© The McGraw-Hill Companies, Inc., 2001. All Rights Reserved. Irwin/McGraw-Hill 10-1 C HAPTER 10 Personal Finance Home and Automobile Insurance Kapoor.

Slides:



Advertisements
Similar presentations
I NSURANCE B ASICS (D ON T R ISK I T ). W HAT IS I NSURANCE ? Risk management tool that limits financial loss due to illness, injury or damage in exchange.
Advertisements

G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance Funded by a grant from Take Charge.
Home and Automobile Insurance
2004 McGraw-Hill Ryerson Ltd. Kapoor Dlabay Hughes Ahmad Prepared by Cyndi Hornby, Fanshawe College Chapter 8 Home and Automobile Insurance 8-1.
Home and Automobile Insurance
Business & Personal Finance
CHAPTER 8 Property and Motor Vehicle Insurance
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 33 Vehicle Insurance pp Introduction to Business, Chapter 33 Slide 2 of 60 Why It’s Important Most states require you to have some form.
Personal Finance FIN 235. LEARNING OBJECTIVES A. What is insurance? B. Why do we need insurance? C. What is the risk management process? D. How does insurance.
Personal Finance Garman/Forgue Ninth Edition
Chapter 12 Property and Liability Insurance The Concept of Liability Liability is the financial responsibility one person has to another in a situation.
8 Home and Automobile Insurance
Chapter 10: Risk Management and Property/Liability Insurance.
Homeowners and Auto Insurance
Lesson 21FIN 403 Property, Home and Auto Insurance Smokers pay much higher premiums for: HOME insurance LIFE insurance AUTO insurance Principle Insure.
Managing Your Personal Finance UNIT 2: GETTING YOUR FIRST CAR Topic: CAR INSURANCE.
Understanding Types of Insurance
8-1. McGraw-Hill/Irwin Focus on Personal Finance, 2e Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. 8 Home and Automobile Insurance.
Lines of Insurance What They Are and Why They Are Important Created in part by The Texas Department of Insurance.
INSURANCE How it works… Why YOU need it…. ALL ABOUT RISK The chance of financial loss from some type of danger RISK MANAGEMENT AVOID THE RISK – Don’t.
Insurance Is protection for individuals against possible financial losses Provides protection against many risks such as unexpected property loss, illness.
© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 20 SLIDE Vehicle Insurance Property Insurance.
Insurance Are you ready for an accident? Senior Advisory – May 4, 2015.
What is Personal Risk Management?. What is Risk? Risk is the chance of loss from some type of danger. Risk is the chance of loss from some type of danger.
Chapter © 2010 South-Western, Cengage Learning Property and Liability Insurance Property Insurance Automobile and Umbrella Insurance.
Managing Your Personal Finance UNIT 3:3 GETTING YOR FIRST CAR Topic: CAR INSURANCE.
Chapter 8 Home and Automobile Insurance Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
Property Insurance. Insuring Your Valuable Property The main causes of property damage are accidents, theft, and vandalism. You can protect yourself from.
Auto Insurance. POP QUIZ!!!! GET OUT PENCIL AND PAPER!
Chapter 8 In-Class Notes. Background on Insurance and Managing Risks Types of insurance Property insurance (auto and home insurance) Health insurance.
EVERYBODY LOVES RAYMOND… Insurance.
0 Personal Finance Unit 4 Chapter 13 © 2007 Glencoe/McGraw-Hill.
Automobile Insurance Managing the Risk G1 © Family Economics & Financial Education – Revised November 2004 – Transportation Unit – Automobile.
Automobile Insurance Managing the Risk G1 © Family Economics & Financial Education – Revised November 2004 – Transportation Unit – Automobile.
Chapter 25 Insuring Against Loss. Nature of Insurance Use insurance to protect themselves from risk due to fire, accident, or other catastrophes. People.
Insurance Terms Business Essentials. Term Insurance An insurance policy that provides coverage for a limited period, the value payable only if a loss.
VEHICLE INSURANCE. Why It’s Important Most states require you to have some form of vehicle insurance. To get the best value, you need to know the choices.
Insurance Take Charge of Your Finances G1.
Copyright ©2004 Pearson Education, Inc. All rights reserved. Chapter 2 Auto and Homeowner’s Insurance.
Auto Insurance Information Mr. Blais Law and You.
Looking at Insurance: Auto and Home Chapter 9. *Risk Factors – Auto Insurance costs Rating Territory Driver Classification Age Gender Marital status Driving.
Chapter 25 Introduction to Risk Management
INSURANCE Reimbursement for personal or financial loss.
Managing the Risk G1 © Family Economics & Financial Education – Revised February 2009– Transportation Unit – Automobile Insurance – Slide 2 Funded.
Template by Bill Arcuri, WCSD Who Wants to Be a Millionaire?
Page 411 Home and Motor Vehicle Insurance Chapter 13.
Chapter 8.  Protection against possible financial loss  Property loss  Illness  Injury  Insurance company (insurer): a risk- sharing business that.
Types of Insurance Essentials Economics Review: What is Insurance? Risk is the uncertainty about a situation’s outcome- may be an unpredictable.
Chapter 16 Part III Motor Vehicle Insurance. Financial Responsibility Anyone who owns or drives a vehicle should have protection against personal injury.
Personal Finance.  The Concept of Risk Management  Planning an Insurance Program  General Insurance Terms  Homeowners Insurance  What’s covered?
Insurance 101 Personal Finance. Learning Goal To be able to define terms relating to insurance.
Insurance Automobile and Health. What is insurance?  Insurance – Manage your risk of financial loss from illness, injury or damage.  Premium – Regular,
"Fun is like life insurance; the older you get, the more it costs." -Frank McKinney (humorist and journalist)
Chapter © 2010 South-Western, Cengage Learning Property and Liability Insurance Property Insurance Automobile and Umbrella Insurance.
Chapter 6 Personal Risk Management. Slide 2 What Is Risk? 6-1 Risk Assessment and Strategies Risk is the chance of injury, damage, or economic loss. Probability.
Auto Insurance. Objectives Students will identify the factors that affect the cost of automobile insurance Students will identify the various types of.
Auto Insurance Home Insurance Vocab 1 Vocab 2Auto Insurance Insurance Game
WHY BUY IT?? VEHICLE INSURANCE. Why It’s Important Most states require you to have some form of vehicle insurance. To get the best value, you need to.
Chapter 10 Home and Automobile Insurance McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 8 Home and Automobile Insurance McGraw-Hill/Irwin
8 Home and Automobile Insurance
Automobile Insurance Managing the Risk.
Home and Automobile Insurance
Home & Motor Vehicle Insurance
* Take Charge of Your Finances G1
20 Insurance 20-1 Vehicle Insurance 20-2 Property Insurance
Insurance Basics (Don’t Risk It)
Home and Motor Vehicle Insurance
Chapter 25 Introduction to Risk Management
Presentation transcript:

