Auto Insurance

Introduction

A car purchase is a big deal! Usually, cars come with a high price tag that you may be paying off for quite some time. With this being the case, we want to make sure that our car is protected. What happens if someone backs into your car and damages it? What if someone tries to steal your car and breaks a window? What if the vengeful neighborhood cats sneak into your car and use the seats as a scratching post?

Ok, maybe not that last one, but we do want to be prepared for these situations because they can definitely happen. This is where auto insurance comes into play. Auto insurance will protect you from high repair costs due to accidents, theft, or sneaky animals.

Insurance Jargon

Jargon is a set of special words or expressions that are used by a particular profession or group and are typically difficult for others to understand. We want to make sure that we understand the jargon that insurance companies use. You may know some of the insurance jargon listed below. Take your best guess with the ones that you are not familiar with. Write down the vocabulary words and definitions that you may not have known in your notebook.

Insurance Quotes

Insurance companies offer quotes to customers to explain the coverage and cost of services. There are many options that a customer can choose from. Anytime you are dealing with insurance, there is a bit of risk involved. You wouldn’t want to purchase coverage that you’ll never use, but you’ll also want to be careful to not leave out coverage that you’ll definitely need!

Quotes are calculated using insurance tables and your driver rating.

Annual Base Premium = Liability Premium + Comprehensive Premium + Collision Premium

Annual Premium = Annual Base Premium x Driver-rating Factor

Example 1: Sarah is the principal driver of her car. She has a driver-rating factor of 1.9. Her insurance includes 25/100 bodily injury and $25,000 property damage. Her car is in age group D and the insurance-rating group is 15. She has a $50 deductible for comprehensive coverage and a $50 deductible for collision coverage. Look at the charts below to determine her annual base premium. What is her annual premium?

Step 1: The first table quotes Sarah at $218.80 for bodily injury. The second table quotes her at $116.80 for comprehensive and $282.80 for collision.

Annual Base Premium = Liability Premium + Comprehensive Premium + Collision Premium

Annual Base Premium = $218.80 + $116.80 + $282.80

Annual Base Premium = $618.40

Annual Premium = Annual Base Premium x Driver-rating Factor

Annual Premium = $618.50 x 1.9

Annual Premium = $1,174.96

Example 2: Try this one on your own and then check your answer below. You have a driver rating of 1.5 and are in the insurance rating group of B, 12. You have elected bodily injury coverage of 50/100 with $50,000 property damage. You have chosen a deductible of $50 for both comprehensive and collision. What is your annual premium? What is your monthly payment? Use the tables above.

Annual Base Premium = Liability Premium + Comprehensive Premium + Collision Premium

Annual Base Premium = $237.20 + $90.40 + $253.20

Annual Base Premium = $580.80

Annual Premium = Annual Base Premium x Driver-rating Factor

Annual Premium = $580.80 x 1.5

Annual Premium = $870.20

Your monthly payment would be $870.20/12 = $72.60

⭐️ Help Video:

If you found any of these problems challenging, here is a video that will go over some of the answers.

More Insurance Jargon

We learned and used a bit more insurance jargon. There are a lot of new words. Match the following vocabulary with its definition. Write down the vocabulary words and definitions that you may not have known in your notebook.

IMAGES CREATED BY GAVS