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Questions and Answers
Comprehensive Coverage pays for damage to your vehicle caused by accidents.
Comprehensive Coverage pays for damage to your vehicle caused by accidents.
False
Medical Payments Coverage only pays for surgical expenses incurred from vehicle accidents.
Medical Payments Coverage only pays for surgical expenses incurred from vehicle accidents.
False
An insurer may cancel a policy mid-term if the insured commits fraud when making a claim.
An insurer may cancel a policy mid-term if the insured commits fraud when making a claim.
True
Rental Reimbursement Coverage covers the full cost of vehicle repairs.
Rental Reimbursement Coverage covers the full cost of vehicle repairs.
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Nonrenewal occurs when an insurer decides not to renew coverage at the end of the policy term.
Nonrenewal occurs when an insurer decides not to renew coverage at the end of the policy term.
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Towing and Labor Coverage provides funds to cover vehicle repairs after accidents.
Towing and Labor Coverage provides funds to cover vehicle repairs after accidents.
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Mechanical Breakdown Coverage is available for repairing damages caused by accidents.
Mechanical Breakdown Coverage is available for repairing damages caused by accidents.
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Filing multiple at-fault claims within three years can lead to nonrenewal of your policy.
Filing multiple at-fault claims within three years can lead to nonrenewal of your policy.
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Personal Injury Protection (PIP) coverage can reimburse for lost wages resulting from an auto accident.
Personal Injury Protection (PIP) coverage can reimburse for lost wages resulting from an auto accident.
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Physical Damage Coverage only applies if the accident was caused by you.
Physical Damage Coverage only applies if the accident was caused by you.
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PIP coverage can be denied if claims are not filed properly and in a timely manner.
PIP coverage can be denied if claims are not filed properly and in a timely manner.
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Uninsured Motorist (UM) Coverage only applies when the other driver is identified.
Uninsured Motorist (UM) Coverage only applies when the other driver is identified.
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Collision Coverage pays for repairs to your vehicle regardless of who caused the accident.
Collision Coverage pays for repairs to your vehicle regardless of who caused the accident.
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If you have adequate health care coverage, you should always keep PIP coverage.
If you have adequate health care coverage, you should always keep PIP coverage.
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Policy cancellation and nonrenewal mean the same thing.
Policy cancellation and nonrenewal mean the same thing.
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Bodily Injury Liability Insurance can cover solutions for pain and suffering in an accident claim.
Bodily Injury Liability Insurance can cover solutions for pain and suffering in an accident claim.
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State law mandates all registered vehicle owners to purchase comprehensive coverage.
State law mandates all registered vehicle owners to purchase comprehensive coverage.
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Personal Injury Protection (PIP) is often included in the basic auto insurance coverage required by law.
Personal Injury Protection (PIP) is often included in the basic auto insurance coverage required by law.
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A policy cancellation and nonrenewal are the same processes within auto insurance.
A policy cancellation and nonrenewal are the same processes within auto insurance.
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Physical Damage Coverage is designed to cover the costs associated with injuries to drivers in an accident.
Physical Damage Coverage is designed to cover the costs associated with injuries to drivers in an accident.
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Raising the deductible on an auto insurance policy will generally increase the premium.
Raising the deductible on an auto insurance policy will generally increase the premium.
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Having a clean driving record can qualify you for a good driving record discount on your auto insurance.
Having a clean driving record can qualify you for a good driving record discount on your auto insurance.
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Multiple policies with the same insurer do not provide any discount benefits.
Multiple policies with the same insurer do not provide any discount benefits.
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Annual mileage is a factor that can increase your auto insurance premium.
Annual mileage is a factor that can increase your auto insurance premium.
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Study Notes
Comprehensive Coverage
- Pays for damage to your vehicle caused by events other than accidents, theft or vandalism.
Medical Payments Coverage
- Provides payment for medical expenses for you and others injured in your vehicle.
- Covers:
- Rehabilitative
- Surgical
- Chiropractic
- X-Ray
- Dental, prosthetic, professional nursing
- Funeral Expenses
Rental Reimbursement Coverage
- Provides financial assistance for renting another vehicle when your vehicle is being repaired.