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill 10-1 C HAPTER 10 Personal Finance Home and Automobile Insurance Kapoor Dlabay Hughes 6e

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Insurance and Risk Management Insurance is protection against possible financial loss. An insurance company, or insurer, is a risk- sharing firm that assumes financial responsibility for losses from an insured risk. People purchase a policy and the firm assumes a risk for a fee called the premium which the insured policyholder pays periodically. 10-2

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Types of Risk Risk is uncertainty or lack of predictability, such as to loss that a person or property faces. Peril is the causes of a possible loss, such as fire, windstorms, robbery, disease or death. Hazard is something that increases the likelihood of a loss, such as driving drunk, smoking in bed, or defective house wiring. Risk management is a long range, organized, planned strategy to protect your assets and family. 10-3

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Risk Avoidance Risk Shifting Risk Assumption Risk Reduction Ways to Manage Risk 10-4

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Coverage and Type of Risk Pure Risk.  Insurable.  Accidental, unintentional.  Nature and financial loss of the risk can be predicted.  Can be personal, property. or liability risk. Speculative Risk.  Chance of loss or gain.  Uninsurable.  Such as starting a small business or gambling. 10-5

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Examples of Risks You Face Disability. Illness. Death. Retirement. Property loss.  Physical damage.  Loss of use. Liability.  You are legally responsible for another person’s losses or injuries. 10-6

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Negligence vs. Vicarious Liability Negligence.  Failure to take ordinary and reasonable care. Such as failure to remove items from a frequently used staircase. Vicarious Liability.  When you are held responsible for the actions of another person.  Such as your child throwing a ball through a neighbor’s window. 10-7

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Planning an Insurance Program Set your insurance goals and prioritize them. Develop a plan to reach your goals. Put your plan into action. Review your results. To put your risk management plan to work ask yourself…  What should be insured?  For how much?  What kind of insurance?  From whom? 10-8

