What Factors Affect Car Insurance Rates?

Grade: 11 Lesson # 13

What Factors Affect Car Insurance Rates?

SS.912.FL.6.6 Explain that people can lower insurance premiums by behaving in ways that show they pose a lower risk.

LAFS.1112.RI.3.7 Integrate and evaluate multiple sources of information presented in different media or formats (e.g., visually, quantitatively) as well as in words in order to address a question or solve a problem.

SS.912.FL.6.6 Explain that people can lower insurance premiums by behaving in ways that show they pose a lower risk.

What Factors Affect Car Insurance Rates?

Lesson Number 13

Correlated Florida Standards (See Full Text on Cover Page)

·  LAFS.1112.RI.2.7

Essential Question

·  What factors affect car insurance rates?

·  Does a driver’s education course lower the auto insurance premium for high school students who are learning to drive?

Learning Goals/Objectives

·  Identify common types of risk.

·  Explain the purpose and importance of car insurance.

·  Understand how insurance companies evaluate and price risk.

·  Explain what statistical factors affect car insurance rates.

·  Summarize how to shop for better rates on car insurance.

Overview

·  This lesson, adapted from TD Bank’s Wow!Zone, introduces students to the basics of car insurance, including managing risk, understanding factors that affect insurance rates, and evaluating insurance coverage.

Materials

·  TD Bank Wow!Zone Lesson #8, Car Insurance, https://www.tdbank.com/wowzone/lessons/Gr9-12Lesson8.pdf

·  Worksheet, What Factors Affect Car Insurance

·  Worksheet Answers, Teacher Version

·  Tips for Cutting the Cost of Car Insurance from Geico Insurance, https://www.geico.com/information/safety/auto/teendriving/parent-cutting-costs/

·  Promethean/Smart Board or Tablets

·  Internet Access

Time

·  50 minutes

Activity Sequence

INTRODUCTION/HOOK(5 minutes)

·  Ask students to brainstorm what persons and things could possibly be damaged in an automobile accident?

o  Your car?

o  Another car(s)?

o  Personal or business property? Give an example.

o  You, the driver?

o  Your passenger(s)?

o  Occupants in other cars or vehicles?

o  Public property: street signs, bridges, school buses?

o  What would happen if you do not have car insurance?

ACTIVITY

1. Explain to students that without Automobile Insurance, they would have to pay for all of the damages and possibly be sued and that is why it is essential to have proper coverage. Review the following Key Definitions with students:

Policy/Policyholder: contract for a specific term (time period) with a customer called policyholder.

Premium: payments to the insurance company.

Deductible: what the customer pays before the insurance company pays a claim.

Claim: request by the customer for a payment following an accident.

Risk: a chance of personal or financial loss.

Collision: insurance coverage for your vehicle. The amount you can collect cannot be greater than the retail value of your vehicle at the time of the accident.

Property damage liability: the portion of an insurance policy that protects you and others when you are found responsible for damage to the property of others.

Liability coverage for bodily injury: the portion of an insurance policy that covers medical expenses for persons injured. There is a maximum payment per person and a maximum payment per accident.

Note: both property damage (PD) and bodily injury (BI) covers court costs if you are sued for an accident.

An automobile insurance policy coverage is typically expressed as three numbers such as 50/100/25, where:

·  $50,000 is for injury/death to one person

·  $100,000 is for injury/death to more than one person

·  $25,000 is for property damage

Comprehensive physical coverage: coverage for damage other than an accident, such as weather damage, theft or vandalism, hitting a deer.

Uninsured Motorist: covers lost wages and medical costs if you are in an accident with a driver without car insurance.

Optional coverage: towing, emergency and road service; “wage loss” insurance for missed work following an accident; rental car reimbursement coverage. (10 minutes for Step 1)

2.Have students work in small groups to discuss and complete the worksheet on factors affecting car insurance rates. (10 Minutes)

3. Review the worksheet answers as a whole-class discussion. Ask students to speculate why young peoplehave to pay a higher premium for car insurance. Ask students if it is fair that the insurance companies set different premiums for different groups/classifications in the population. Is it discrimination? Why or why not? Discuss the benefits of taking a driver education course before buying insurance (10minutes).

3.Discuss tips for lowering car insurance premiums (Geico website or printout of attached.) (10 Minutes)

CLOSURE

·  Review with students the importance of protecting assets with insurance coverage. Ask to think of two or three new things learned during today’s lesson and call on a few of the students to share what they learned. (5 minutes)

OPTIONAL EXTENSION SUGGESTION/HOME LEARNING

·  Have students write a script covering the key points from today’s lesson. A skit or a student-produced video could show a customer comparison-shopping for car insurance by asking important questions about policy coverage and alternate deductibles. The skits can be performed in another class period that follows this lesson.

·  Have students research the cost of insurance, as well as the impact of a local driver’s education course.