Transportation Expense Coverage
- Covers transport costs like rental cars, bus fares, etc.
Towing and Labor Coverage
- Covers towing your vehicle to a repair shop following an accident or breakdown.
Mechanical Breakdown Coverage
- Pays for repairs to your vehicle due to mechanical issues like engine failure.
Nonrenewal vs Cancellation
- Nonrenewal: Your insurance policy is not renewed at the end of its term.
- Cancellation: Your insurer ends your policy mid-term.
Reasons for Nonrenewal
- Fraud or misrepresentation in your application.
- Filing three or more "not at fault" claims within three years.
- Filing two or more "at fault" accident claims within three years.
- Conviction for driving under the influence, drugs, or while intoxicated.
- Conviction for certain offenses related to vehicle use.
- Violating the insurer's underwriting guidelines.
Reasons for Cancellation
- Fraud or misrepresentation in your application.
Minimum Required Coverage
- States require all registered vehicle owners to have basic liability coverage.
Liability Coverage
- Protects you financially in case you cause an accident.
Bodily Injury Liability Coverage
- Pays expenses related to injuries caused to others in an accident:
- Legal defense fees
- Medical bills
- Lost wages
- Pain and suffering
Property Damage Liability Coverage
- Covers financial losses from damage to someone else's property:
- Legal defense fees
- Physical damage to vehicles and property
Uninsured Motorist (UM) Coverage
- Helps pay for repairs and expenses if:
- You are injured or your property is damaged by an uninsured driver.
- The other driver leaves the scene of the accident.
Personal Injury Protection (PIP)
- Provides reimbursement for:
- Medical expenses
- Lost wages
- Coverage is available up to a specified dollar amount in your policy.
- Claims must be filed accurately and promptly.
- Consumers can waive PIP if they have sufficient health coverage.
Physical Damage Coverage
- Protects you from expenses related to damage or loss of your vehicle due to incidents like accidents, theft, or vandalism.
Collision Coverage
- Pays for repairs to your vehicle or reimburses you for its value if the cost of repairs exceeds 75% of its value.
- Coverage applies regardless of who caused the accident.
Factors Influencing Rates
- Underwriting Guidelines: Insurers assess your risk profile using these guidelines.
- Driving Record: Recent accidents or violations (within three years) can affect your rates.
- Geographic Area: Number of claims in your area can impact rates.
- Gender and Age: Rates typically decrease at age 25 and may increase as you approach age 50/55.
- Marital Status: Married individuals usually pay lower premiums.
- Prior Insurance Coverage: Gaps in insurance coverage can result in higher premiums.
- Annual Mileage: Higher mileage = higher premiums.
- Age, Make, and Model of Vehicle: Vehicles with high repair costs or a history of accidents attract higher premiums.
- Credit History: Your credit history might be considered in determining your premium.
Discounts
- Good Driving Record: Discount may be available if your record is clean.
- Safety Devices: Anti-lock brakes, safety belts, or air bags, may qualify for a discount.
- Anti-theft Devices: Car alarms and other theft-deterrent devices may result in a discount.
- Multiple Policies: Discounts may be available for multiple policies (e.g., homeowners and auto) with the same insurer.
- Good Student: A good student discount might be available if you maintain at least a B average.
- Driver Education Courses: Completion of a driver education course may qualify you for a discount.
- Renewal Discount: A discount might be available for maintaining continuous coverage with the insurer for a specified number of years.
- Memberships or Employment Discounts: Discounts may be available for members of credit unions, shoppers' clubs, or if you're affiliated with an organization that provides discounts.
- Deductible: Raising the deductible on your policy will decrease your premium.
Basic Overview
- Auto insurance coverage includes various types of protection.
- Purchasing minimum coverage is legally required for all vehicle owners.
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Description
Explore the various types of auto insurance coverage that protect you in different situations, from comprehensive coverage to medical payments. This quiz covers essential aspects like rental reimbursement, transportation expenses, and mechanical breakdowns. Test your knowledge on nonrenewal versus cancellation of policies.
