26.2- Automobile and Umbrella Insurance

Driving record:

includes -the number and type of traffic tickets you've received for driving infractions -misdemeanors -number of accidents

Adding a teenage driver to an existing policy will...

increase premiums

Young single drivers...

are statistically more likely to be involved in an accident than married drivers over 25. -thus young drivers pay higher premiums

No-Fault Insurance is...

automobile insurance in which drivers receive reimbursement for their expenses from their own insurer, no matter who caused the accident.

Personal Injury Protection is

automobile insurance that pays for medical, hospital, and funeral costs of the insured and his or her family and passengers, regardless of fault.

Umbrella Liability Insurance This type of policy protects you from extraordinary losses, which are...

extremely high claims because of unusual circumstances Ex: you may be involved in an automobile accident in which a person receives a permanent injury. Medical costs may exceed $500,000 with additional costs for many years to come. As long as you carry the requiered liability coverage on your automobile insurance, the umbrella policy will cover the rest.

More serious offenses called misdemeanors may include:

fines as well as jail time Ex: -speeding -driving without a license -reckless driving

The causes might be:

fire theft tornado hail water falling objects natural disasters and acts of vandalism Ex: car is scratched while parked in a mall lot, your comprehensive insurane pays for the damage.

Collision coverage

is automobile insurance that protects your own car against damage from accidents or vehicle overturning.

It was also hoped that by reducing the number of lawsuits,...

more money could go to injured people in a timelier manner.

New and expensive cars cost...

more to insure because they are worth more and would therefore be more expensive to repair or replace.

Standard policies also cover:

theft of the vehicle and/or its contents

Every state has an assigned-risk pool that consists...

of people who are unable to obtain automobile insurance due to the high risk they present. -the state assigns these people to different insurers in the state. -the insurers must then provide coverage.

Many insurance companies use...

point systems to calculate premiums Ex: -a traffic infraction = 1 point -a misdemeanor = 5 points

Other factors: the farther you drive on a regular basis (such as work)...

the higher your insurance premiums

100/300/50 these numbers mean that...

the insurer will pay up to $100,000 for injury to one person, $300,000 total for all people, and $50,000 for property damage per accident.

If an accident is legally not your fault...

the other driver's liability coverage will pay for damages to your car

Umbrella liability insurance would generally pay up to...

$1 million or $2 million for any accidental injuries caused to another person while you are driving or for an accident that occurred on your property or in the course of your employment.

How may points makes your premiums to rise?

3 points

Types of automobile insurance coverage:

-Liability -Collision -Comprehensive -Personal injury protection (PIP) -Uninsured/underinsured motorist *when this types are purchased together in a single policy it is know as: FULL COVERAGE

Premium discounts are available for certain conditions, such as:

-more than one vehicle insured with the same company driver's education training -good grades in high school and college (usually a B average or better)

Liability insurance coverage is usually described using a series of numbers such as

100/300/50

Personal Injury Protection (PIP) Also known as:

Also known as a medical coverage insurance

Cost of automobile insurance:

Automobile insurance is expensive, premiums are based on a number of factors, such as: -model, style, and age of the car -driver classification (age, sex, marital status, driving record) -location (city, county) of driver and car -distances driven -purpose of driving (such as work) -age, sex, and marital status of other regular drivers of the car

Liability coverage:

Most states require all drivers to carry liability insurance

Automobile Insurance

Most states require minimum automobile insurance

No-Fault Insurance

These laws set up a system of compensation for auto accidents that does not require a legal determination of who was at fault before claims are paid. -Many states have passed no-fault insurance laws.

Most collision coverage has...

a deductible Ex: you may have to pay the first $500 (or whatever deductible is specified by your policy) for repairs, and the insurer pays the rest

An infraction is...

a minor violation, punishable only by a fine, and includes such things as: -parking violation -failure to come to a complete stop at a stop sign -an improper left-hand turn

Premiums charged for liability insurance vary...

according to the amount of coverage

To reduce costs for this kind of insurance, consider... (PIP)

buying a car with airbags antilock brakes and other safety devices to lower the risk of injury

Assigned-Risk Policies If you have an accident that costs your insurer large sums of money, the insurer may...

cancel your policy. -also the number of traffic citations and fines on your record may also cause your insurer to drop you. If so, you may not be able to find another insurer willing to insure you.

Very serious traffic violations can...

cause insurance premiums to rise dramatically Ex: -drunk driving -hit and run -leaving the scene of an accident

Statistics may cause insurers to...

charge higher premiums on sports cars than on family cars.

Certain geographic locations (such as large cities) have had higher accident rates, so as a result, insurers...

charge higher rates to drivers in these areas

Automobile insurance covers:

costs of damage to the vehicle its owner and any passengers

Also covers:

costs of repairs to other vehicles medical expenses of occupants in other vehicles property damage (shrubs, trees, and fences)

who will be driving the car...

is also a factor in setting premiums

Uninsured/underinsure coverage is...

is automobile insurance that pays for your injuries when the other driver is legally liable but unable to pay. (in other words, if the other driver is legally at fault for the accident but has no insurance or insurance that is insufficient to cover the costs, your insurer will pay your medical costs.) -this coverage will also protects you as a pedestrian if you are hit by an uninsured vehicle.

What is the basic idea behind non-fault insurance?

is to avoid the years of legal battling required to settle a case and determine fault. -Even then, drivers with no assets and no insurance would not be able to fix the other driver's car or pay for damages resulting from their negligence.

Purpose of liability coverage:

is to protect the insured against claims for bodily injury to another person or damage to another person's property. -it pays nothing toward the insured's own losses, either personal injury or damage to the vehicle.

Type of car: Except for vintage (antique) cars, older cars should require...

less insurance than newer cars because older cars are worth less.

Many minor traffic accidents involve damage that costs

less than the deductible

However it may be wise to have a higher deductible and pay...

lower premiums to save money In other words, paying the first $1,000 for each accident would be less expensive in the long run than having a $500 deductible and paying higher premiums

you can also choose a higher deductible for comprehensive coverage to...

lower your premium

Comprehensive Coverage

protects you from damage to your car from causes other than collision or vehicle overturning.

People who maintain required liability coverage on their automobile and residence can also...

purchase an umbrella policy that picks up where the other coverage leaves off.

When you are in an accident that is your fault and your insurance company has to pay claims, you are likely to...

see a surcharge, which effectively increases your premium for three year or longer

Assigned-risk pool The insurance premiums may cost the insured...

several times the normal rate until the risky driver is able to re-establish a good driving record.

Statistics Insurers base their premiums on

statistical probabilities

Umbrella Liability Insurance

supplements your basic auto and property liability coverage by expanding limits and including additional risks.

Full Coverage

when all types of automobile insurance coverage are purchased together in a single policy

Number of claims filed

when you file too many claims, your premiums rise

If the insured is injured as a pedestrian or bicyclist, this insurance... (PIP)

will pay the medical costs

Collision coverage this coverage will pay for the damage to your car in the event...

you are at fault and the other driver's liability insurance does not have to pay.

If the accident is your fault and all you have is liability coverage...

your insurance will not pay for the damages to your car

If you reach 10 points:

your policy could be canceled