Page 510 - Business Principles and Management

Chapter 18 • Credit and Insurance

VEHICLE INSURANCE
Many businesses own a large number of vehicles, includ-
ing cars, trucks, and special vehicles for moving inventory
and loading trucks, train cars, and airplanes. Several dif-
ferent kinds of vehicle insurance are needed for protection
against theft, property damage, and personal injury. Sev-
eral common types of vehicle insurance are available.
Collision insurance provides protection against dam-
age to the insured’s own vehicle when it is in a collision
with another car or object.
Comprehensive insurance, included in most basic PHOTO: © GETTY IMAGES/PHOTODISC.
vehicle policies, covers loss caused by something other
than collisions, such as rocks hitting a windshield, fire,
theft, storm damage, and vandalism.
Vehicle liability insurance provides protection against
damage caused by the insured’s vehicle to other people or
their property. Most states require all vehicle owners to carry a minimum amount
of liability insurance. What is the intent of no-fault
Medical payments insurance covers medical, hospital, and related expenses insurance?
caused by injuries to any occupant of the vehicle. These payments are made re-
gardless of the legal liability of the policyholder.
Normally, the insurance company of the person responsible for an accident
must pay the costs of damages. However, some states have passed no-fault insur-
ance laws. Under no-fault insurance, each insurance company is required to pay
the losses of its insured when an accident occurs, regardless of who was responsible
for the accident. The intent of no-fault insurance is to reduce automobile insurance
costs that result from legal actions taken to determine fault and obtain payment for
losses.

CHECKPOINT

What are the major types of property insurance that
businesses need?

Insuring People

People are important to the success of all businesses. Owners and managers, em-
ployees, people working for suppliers or other businesses, and customers influ-
ence the financial success of the business. There are economic risks that involve
all those people. Insurance is available to protect businesses from those risks.
The primary types of insurance related to employees are health, disability, life,
and liability insurance as well as employee bonding.

HEALTH AND DISABILITY INSURANCE

Health insurance provides protection against the expenses of individual health
care. Typically, businesses offer three categories of coverage to their employees:
(1) medical payments, (2) major medical, and (3) disability. Medical payments
insurance covers normal health care and treatment costs. Major medical insurance

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