INSURANCE BASICS (DON T RISK IT)

I ^NSURANCE B ^ASICS

(D ^ON ’ ^T R ^ISK I ^T )

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 Risk management tool that limits financial loss due to illness, injury or damage in exchange for a premium

 Shared Risk- Insurance company collects

premiums from several people and use these premiums to pay losses of another policyholder.

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 Premium – regular payment you make to an insurance company

 Policy – legal contract you sign when you buy insurance

 Policy holder – what you become when you buy insurance

 Claim – formal request for payment from an insurance company

 Risk - the chance that you will suffer a financial loss

 Grace Period - if you do not pay your premium before the due date, you have no insurance

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 Liability – the section of the property policy that pays for damages that you may have

unintentionally caused; it also pays for personal damage or injuries to others

 Comprehensive – auto insurance coverage that pays you if your car is stolen or for any acts of nature

 Collision – auto insurance coverage that pays you to fix your car if you are at fault of an accident or the other guy doesn’t have insurance

 Uninsured motorist –a person that does not have insurance

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 Discount – Good driver, good student, member and multiple policies are things that can bring down the cost of insurance

 Deductible – a clause in your insurance policy

that states that you will pay for a specific amount of claim before the company pays

 Financial responsibility – Being able to pay for the damage you are legally liable for

 Appraisal – an expert’s determination of the value of a piece of property

 Rider – a special addition to an insurance policy that covers a specific type of loss (such as jewelry, guns, etc.)

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 Property Insurance (protection from financial

loss when things you own are stolen, damaged, or destroyed)

 Liability Insurance (protects you from loss that you cause others)

 Personal Insurance -Health and Life (protects you and your family from loss due to illness, disability, or death)

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 Based on data about past losses and their costs

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Types of Coverage

 Bodily injury liability coverage

 Property damage liability coverage

 Medical payments coverage

 Uninsured/underinsured motorist coverage

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 Pays for someone else’s property or injuries if you are liable, or at fault, in an accident

 Every driver in Mississippi must carry liability insurance – state law

 Minimum liability amounts in an auto insurance policy are:

 $25,000 for bodily injury per person

 $50,000 for bodily injury per accident

 $10,000 for property damage

 Referred to as 25/50/10

 Before you get in an accident, you may wish to carry more than the minimum.

 How many cars on the road today cost more than

$10,000?

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Pays you if your car is stolen or damaged by

basic acts of nature (hail storm, fire, wind,

flood, etc).

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Collision coverage

 Pays to fix your car whether you are at fault or not if other person has no insurance.

 Deductible – comprehensive and collision carries an amount you pay before the insurance company pays anything

 The higher the deductible the lower your premium.

 If you have an auto loan, you must carry comprehensive and collision insurance.

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Driver classification (age, gender, and

marital status)

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Rating territory

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Driving record (accidents and traffic

violations) (“Points” added for these will

increase your premium by about 10

percent. Too many points and your

company will drop you.)

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Type of car

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Claims history

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Your grades – “good student discount”

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 Have a good driving record

 Choose a less expensive car

 Good grades and

 driver’s education training

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Cars are more expensive to repair

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Litigation involving medical injuries

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 If you’re in an accident and your car is “totaled” most insurance companies pay the Actual Cash Value (ACV) or book value of your vehicle.

 Book value determined by:

 Kelly’s Blue Book

 NADA

 Market value – is amount items are worth now (not what you owe)

 Replacement value – is cost of replacing regardless of value

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 Make sure everyone in your car is OK

 Check the other car to see if they are OK

 Call the police

 Get the following information from the other driver: name, address, telephone number, license plate

number, drivers license number, insurance information

 Give the same information to the other driver

 Get the name and phone number of any witnesses

 Keep a disposable camera in your car and take accident pictures

 Call your insurance agent as soon as possible

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 Did you know that if your friend wrecks your car, the accident is on you?

 You are responsible for who drives your car

 As far as your insurance company is concerned, the accident will go on your insurance record and you

will pay the charges even if your friend has insurance

 Be careful who you give your keys to