Insurance 101 “Risk Management”

Insurance Risk Management Protection against Financial Loss

Insurance “Premium” The payment you make to an insurance company in exchange for its promise of financial protection and help.

“Deductible” The amount of the damage or claim you are responsible for before the insurance companies starts to reimburse. The amount you have to “pay” before insurance kicks in. You will choose your deductible and it will affect your premium.

“LIABILITY” Responsibility Who is “liable” or responsible for damages? Can you say “Law Suit?”

Methods Of Risk Mgmt. Avoid it Reduce it Accept it Transfer/Share (Insurance Concept)

Keeping Costs Down Reduce your own risks Shop around for best deals Manipulate your Deductible Deductible: The amount of money you must pay out of your own pocket before the insurance company begins to reimburse you. The amount of “risk” you are willing to assume.

General Terms Insurance Agent: Your “Risk Manager” Advises you as to the proper types of coverage's needed and assists you with smaller claims. Claims Representative: Helps the policy holder with larger claims. Very important job! Underwriter: Works with “statistical data” to set rate classes according to risk.

Main Categories of Insurance Auto Health Property (Homeowners/Renters) Life Disability Liability

Auto Insurance Protects you, your passengers, your vehicle, the driver of the other vehicle, their passengers, and their vehicle in the event of an accident or personal/financial loss.

Main types of auto coverage Liability Medical Payments Uninsured/underinsured motorist Collision Other than collision (Comprehensive)

Auto: Liability Liability: Responsibility. Liability pays for bodily injury of the other person when you are at fault or responsible. Liability can also protect you against damage to other’s personal property.

Auto: Medical Payments Protects you, your family members, and anyone else riding with you in your car. Covers medical expenses such as hospital bills, doctors fees, etc.

Auto: Uninsured/underinsured If an uninsured motorist injures you or damages your car, you turn to your own policy to pay your bills

Auto: Collision Pays for the repair of your car if it’s damaged in an accident by colliding with another vehicle or an object.

Auto: Other Than Collision/Comp Protects you from everything except a collision, such as natural disasters including damage caused by theft, hail, flood, vandalism, etc.

Factors affecting auto premiums Age Sex Marital Status Type of Car Grades Driving Record Location Use

Health Insurance (Medical) Most often subsidized by your employer Covers costs of medical bills Premium, Annual deductible, Co-Pay, Stop loss limit, etc.

Property Insurance Protects all dwellings and structures (Homeowner’s) Protects your stuff, all material possessions including clothing, stereo equipment, appliances, computers, bikes, furniture, etc. (Homeowners or Renters)

Life Insurance Protects people who depend on you financially in the event of your untimely death.

Disability Insurance Pays your income from a job if you are sick or physically unable to work for long periods of time. Will typically pay around 60-70% of your full-time wage.

Liability Insurance Once again, liability insurance protects you in the case of a lawsuit related to any incident where you were found responsible.