Transcript Slide 1
CURRICULUM CONNECTIONS |
Connecting Our World to Yours
AUTOMOBILE INSURANCE: THE BASICS
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Auto Insurance: The Basics
Why do you need Insurance?
You might cause damage to other people’s property You may injure or kill yourself and others You may damage your car or other cars involved You may sustain an injury resulting in lost wages, pain and suffering, legal fees and fines
MOST PEOPLE DON’T HAVE THE MONEY TO PAY FOR THE LOSSES THEY MIGHT CAUSE WHILE DRIVING ….AND IT’S THE LAW!
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Auto Insurance: The Basics
What is Automobile Insurance?
An
Auto Insurance Policy
is a contract between you and an insurance company.
You pay a premium and in exchange the insurance company promises to pay for specific car-related financial losses during the term of the policy.
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Auto Insurance: The Basics
Different Policies in Each Province
Auto insurance is sold by private companies in all of the ten provinces and three territories -
BC, Saskatchewan
and
Manitoba
insurance have government-run - In
Quebec
injury and death claims are covered under a government system - The basic car insurance policy is defined by provincial governments, but you choose your limits, deductibles and optional coverages
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Auto Insurance: The Basics
Where Can You Buy Insurance?
• From a broker – A broker deals with a number of companies and tries to find you the best coverage for the best price • From an agent – An agent sells insurance for just one company • From the insurance company – “direct writers” allow you to purchase insurance directly from the company through a call centre or website
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Auto Insurance: The Basics
FACTORS THAT INFLUENCE YOUR INSURANCE RATING:
Where You Live
For example: Someone living in a large city, where accidents are more likely, may have higher premiums
How You Use Your Car
The more time a car spends on the road, the higher the chance of an accident. This means higher premiums if you: drive a lot drive long distances drive to work every day
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Auto Insurance: The Basics
FACTORS THAT INFLUENCE YOUR INSURANCE RATING:
The Type of Vehicle You Drive
Insurers consider the make and model of your vehicle in terms of the risk factors that vehicle is associated with.
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Some makes and models fare better in collisions than others, meaning injury to the occupants and damage to the car may be less severe
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Newer, more expensive cars, cost more to replace, and so they are more expensive to insure
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In determining your vehicle’s risk and expected claim severity, your insurance company may rely on IBC’s “CLEAR” - Canadian Loss Experience Automobile Rating (more on this later)
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Auto Insurance: The Basics
FACTORS THAT INFLUENCE YOUR INSURANCE RATING:
You – The Driver
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Depending on which province you live in, your insurer may consider the claims history of the “statistical group” to which you belong as a driver - If you belong to a group that is more likely to make claims, then your premiums may be higher YOUR PREMIUMS WILL BE HIGHER IF YOU HAVE ANY OF THE FOLLOWING:
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Minor violations under the “Highway Traffic Act” and/or major violations under the “Criminal Code” (ie. Speeding tickets and other moving violations)
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Accidents (At Fault losses may increase your premiums)
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Comprehensive Claims
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Past false insurance claims/fraud convictions
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Auto Insurance: The Basics
FACTORS THAT INFLUENCE YOUR INSURANCE RATING:
Other Factors
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Insurance prices are also affected by government regulations, market forces, taxes, discounts, geography and unpredicted catastrophic events
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Insurers consider your individual history in combination with that of your “statistical group”
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Auto Insurance: The Basics
There is no one-size-fits-all method of determining premiums!
Not all 30 year-olds driving Fords, living in downtown Calgary pay the same amount of insurance
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Auto Insurance: The Basics
WHAT is “CLEAR”?
CLEAR = Canadian Loss Experience Automobile Rating
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This rating system determines what effect the specific type of car you drive will have on your insurance premiums
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Based on insurance claims data,
every model of car and light truck for every model-year is grouped according to assessed risk – expected claims frequency and cost, and the likelihood the vehicle will be stolen
.
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The higher the CLEAR number, the higher the risk
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Auto Insurance: The Basics
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Before CLEAR
Vehicles with the same Manufacturer’s Suggested Retail Price (MSRP) would be classified into the same rate group. The greater the vehicle’s MSRP, the higher the premium
BUT… this rating system ignored certain factors:
1. Most collision claims result in repair rather than replacement so the price of the vehicle is not the only predictor of repair costs 2. The added costs of features like anti-lock brakes, airbags, etc., which lower the likelihood of claims, shouldn’t necessarily result in higher premiums 3. Vehicle price, by itself, is not always the best predictor of the likelihood of being involved in a claim or of the average claim cost 4. Vehicles do not all depreciate at the same rate 5. Vehicles may exhibit different track records for different types of claims
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Auto Insurance: The Basics
Is CLEAR Fair?
