Car Insurance
by Megan Heine
| 34 Questions
Students will be able to
  • Describe the main types of auto insurance policies
  • Explain a deductible, out-of-pocket expenses, and what insurance will pay for in different situations
  • List factors that determine auto insurance premiums
  • Determine legal minimum and recommended coverage levels
  • Read an insurance policy and determine coverage provided
  • React properly to an accident and successfully file a claim
List the pros and cons of having automobile insurance. How could it help someone? How could it hurt someone?
Do you agree that individuals should be required to carry auto insurance? Why or why not?
Top 10 Reasons You Need Car Insurance
Review this list of reasons car insurance is important. Beyond that it’s the law, list the three reasons you found most important, and explain why.

  1. It’s the law. In virtually every state, you must carry car insurance or face criminal fines. Repeated offenses could lead to the loss of your driver’s license and even a jail sentence.
  2. Your car is an important asset. For many people, a car is the second-most-expensive purchase they will make in their lives, next to the purchase of a home. Vehicles are essential not just because they’re expensive, but also because of the service they provide to families. Car insurance is a way to protect that important asset.
  3. Your lender will always want to be paid. If you have an accident and can’t afford to get your vehicle repaired because you don’t have car insurance, the company that provided you a car loan won’t stop asking for monthly payments. Car insurance is one way to help ensure that you can continue to make your car loan payments.
  4. Cars get you to work. If you decide to forgo insurance and then get into an accident and sustain damage you can’t afford to repair, that doesn’t affect your need to get to and from work and make other necessary daily trips. Car insurance helps pay for car repairs so you continue to make your daily trips.
  5. The cost of a major accident. One of the many important roles of car insurance is the money for medical costs of people who are injured in accidents that are your fault. Of course, that includes any injuries you may suffer as well.
  6. Provide legal protection. There’s nothing to stop someone from suing you after an accident even if they are in the wrong. But car insurance gives you a buffer between legal claims and your wallet. That includes providing an attorney to handle any lawsuit stemming from a lawsuit over an automobile accident.
  7. Protection from Mother Nature. What will you do if there’s a mudslide,  hurricane, or earthquake that damages or even totals your vehicle? That can be a time when money is extremely tight, but car insurance provides some protection in those circumstances.
  8. Non-accident protection. Car insurance can also be crucial if your vehicle is stolen or vandalized. That’s one of the reasons why many insurance companies offer a break on insurance if a policyholder regularly parks his or her car off the street and in a covered garage, where the instances of theft and vandalism are much less prevalent.
  9. Stop a slide to bankruptcy. For many people, the uninsured loss of a vehicle completely turns their lives upside-down. There’s no money for another vehicle, so getting to work on time can be difficult. That can lead to loans or credit card use that could spiral out of control.
  10. Peace of mind. Because car insurance helps in so many areas, not having insurance can lead to some nerve-racking times just hoping against hope that no other bad news arrives. Studies actually show that contented workers are more productive on the job. That’s just one of the perks of peace of mind.
One reason car insurance is really important is… because...
A second reason car insurance is really important is… because...
A final reason car insurance is really important is... because…
While driving, you need to protect against a lot of different things.
Watch this video to discover the 5 types of car insurance and how each of them can protect you in an accident.
Fill in the sentences by describing what each type covers.
Liability Coverage
Protects against…

DOES NOT cover...
Collision Coverage
Damages to YOUR car in an accident, even if...

DOES NOT cover...

Optional? Yes / No
Comprehensive Coverage
Covers damages to your car that are...

Won’t cover some things though (damage to freezing, breakdowns). Find out...

Optional, but good for...
Personal Injury Protection ‘No-Fault Insurance”
Will pay cost of treating...
Uninsured or Underinsured
Protects against the risk of being hit by...

Pays for medical expenses and...

