Personal Finance / Unit 8: Insurance and Risk
8.4 Auto Insurance
Notes
Drivers are generally required to carry at least a minimum amount of liability insurance.
- Liability pays for injuries and damage you cause to others.
- Collision pays to repair your car after a crash.
- Comprehensive covers non-crash damage such as theft, hail or fire.
- Uninsured motorist coverage helps if the other driver has no insurance.
- Premiums depend on age, driving record, vehicle, location and coverage. A higher deductible can lower the premium.
- Example: collision repair is $3,200 and your deductible is $500. The insurer pays $2,700.
Practice
Which coverage pays for damage you cause to another person's car?
Liability covers harm you cause to others.
A hail storm damages your parked car. Which coverage typically applies?
Comprehensive covers non-crash events such as hail.
A crash causes $4,000 of damage to your car. Your collision deductible is $1,000. How much does the insurer pay?
$4000 - 1000 = 3000$.
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