

the amount of coverage you require

Liability coverage is expressed by three numbers 100/300/50 What does the 100 stand for?

the maximum amount that the insurance company will pay for the injuries of any one person in any one accident.

What does the 300 stand for?

the maximum amount the company will pay for all injured parties (two or more) in any one accident.

Comprehensive coverage pays for

theft, fire, vandalism, or damages not related to a accident

Many states with no-fault insurance systems require ________.

wage-loss insurance

Property damage liability insurance covers you when...

your in an accident while driving someone else's car