Chapter 8 Flashcards
What is property insurance
Ensures that any damages to your auto and home are covered and that your personal assets are protected from any liability
What is health insurance
Covers health care needs, e,g. dental
What is disability insurance
Ensures that your monthly income will continue if you are unable to work because of any injury or illness
Define critical illness insurance
Ensures that you have access to lump sum benefits if you suffer a critical illness
What is long term insurance
Ensures that you have access to benefits that will help you to cover added living costs, such as in home nursing care, when unable to take care of yourself due to injury or illness
Define life insurance
Ensures financial support for dependants, other individuals, charities when you die
What is the primary function of insurance
to maintain your existing level of wealth by protecting against financial losses or liability due to unexpected events
List the steps for risk Management
- recognize the risk to which you are exposed
- decide whether to protect against those risk
- decide on the amount of coverage you need, and the policy provisions you require
List the alternatives to risk management
- avoid risk
- reduce risk
- Accept risk
- Share risk
define the term premium
- The cost of obtaining insurance
T OR F? insurance companies pool together several insurance policies based on the type of insurance purchased and the characteristics of a group of policy owners
True
What is the relationship between insurance company claims and premiums
Profit = (premiums + investment earnings) - (claims + business expenses)
Would premium be relatively low or high for an event that is unlikely and cause minor damage
Relatively low
Would premium be relatively low or high for an event likely and could cause major damage
Relatively high
what does a high insurance premium suggest?
that there is a good chance you may use the insurance coverage provided
Who are insurance underwriters?
Employees of an insurance company who calculate the risk of specific insurance policies and decide what policies to offer and what premiums to charge
who is an insurance agent
Someone who represents one or more insurance companies and recommends insurance policies that fit customers needs
Mention what auto insurance insures against
the legal liability that may arise from causing death/injury to others
The expense associated with providing treatment to you, your passengers and other persons outside your vehicle
the cost associated with damage to your vehicle
Define the term insurance policy
Contract between an insurance company and policy owner
What is an auto insurance policy?
specified coverage provided by an insurance company for a particular individual and vehicle
Mention the three sections associated with an auto insurance policy
Third party liability coverage
accident benefits
loss or damage to the insured automobile
What is third person liability?
a legal term that describes the persons who have experienced loss because of the insured
What are two key components in a third party liability coverage
Bodily injury liability
property damage liability
What liability coverage under third-person coverage offers medical bills, pain, suffering, and economic loss and protects you from liability associated with injuries you or family listen on the policy caused to others
Bodily injury liability coverage
What does the property damage liability coverage cover?
covers another persons property damage caused by the policy owner. Does not cover your own car or other property that you own.
T OR F? you should purchase minimum required for property damage liability coverage because if it less than likely you cause damage to another person or their vehicle
False! you should always purchase more than the minimum amount
Explain Section B: Accidental benefits
Insures against the cost of medical care for you and other passengers in the car. It also applies if you are in an accident caused by a hit and run driver or a driver who is at fault but their insurance company goes bankrupt
What is collision insurance
Insures against costs of damage to your car resulting from an accident in which the driver of your car is at fault
what is comprehensive coverage
insures you against damage to your car that results from something other than collision. e.g. floods, theft, hail etc
What section under the insurance policy can Collision insurance and comprehensive insurance be found
Section C: Loss of or damage to insured automobile
define the term deductible?
A set of dollar amount that you are responsible for paying before any coverage is provided by your insurer
what is facility association
Ensures that drivers unable to obtain insurance with an individual company can obtain the coverage they need to operate their vehicles legally (applies to higher risk drivers)
explain the no-fault auto insurance
Allows policy owners in all provinces to receive immediate medical payments through their own insurance policy, regardless of who is at fault for causing the accident
Explain the pure no-fault system
You are unable to sue the at fault driver for pain and suffering and economic loss
What are exclusions?
A term appearing in insurance contracts or policies that describes items or circumstances that are specifically excluded from insurance coverage
What are exclusions?
A term appearing in insurance contracts or policies that describes items or circumstances that are specifically excluded from insurance coverage
List some other optional coverages
Loss of vehicle use (cost of rental car)
towing
damage to non owned automobile
family protection coverage
Mention factors that affect your auto insurance premiums
the likelihood that you will submit claims estimated cost to cover these claims amount of liability coverage amount of deductible Value of car repair record of car location driving training/record age + sex (for some provinces) driving distance (for some provinces)
if you are in an accident when should u call the police?
Call the police if:
someone sustained injury
significant property damage
you think other driver is guilty of a criminal code offence
if you are in an auto accident what should be done?
File a claim with insurance company
if the other driver is at fault, your insurance company should seek damage from other driver insurance
if other driver is not insured, ur insurance company will pay accident benefits up to limit
define the term homeowners insurance
provides insurance in the event of property damage, theft, or personal and third party liability relating to home ownership
What are the types of Perils covered by homeowners insurance
All perils coverage
Named perils coverage
explain cash value policy
pays you the value of the damaged property after considering its depreciation
explain replacement cost policy
pays you the cost of replacing the damaged property with an item of similar brand and quality
What is home inventory
contains detailed info about your personal property that can be used when filing a claim
List factors that affect homeowners insurance premiums
Value of insured home deductible location degree of protection discounts
What are ways to reduce your homeowner’s insurance premiums
increase deductible improve protection use one insurer for all types of insurance stay with the same insurance company shop around
explain tenant insurance
An insurance policy that protects your possessions within a house, condo or apt that you are renting
- does not insure the structure itself
cover personal assets and living expenses
explain tenant insurance
An insurance policy that protects your possessions within a house, condo or apt that you are renting
- does not insure the structure itself
cover personal assets and living expenses
what is umbrella personal liability policy
A supplement to auto and homeowners insurance that provided additional personal liability coverage
