2. © Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 1.10.1.G1 Insurance Take Charge of Your Finances 1.10.1.G1

3. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1

4. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Risk Risk is the uncertainty about a situation’s outcome This can be an unpredictable event which leads to loss or damage

5. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 General Insurance Terminology Insurance is an arrangement between an individual (consumer) and an insurer (insurance company) to protect the individual against risk A policy is a contract between the individual and the insurer specifying the terms of the insurance arrangements

6. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 General Insurance Terms Loss: an accident or illness that you have experienced which causes a financial setback. Claim a request that the insurance company pay you for your loss. Usually, a company will not seek you out to offer payment for your loss; you must file a claim for payment. Proof of loss when you have a claim you must be able to prove you had a loss. You can’t just say that the only thing the robber took was a $100 pair of shoes. You’re going to have to produce some kind of proof that you owned that pair of shoes. This is why Mom always says – “Keep your

7. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Insurance Terminology A policyholder is a consumer who purchases the policy A premium is a fee paid to the insurer to be covered under specified terms A deductible is the amount paid out of pocket by the policy holder for the initial portion of a loss before the insurance coverage begins

8. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Deductible Example A person might have an auto insurance policy with a $500 deductible on collision coverage. If this person were in an accident that did $800 worth of damage to the car, then the insurance company would pay him or her $300. The insured is responsible for the first $500 of damage (the deductible), and the insurance company pays the balance.

9. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Insurance in all forms Gene Simmons – Lead singer for KISS – had a policy for his tongue Kicker for the Baltimore Colts had a policy for his kicking foot. Paris Hilton – had a policy for her dog Marilyn Monroe – had a policy on her legs

10. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Types of Insurance Types of insurance can include: Automobile Health Life Disability Homeowners/Renters

11. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What is auto insurance? Automobile Insurance Arrangement between an individual (consumer) and an insurer (insurance company) Protects individuals against risk from automobile accidents

12. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Four Types of Coverage 1. Liability Insurance 2. Medical Payment Insurance 3. Uninsured/Underinsured Motorists Insurance 4. Physical Damage Insurance Comprehensive Collision

13. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Liability Insurance Covers injuries or damage caused to other people or their property Two types of liability occur from owning and operating a vehicle: 1. Bodily Injury – driver or car owner is held legally responsible for injuries suffered by another person 2. Property Damage – driver or car owner is held legally responsible for damaging another’s property

14. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Liability Insurance continued Policy limits for liability are usually quoted with three figures such as 25/50/10 Each figure represents a multiple of $1,000 25 = $25,000 Per-person bodily injury limit $25,000 is the most which will be paid for any one person’s bodily injury liability losses from an accident

15. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Liability Insurance continued 50 = $50,000 Per-accident bodily injury limit $50,000 is the most which will be paid for all bodily injury losses from an accident 10 = $10,000 Per-accident property damage liability limit $10,000 is the most which will be paid in property damage liability from an accident

16. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Liability Insurance continued Liability insurance is the minimum amount of insurance required by law Does not cover losses suffered by the insured or property damage to that driver’s car if he or she caused the accident Must have at least the state minimum for liability insurance Missouri’s minimum liability limits: 25/50/10

17. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Medical Payment Insurance Covers injuries sustained by the driver of the insured vehicle or any passenger regardless of fault Covers insured family members injured as passengers in a car or injured while on foot or bicycle Pays for hospital and medical bills Some pay for funeral expenses Not required in all states

18. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Uninsured/Underinsured Motorists Insurance Uninsured/Underinsured Covers injury or damage to the driver, passengers, or the vehicle caused by a driver with insufficient insurance Situations where this is needed: Hit-and-run accidents (unidentified driver) Accident with an uninsured driver Accident with someone with insufficient insurance to cover the losses Not required in all states

19. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Physical Damage Insurance

20. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Physical Damage Insurance continued 2. Collision Coverage – covers a collision with another object, car, or from a rollover Paid regardless of fault Generally covered when driving someone else’s car with their permission 1. Comprehensive Coverage – includes all physical damage losses except collision and other specified losses. Usually includes deductible. Losses covered include: Theft, vandalism Fire, ice, windstorm, or hail Glass breakage Contact with animal

21. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Optional Protection Towing Coverage Pays the cost of having a vehicle towed to receive repairs Rental Reimbursement Provides a rental car when the insured’s vehicle is being repaired after an accident or if the vehicle was stolen May provide only part of the funds

22. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What your policy covers… Auto Liability Insurance pays for someone else’s property or injuries if you are liable, or at fault, in an accident. The policy will list this as Bodily Injury and Property Damage. Your insurance pays if the other person is at fault and does not have any insurance. Your policy is required to have Uninsured Motorist coverage for your injuries. UM does not pay for your car.

23. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What your policy covers If you’re at fault, or the other guy doesn’t have insurance; Collision pays to fix your car. Comprehensive pays you if your car is stolen or damaged by basic acts of nature. These are generalized statements. You will need to read your policy for specific items and events covered.

24. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What you should know… There are several ways to meet Missouri’s Financial Responsibility laws.  You can register a $60,000 bond with the Department of Revenue with the $60,000 you just happen to have lying around.  You can purchase an automobile liability insurance policy. The minimum liability amounts in an auto insurance policy are $25,000 for bodily injury per person, $50,000 for bodily injury per accident and $10,000 for property damage. This is typically referred to as 25/50/10. Before you get into a large accident, you may wish to consider more than the required state minimum. Ask your self this; how many cars on the road today cost more than $10,000?

25. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Insurance Rate Influences

26. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Influences continued Driving record Safe drivers have lower rates Number and type of tickets will raise rates Number and severity of accidents will raise rates Type and age of vehicle Newer, more expensive, and higher repair cost vehicles have higher rates Frequently stolen vehicles have higher rates Color of vehicle does not matter

27. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Influences continued Vehicle use Rates are usually higher when driving more than 7,500 miles a year The more one drives, the greater the chance of an accident Place of Residence Rates vary among states People in large cities usually pay more than in rural or suburban areas Weather conditions may affect rates

28. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Influences continued Number of drivers on the policy Additional drivers raise the premium Costs a driver under the age of 25 less to be added to his/her parents’ policy than to purchase a separate policy Driver training May receive a discount for having taken a driver’s education course

29. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Influences continued Good student discount May receive a discount for good grades in school Multiple car discount May receive a discount for having two or more vehicles on the same policy Anti-theft systems May receive a discount for anti-theft devices such as car alarms

30. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Influences continued Multiple policies with the same company Having both auto and home insurance Long-time customers Some companies might offer discounts to long-time customers

31. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What you should know… Does your friend drive your car… Did you know that if your friend wrecks your car, the accident is on you? You are responsible for who drives your car. So, even if you ask your friend if they have insurance before they drive, it may not matter. As far as your insurance company is concerned, the accident will go on your insurance record and you will pay the surcharge. Be careful about who you give the keys to.

32. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What you should know… An auto insurer can place you in a high risk policy! Current Missouri law does not prevent an insurer from putting you into a high risk policy if you have not been insured in the last 30 days. This situation can be avoided by paying your premiums on time and not letting your policy lapse.

33. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What do I do if I get into an accident? 1. Make sure that everyone in your car is not hurt 2. Check the other car to see if they are OK 3. Call the police 4. Get the following information from the other driver: name, address, telephone number, license plate number, drivers license number, insurance information. 5. Give the same information to the other driver. 6. Get the name and phone number of any witnesses 7. Keep a disposable camera in your car and take accident pictures 8. Call your insurance agent as soon as possible

34. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Main Points to Remember…  Minimum Limits of Liability  Deductibles  Who’s driving your car  What to do in case of an accident  Always Drive Safely

35. © Family Economics & Financial Education – Updated April 2008 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences at the University of Arizona 1.10.1.G1 Unit 6 Insurance Homeowners & