Auto Insurance Overview PDF

# Chapter 2 Auto Insurance Overview ## What Factors Impact Rates? - **Underwriting Guidelines:** An insurer will assign a rate based on your individual risk characteristics. - **Driving Record:** Accidents and traffic violations that have occurred in the past three years in determining your risk....

# Chapter 2 Auto Insurance Overview ## What Factors Impact Rates? - **Underwriting Guidelines:** An insurer will assign a rate based on your individual risk characteristics. - **Driving Record:** Accidents and traffic violations that have occurred in the past three years in determining your risk. - **Geographic Area:** The number of claims filed by policyholders in your geographic area affects the rates charged by insurers. - **Gender and Age:** Males and young adults have a higher incidence of accidents. - **Marital Status:** Married individuals generally pay lower premiums than single people. - **Prior Insurance Coverage:** Insurers may require individuals to pay higher premiums if there has been any lapse in insurance coverage. - **Annual Mileage:** Insurers will consider a policyholder a greater risk, and charge them a higher premium, if the mileage is high. - **Age, Make and Model of Vehicle:** Certain makes and models of vehicles, when involved in accidents, cause or permit greater levels of bodily injury, sustain greater levels of damage, and are more difficult and costly to repair. - **Credit History:** Insurers may review an individual's credit history when determining that person's premium. ## Discounts Available - **Good Driving Record** - **Safety Devices** - **Anti-theft Devices** - **Multiple Policies** - **Good Student** - **Driver Education Courses** - **Renewal Discount** - **Memberships or Employment Discounts** - **Review your Deductible** ## Basic Overview of Coverage - **Auto Insurance Coverage:** State law requires all registered vehicle owners to purchase certain minimum protections or coverage levels - **Liability Insurance** - Protects policyholders when they have caused an accident ### Bodily Injury Liability Insurance - Pay for a lawyer to defend you if you are sued. - Pay the amount of medical expenses, lost wages, and pain and suffering that you are legally responsible to pay to another person - Pay an amount to settle these claims. ### Property Damage Liability Insurance - Pay for a lawyer to defend you in the event you are sued. - Pay the amount of physical damage that you caused to vehicles or property that you do not own. - Pay an amount to settle these claims. ### Uninsured Motorist (UM) Coverage This insurance covers repairs to your property, as well as medical expenses, lost wages, and pain and suffering. ### Personal Injury Protection (PIP) PIP coverage will reimburse you for reasonable and necessary medical expenses resulting from an auto accident, as well as lost wages. ### Other Coverages Available - **Physical Damage Coverage:** Protects you from expenses related to damage or loss of your vehicle - **Collision Coverage:** Pays to repair your vehicle or pays you what your vehicle was worth right before an accident occurred. - **Comprehensive Coverage:** Pays for damage to your car resulting from causes other than an accident, such as vandalism or theft. ### Additional Coverages - **Medical Payments Coverage:** Pays for medical expenses and related costs. - **Rental Reimbursement Coverage:** Pays for all or a portion of the cost of a rental vehicle while your vehicle is being repaired. - **Transportation Expense Coverage:** Covers additional transportation costs. - **Towing and Labor Coverage:** Pays to tow your vehicle to a repair shop. - **Mechanical Breakdown Coverage:** Pays to repair your vehicle after a mechanical breakdown. ## Difference Between a Nonrenewal and a Cancellation? - **Nonrenewal:** Occurs when an insurer decides not to renew your insurance coverage. - **Cancellation:** Occurs when an insurer decides to stop your coverage during the effective period of the policy ### When an Insurer May Nonrenew Your Policy - If you committed fraud or misrepresented your driving record. - If, within the past three years, you filed three or more claims where you were not responsible, filed two or more claims for accidents that you caused, or filed any combination of three or more “at-fault” accident claims, - If you were convicted of operating a motor vehicle while under the influence of alcohol, impaired or intoxicated, or while under the influence of drugs, assault, reckless endangerment, or criminal negligence, or were convicted of using a motor vehicle to participate in a felony act. ### When an Insurer May Cancel Your Policy - If you commit fraud or misrepresent your driving record when applying for your insurance or while making a claim. - If there exists a matter or issue related to the risk that constitutes a threat to public safety. - If there is a change in the condition of the risk that results in an increase in the hazard insured against. - If you fail to pay your premium when due. - If the driver's license or motor vehicle of the named insured or any covered driver under the policy is suspended or revoked.