Evaluation of Activities Involved with Car Insurance - Coursework Example

Evaluation of Activities Involved with Car Insurance Student’s Name Institution Evaluation of Activities Involved with Car Insurance Introduction: Car insurance is also referred to as vehicle insurance or auto-insurance and is a form of insurance which is purchased to cater for all forms of automobiles which use both private and public roads. it should be noted that this form of insurance provides covers for the vehicles owners from any monetary loss that may arise from accidents which happens on a daily-basis and thus, resulting into physical damages and injuries and the economic burden as well as the legal accountability which may arise thereafter. There are terminologies which are associated with this form of insurance and these policies vary from one geographic region to another (Cheeseman, 2012). There is usually an unfavorable connection between the policy holders with the car insurance companies. The aforesaid phenomenon occurs due to the fact that car insurance is an obligatory requirement for many jurisdictions before the car owners can be allowed to drive in any public or private roads. Therefore, there is need to highlight on the importance of car insurance, the rights and privileges of the policy holder and the obligations of the insurance company towards the policy holders (Cheeseman, 2012). Car insurance can be a very complex topic for potential clients who do not understand the concept and criteria of car insurance. On the other hand, car insurance can be a very easy and understandable concept especially to an individual who understands the worth of Car Insurance as a methodology for Financial Protection. Due to this reason this paper will attempt to explain the main aspects of car insurance. This report will be divided into numerous sections which will allow the reader to clearly comprehend the key aspects which are represented within the car insurance business, the possible benefits of having car insurance and the manner in which the car insurance policies can be manipulated to benefit all the parties equally (Cheeseman, 2012). Also, in this report the focus will be on the types of coverage which insurance companies offer and discuss possible insurance needs as well. Additionally, the report analyzes the facets which affect the price of motor-insurance and the manner in which is used to bring the costs down as well as the approached adopted to understand the major constituents of the policy. Reason for the Choice of the Topic: Ever since the introduction of motor-vehicles, there have been numerous reports which have been represented to showcase the numerous cases of car accidents. Car accidents are not easy to prevent whether the driver is the most careful driver on the road or not. This notion comes as a result of the fact that the road users have different manners of understanding the traffic rules given the fact drivers can be drive carelessly leading to harm and damage of the vehicle or third parties (Cheeseman, 2012). As a result of this phenomenon, there is need to determine the exact causes of the accident by use of immediate actuarial services in the process of determining the rationale behind determination of the liability at hand. The main focus of this report is to provide the strategies and thus highlight on the manner in which car insurance policies are implemented. Thus this report is organized in such segments as follows; Methodologies used in Acquiring Car Insurance: Notably, motor-vehicle owners understand little or nothing about auto-insurance. The key reason for this is because the insurance companies use technical terms which might not be popular with the drivers and car owners. Car insurance companies use terms such as policy- holder, deductibles or premium. However, the car owner may not truly understand the different parts of car insurance to the latter and even worse, the methodologies used to make a wise decision pertaining to the different types of insurance offered and the manner in which they operate (Morales and Medina, 2012). In the United States particularly, the forty-seven states has made it a mandate that motor-owners and motorist have at least some type of car insurance, so it is a fairer notion to understand the immediate requirements of the law which motor-owners to possess and the additional or optional coverage which can help to protect them from monetary burden in the event of such accidents (Morales and Medina, 2012). Prior to purchasing car insurance, car owners must consider a number of facets which are very crucial in making a decision pertaining to the type of car insurance to purchase. These factors may include the type of car-model one possesses, driving history of the owner of the car and exact amount of money the motorist is willing to pay. Understanding the mere basics of motor- insurance will make motorists certain about the car insurance policy which they chose will take care of the financial and non-financial needs in the event of an accident (Morales and Medina, 2012). The law demands that every driver should possess valid motor- insurance. In fact, most states require it by the constitution. Whenever an individual engages in purchasing of car insurance, one is deemed to have also purchased car requirements which are referred to as policies. The policy is based on a tranquility of facets including the model of the car one drives as well as the form of insurance a potential car owner is willing and able to purchase. Motor- insurance policies are actually a package of different types of insurance coverage. For motorist to positively attain substantial benefits from the insurance company some technical understanding of whether the key types of insurance coverage is needed for relevance. This is because some of these motor-insurance covers are made a prerequisite whereas some of them are optional in nature. According to Atkins and Reid (2012), there are a variety of insurance covers, some of these covers are meant to incorporate the third party where as some of them cannot assist in case of for third party’s needs. Thus, a thorough understanding of these aspects can help motor-owners make reliable and relevant