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Homeowner’s Insurance Coverages Homeowners insurance is coverage for a place of residence and its associated financial risks.  Buildings and other structures, plus trees, shrubs and plants.  Additional living expenses.  Personal property.  Personal property floater.  Household inventory.  Endorsement for specialized coverages.  Medical payments for minor injuries on your property.  Personal liability. 10-9

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Umbrella Policy Also called a personal catastrophe policy. Supplements basic personal liability coverage. $1,000,000 or more in liability coverage

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Items Covered by Renter’s Insurance Personal property loss or damage. Personal liability. Additional living expenses. A landlord’s insurance usually won’t cover personal belongings. Only 40% of renters have renter’s Insurance

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Home Insurance Policy Forms Basic form (HO-1) Broad form (HO-2) Special form (HO-3) Tenant’s form (HO-4) Condominium form (HO-6) Modified coverage form (HO-8) In addition to the above other items are covered such as credit card fraud, check forgery, temporary repairs and fire department charges in areas with such fees

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill How Much Coverage Do You Need? Look for a policy with full coverage rather than a coinsurance clause. What would it cost to replace your home? Have sufficient liability coverage. Include protection for specific items such as collections, cameras, and jewelry. Determine the value of the contents of your home.  Actual cash value - cost less depreciation.  Replacement cost - repair or replace with new item

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Factors That Affect Home Insurance Costs Location of residence. Type and age of the structure. Amount of coverage and deductibles. Discounts - alarm system, smoke detector, if you insure your car with the same company. Company differences.  Compare costs and coverages at sites such as  Customer satisfaction information is available at

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Automobile Insurance Coverages Financial responsibility law.  40 states have compulsory automobile insurance laws.  see Exhibit 10-8 to see the minimum limits in your state. Requires drivers to prove their ability to cover the cost of damage or injury caused by an automobile accident

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Motor Vehicle Liability Coverage bodily injury liability property damage liability

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Motor Vehicle Insurance Coverages (continued) Bodily injury coverages  Bodily injury liability covers the risk of financial loss due to legal expenses, medical expenses, lost wages and other expenses associated with injuries caused by an accident for which you were responsible.  Medical payments covers the cost of health care for persons injured in your automobile, including yourself

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Motor Vehicle Insurance Coverages (continued) Property damage liability covers damage to others person’s car when you are at fault. It also includes damage to such things as street signs and buildings.  For example, during a snow storm you might accidentally slide your vehicle into a neighbor’s mailbox or tree        

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Auto Insurance Coverages Uninsured motorist.  Pays for the cost of injuries if your vehicle is hit by a person without insurance. However, it does not cover property damages. Underinsured motorist  Pays costs if your car is hit by a person who doesn’t have enough insurance to cover the damage they did to you and your car. (continued) 10-19

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill No-Fault Insurance Each driver collects from their own insurance company.  Medical expenses.  Lost wages.  Related injury costs. Intended to provide fast and smooth methods of paying for damages without taking the legal action frequently necessary to determine fault. Systems vary from state-to-state

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Collision Coverage When your car is in an accident, collision insurance pays for damage to your automobile, regardless of who is at fault. However, if you are not at fault they will try and collect from the other driver’s property damage liability first

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Comprehensive Physical Damage Covers damage to your vehicle that is not caused by a collision, such as...  Fire.  Theft.  Vandalism.  Glass breakage.  Hail, sand, or wind storm.  Your car rolls downhill into a tree

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Amount of Coverage Legal concerns include having enough coverage if you were sued.  $100,000/$300,000 is recommended for bodily injury liability,with an additional $1,000,000 or more umbrella liability policy recommended. Property values of vehicles have gone up.  $50,000-$100,000 is usually suggested for property damage liability

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Auto Insurance Premium Factors Automobile type.  Year, make and model. Rating territory.  Accident, theft, and vandalism rates in the area where you live. Driver classification.  Age, sex, marital status, credit history, driving record, and driving habits. Assigned risk pool for people who are unable to obtain insurance

© The McGraw-Hill Companies, Inc., All Rights Reserved. Irwin/McGraw-Hill Reducing Automobile Insurance Premiums Find out how much it will cost to insure a car before you buy it. Compare companies - Have larger deductibles. Look for discounts.  Establish and maintain a good driving record.  Non-smoker.  Install security devices such as a car alarm.  If you have more than one vehicle insure them both with the same company