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What Is Auto Insurance?Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage
Basic Auto CoverageBodily Injury Liability This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone elses car with their permission.
Basic Auto CoverageMedical Payments or Personal Injury Protection (PIP) This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Basic Auto CoverageProperty Damage Liability This coverage pays for damage you may cause to someone else's property. Usually, this means damage to someone elses car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
Basic Auto CoverageCollision This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000the higher your deductible, the lower your premium.
Physical Damage Insurance continued2. Collision Coverage covers a collision with another object, car, or from a rolloverPaid regardless of faultGenerally covered when driving someone elses car with their permission
Basic Auto CoverageComprehensive This coverage reimburses you for loss due to theft or damage caused by something other than a collision, such as fire, falling objects, windstorm, hail, flood, vandalism, or deer. States do not require that you purchase collision, but if you have a car loan, your lender may insist you carry it until your loan is paid off.
Physical Damage Insurance1. Comprehensive Coverage includes all physical damage losses except collision and other specified losses. Usually includes deductible. Losses covered include:Theft, vandalismFire, ice, windstorm, or hailGlass breakageContact with animal
Basic Auto CoverageUninsured and Underinsured Motorist Coverage This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.
Liability Insurance continuedPolicy limits for liability are usually quoted with three figures such as 25/50/10Each figure represents a multiple of $1,00025 = $25,000Per-person bodily injury limit$25,000 is the most which will be paid for any one persons bodily injury liability losses from an accident
Liability Insurance continued50 = $50,000Per-accident bodily injury limit$50,000 is the most which will be paid for all bodily injury losses from an accident10 = $10,000Per-accident property damage liability limit$10,000 is the most which will be paid in property damage liability from an accident
Insurance Rate InfluencesInsurance rates are determined for individual cases these factors influence the rates:AgePeople under age 25 pay higher premiumsGenderMen have more accidents, rates may be higherMarital statusMarried drivers have fewer accidents, so rates are lower
Influences continuedDriving recordSafe drivers have lower rates Number and type of tickets will raise ratesNumber and severity of accidents will raise ratesType and age of vehicleNewer, more expensive, and higher repair cost vehicles have higher ratesFrequently stolen vehicles have higher ratesColor of vehicle does not matter
Influences continuedVehicle useRates are usually higher when driving more than 7,500 miles a yearThe more one drives, the greater the chance of an accident
Place of ResidenceRates vary among statesPeople in large cities usually pay more than in rural or suburban areasWeather conditions may affect rates
Influences continuedNumber of drivers on the policyAdditional drivers raise the premiumCosts a driver under the age of 25 less to be added to his/her parents policy than to purchase a separate policyDriver trainingMay receive a discount for having taken a drivers education course
Influences continuedGood student discountMay receive a discount for good grades in schoolMultiple car discountMay receive a discount for having two or more vehicles on the same policyAnti-theft systemsMay receive a discount for anti-theft devices such as car alarms
Influences continuedMultiple policies with the same companyHaving both auto and home insuranceLong-time customersSome companies might offer discounts to long-time customers
ReviewWhat are the 5 basic components of auto coverage?What does COLLISION cover?What does COMPREHENSIVE cover?What does PERSONAL INJURY cover?What does PROPERTY LIABILITY cover?What does UNDER/UNINSURED cover?
Life insuranceA contract between an insurer and policyholder specifying a sum to be paid to a beneficiary upon the insureds deathBeneficiary - is the recipient of any policy proceeds if the insured person diesDependent - a person who relies on someone financially
Types of life InsuranceTerm and WholeTerm - covers policyholders for a fixed span of time. Can last up to 30 years.Whole - combines term insurance with an investment componentShould have 2 - 3 times your annual salary. Can talk to a financial advisor for exact amount.
Renters insuranceCovers personal property - not the physical residenceLiability protection against accidental occurrencesInexpensive
Disability InsuranceShort Term Disability - waiting period of 0-14 days up to 2 yearsLong Term Disability - Waiting period of weeks to months up to few years or rest of lifeNoncancelable - cannot be canceled by the insurance company except for nonpaymentGuaranteed renewable - right to renew with the same benefits, however, the insurer has the right to increase your premiums.