decisions on the manner required to deal with the aforementioned benefits. Many insurance policies incorporate a substantial number of the aforesaid types of coverage. For instance, the first step is involved with the selection of the insurance one need for their respective cars and later understands the laws and regulations in their respective states. This will help to showcase to one about the minimum insurance they would need for their respective automobiles. Despite the fact that only a few aspect of insurance coverage are made prerequisite, motor-owners should make an effort of covering a variety of risks in order to avoid larger burdens in the case of car accidents. However, before embarking on an insurance cover it is fairer to understand technical aspects such as those considered in the following paragraph. Understanding one’s State Laws: Purchase of liability insurance within any given state is a prerequisite requirement. Liability insurance is the amount of money one pays for bodily injuries as well as property loss which the policy holder might have caused to another possible driver. Fifteen states including Florida, Maryland, Michigan, Massachusetts, New York and New Jersey also require that one purchase Personal Injury Protection in addition to motor- coverage. This coverage pays for one’s medical burden and lost salaries in the event of motor- accidents. One’s insurance premium will most likely be determined by state law, but most of the people within these states are encouraged to purchase more than the amount required. Understanding one’s Car-Insurance Options: There are a number of car insurance options; however, comprehending to the exact requirement of the motor-owner’s needs is a significant platform for making the relevant decision on the coverage type. In the case that one’s car is leased, they will probably generate a need gap insurance which should pay for the immediate difference between the amount that insurer pays and the amount that one owes for leasing a car when it is damaged completely. Understanding the Exact Amount of Money to Spend on Car-Insurance Covers: In the case that the motor-owner comprehends totally to the state laws and has examined their personal needs, the next requirement is for them to incorporate the different pieces of motor- insurance coverage within a single comprehensive policy (Macharis and Astrid, 2012).The first piece of the policy is, in most cases, attributed with liability insurance. In the case that one has minimum liability coverage and later injures a third party, their attorney should seek the policy-holders personal belongings. Therefore, one needs to comprehend their respective belongings as well as the amount they can be allowed to lose in the event of a motor- accident. Many insurers feel that minimum liability is a gamble. In fact, it is a rationale behind it requiring a little more money needed for additional levels of protection. After all, in the case that one experiences an accident, it is much better for the insurance company to be accountable than for one to be personally accountable. It is fair to note that through conducting research on various scenarios such as those attributed with writing-off a third party’s car, the amount insured should be able to take care of the damage instead of having to use individual funds to cater for the loss caused for the aforesaid car. This will increase the confident levels of the owner of the car to about the whole aspect incase an accident happens (Macharis and Astrid, 2012). Understanding one’s Vehicle: Before taking up insurance cover and submitting the amount insurable the key importance should be attached to the value of the car. This means that a more worthy motor-vehicle is likely to attract a more insurable amount within an insurance company. The insurance policy should be able to cater for the needs of the motor-owner in terms of adding to the budget to cater for the service provider and the needs of the accident in case it is encountered. Understanding the Different Insurance Alternatives; Many potential policy-holders fail to realize that other types of insurance including health insurance and homeowners insurance may pay for losses which are resulted by a motor- accident. For instance, whenever one possesses comprehensive health coverage, then, they probably would not need more than the Personal Injury Protection. Motor-owners should make sure they comprehend the different elements of their insurance coverage which they already possess so that they do not purchase useless coverage (Macharis and Astrid, 2012). The best way to figure out their own car insurance needs is to evaluate the potential policies and figure-out the amount money which they are willing to gamble. For instance, it may not be sound to buy collision insurance in the case that one’s car is not more valuable given the fact that it would cost less to fix the motor-vehicle than to keep the already covered car. Car insurance is merely about the amount of money which motor-owners are willing to pay out of their own pocket versus the level of coverage which they desire insurance companies to cover. Once the decision is made, the motor-owners are now placed in a position upon which they can purchase the insurance policy fairly. Price of an Insurance Policy: There are several facets which affect the price of motor- insurance. Of course, prices changes by company and revaluation of prices should be made thoroughly before any purchase of policy is considered. The first matter which affects the coverage- price is the model of motor-vehicle at hand. For instance, a sports- motor vehicle would costs more to insure than a family motor vehicle. Also, purchase of vehicles that has a high theft rate, would translate to the coverage being more expensive. Essentially, though, insurance coverage will be dependent on the worthiness of one’s car (Berard, 2012). Another facet which affects motor-insurance costs is the immediate residential situation. In the case that a motor-owner resides in an area where there is a high happenings of accidents or vandalism, insurance policy will likely to cost more in terms money. For instance, since more cars are damaged in urban areas than in rural