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CLEAR allows auto insurers to predict future claims more accurately and fairly – thus, rewarding vehicle owners for buying vehicles that experience fewer claims and smaller losses.
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The CLEAR system has the support of both insurance regulators and consumer associations.
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The CLEAR system encourages manufacturers to build vehicles that are safer, less expensive to repair, and less likely to be stolen.
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The CLEAR system does not penalize vehicles that are higher cost due to loss-prevention features (ie anti-lock brakes, air bags, etc).
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Auto Insurance: The Basics
SO….How can YOU lower your premiums???
Ask your insurance rep about lowering your premium by:
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INCREASING YOUR DEDUCTIBLE
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DROPPING COLLISION COVERAGE ON AN OLDER CAR
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INSURING YOUR HOME/APARTMENT AND CAR TOGETHER
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INSTALLING A CAR ALARM SYSTEM
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CHOOSING A CAR WITH A LOWER-COST INSURANCE RATING
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Auto Insurance: The Basics
What Coverages are LAW?
Provincial Governments mandate that you MUST carry certain types and amounts of auto insurance coverage While these vary from province to province, generally both ACCIDENT BENEFITS and THIRD-PARTY LIABILITY are required.
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Auto Insurance: The Basics
ACCIDENT BENEFITS
This coverage pays for medical treatment, income replacement and other benefits to help you heal if you are injured in a collision.
These may also be referred to as “no-fault benefits”
These benefits are paid by the insurer regardless of who caused the collision
Accident Benefits coverage is mandatory in every province except Newfoundland and Labrador
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Auto Insurance: The Basics
THIRD-PARTY LIABILITY
In most provinces, the person who did not cause the collision has the right to sue the at-fault driver for additional costs and damages not covered by Accident Benefits Third party liability covers you for the legal costs of being sued if you are the at-fault driver Manitoba, Saskatchewan and Quebec have “pure no-fault systems” – which means there is no right to sue Ontario has a hybrid system – accident benefits plus the right to sue for additional compensation for economic loss, if your injuries are recognized as permanent and serious
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Auto Insurance: The Basics
Mandatory Coverages in ON
Type of Coverage LIABILITY ACCIDENT BENEFITS UNINSURED MOTORIST What Coverage Does Minimum Limit or Requirements Protects you if someone else is killed or injured or their property is damaged because of your negligence Provides benefits if you are injured or killed in an automobile accident anywhere in Canada and the US regardless of who caused the accident Protects you if you are injured or killed by an uninsured motorist or hit-and-run driver to the extent you were not at fault. Covers damages to your automobile caused by an uninsured motorist $200,000 The details of the accident benefit coverage are set out in Insurance Act of Canada – available online at www.ibc.ca
$200,000 limit Subject to $300 deductible DIRECT COMPENSATION Allows you to claim from your insurnace company for damage to your vehicle and its contents caused by someone else Standard $0 deductible
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Auto Insurance: The Basics
Optional Coverages
You are not required by law to purchase Collision or Comprehensive Coverage. However, if you owe money on your vehicle, your
lien holder
(
the person or group you are making payments to)
may require that you have these coverages.
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Auto Insurance: The Basics
Optional Coverages
COLLISION -
This coverage pays for damage to your vehicle to the extent that you are at-fault or for damage caused by an unidentified vehicle or object
COMPREHENSIVE -
This coverage pays for all insured damage to your vehicle except for collision damage (eg. theft, vandalism, fire)
ALL PERILS -
This coverage combines collision and comprehensive coverages. It is the broadest coverage available as it includes all types of coverage unless specifically excluded.
SPECIFIED PERILS –
This coverage pays only for losses caused by perils specifically listed in the policy.
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Auto Insurance: The Basics
If you want MORE than minimum coverage…
You may choose to buy additional auto insurance coverage for theft, vandalism, or other damage to your car You also have the option to buy higher limits on some of the coverage, such as Third-Party Liability and Accident Benefits
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Auto Insurance: The Basics
Additional Coverages
LOSS OF USE
– Pays for alternate transportation if your car is not drivable due to a claim
FAMILY PROTECTION ENDORSEMENT
– Protects you if there is a serious injury and the other ‘responsible driver’ was not adequately insured
DAMAGE TO NON-OWNED AUTOMOBILES
– If you need to rent a car for a short term – provides you with collision and comprehensive coverage on the rented car
LIMITED WAIVER OF DEPRECIATION
– ensures you will receive the full value of what you paid for the car without depreciation if its written-off (this coverage must be purchased within the first 24 months of the original delivery date of the vehicle)
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Auto Insurance: The Basics
Having Trouble Getting Insurance?
The FACILITY ASSOCIATION exists so that car insurance is available to anyone who is entitled to have it.
