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29 Cards in this Set
- Front
- Back
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insurance
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protection against possible financial loss
many types based on principle of pooling risks - thousands of policy holders - all pay premiums into central pool - pool is usually large enough to meet expenses of small number of people that acually suffer loss |
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personal insurance program
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1. set insurance goals
2. develop plan to reach goals 3. put plan into action 4. check your results |
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insurance goals
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minimize personal, property, and liability risks
define what to do to cover basic risks present in your life situation provide financial resource to cover costs that could result from loss reduce potential loss of income reduce additional expenses reduce loss of real or personal property |
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plan to reach insurance goals
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list risks
which risks can you afford what resources are available to you |
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putting insurance plan into action
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obtain financial and personal resources
budget resources use resources to reach risk management goals best plans are flexible (emergency fund should be available) what should be insured? for how much? what kind? from whom? what amount can i afford? |
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reviewing insurance plan results
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periodic review (2-3 yrs)
does it work? does it adequately protect plans and goals? does family situation change cause change in goals? |
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most overlooked insurance
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disability
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types of insurance
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1. property damage insurance
2. liability insurance |
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property damage insurance
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loss of use caused by
- robbery, burglary, vandalism, arson physical damage caused by hazards - fire, wind, water, smoke |
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liability protection
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your responsibility for injuries or damages to the property of others
commonly caused by negligence strict liability - when a person is responsible for intentional OR unintentional actions |
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homeowner's insurance
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coverage for your place of residence and its associated financial risks (damage to personal property and injuries to others)
important for renting and owning |
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things covered by homeowner's insurance
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- house and other structures
- additional living expenses (not in all policies) - personal property expenses (certain things not covered traditionally - require personal prop floater) - personal liability and related coverages |
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personal property floater
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covers damage or loss of specific item of high value
requires detailed description of item periodic appraisal of value coverage regardless of location usually for jewelry or computers |
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umbrella policy
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when basic personal liability coverage of $100,000 is not enough (person has high net worth)
added protection covers for personal injury claims such as libel, slander, defamation, invasion of property an extended liability policy; "plus plan" sold in amounts of $1 million or more |
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renter's insurance
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covers:
- personal property and belongings - liability - sometimes additional living expense main component: protection against financial loss due to damage or loss of property |
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methods that insurance companies base claim settlements on
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1. actual cash value method (ACV)
2. replacement value method |
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actual cash value method
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payment received = current replacement cost of damaged or lost item - depreciation
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replacement value method
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recieve full cost of repairing or replacing a damaged or lost item
depreciation is not considered many companies limit to 400% of the item's actual cash value not much more expensive than ACV coverage (10-20%) |
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factors that affect home insurance costs
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location of home
type of structure coverage type and policy type |
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ways to reduce home insurance costs
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- increase deductible
- buy through a group plan - compare rates of diff insurance co's - deterrents to burglars |
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automotive insurance
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mandated by financial respsonsibility law
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auto insurance coverages
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two main categories:
1. bodily injury - bodily injury liability - medical payments - uninsured motorists protection 2. property damage - property damage liabilty - collision - comprehensive physical damage |
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bodily injury liabilty
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covers risk of financial loss due to legal expenses, medical expenses, lost wages, and others for which you're at fault
usually split limit: 100/300/50 100 = most any one person could collect (in thous) 300 = total for all people 50 = property damage liability |
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medical payments coverage
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covers costs of health care for people who were injured in your automobile, including you
also medical benefits if you or member of family is struck by auto or injured in somone else's |
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uninsured motorist protection
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if in an accident caused by someone without insurance
cost of injuries coverd usually does not cover property damage covers injuries from hit-and-run |
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no-fault insurance
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auto insur program which drivers involved in accidents collect medical expenses, lost wages, and related injury costs from own insurance companies
to settle claims quickly and avoid costs of claims |
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collision insurance
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pays for damage to your automobile, regardless of fault
amount is limited to retail value of auto at time of accident |
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comprehensive physical damage
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protection for auto
protects from damages caused by risk other than collision; fire, theft, glass breakage, earthquake, avalanche, hitting an animal |
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auto premium factors
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auto type
rating territory (where you live) driver classification (age, sex, status, driving records, driving habits) --> under 25, over 70 higher usually group policy |
