INSURANCE BASICSSection 22.1 ~ Objectives

• Common insurance terminology• How to lower some insurance

costs

Insurance Policy ~ What is that?!!

An insurance policy is a legal contract between a person buying insurance (policyholder) and an insurance company.

The buyer pays an agreed-upon amount of money to the ins. Co.

The ins. Co. agrees to pay for losses caused by such events as automobile accidents, theft, or injuries.

Insurance Policy

An insurance Policy explains: Who is covered Types of losses for which the company

will pay Amounts the company will pay The cost of the insurance

Insurance Coverage

An insurance policy describes a policyholder’s coverage

Coverage refers to losses that an insurance company agrees to cover

The amount of coverage is the actual dollar amount that will be paid by the company in case of a loss

Exclusions are losses that are not covered

Benefit and Beneficiary

An insurance benefit is the money paid by an insurance co. for a loss

The beneficiary is the person, usually the policyholder, to whom the benefit is paid

Premiums

A premium is the amount of money a policyholder pays for insurance They can usually be paid in

installments or one time (usually a discount)

Deductables

A deductible is the portion of the cost of a loss that an insurance policyholder pays before the insurance pays the remaining cost

The higher the deductible, the lower the cost of your premiums

Kinds of Insurance

You can insure almost anything!Professional dancers and models have their legs insured……….Jennifer Lopez has an insurance policy for her butt! 27 million

Other Kinds of Insurance

Automobile InsuranceHealth InsuranceDental InsuranceHomeowner’s InsuranceRenter’s InsuranceCell PhoneList goes on…………..

Government Insurance Programs

Include: Unemployment Workers’ compensation Medicare Medicaid

Holding down insurance costs(?)

A few tips…………. Know the type you want/need Shop Around for coverage and costs Ask about different premium costs

w/different deductibles Don’t buy more coverage then you need,

or less then you need

Holding down insurance costs

The craziness of it is……………Insurance companies are less willing to insure you if they believe you are more likely to use the insurance

Young drivers & people with poor driving records pay high premiums (25)People with poor health habits have a hard time finding affordable insurance.

22.2 Home and Auto Insurance

Objectives• Why it’s important to own home

insurance• The five types of Auto insurance• What factors influence auto insurance

premiums

Basic knowledge of how insurance works, and why you need it, will help (and protect) you throughout your life

Home Insurance

Renters insurance covers your belongings up to a set amount, minus your deductible

Homeowners protects your house and its contents against losses due to fire and theft

Supplemental insurance is usually needed to cover floods and earthquakes

Automobile Insurance

Most states have laws requiring drivers to have insurance

~Types of Insurance~The types of auto insurance coverage are:• Liability Insurance• Medical Payments Insurance• Collision Insurance• Comprehensive insurance• Uninsured Motorist Coverage

Liability Insurance

Liability insurance is insurance that covers damages or injury for which you are responsible

It covers damage to the other car but doesn’t cover your injuries or damage to your car

Medical Payments Insurance

Covers your medical expenses and the medical payments of your passengers

Many policies will only cover up to $5,000 per per person

Collision Insurance

This covers the cost of repairs to your car that are the result from an accident

It also covers damage to your car caused by an uninsured person

Comprehensive Insurance

Insurance that covers damage to your car other than a collision; like theft, fire, or vandalism

Uninsured Motorist Coverage

Protects you against drivers who do not have liability insurance

You may not need it if you have medical payments or health coverage

No-fault System

To limit delays and disagreements, some states have a no-fault system

Under this system, policyholders have their claims paid by their own insurance company, no matter who is at fault

Buying Automobile Insurance

Ways to control or lower the cost of your auto insurance premiums are to:• Shop around & get estimates from at least 3

companies• Drive carefully; take advantage of safe-driver

discounts (points add a surcharge for years)• Take driver education classes• Buy only the coverage you need• Raise your deductibles• Take advantage of insurance discounts