Ch8: Home and Car Insurance Flashcards
What is insurance?
protection against possible financial loss
What is an isurance company?
risk-sharing firm that assumes financial responsibility for losses from an insured risk
When obtaining insurance, you purchase a ____ known as _____
policy, coverage
The insured policyholder pays ________ ______
periodic premium
What is risk?
chance of loss or injury; uncertainty or lack of predictability
What is peril?
anything that may cause loss; usually an event–fire, windstorm, robbery, accidents
Hazard
anything that increases likelihood of a loss–driving drunk, defective house wiring
What are the most common types of risk?
personal, property, and liability
Personal risk
loss of income or life; caused by illness, old age, uemployment
Property risk
losses to property; caused by perils such as fire or theft
Liability Risks
losses caused by negligence resulting in injury or property damage
Pure risks are _______ while speculative risks are ___________
insurable, uninsurable
Types of pure risk
property, personal, liability
What is negligence?
failure to take ordinary care to prevent accidents
Risk Management
organized plan for protecting yourself, your family, and your property; avoidance, reduction, assumption, shifting
Things to include in your insurance plan
what you need to insure, how much to insure it for, what kind of insurance should you buy, who should you buy insurance from
what is a claim
a request for payment to cover financial loses
Potential property losses
home, automobile, furniture, clothing, and personal belongings
what is a liability
legal responsibility for the financial cost of another person’s losses or injury
Vicarious liability
you are held responsible for actions of another person, such as your child throwing a ball through your neighbor’s window
________ insurance is coverage for your place of residence and its financial risks, such as damage to personal ________ and damage to _______
Homeowner’s, property, other
A _______ form covers personal property loss or damage specified in the policy; a form of renter’s insurance
broad
Homeowner’s insurance covers…
furniture, appliances, clothing
_____ _______ is advised in order to replace belongings under homeowner’s insurance
Household inventory
Personal Liability covers
injuries to other people on your property
an umbrella policy covers…
personal catastrophies; $1-3 million coverage over standard policy
Look for policies with ________ coverage. Coinsurance clause requires you pay part of the loss.
full
Actual cash value
replacement cost less depreciation
Replacement value
full cost to repair or replace the damaged/lost item
some companies limit to 400% ACV
10-20% > ACV coverage
Home insurance discounts
fire alarms, smoke detectors, bundling insurance policies
All states have compulsory automobile insurance laws.
T or F
true
Financial Responsibility Law
state legislation requiring proof of ability to cover cost of damage or injury caused in an automobile accident
Bodily Injury Liability
covers loss due to legal expenses, medical expenses, lost wages, and others associated with injuries caused by an accident for which you were responsible
100/300/50
expression of bodily injury liability
1: $100,000 max paid to one person
2: $300,000 max paid out for one incident
3: $50,000 max in property damage
_______ car, home, and umbrella insurance saves money on _________
bundling, premiums
Uninsured Motorist Protection
protects you and family if in accident with uninsured driver
Underinsured Motorist’s Coverage
protects you when another driver doesn’t have enough insurance to cover the damages they caused
Automobile Property Damage Liability
applies when you damage other’s property, including buildings and street signs
Collision (liability?)
pays for damage to your vehicle, regardless of fault; limited by ACV of vehicle at the time of accident
Comprehensive Physical Damage
covers damage to vehicle: fire, theft, falling onjects, vandalism, hail, floods, tornadoes, earthquakes, avalanches
No-fault Insurance
regardless of fault, each driver collects from their own insurance company; coverage varies by state
Benefit of No-Fault insurance
limits state costs of determining fault
other auto insurance
wage loss insurance
towing and emergency road service coverage
rental reimbursement coverage
Concerns in obtaining coverage
enough coverage to be sued
recommended: 100,000/300,000 bodily injury liability and umbrella policy
What effects the insurance premium factors for your car?
year, make, model of car; territory rating (theft, vandalism), driver classification (gender, marital status, age, driving record and habits, credit score)
Premium discounts on auto insurance
maintain good driving record, non-smoker, instal security devices, insure multiple vehicles with the same company, larger deductibles, make and model of car, maintain good credit history
