Do I need to get auto insurance if I buy a car?
Yes. It is the law.  Auto insurance companies may 
allow your car and you to be covered under the auto 
insurance of your parents.
Liability Auto Insurance (Property & Body):  
If you are responsible for an accident (called liable), 
liability auto insurance pays for —1) someone else's 
property damage, and  2) someone else's bodily 
injury.  You may buy "property damage" 
insurance to cover $50,000 to $100,000 or more per accident.  You may buy "bodily injury" insurance to 
cover $5,000 to $100,000 or more per person.  More coverage costs more m
oney.  Bodily Injury 50/100 
means $50,000 maximum coverage for each person and $100,000 maximum cove
rage for each accident.  
Then, the auto insurance company will pay no more than $100,000 for one 
accident.
Collision & Comprehensive Auto Insurance:   
Collision insurance pays for damages to your car from an accident.   Comprehensive insurance pays if 
your car is stolen or is damaged by other than an accident (such as flood or vandalism).  Both collision and 
comprehensive auto insurance are sold with a "deductible."  Deductible i
s the amount you must pay before 
the insurance kicks in and pays the rest.  For example, you may buy insu
rance with $250, $500, or $1,000 
deductible.  If you buy $500 deductible for comprehensive auto insurance
   — then a person smashes your 
front windshield with a brick — and the front windshield costs $300 t
o replace.  You will pay $300, and the 
auto insurance company will pay $0 because the cost of repair was not hi
gher than your $500 deductible.  
The higher the deductible (for example $1,000), the lower is the premium cost of auto insurance
.  Yearly 
cost of auto insurance is called "premium."  Some may not buy collision 
or comprehensive insurance:  
a) To save money; b) Car is too old to repair.  
Medical Auto Insurance:   Pays for you and your passenger's medical bills when hurt in an auto acc
ident. 
Uninsured Motorist Auto Insurance:   Pays for damages to your 
car after an accident if the other driver does not have auto insurance. 
 
Most uninsured motorist insurance has no deductible — that is, 
uninsured motorist insurance pays to repair all damages.
Seventeen states have — No Fault Auto Insurance (also called  
Personal Injury Protection or PIP):
Pays for you and your passengers' medical bills up to a certain amount o
f money (call "limit") — no matter 
who caused the accident.  If your medical bills are higher than the limi
t, the other driver's auto insurance 
will pay the extra medical costs.  If the other driver does not have aut
o insurance, you need to sue the other 
driver in court to get the extra cost paid..  	
Your Money: Auto Insurance (page 1 of 2)	
Your Money: Auto Insurance

Permission to use with usworkworld.com subscription.  
1. Why do you need to get auto insurance?
2.  What may auto insurance companies allow?
3.  If you are at fault for the accident, for what 2 
things does Liability Auto Insurance pay?
4.  In what amounts may you buy:  a) property 
damage insurance to cover?  b) bodily injury 
insurance to cover?  c) What does more
  coverage cost?
5.  What does Bodily Injury 50/100 mean?
6.  For what does collision insurance pay?
7.  For what does comprehensive insurance pay?
8.  Define "deductible."
9.  If you buy auto insurance with $500 deductible, 
then someone slashes your car's tires, and it 
costs $800 to replace all the tires — How much 
will you pay and how much will auto insurance 
pay to replace all the tires?
10.  If you buy a higher deductible, what happens to 
the premium cost?
11.  List 2 reasons why some drivers may decide to 
not buy collision or comprehensive insurance.
12.  a) For what does uninsured motorist insurance 
pay?  
QUICK CHECK:	
Your Money: Auto Insurance (page 2 of 2)	
How much does auto insurance cost?
Total yearly price of auto insurance (called auto insurance premium) de
pends on 
several things: 1) Your age with younger drivers given higher premiums  2) Your 
past driving record with clean driving records given lower premiums.  3)
 Type of 
car that you drive with expensive cars given high premiums because these
 cars are 
expensive to repair.  4) Where you live with high crime cities getting higher 
premiums.  5) Your yearly miles driven with high yearly miles getting higher 
premiums.  6) Number of cars in the auto insurance plan with lower prem
iums for 
plans with more than one car.  
Insurance companies make teens pay higher premium because teens have mor
e car crashes than any other 
age.  Car crashes are the #1 killer of U.S. teens.  Recently, the number of fatal accidents for teens increased 
due to distractions such as car radio, cell phone, and friends talking. 
 Here are average costs of auto 
insurance from carinsurance.com. 
16 years old    $253 per month    30 years old   $56 month
18 years old    $181 per month    40 years old   $55 month
21 years old    $86 per month     50 years old   $51 month
25 years old    $61 per month     70 years old   $55 month	
13. a) How many states have 
  "no fault insurance"?  
  b) For what does no fault 
auto insurance pay?  c) If your medical bills are 
higher than the limit, what happens?  d) What 
must you do if the other driver does not have 
auto insurance?
14.  Do you think the following is fair or not fair?  
  Write down your opinion and one reason why 
you think this is fair or not fair. 
  a) Give younger drivers higher premiums?  
  b) Give good driving records lower premiums?  
c) Give expensive cars higher premiums?  
  d) Give high crime cities higher premiums?  
  e) Give more miles driven higher premiums?  
15.  a) What is #1 killer of U.S. teens?  b) Number 
of fatal accidents increased due to what?
16.  a) Which age has the highest monthly cost for 
auto insurance?  b) What happens to auto 
  insurance cost as you get older?  c) Do you 
think it is fair to make younger drivers pay more 
for auto insurance?  d) Give a reason for your 
answer.

Auto World Insurance Company Worksheet	
Jason, Amelia, and Benjamin own cars covered by the following types of insurance 	
Permission to use with usworkworld.com subscription.  	
Collision Auto  Insurance
$30,000 with $750 deductible
Comprehensive Auto  Insurance
$5,000 with $1,000 deductible
Uninsured Motorist Insurance
$50,000 per accident
Event #1
Amelia's parents bought her a 2020 Honda Civic for high school graduatio
n.
Amelia drove the Civic to school to take her senior finals, and parked in the 
student parking lot.  After finals, Amelia went to the parking lot, and pushed 
the key to unlock her new Civic.  Just then, another senior with raised 
pickup truck backed out of his space and crashed into the back of Amelia's 
Honda Civic.  He told Amelia,  "Sorry. I don't have insurance," and quickly drove off.  Amelia got a 
picture of his license plate.  The police were able to identify the truck and driver, and cited the driver as 
responsible for the accident.  TIP: If Amelia did not get the license plate or picture as proof, Auto World 
may be deny Amelia's claim and say Amelia backed into something.  Amelia's Civic costs $2,350 to repair.  
a) What type of insurance will pay for Amelia's car repair?  
b) How much will this type of insurance pay to repair the Civic? 
Event #2
Benjamin walked out to go to work at Del Taco.  Benjamin parks his Prius on the street because there is 
no space in garage or driveway.  When Benjamin hit the key to unlock driver's side, he was shocked.  Ben 
saw that the driver side window was smashed and glass was on the street 
and in his car.  And, his Prius was 
"keyed" from back to front!  It will cost $2,360 to repair the Prius.  
a) What type of insurance will pay to repair the Prius?  
b) How much will this insurance pay to repair Prius after deductible? 
Event #3
When texting, Jason suddenly sees that a stoplight turned red, and he ca
nnot 
stop in time!  Jason slams on the breaks, slides into the intersection, 
but still 
hits the UPS truck crossing the street that had the green light.  Jason's passenger , Emma, flies forward and 
hit her face on the dash.  Police cited Jason as driver at fault.  
It costs $3,500 to repair the UPS truck.   It cost $1,600 for Emma to go
 to the doctor and get stitches.
It cost Jason $1,000 to go to a doctor to fix his broken texting finger .
It costs $4,500 to fix Jason's car, but Jason's car is worth only $2,000.
  
a) What type of insurance will pay to repair the UPS truck?   b) How much will this insurance pay to 
repair the UPS truck?   c) What type of insurance will pay for Emma's medical bills?   d) How much will 
this insurance pay for Emma's medical bills?   e) What type of insurance will pay for Jason's medical 
bills?  f) How much will this insurance pay for Jason's medical bills?   g) What type of insurance will pay 
to repair Jason's car?  h) How much will this insurance pay Jason to fix his car?  (Tip: If Jason's car is 
worth less than repair cost, insurance will only pay to replace the car, less Jason's $750 deductible.)	Liability --
$25,000 bodily injury insurance per person
$50,000 bodily injury insurance per accident
$10,000 property damage insurance per accident
Medical Auto  Insurance — $10,000 per person