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Chapter 21 Risk
Terms in this set (18)
Approaches for compensating auto accident victims
Financial Responsibility Laws
Compulsory Insurance Laws
Unsatisfied Judgment funds
Uninsured Motorists Coverage
Low-Cost Auto Insurance
"no pay, no play" laws
No-Fault Auto Insurance
Which is more effective at reducing uninsured drivers?
Compulsory Insurance Laws shows no correlation
Financial Responsibility Law
-Requires persons involved in auto accidents
to furnish proof of financial responsibility up
to a minimum dollar limit (requires you to prove you have enough money saved to pay for damages resulting from a car accident)
proof of financial responsibility can be: (3)
◦ Auto liability insurance policy.
◦ Posting a bond or depositing the amount required by law.
◦ Showing that the person is a qualified self-insurer.
compulsory insurance law
Requires motorists to carry at least minimum amount of liability insurance before the vehicle can be licensed or registered.
Unsatisfied judgment funds
-a state fund for compensating auto accident victims who have exhausted all other means of recovery
-Victim must obtain a judgment against the
negligent motorist and show judgment
cannot be collected.
-Maximum amount paid is equal to the state's
minimum liability limits.
uninsured motorists coverage
-Injured person's insurer provides coverage
for bodily injuries (since the at-fault driver
did not have liability insurance).
-Required in some states.
-May provide some coverage for property damage (depending on state).
low-cost auto insurance
-Provides minimum amounts of liability
insurance at reduced rates to motorists who
cannot afford regular insurance.
-Only available in a few states.
goal of low cost auto insurance
Goal is to reduce the number of uninsured drivers.
"no pay, no play" laws
-Restrict uninsured motorists from suing
negligent drivers for noneconomic damages.
-Exist in twelve states.
what are noneconomic damages?
no fault auto insurance
After an accident involving bodily injury, each party collects from their own insurer regardless of fault.
Accident victims cannot sue at all; no payments for pain and suffering
Accident victims can sue if bodily injury exceeds a certain
dollar amount or verbal threshold (death, dismemberment,
Personal Injury Protection (PIP) endorsement
added to policy
benefits restricted to economic loss
◦ Medical expenses
◦ Loss of earnings
◦ Essential services expenses (housework)
◦ Funeral expenses
◦ Survivors' loss benefits
motorists can still sue the negligent driver for,,,
major rating variable for personal auto insurance
Number of Vehicles
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