areas, motor-owners will probably pay more for insuring a car in the case that they live within a city-location. The number of times the car is driven will also affect one’s insurance costs. The more a car is driven, the higher the chances it will be involved in a road-accident. Drivers who drive long-distance to their workplace are likely to pay more money than individuals who live near their workplace. Meanwhile, in the case that a car is used only on the weekends, one’s insurance price should be lower than for individuals who commute to work daily (Berard, 2012). Conclusion and Recommendations: Car insurance is one of the most fundamental initiatives of each state law. Every jurisdiction requires that the car owners are protected against monetary turmoil from the losses that may occur from accidents considering that accidents are not easy to prevent. Motor-owners are not placed at a fair position upon which they can cater for the accidents but rather can be able to develop a monetary plan which may lead to financial freedom in case of motor-accidents. The fact of the matter is many people may lack the information on the manner in which various insurance policies operate. Additionally, some of the people fear the monetary burden attributed with renewing the insurance coverage. Thus, this paper recommends the following measures (Polborn, 2008). Therefore, in the case of cost factors are perceived to be scary one needs not to worry at all, since there are numerous ways which have been devised to keep one’s insurance prices down. There are four main facets which help keep motor-insurance coverage down. They are discussed as below: First, in the case that one is contemplating to purchase a car, they should consider purchasing a motor-vehicle which is fair in appearance to insurance companies. For instance, insurance companies possess enough experience in order to distinguish the models of motor-cars which are considered to be prone to loss or damages. They also comprehend on the types of cars which are mostly stolen. Thus, in the case that one has not purchased car yet, it is fair that they figure it out the methodologies used in identifying cars as "good” among auto-insurers (Polborn, 2008). Second, it should be noted that most insurance companies offer discounts for a variety of reasons - for example, good students, having more than one car insured and accident-free driving are all worth a discount. Thus, it is safe to inquire from insurance companies about the specific discounts which are made available to potential car owners. Third, it is fairer to consider car-pooling or using public transportation as a means to get to work. The lesser one uses their respective cars, the lesser they will be involved in paying for insurance costs (Polborn, 2008). Fourth , it is safe to drive carefully given the fact that insurance companies are not happy to insure accident-prone drivers, so the safer one chooses to drive, the lesser they will have to pay for auto-insurance costs (Polborn,2008). It is important that car owners are never afraid to inquire from their respective insurance companies about any form of discounts which are offered since this could lead to them saving substantial amount of money. Purchasing auto insurance is not simply about the value of one’s car or the number of times one performs accidents, it is about the amount of money one is willing and able to pay for their respective accident-coverage. Notably, all auto-insurance policies offer deductibles in their policies. The deductible is the part of one’s policy which they are responsible for paying. This means that auto-insurance policies do not necessarily cover for all expenses there is in accidents. One is required to pay for part of the damages caused but then, the amount, one pays, depends on their respective policy-held. Deductibles changes from state to state but are most often in amounts of $100, $250, $500 or $1,000(Dean, 2010). Whenever deciding on which insurance policy one desires to purchase, choosing a deductible is a crucial step. After all, one is only expected to pay for the deductible for each and every condition in which they aspire insurance firms to cover for loses. Deciding on the amount of money one is willing to pay and the number of times one desires then they will have to make an insurance claim which is to help them decide on whether the deductible amount is right for them. In addition to this, the premium one is willing to pay, or the price of one’s total coverage annually, can be lowered by selecting a higher amount of deductibles. In other words, in the case that one is willing to pay higher out-of-pocket costs, then, they can lower the total cost of their insurance policies altogether. The process of purchasing an auto-insurance policy does not have to be chaotic as such since one desire for a policy which is able to take care of their respective expenses in the event that an accident occurs, theft, vandalism or most any other instance in which there is damage to one’s personal or third party’s vehicle. By knowing the requirements of one’s state, one’s needs as well as the amount of discounts one qualify’s for it becomes easier to secure an insurance cover altogether. Reference Atkins, G and Reid, J. (2012). The magic pudding-UK motor insurance, Journal of the Australian & New Zealand Institute of Insurance & Finance, vol. 35, no.1, p.24-27 Berard, M. G. (2012).Flying cars; the reconciliation of aircraft and automobile insurance Policies, Tort Trial & Insurance Practice Law Journal, vol. 47, no. 2, p.781-802 Cheeseman, H, R. (2012). Business Law, 8th Ed, Prentice Hall Publications Dean, D. H. (2010). Rental experience and likelihood to purchase rental car insurance among young adults, Young Consumers, vol. 11, no.3, p.215-225 Macharis, C and Astrid D, W. (2012), The typical company car user does not exist: the case of Flemish company car drivers, Transport Policy, vol.24, p. 91-98 Morales, J, A and Medina, S. (2012). Estimation of operative risk for fraud in the car insurance Industry, Global Journal of Business Research, vol.6, no 3, p. 73-83 Polborn, M. (2008). Endogenous categorization in insurance, Journal of Public Economic Theory, vol. 10, no.6, p. 1095-1113 Read More