Personal Finance: Quiz 4 (Auto Insurance)

What is it called when you pay money for a policy?

Premium

What is an umbrella policy?

Extra liability (to protect your assets) if someone is suing you

What are 4 different ways to deal with risk?

- Avoid (don't drive) - Reduce (don't drive on roads at night if you don't want to hit deer) - Accept (Jay doesn't have life insurance on his kids) - Transfer (buy insurance)

(Types of Insurance) Collision

- Covers only your car, nothing else - Deductible - you have to pay an amount and insurance covers the rest (0, 100, 250, 500, or 1000 - the lower number chosen means the higher your premium is, or the amount you pay for insurance each year)

(Types of Insurance) Comprehensive

- Covers perils (such as hitting a deer, hail damage, wind, tree falls on it, tornado, vandalism) - Have to choose a deductible

(Types of Insurance) Medical Payments

- Covers you and your family

What are 3 ways to decrease auto insurance rates?

- Good student discount - Low mileage discount - Shop around for other insurances - Drive a low value vehicle - Drop collision and comp on an old car - Raise deductibles - Combine house and auto on same company (multi-policy discount)

What are examples of the perils covered by Comprehensive insurance?

- Hitting a deer - Hail damage - Wind - Tree falls on car - Tornado - Vandalism

(Types of Insurance) Liability

- Something you did to others - Covers body injury (pedestrian, passengers in the other car, guests in your car) and property - 100 / 300 / 100 ($100,000 of coverage per person per accident / $300,000 per accident maximum / $100,000 property)

(Types of Insurance) Uninsured/Underinsured

- When the other person hits you and doesn't have insurance or not enough - Hit and run situations - Only good for bodily injury