Insurance Unit 2 Presentation Personal Finance Semester 2

INSURANCE

Better to have and not need it then need it and

not have it..

Automobile & Home Insurance

What do you know about Insurance?

Types of Insurance and Important Terminology

List as many different types of Insurance that you are familiar with.

If you heard any of the Insurance vocabulary below provide definitions:
- premium
- deductible,
- claim
- settlement

Concept Behind Insurance:

■ Pay a sum of money in advance

(just in case) of an incident of loss.

■ Protects you from risk.

Some Important Terms:

Premium - The amount you pay EACH
YEAR to have the insurance.

Claim - A Formal request by a
policyholder to an insurance company
for coverage or compensation for a
covered loss or policy event.

Some Important Terms:

Deductible - The maximum amount you
would pay for EACH CLAIM you file. (It is
“deducted” from the settlement)

Settlement: The net amount of
compensation you receive from the
insurance company (after your
deductible ) to settle a claim.

Types of Insurance:

■ What types of insurance are you familiar with?

– Home
– Auto
– Life
– Medical/Dental
– Personal Property
– Pets
– Disability
– Liability
– Travel

Types of Auto Coverage:

■
Bodily Injury Liability: When you are legally responsible for causing
injury to other people as a result of a car accident, this type of
coverage will protect you against financial loss, including the cost of
your legal defense team.

■
Property Damage Liability: Pays for damage you caused to another
person’s property - - however, this does not cover damages to your
own car.

■
Medical Payments Coverage: Pays medical/funeral expenses for you,
your family members and other passengers in your car b/c of injuries
sustained in an accident - - no matter who caused the accident.

■
Uninsured/Underinsured Motorist Coverage: Pays medical/damage
expenses for you and your passengers caused by a driver without
insurance or with too little insurance to cover the loss - - it does not
cover the other driver.

Types of Auto Coverage:

■
Comprehensive Coverage: Pays for damage to your car caused by
something other than a collision. (earthquakes, fire, flood, wind, etc.)

■
Collision: Pays for damage to your car caused by colliding with
another car or object – this is the most expensive portion of an
automobile policy.

■
**Comprehensive & collision coverage often carry a deductible,
which is the amount of money you pay before the insurance
company pays for anything**

■
Additional Options: Rental car insurance, coverage for options such
as MP3 players or high-tech sound systems, etc.

Take a guess…

■
What are some factors that can affect the cost of your car insurance
premium??? (The total price you pay per year for a policy.)

–Driver Classification: Insurance companies classify drivers according to age,
gender and marital status and charge different premiums accordingly.
(Example – Statistics tell insurance companies that young males have more
accidents than young females or older males, as a result if you’re a male
under 21, you’ll pay more for your insurance, even if you have a good/clean
driving record.)

–Rating Territory: Statistics show more claims come from some geographical
areas than others. Insurance companies divide states into rating territories
and if you live in an area that generates more claims, you will pay more.

–Driving Record: The official list of your accidents and traffic violations can
increase/decrease your premium. The better the record, the better the price.
(One point on your license can increase your premium up to 10%!!!!!)

■
If you accumulate too many points, your insurance company will drop you.

Continued….

■ Factors that can affect the cost of your

insurance premium…

– Type of Car: Some cars are more expensive to

repair/replace than others. Also, statistics show that
thieves tend to steal popular cars more often than
other types of cars - - if you have one of these
cars, your premium will go up.

– Claims History: The more claims you make on your

policy, the more you cost the company, so your
premiums will be higher.

Reduce your premium:

■ What are ways you can personally reduce the cost of

your insurance premium???

– Keep your driving record clean – obey traffic laws, wear your

seatbelt, don’t talk on the phone and drive!!!

– Choose a moderately priced car with safety features (airbags,

theft deterrent systems, anti-lock brakes, etc) - - auto
insurance companies give discounts for safety features.

– Be a good student!!! Some insurance companies give

discounts (around 10%) for B average students. Also, some
give discounts for completing a drivers ed course.

– Increase the size of your deductible (the amount you would

pay out of pocket in case of an accident).

Homeowner’s Insurance

■
Provides personal property and liability protection for your home.

1.
Personal Property/Exclusions

2.
Liability

3.
Umbrella Policy

4.
Special Risk Coverage

5.
Renter’s Insurance

6.
How much insurance should you buy/80% rule

7.
Factors affecting cost of homeowner’s insurance – location, age of
house, distance to fire station/hydrant

8.
Reducing your premium – increase deductible, upgrade home

9.
Reducing your premium – install smoke detectors, security, special
discounts

10.
How to choose an agent

11.
How to choose an insurance company

12.
How to file a homeowner’s claim/automobile claim/no-fault insurance