IMch14 - CHAPTER 14 Risk Management for Auto OwnersPart II WHERE DOES THE AUTO INSURANCE PREMIUM GO AUTO DEATH RATES CAR THEFT COST CONTAINMENT

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CHAPTER 14 Risk Management for Auto Owners—Part II WHERE DOES THE AUTO INSURANCE PREMIUM GO? AUTO DEATH RATES CAR THEFT COST CONTAINMENT Loss Control and Prevention Restriction of Payments Redistribution of Losses and Expenses NO-FAULT Modified No-Fault Add-On States Choice No-Fault Evaluation of No-Fault ALCOHOL AND DRIVING NEW LAWS ADVANCES IN DRIVER AND AUTO SAFETY AIR BAGS, AUTO PROPERTY DAMAGE, AND TEENAGE DRIVERS KEY TERMS AND CONCEPTS Dollar amount Driving while intoxicated (DWI) No-fault Original equipment manufacturer (OEM) parts Verbal threshold ANSWERS TO QUESTIONS FOR REVIEW AND DISCUSSION 1. Insureds do not choose the $1,000 deductible because the rate credits do not make it attractive and they believe it would be a poor buy. 2. Under no-fault insurance, the insurance company would pay for damage to the insured’s car and for injuries to the insured and his or her family riding in the car, regardless of who caused the accident. Since fault would not have to be determined, costs for adjusters would be reduced. Legal fees and awards for pain and suffering would be eliminated because most auto accident cases would not go to court. There would be a redistribution of the benefits, with a higher percentage going to the insured rather than to adjusters and lawyers. 3. A verbal threshold uses a verbal definition to determine the point after which an insured may bring legal action when a no-fault insurance system exists. States that use verbal thresholds have a much lower ratio of bodily injury claims per 100 property damage
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This note was uploaded on 07/04/2010 for the course FIN 319 taught by Professor Briar during the Spring '10 term at Citadel.

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IMch14 - CHAPTER 14 Risk Management for Auto OwnersPart II WHERE DOES THE AUTO INSURANCE PREMIUM GO AUTO DEATH RATES CAR THEFT COST CONTAINMENT

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