6: Insurance & Risk Management Flashcards
1
Q
What is INSURANCE?
A
Insurance is protection again
2
Q
An insurance company or insurer
A
- a risk sharing business that agrees to pay for losses that may happen to someone it insures
- You join the risk sharing group by purchasing a contract known as a POLICY (a written agreement)
- You are now called a POLICYHOLDER
- You pay them a “fee” called a PREMIUM for taking that risk RISK is the chance of loss or injury
- CLAIM: a request for payment of a loss
3
Q
Types of Insurance
A
1.) Property
2.) health
3.) Life
4.) disability
4
Q
1.) Property Insurance
A
- HOMEOWNERS INSURANCE: Your homeowners insurance policy provides coverage(protection) for:
^ The home building, or any other structures on the property (FIRE-THEFT)
^ Personal property
^Temporary Living Expenses
^Liability Coverage
5
Q
Building and other structures
A
- The main purpose is to protect you against financial loss in case your home is damaged or destroyed
- Detached structures on your property like a garage or tool shed are also covered
- Coverage can also include trees, shrubs, and other plants, which are part of the landscaping
6
Q
Personal Property (what is it?)
A
Personal property are things like:
- Furniture (bed, dresser, tables, lamps, sofa)
- Appliances (stove, refrigerator, microwave, washer, dryer)
- Clothing
- Computers
- Jewlery
- HOUSEHOLD INVENTORY: A list of belongings with purchase dates and costs
7
Q
More Property Information
A
- RENTERS INSURANCE: For people who rent, home insurance coverage includes personal property protection and additional living expenses coverage. Do not assume you are covered under your Landlord’s insurance policy
- CLAIM SETTLEMENTS: If you have a loss, there are one of two solutions:
- ACTUALY CASH VALUE: The payment you receive is based on the replacement cost of an item minus depreciation (Depreciation is the loss of value of an item as it gets older.) This means you would receive less for a 5 yr old item that what you paid for it.
- REPLACEMENT VALUE: Under this method, you receive the full cost of repairing or replacing the item lost. (This coverage is more expensive)
- ENDORSEMENT OR RIDER: Attached to the policy for added coverage.
8
Q
Property Insurance Deductible
A
- A deductible
9
Q
Property Liability Coverage
A
- PERSONAL LIABILITY COVERAGE: protects you from lawsuits arising from property damage or bodily injury.
- MEDICAL PAYMENT COVERAGE: protects you, your family, and your guests from accident-related medical bills
- PHYSICAL DAMAGE COVERAGE: Minor damage that you or someone in your family causes to another’s property
10
Q
Filing a claim
A
- After a loss, contact your insurance company as soon as possible
- You will most likely be asked to fill out a claim form
- If home damage, a claim adjuster will inspect the damage and submit a report to the company
- Once the insurance company has this verification and an estimate for the cost of repairs, it will pay your claim
11
Q
Motor vehicle insurance
A
- Types and/or parts of automobile insurance
- Liability coverage
- Collision and comprehensive
12
Q
Liability Insur
A
- This part of the insurance covers BODILY INJURT LIABIITY or PROPERTY DAMAGE LIABILITY that YOU cause to another person and vehicles, buildings, and property
- ILLINOIS LAW REQUIRES all motor vehicles registered and operated in Illinois to be covered by liability insurance
- MINIMUM AMOUNTS: $25,000 for injury or death of one person in an accident, $50,000 for injury or death of more than one in an accident, $20,000 for damage to property of another person
13
Q
Liability Insurance cont.
A
- Insurance companies represent the liability coverage expressed as 3 numbers such as 100/300/50
- The first number 100 means $100,000 is the maximum amount they will pay for injuries of any one person in any one accident
- The second number 300 means $300,000 is maximum amount they will pay for all injuries parties (two or more) in any one accident.
- The third number 50 means $50,000, indicates the limit for payment for damage to the property of others.
14
Q
Medical payment, personal injury, and No-fault
A
- MEDICAL PAYMENT: covers you and your passengers if you were at fault in an accident, this type of coverage also provided medical benefits for you and members of your family while riding in another person’s vehicle or if any of you are hut by a vehicle
- PERSONAL INJURY: this covers lost wages if you cannot work, as a result of an accident, and rehabilitation costs, and home nursing care
- NO DAULT: this allows policyholders to submit a claim to their insurance company for reimbursement instead of waiting to see who’s fault the accident was
15
Q
Uninsured or underinsured motorist
A
- This type of insurance covers you or your family members if you are involved in an accident with an uninsured or hit and run driver
- UNINSURED: this means the other driver does not have insurance
- UNDERINSURED: this means that your policy will take over to assist with payments, due to injuries and damages that are beyond their policy limits