Kicks in when you’re hit and your damages/expenses are _____________ than the value of insurance policy of the person who hit you.
Part I: Name that Coverage
Read the description below, and correctly identify the type of coverage.
If your car was damaged in an accident, I’ve got your back. It doesn’t matter who was at fault while driving. However, if the damage came from something besides a crash, I won’t be around to help you. I am…
You are hit in an accident by another driver. At the hospital, you discover the other driver doesn’t have insurance to cover your medical bills. That’s when I kick in! I am…
Doesn’t matter who was at fault, if you’re in a car accident and need your injuries paid for, I’m there for you. Simple as that. However, anything beyond your injuries and I can’t help you. I am...
I’m the best friend of new and/or expensive cars, because repairing even small damage can be incredibly costly. Did I mention that the damage doesn’t even have to be from an accident with another driver? Nope! If you hit an animal, or your car is stolen, or a tree falls on it, I’ve still got you covered! (But read my fine print because there are a few cases I won’t cover). I am…
I’m the one you call when you cause damage to other people and vehicles. I protect others against you in case an accident is your fault (which protects you… in your wallet). But I won’t pay for any damage to your car or body. I am...
Part II: Scenarios
Read the following scenario and describe which type(s) of insurance would be able to help the people involved. *Important Note: You can’t buy the insurance AFTER the accident and still expect to be covered. You’d need to be already insured with the specific insurance type in order to file a claim.
Stephen is slowing down as he approaches a red light. He is looking in his mirror to switch lanes and misjudges how close Keisha’s car is, rear-ending her car. When they get out and assess the damage, Keisha’s bumper will need to be replaced. What type(s) of insurance could Stephen use to cover this accident?
Keisha had some discomfort in her neck at the time of the accident but thought it was minor and would go away. A week or so after the accident, Keisha finally goes to the doctor, who diagnoses her with whiplash and recommends two months of physical therapy. What type(s) of insurance could Keisha use to cover this accident?
Melanie get into an accident on the highway that sends her to the hospital for three weeks with multiple broken bones. Her hospital bill totals over $32,000, but she discovers that the woman who hit her only has $25,000 worth of liability insurance. What type(s) of insurance could Melanie use to cover this accident?
Bernard is driving late at night down a narrow road when a deer runs across the road. Bernard doesn’t have time to avoid the deer and hits it. His windshield gets smashed and his bumper is partially ripped off, but Bernard is okay. What type(s) of insurance could Bernard use to cover this accident?
Deductibles and Coverage Limits
During every accident, the most important question you may want answered is, “who pays?” Understanding your deductible and coverage limits is crucial to determining that.
Review the explanations and examples, and then determine “who pays?” in these sample scenarios.
Norris has a deductible of $1,000. He damages his car in an accident and it will cost $3,300 to repair.
How much does Norris have to pay?
How much does his insurance pay?
Alicia has a deductible of $325 and a Bodily Injury Liability coverage limit of $50,000. She hits another driver and injures them severely. The case goes to trial and there is a verdict to compensate the injured person for $40,000
How much does Alicia have to pay?
How much does her insurance pay?
Just before the accident, Alicia actually reduced her policy from $50,000 to $25,000.
How much does Alicia have to pay?
How much does her insurance pay?
5 factors that affect your auto insurance payment
Everyone pays a different amount for auto insurance. Watch this video to learn the 5 key factors that influence how much you’ll pay.
Complete the sentences in the chart as you watch.
Your Deductible
The upside to having a high deductible is…

The downside to having a high deductible is…
Your Vehicle
In general, the ( more / less ) your car is worth, the ( more / less ) you’ll pay to insure it.
Your Mileage
You pay more if you drive a lot because…
Your Driving History
One speeding ticket can raise your auto insurance rate by nearly...

One DUI can…
Your Personal Information
What types of drivers generally pay more?
An unexpected car accident can leave you feeling a bit scattered. That's why it's important to brush up on post-accident procedures now, when you're good and levelheaded. This 7-step guide can help make the moments after an accident less stressful — and the claims process a whole lot smoother.

1. Move to a safe area (if you can)

If it's safe to do so and you aren't seriously injured, move your car out of further harm's way, like to the shoulder of the road. If moving your car just isn't possible, flip on your hazards to warn other drivers that your vehicle isn't going anywhere any time soon.

2. Stop your vehicle and get out

Make sure your car is no longer moving, turn off the engine, shift into park, or set the hand brake if you drive a manual. Take a moment to catch your breath. Check to make sure it's safe to get out of your car before opening the door. If you have flares or similar road safety items, consider using them.

3. Check on others involved

Check on all the other parties involved, including drivers, passengers, and pedestrians, to make sure no one is hurt. Call 911 if anyone may be injured. Even a seemingly minor symptom like dizziness should be checked out by a health care professional.

4. Call the police to the scene

Even in minor accidents, a police accident report can prove invaluable when dealing with your car insurance company and other drivers. Cooperate fully, but avoid admitting fault or blaming others while at the scene. Let the police objectively judge events and determine who, if anyone, is at fault in the crash.
If the police can't make it to the scene (which is more likely if there are no injuries), you can file an accident report through your state's DMV.

5. Gather info

Try to write down as much info as possible in the accident aftermath, including:
  • Driver and passenger names
  • License plate numbers
  • Insurance info
  • Makes and models of all vehicles involved
  • Contact info for any eyewitnesses
  • Location of the accident
  • The name and badge number of any responding police officers

6. Document the scene

If you have a smartphone with a camera, snap some photos of the accident scene. They'll come in handy during the claim process.

7. File your insurance claim

If you aren't sure who to call, check your insurance ID card for your insurer's contact information.
After step 7, it's our turn to help. We'll work with you to get your car repaired as quickly as possible.

What you can do before the accident

If you haven't been in a car accident, after patting yourself on the back (while the car's stopped, of course), use these handy tips to make sure you're ready for the unpredictable:
  • Pack a safety kit
  • Keep important documents at the ready (ID, additional insurance company contact information, vehicle registration, health plan info, etc.)
  • Have your phone on you and charged whenever you hit the road
  • Keep loose items in the center console or glove box, and not on the seats, where they can get lost or fly around in an accident
No matter how clean your driving record, you never know when an accident can happen. You'll be glad you kept these 4 elements in mind if (and we do mean "if") you find yourself handling the aftermath of a crash.
Describe the steps you should take immediately following an accident.
Exit Ticket
Define each of the following: Premium and Deductible
Why should you definitely get car insurance if you have a car?
What steps should you take if you get into an accident?
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