Risk Management: Insurance

Insurance is for chickens Think the sky might fall Protection against catastrophic losses Losses occur due to perils and threats: Theft Fire Liability Physical injury Wind, hail, flood, earthquakes

Insurance on Property Homeowners Renters Boarders Structure Outbuildings Personal property Liability Renters Boarders

Financial Pyramid Asset Preservation Asset Accumulation Asset Protection

Protection of Assets Who gets protected? Automobile Insurance Collision – your damage Liability – covers you if your fault Comprehensive – damage not related to an accident (theft, vandalism) Personal injury – medical costs Uninsured driver – you if other is not insured Homeowners insurance You and lender Renters insurance Your personal property

Splitting Cost of Risk Price is determined by split How much you can cover How much you need someone else to cover Deductible is consumers part of the risk Premium is based upon split

Know What you Have Read the policy Know loss limits on items ex. Guns, jewelry, electronics Know reputation and rating of company, AM Best, and Moodys Compare and update when needed What kinds of things could happen to cause changes in coverage?

Finding a good product Rates and needs can change over time Get quotes from several companies Ask for referrals The Oklahoma Insurance Department provides information about shopping, agents, costs, and explanations, and how to file a complaint https://www.ok.gov/oid/

Possible ways to save on Home and Auto Higher deductible Take security measures – alarm systems can offset the cost of monitoring Anti-theft devices Good grades No claims High credit score Multiple policy discounts

Other considerations If property owner fails to keep up insurance – lender will place insurance on property with higher premium Important to know difference between replacement value and actual cash value Replacement costs can increase, thus cost of policy increases Conduct an annual check up Keep an inventory

Other considerations cont. Areas change over time with development Check your address at www.floodsmart.gov Earthquakes are very common now Policies are fairly inexpensive with high deductibles Automobiles lose value over time The insurance company represents you! You must contact them when an accident occurs.

Optional Insurance Business use of car Rider or floater on equipment you take with you – laptop, electronics, cameras Home warranty

Questions and Comments

Insurance on Life Life insurance is different because it is all or nothing. You have to get it as close to right as possible. Decide who needs it Decide how much is needed Decide on type of policy Understand the basics Decide how to purchase

Who needs it? Life insurance is to cover expenses that would be left if a person who lends support died Spouses – need to consider their contribution to the household and the earning potential of the partner Parents – determine amount needed for children and the amount of time they need it Think about what money is needed if you are gone, debts, cost to replace

What kind? Insurance protects against risks With loss of life – risks could be limited by time or circumstance Term = time limited (longer the term, greater cost) – no cash value Child support Mortgage Loans Whole life or universal – cash value, costs more Support of surviving spouse if unemployed

How Much? Determine immediate and future needs Determine immediate resources Determine which gaps would exist Use online calculator: http://www.lifehappens.org/insurance-overview/life-insurance/calculate-your-needs/ or http://www.bankrate.com/calculators/insurance/life-insurance-calculator.aspx

General Insurance Tips Get what you need but only as much as you need Part of the benefit is peace of mind Review policies regularly Compare costs between companies Keep inventory Make changes when needed

Help is Here The Oklahoma Insurance Department can help consumer who are having issues with insurance companies. The OID has valuable information on you rights to insurance coverage and the basic information about insurance Be sure and bookmark their website at https://www.ok.gov/oid/

Questions and Comments