1. Motor Vehicle Insurance
Insurance Unit

2. Vocabulary
• Insurance- Protection against possible financial
loss
• Policy- legal contract between a person
(policyholder) buying insurance and the
insurance company
• Premium- what the policyholder pays the
company for the insurance
• Deductible- the portion of the loss that you pay
before the insurance company pays anything
• Claim- an oral or written notice to the insurance
company

3. Vocabulary
• Liability- legal responsibility for the
financial cost of another person’s losses
or injuries
– It is the law that you have to carry automobile
insurance (liability) in Illinois (minimum
20/40/15)

4. Bodily Injury Coverage
Bodily Injury Coverage
Bodily Injury Liability Medical Payments Uninsured Motorist’s
(people in other car) Coverage Protection
Medical Payments Coverage- is insurance for medical expenses of anyone
injured in your vehicle, including you.
Uninsured Motorist’s Protection- is insurance that covers you and your
family members if you are involved in an accident with an uninsured or hit-
and-run driver.

5. Property Damage Liability
• Is motor vehicle insurance that applies when you
damage the property of others.
• Protects you when you are driving another person’s
vehicle with the owner’s permission.

6. Liability
• Insurance that covers physical injuries and
property damage caused by an accident
for which YOU are responsible
100 / 300 / 50
Indicates $100,000 Indicates Indicates $50,000
limit that will be paid $300,000 limit limit for payment for
to one person in an that will be paid damage to the
accident. to all other property of others.
Bodily Injury Liability people injured Property Damage Liability
in an accident.
Bodily Injury Liability

7. Other Coverages for YOUR car
Property Damage Coverage
Comprehensive
Collision Physical Damage
Collision- insurance that covers damage to your vehicle when it is involved
in an accident. (You do NOT have to have this coverage.)
Comprehensive Physical Damage- protects you if your vehicle is
damaged in a non-accident situation (You do NOT have to have this
coverage.)

8. Other Coverages
• Rental reimbursement coverage- pays
for a rental car if your vehicle is stolen or
being repaired
• Wage-loss insurance- pays for any
salary or income you might have lost due
to being injured in a car accident
• Emergency road service coverage

9. Driver Classification
• Assigned Risk Pool- a group of people
who cannot get motor vehicle insurance
who are assigned to each insurance
company operating in the state.

10. Insurance Premium Factors
• Vehicle Type
– Year, Make, and Model of vehicle
• Rating Territory (owner’s place of
residence)
– Location
– Cost more if you lived in the city due to more
accidents and theft

11. Insurance Premium Factors
• Driver Classification
– Based on age, sex, marital status, driving
record, & driving habits
– Under 25 yrs. and over 70 yrs. old have more
frequent & serious accidents
– Cost and number of claims you file with your
company also affect your premium

12. Insurance Premium Factors
• Discounts
– Discounts for good students…A/B average
will earn you a 5% to 10% discount (about
$100 savings a year)
– Living outside the city limits or in a safe
neighborhood can save you 5% to 10%

13. Insurance Problem
Jamal breaks his arm in a car accident and
has to go to the emergency room. His total
bill is $740.37. His insurance pays 85% of
the bill. How much is Jamal responsible for
paying?
$111.06

14. Home/Renter’s Insurance

15. Home Insurance
• Renter’s Insurance
– Protects your
belongings to a set
amount
• Homeowner’s
Insurance
– Protects your house and
it’s contents

16. The Centrino’s have homeowner’s insurance
that pays 60% after a $600 deductible is met.
After a recent storm, the Centrino’s filed a
claim to replace their roof. The roof costs
$2,000.00 to replace. What was the
insurance company’s payment in this case?
$840.00

17. Health & Life Insurance

19. Major Medical Coverage
• It covers:
– Hospital and surgical expenses
– Doctor visits
– Prescription drugs
– Medical tests
• Requires deductible and coinsurance
• You choose any hospital and physician
you prefer

20. Tim recently stayed in the hospital. His
health insurance policy pays 70% of his
hospital bills after a $700.00 deductible is
met. The total of the hospital costs were
$21,500.00. What were Tim’s total
payments after the deductible?
– $6,240.00

21. Health Maintenance Organization
(HMO)
• No deductibles
• Small co-payment
• Check-ups and well-baby care are covered
• Choice of physicians is limited

22. Preferred Provider Organization
(PPO)
• More freedom of choice of doctors
• Higher premiums
• Higher co-payments than with an HMO

23. Types of Plans
• Group Plans
– Offered through employers
– Keep premium costs down (spreading risk over
large number of people)
– Have deductible, coinsurance, major medical
coverage
• Individual Plans
– Students, self-employed, retirees
– Can be expensive!

24. Disability Coverage
• Pays you a percentage of your salary if you can
not work
• Short-term disability=few months
• Long-term disability can pay for a lifetime of
missed work

25. Types of Life Insurance
• Term Life Insurance
– Protects your dependents if you die
– No cash value
– Provide coverage for a set number of years
– The beneficiary receives the face value of the
policy if you die

26. Buying Life Insurance
• You purchase a policy and pay premiums
• The company pays a benefit to your beneficiary
if you die
• Should you buy life insurance?
• How much life insurance do you need?
• What are some tips on buying life insurance?