1. Home and Motor Vehicle Insurance
Chapter 13
Home and Motor Vehicle Insurance

2. Here is what is in this chapter.
We will discuss:
What insurance is
Types of risk people take and why insurance is important.
Types of Home and renter insurance.
Types of Car insurance.

3. Do you know that you can insure just about anything…..
For a price that is…..
Marilyn Monroe – had her legs insured.
Gene Simmons – had his tongue insured.
Kicker for the Colts – had his foot insured.
Paris Hilton – has her dog insured

4. Insurance and Risk Management
Section 13.1

5. Do you remember the movie “Along came Polly”
screenplay-E

6. What is Insurance? Is protection against possible financial loss.
If your house burns down.
If someone breaks into your car?
If there is a flood, tornado, hurricane…..
If you have to go to the hospital, or family member has to go…
Are all types of insurance….

7. Insurance company and how they work.
An insurance company is a risk-sharing business.
They agree to pay if something happens by the terms in a POLICY…
It is not free though…..
The company agrees to pay if something happens, but you pay money every month, or year called a premium.

8. The policy The person who buys the policy is called the policyholder
The protection that the policy provides is called COVERAGE.
The person who is protected by the policy is called the insured.

9. Types of Risk Risk – Defined – is the chance of loss or injury.
Peril – is anything that may possibly cause a loss.
Many different types – fire , wind, explosion, robbery, and accidents.

10. Hazard – is anything that increases the likelihood of loss through peril.
Types of Hazard:
Personal Risk – involves loss of income or life due to illness, disability, old age or unemployment.
Property Risk – includes fire, theft…
Liability Risk – losses by negligence that leads to injury or property damage.

11. Negligence
Failure to take ordinary or reasonable care to prevent accidents from happening.
If a property owner does not clear ice from a side walk and someone falls, the owner is considered to be negligent.

12. Pure Risk
Personal, property, and liability are types of pure risk, or insurable. If something actually happens then they will pay.
Pure risks are unintentional or accidental.

13. Speculative Risk This is uninsurable risk.
For example when we start a business and it goes under. An insurance company will not insure this….

14. Types of Risk Management
Risk Avoidance
Installing a burglar system in house to prevent crime.
Not driving a car, is a way to avoid risk but if you have a 20 minute car ride to work, it may not be practical.

15. Risk Reduction Things that we do to make what we do a little safer…
Wearing a seat belt
Having a fire extinguisher ready
Eating properly

16. Risk Assumption
This means taking on a responsibility for the negative results of a risk. It makes sense to assume a risk if you know that the possible loss will be small.
Self-insuring a car that is not worth much. If the car wrecks it is probably better to buy a new one, than trying to fix the old one.

17. Risk Shifting
Shifting risk means to move the responsibility of paying to someone else.
The insurance company agrees to pay for your losses when you pay a fee.
Usually the person who the policy falls under has to pay a little on what ever happened it is called a deductible.

18. Property and Liability Insurance
People spend large sums of money each year on homes, cars, and valuables.
Others want to take it
3million burglaries a year
500,000 fires a year
200,000 cases from other types of peril.

19. 2 types of risk for property
1st is physical
From peril – wind, fire, flooding
2nd is criminal behavior

20. Liability
Is the legal responsibility for the financial cost of another person’s losses or injuries.
You can be found legally responsible even if the injury or damage was not your fault.
You have a friend fall and hurt themselves in your backyard. They can sue you, even though you did nothing wrong, you can still be liable.