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Auto Insurance

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    Auto Insurance Auto Insurance Presentation Transcript

    • What you will learn during the course • Auto Insurance Welcome to • Homeowners Insurance FIN 3360/6360 • Health Insurance Risk and Insurance • Life Insurance • Structure of Insurance Industry State Farm Auto Insurance Policy Declarations Page • Identifies Insured • Describes Coverage • Policy Period: 8/24/07 - 2/23/08 • Premium: $435.08 1
    • California Coverage • Average auto liability A) Bodily Injury Liability insurance premium - $391.24 $100,000 Each Person • Average auto collision $300,000 Each Accident insurance premium - $391.24 • Average auto comprehensive Property Damage Liability insurance premium - $263.64 $100,000 Each Accident • Average auto combined This coverage is often described as: insurance premium - $765.20 100/300/100 Four Ways to Accomplish Financial Minimum Limits in California Responsibility in California • Coverage by a motor vehicle or automobile • Bodily Injury liability insurance policy; $15,000 for death or injury of • A cash deposit of $35,000 with the Department any one person, any one of Motor Vehicles (DMV); accident. • A certificate of self-insurance issued by DMV to $30,000 for all persons in any owners of fleets of more than 25 vehicles; or one accident. • A surety bond for $35,000 obtained from an • Property Damage insurance company licensed to do business in California. $5,000 for any one accident. 2
    • Driver Responsibility in California Coverage (Continued) C) Medical Payments • All California drivers and owners must have at least the statutory limits $25,000 Each Person of minimum liability insurance or an approved alternative way to pay for injury or property damage they may D) Comprehensive cause. Penalties are very severe for non-compliance with this section of G 100) $100 Deductible Collision the vehicle code. H) Emergency Road Service Coverage (Continued) Car Policy U) Uninsured Motor Vehicle $100,000 Each Person $300,000 Each Accident • Your use of your car W) Underinsured Motor Vehicle $100,000 Each Person $300,000 Each Accident 3
    • When and Where Coverage Definitions Applies • When - Policy Period shown on the declarations page • Where - in the U.S., its territories and • You or Your - means the named insured possessions or Canada and (for liability, shown on the declarations page medical payments and physical damage coverage only) in Mexico within 50 miles • Your Car - means the car or the vehicle of the U.S border described on the declarations page Liability - Additional Coverages Section I - Liability • Court costs • Pays damages which an insured becomes • Interest on damages legally liable to pay because of bodily • Premiums or costs of bonds injury to others and damage to property and • Expenses incurred by an insured defends any suit against an insured – Wages up to $100 per day – First aid at the accident – At their request 4
    • Liability Exclusions Liability - Example • While charging persons for a ride • While driving your car, you run into another • For bodily injury to a family member car. The accident is your fault and it costs • For damage to property owned by, rented to $7,500 to repair the other car. or in the charge of or transported by an insured • For liability assumed by the insured under any contract or agreement Liability - Example Medical Payments • Pays reasonable medical expenses for • Same accident as before, but you also injure accidental bodily injury that occurs to you the driver of the other car. He incurs while occupying a vehicle covered under $30,000 in medical bills. He sues you and the liability section or as a pedestrian if is awarded $120,000 for bodily injury. struck by a motor vehicle or trailer 5
    • Medical Payments - Example Definition • Occupying - means in, on, • Same accident as before, except you are entering or alighting from injured and incur $28,000 in medical bills. Answers to Examples Medical Payments - Example • Property Damage Liability - Your policy pays $7,500. While getting out of your car, you trip on the curb and break your ankle. • Bodily Injury Liability - Your policy pays Your medical bills are $4,000. $100,000. • Medical Payments, first example - Your policy pays $25,000. • Medical Payments, second example - Your policy pays $4,000. 6
    • Comprehensive Pays for loss to your car • Earthquake except by collision • Windstorm Comprehensive Includes breakage of • Hail glass and loss caused • Water Collision by: • Flood • Missiles • Malicious mischief or Emergency Road • Falling objects vandalism • Fire Service • Riot or civil • Theft or larceny commotion • Explosion • Hitting or being hit by bird or animal Comprehensive - Example A 0 Comprehensive - Example B 2400 C 2500 D None of the above Someone scratches the paint on your car with a tool. It costs $2500 to sand and paint your car to repair the damage. 7
    • Comprehensive - Comprehensive - Transportation Costs - Example Transportation Costs Your car is stolen. You immediately Provides up to $25 per day in report the loss and rent a transportation costs if your car is replacement for $40 per day. Six stolen after you report the loss and days later State Farm settles your ending when they offer to pay the claim. loss Comprehensive - Transportation Costs - Example A 0 Collision B 64 C 80 D 96 Pays for loss to your car caused by E None of the above collision but only for the amount of each such loss in excess of the deductible. 8
    • Collision - Example Definition Your car is parked at Marketplace while you are shopping. When you return to your car, the rear fender is smashed. You can’t find out who Collision - means your car upset or ran into your car. It costs $700 to hit or was hit by a vehicle or other repair the damage. object. Clothes and Luggage - Collision - Example Comprehensive and Collision A 0 Pays up to $200 in B 600 excess of the C 700 deductible for loss D None of the above to your clothes and luggage if they were in the car at the time of the loss. 9
    • Clothes and Luggage - Clothes and Luggage - Example Comprehensive Loss must be caused by: You decide to drive to Los Angeles • Fire for the weekend. While your car is parked at the Speedway, someone • Lightning breaks into your car and steals your • Flood luggage, which contained your • Falling objects clothes. The luggage was worth • Explosion $100 and the clothes were worth • Earthquake $200. • Theft of the entire car Limits of Liability - Clothes and Luggage - Example Comprehensive and Collision A 0 The limit of liability is the lower of: B 100 • actual cash value C 200 • the cost of repair or replacement D 300 E None of the above 10
    • Emergency Road Service - Emergency Road Service Example Pays the cost you incur for: While driving you get a flat tire. • up to 1 hour of labor costs at site of When you discover you don’t have breakdown a spare, you call a service station • towing to nearest repair location for help. They bring you a new tire • towing out if stuck on or next to public and put it on your car. They charge highway $100 for the new tire and $25 for • delivery of gas, oil, loaned battery or changing your tire. change of tire - does not pay for the cost of these items Emergency Road Service - Example Uninsured Motor A 0 Vehicle Coverage B 25 Underinsured Motor C 100 Vehicle Coverage D 125 E None of the above 11
    • Definition of Uninsured Motor Uninsured Motor Vehicle Vehicle • A motor vehicle without insurance, with Pays damages for accidental bodily insurance limits below the legally required injury an insured is legally entitled limits in your state, or if the insurer denies to collect from the owner or driver coverage or becomes insolvent of an uninsured motor vehicle • A “hit-and-run” motor vehicle whose owner or driver is unknown which strikes the insured or the vehicle the insured is occupying Uninsured Motor Vehicle - Deciding Fault and Amount Example • Whether the insured is legally entitled to You are driving your car when you are hit collect damages and, if so, the amount must from behind by an uninsured driver. You be decided by agreement between the are injured and taken to the hospital for insured and State Farm treatment. You incur $5,000 in medical bills. You would be entitled to a bodily • If there is no agreement, these questions injury award of $15,000 if the other driver will be settled by arbitration had been insured. 12
    • Uninsured Motor Vehicle - Underinsured Motor Vehicle Example A 0 Same as Uninsured Motor Vehicle except this applies if the at fault B 5,000 driver has bodily injury limits less C 15,000 than your Uninsured Motor Vehicle D 20,000 coverage (100/300) E None of the above Underinsured Motor Vehicle - Underinsured Motor Vehicle - Example Example A 0 As a pedestrian you are B 20,000 hit by a driver with C 30,000 20/40 bodily injury D 50,000 limits. You are E None of the above entitled to a $50,000 bodily injury award. 13
    • How Do Medical Payments and Medical Payments and Uninsured/Underinsured Motor Uninsured Motor Vehicle - Vehicle Coverages Combine? Example 4. “The uninsured motor vehicle An uninsured driver going the wrong way on a coverage shall be excess over and one way street hits you while you are in your shall not pay again any medical car. You incur $25,000 in medical bills and expenses paid under the medical $20,000 in lost wages. You would be payments coverage.” entitled to a bodily injury award of $110,000 Page 13 if the driver had been insured. Medical Payments and Uninsured Medical Payments and Uninsured Motor Vehicle - Example Motor Vehicle - Example Bodily Injury Award consists of: A 0 25,000 medical expenses B 25,000 20,000 lost wages C 100,000 65,000 pain-and-suffering D 110,000 110,000 total E None of the above State Farm pays 25,000 under Medical Payments 85,000 under Uninsured Motor Vehicle 110,000 total 14