ch29 by niusheng11

VIEWS: 4 PAGES: 19

									      Overview of Automobile Coverages


1. Automobile liability coverage
2. Medical payments coverage
3. Physical damage coverage, comprehensive
   and collision
4. Uninsured motorists coverage




                                         29-1
    Vicarious Liability and the Automobile


1. Agency-principal relationships
2. Family purpose doctrine
3. Parents who sign application for license
4. Permissive use statues




                                              29-2
               Guest Hazard Laws


1. At one time, most states had guest laws,
   which restricted the right of passengers to
   sue the driver of an auto they occupied.
2. Injured guest can collect from a negligent
   driver only if the driver was operating in a
   grossly negligent manner.
3. No jurisdiction has adopted a guest law for
   many years and the laws in many states
   have been repealed or declared
   unconstitutional.
                                                  29-3
    Auto Liability Insurance Requirements


1. As late as 1971, only three states had
   compulsory auto liability insurance laws.

2. Currently, 40 states and the District of
   Columbia have compulsory auto liability
   insurance laws.

3. The remainder of the states have Financial
   Responsibility Laws.



                                                29-4
         Financial Responsibility Laws


1. Despite widespread enactment of
   compulsory auto insurance laws, most
   states retained financial responsibility laws.
2. The laws require all parties involved in an
   accident causing bodily injury or property
   damage above a specified amount to show
   proof of financial responsibility.
3. Sometimes called “free-bite” laws, because
   proof of financial responsibility is required
   only after an accident.
                                                 29-5
         Financial Responsibility Laws


4. Financial responsibility is proved by a
   certificate of insurance (SR-21) or by
   depositing cash or securities with the state.

5. If proof cannot be provided, the individual’s
   license will be revoked until proof of future
   financial responsibility (SR-22) is provided.




                                               29-6
        Insurance for High Risk Drivers


Drivers who cannot obtain auto liability
insurance through normal market channels may
obtain coverage from an assigned risk plan or
alternate “shared market” mechanism:
 • automobile insurance (assigned risk) plan
 • reinsurance pool
 • joint underwriting association
 • Maryland State Auto Insurance Fund

                                               29-7
 Criticisms of the Tort System as It Relates to
                  Automobiles

1. Many persons who are injured remain
   uncompensated.
2. Amount of compensation depends on
   attorney’s skill.
3. Traditional system is inequitable, overpaying
   and underpaying.
4. Traditional system is too expensive.



                                              29-8
               No-Fault Concept


1. Under the no-fault concept, no attempt is
   made to fix blame.
2. Each party collects for injuries sustained
   from his or her own insurance company.
3. Under a pure no-fault system, the right to
   sue would be abolished.




                                                29-9
          Types of Auto Reform Laws



1. Pure no-fault
2. Modified no-fault
3. Expanded first party




                                      29-10
           Typical No-Fault Benefits


1. Medical Expenses up to specified maximum.
2. Loss wages up to specified dollar maximum.
3. Loss of services (e.g., by homemaker) up to
   specified dollar maximum.




                                             29-11
      Automobile Insurance Rating Plans


Most automobile insurance rating systems
begin with three basic factors

1. Age and sex of the driver

2. Use of the auto

3. Driver’s record




                                           29-12
          Automobile Rating System
           Operator Classification

Adult Classifications

1.   Principal operator age 75 or over

2.   Principal operator age 65 to 74

3.   Principal operator age 50 to 64

4.   Only operator female, age 30 to 49

5.   All other adult operators

                                          29-13
          Automobile Rating System
           Operator Classification

Youthful Operator Classifications
 6. Female under 25, not married, owner or
    principal operator
 7. Male under 25, married
 8. Female under 25, not married, not owner or
    principal operator
 9. Male under 25, not married, not owner or
    principal operator
10. Male under 30, not married, but is owner or
    principal operator
                                               29-14
           Automobile Rating System
               Use classification


1. Pleasure use

2. To and from work less than 15 miles

3. To and from work over 15 miles

4. Business use

5. Farm use




                                         29-15
             Driver and Use Rating Factors

                       Pleasure Under   Over Business Farm
Principal Operator        Use 15 mi.    15 mi.  Use Use
Age 75 & Over           1.00    1.05    1.15   1.20   .85
Age 65 to 74            .85     .90     1.00   1.05   .70
Age 50 to 64            .80      .85     .95   1.00   .65
Female, age 30 to 49    1.00    1.05    1.15   1.20   .85
Other Adult Operator    1.00    1.05    1.15   1.20   .85



                                                      29-16
           Automobile Rating System


Youthful operator discounts

 1.   Drivers training credit

 2.   Good student discount




                                      29-17
        Sample: Youthful Driver Rating Factors
                                    Pleasure or To Work or School
Youthful Operator          Age       Farm Use    or Business Use
Unmarried F (Not O/PO)   Under 21     2.10            2.25
Unmarried F (Not O/PO)    21 - 24     1.30            1.45
Unmarried F (O/PO)       Under 21     2.60            2.75
Unmarried F (O/PO)        21 - 24     1.60            1.75
Unmarried M (Not O/PO)   Under 21     2.50            2.65
Unmarried M (Not O/PO)    21 - 24     1.35            1.50
Unmarried M (O/PO)       Under 21     3.30            3.45
Unmarried M (O/PO)        21 - 24     1.75            1.90
Married Male             Under 21     1.55            1.70
Married Male              21 - 24     1.25            1.40
                                                             29-18
           Safe Driver Rating System


Safe driver rating plan charges points for
violations and accidents

1. 40 point surcharge for 1 point
2. 50 additional point surcharge for second
   point (+ 90 total)
3. 60 additional point surcharge for third point
   (+150 total)
4. 70 additional point surcharge for fourth
   point (+220 total)
                                              29-19

								
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