FIN 342 Lecture Notes - Lecture 12: Vehicle Insurance, Liability Insurance
Document Summary
Your risk characteristics: good student discounts, own a home, nonsmoker, good credit. What type of vehicle you own: higher theft risk, more expensive to repair, safety features (airbags, antilock breaks, anti-theft) Financial responsibility laws: proof of financial responsibility is not required until after first accident or conviction of offense. Proof includes insurance with minimum limits: problems with this approach. No guarantee all victims will be paid (unlicensed drivers) Low minimums may not cover all of victim"s costs: colorado: must carry 25/50/15, no pay, no play laws. Uninsured can"t sue for noneconomic damages (pain and suffering: compulsory insurance laws. Co: can"t register your vehicle if nor insured. May not reduce the number of uninsured: increase the number of unregistered. Minimums are too low to cover victims" losses. Doesn"t prevent or reduce the number of accidents. Regressive- the poor pay a larger proportion of their income for auto insurance: making it compulsory reduces the cost to everyone.