Sources/Bibliographic Information that contributed to this lesson:

https://www.statefarm.com/insurance/auto/resources/new-teen-drivers

https://www.njea.org/news-and-publications/njea-review/september-2013/reinventing-drivers-ed

https://driversed.com/resources/auto-central/insurance-discount-content.aspx

https://www.tdbank.com/wowzone/lessons/Gr9-12Lesson8.pdf

http://www.valuepenguin.com/car-insurance-discounts

https://www.geico.com/information/safety/auto/teendriving/parent-cutting-costs/

Tips from GEICO:

Helping Cut the Costs of Car Insurance for Your Teen

Recommendations to help with your budget

You have to keep your eye on the big things when a teenager starts to drive, like making sure they drive safely. But parents and teens also have to watch the little things to save money on auto insurance premiums.

GEICO has some recommendations that could help the family budget.

Discounts for driver training programs: A number of auto insurance companies in several states provide discounts for students who complete a driver-training program. Discounts will vary, so it's important to do some comparison-shopping.

Good student discounts: Good grades could add up to sizeable savings. Full-time students with a B average or with dean's list or similar honors could qualify for as much as a 15 percent discount. Discounts will vary by state and by insurer. Traffic offenses will nullify a student discount; that's another reason to drive safely.

Teens should start slow: New drivers should approach driving the same as they would any new activity, gradually and deliberately. Limited use of the family vehicle is the best way to gain experience and control costs. New drivers should not have unlimited access to vehicles until they have become more experienced behind the wheel.

Consider the type of car: Young drivers are inexperienced and should never be allowed to drive high-performance cars. Keep in mind, too, that insurance costs are lower on more conventional vehicles.

Get a quote before you buy: Insurance costs vary by age and type of vehicle. It's always good advice to call for a quote or get a quote online before you buy any vehicle.

Review your deductible: This applies to all drivers, not just young teen drivers. Increasing deductibles, which results in sharing a greater portion of any comprehensive or collision loss, can reduce auto insurance premiums. Again, check with insurers to find out exactly how much is saved by increasing the deductible from, say, $200 to $500 or even $1,000.

Drop some coverage: Consider dropping collision and comprehensive coverage for an older car, because they only cover the current value of the car.

Safety, safety, and safety: The best way to cut teen auto insurance costs is to teach young drivers to drive safely and become experienced gradually. Because young drivers are the least experienced, more fatal accidents occur in this driving group. Premiums reflect this overall driving behavior.

GEICO Family Pricing program: Your son or daughter can move from your GEICO policy to his or her own GEICO policy while continuing to receive the same great car insurance rates you're currently receiving. To apply for a quote with the GEICO Family Pricing program, get a free online car insurance quote online, call 1-800-555-2760, or visit a local agent. Learn more about this valuable program with information for parents and children, including important details and restrictions.

Downloaded from GEICO website

Driver Training Discounts according from DMV.ORG:

Most car insurance companies offer discounts to young drivers who complete driver's education programs, because those drivers are statistically less likely to engage in risky driving behaviors and get into car accidents.

The details of the driver discount will vary by auto insurance company. Consider comparison-shopping for car insurance quotes and discounts before settling on a provider.

NOTE: Driver training discounts typically refer to driver's education courses for new young drivers. To learn about defensive driving training for adults, see “Defensive Driving Discounts below."

Requirements for Discounts

Driver training discount requirements vary by car insurance company and state. Generally, in order to qualify you will need to:

•  Be under 21 years old.

•  Complete a qualifying driver's education course.

◦  This may include a minimum number of course hours and supervised driving hours.

•  Show documentation of course completion.

Some states will approve online courses, and others will require you take the course in person at an approved location.

To learn about driver's education requirements in your state, visit our Driver's Education section.

Defensive Driving Discounts

If you have completed a defensive driving course, you might be eligible for a car insurance discount. Depending on your auto insurance provider, you might even receive a discounted rate on the course itself. Be sure to ask your car insurance agent about the possibility.

In many cases, this discount is only offered to senior drivers (usually classified as over 50 years old).

Defensive driving courses often cover the following topics:

•  Defensive driving techniques.

•  Traffic laws.

•  Drug and alcohol awareness.

•  Driving in adverse weather.

Discount Requirements

While requirements and restrictions vary by car insurance company and state, the following standards generally apply:

•  You must complete an approved defensive driving course with a passing grade to earn the discount.

•  You can only take a defensive driving class for a discount once every several years.

•  You can usually only apply one defensive driving discount per car.

Contact your auto insurance provider to discuss the availability of defensive driving discounts in your state. Also, visit our Defensive Driving section to learn about the courses available in your state.

NOTE: If you are required to take a defensive driving course based on a court order, or if you are required to file an SR-22 certificate, you may not be eligible for this discount.

Additional Safe Driver Discounts

In addition to discounts for completing a defensive driving course, many companies offer auto insurance discounts for consistently practicing safe driving skills, in the form of an accident-free or good driver discount.

Be sure to ask about these discounts if you have a good driving record.

http://www.dmv.org/insurance/defensive-driving-and-driver-training-discounts.php

Source: https://www.geico.com/information/safety/auto/teendriving/parent-cutting-costs/

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