FACILITY
is not an insurance company – it is a not-for-profit organization made up of all car insurance providers operating in most provinces (except BC, Manitoba, Saskatchewan and Quebec)
FACILITY
insures drivers who cannot get insurance in the regular market due to their status as a “high-risk” driver
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Auto Insurance: The Basics
Who is “high-risk”?
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A driver with one or more moving violations on his/her record
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A driver with a poor or non existent driving record
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A driver with an extensive claims history
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Someone driving a high-risk automobile
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Someone using their car for a high-risk activity (ie transporting nuclear materials for work)
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Auto Insurance: The Basics
FACILITY ASSOCIATION
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Insurance Premiums are based on risk, so high-risk drivers pay more for their insurance through FACILITY.
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HOWEVER, those insured with facility are not destined to pay higher rates forever.
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If you are insured with FACILITY ASSOCIATION:
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You should be shopping around for insurance as the insurance marketplace improves
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OR if your situation changes, there is more chance you can find insurance in the regular market – at a lower price
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Auto Insurance: The Basics Risk Responsibility Reality
“WORKPLACE ROMANCE”
What are the actions that Luanne and Bill take with regards to the car?
What are the consequences of these actions?
What kind of protection should be in an auto insurance policy to protect Fred the Fry Cook, and perhaps Luanne and Bill?
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Auto Insurance: The Basics Risk Responsibility Reality
“WORKPLACE ROMANCE”
How will the actions of Luanne and Bill effect Fred’s car insurance costs?
Would an insurance company need to know who is driving? Why or why not?
Should the insurance cover the actions of Bill even if he wasn’t really watching the road?
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Auto Insurance: The Basics Risk Responsibility Reality
“WORKPLACE ROMANCE”
BORROWING A CAR?
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The person whose car you borrow must give you permission - The use of the car cannot be part of a regular pattern - You must be a licenced driver who is legally allowed to drive in the province - If you have an accident while driving a borrowed car, the accident goes on the record of the person who has the insurance policy on the
borrowed
car.
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Auto Insurance: The Basics
LENDING SOMEONE YOUR CAR?
- You must consent to its use by the other driver - The person who borrows your car cannot be using it as part of a regular routine - The person to whom you lend your car must be a licensed driver who is legally allowed to drive in the province.
- If the person borrowing your car has an accident while driving your car, it goes on
YOUR
insurance record.
WHEN YOU LEND YOUR CAR, YOU ARE ALSO LENDING YOUR GOOD DRIVING RECORD!
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Auto Insurance: The Basics
Maintaining your Driving Record
Now that you have insurance and have lowered your premium, how can you ensure that you maintain your good rating?
- wear a seatbelt - observe speed limits - concentrate while driving be patient (“FIDO” – F
orget
I
t,
D
rive
O
n)
don’t drink and drive good grades and a driver’s education course can also help reduce your rates
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Auto Insurance: The Basics
3: 8:
Distracted Driving
Distracted Driving = Dangerous Driving
45: 4: 300: 3000: The number of feet your car covers in one second, at 50 km/h Drivers on cellphones are 4 times more likely to crash Number of items that a fighter pilot needs to keep track of in a regular, non-combat mission Number of items the average driver needs to keep track of during rush hour, including signs, traffic lights, other vehicles, passengers and pedestrians, plus road and weather conditions One study showed that nearly 80% of crashes and 65% of near crashes involve some form of driver inattention within 3 seconds before the event Driver distraction is estimated to be a contributing factor in 8 out of every 10 police-reported crashes.
* Taken from Insurance Bureau of Canada – “Drive to Survive”
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Auto Insurance: The Basics
STOP DISTRACTED DRIVING
1. Turn off your cellphone or PDA when you get into your car. Lock it in the trunk if it helps!
2. Tell everyone that for safety reasons, you no longer take calls while driving. If you’ve called someone who is driving, let them go and call them later.
3. Change your cellphone message to tell callers that you may be driving and you will call them back later.
4. Pull over somewhere safe if you are tired, or if you need to make a call, get something to eat or drink, etc.
5. Pre-program your car radio and adjust your channels, CDs or MP3 player only when stopped.
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Auto Insurance: The Basics
STOP DISTRACTED DRIVING
6. Check out your dashboard controls, and adjust your headrest, seatbelt, rearview mirror, etc., before driving 7. Get clear directions and check the map ahead of time.
8. Be well rested before getting behind the wheel.
9. Stop distraction before it starts: eat your sandwich, check your messages, finish personal grooming, etc., before you hit the road.
10.Ask passengers to limit chatter and to help you navigate and spot hazards * taken from Insurance Bureau of Canada – “The Drive to Survive”
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Auto Insurance: The Basics
BE SMART.
Obeying the rules of the road and maintaining a good driving record means you pay less.
Information provided by Insurance Institute of Canada (www.career-connections.info), Insurance Bureau of Canada (www..ibc.ca) and Insurance Education Institute (www.ief.org)