chapter 11 Flashcards
What are the 4 methods of managing risk? P 311-313
Avoid risk, Reduce risk, accept risk, insure against risk
What is the purpose of insurance?
Insurance companies offer insurance policies that can protect you against financial loss. They charge premiums to the insured in return for the insurance they provide.
What is no-fault insurance programs? Florida is a no-fault state p. 315
do not hold a specific driver liable for causing the accident. The intent is to avoid costly court battles in which each driver attempts to blame the other. No-fault provisions vary among the states that have imposed no-fault laws.
What factors are the auto insurance premiums based upon?
Characteristics of your car, Your personal characteristics, your insurance companies.
What is comprehensive coverage (D)? What is collision coverage?
Collision insur-ance insures you against costs of damage to your car resulting from an accident in which you are at fault. Comprehensive coverage insures you against damage to your car that results from floods, theft, fire, hail, explosions, riots, vandalism, or various other events.
What does policy limit 25/50/10 indicate in an automobile policy? What is the minimum required by law for the financial responsibility law in Florida? p. 317 Understand for example: What is the 10 in 25/50/10 policy limits?
The auto insurance policy specifies monetary limits on the coverage of the bodily injury per person, bodily injury for all people who are injured, and prop-erty damage.
For example, the split liability limit of 100/300/50 means that the coverage is limited to $100,000 per person injured in an accident, $300,000 for all people combined, and $50,000 to cover damage to the car or other property. If one person suffers bodily injury that results in a liability of $80,000, the entire amount of the liability is covered. If one person’s bodily injury results in a liability of $120,000, the coverage is limited to $100,000. If four people suffer bodily injuries amounting to a total of $400,000, $300,000 of that amount is covered.
What is a homeowner’s policy? What are the basic homeowner’s policy provisions? P.324
provides insurance in the event of property damage, theft, or personal liability relating to home ownership. It not only protects the most valuable asset for many individuals, but also limits their potential liabilities (expenses) associated with the home. Premiums on homeowner’s insurance are commonly paid yearly or may be included in your mortgage payment.
What is a personal property floater? p. 326
Personal Property Floater. Some personal assets are very valuable but are not fully covered by your homeowner’s policy. You may need to obtain a personal property floater (also called personal articles floater), which is an extension of the homeowner’s insurance policy that allows you to itemize your valuables.
What factors affect homeowner’s insurance premiums? p. 327
Value of Insured Deductible. Location. Degree of Protection Discounts.
What is the difference in replacement cost and cash value policy? P. 325
A cash value policy pays you for the value of the damaged property after considering its depreciation (wear and tear).
Replacement cost pays for the actual cost of replacing the damage property.
What will the liability provision on the homeowner’s policy cover? p. 327
The policy specifies coverage in the event that you are sued as the result of an event that occurs in your home or on your property.
How can you reduce homeowner’s insurance premiums? p. 328
Increase Your Deductible. Improve Protection. Use One Insurer for All Types of Insurance. Stay with the Same Insurance Company. Shop Around.
What is renter’s insurance? Describe p. 330
Renter’s insurance insures your possessions within a house, condo, or apartment that you are renting. It does not insure the structure itself because the insurance is for the renter only, not the owner of the property.
What is an umbrella personal liability policy? p. 330
This type of policy is intended to provide additional insurance, not to replace the other policies. In fact, the insurance will not be provided unless you show proof of existing insurance coverage. Umbrella policies are especially useful when you have personal assets beyond a car and home that you wish to protect from liability
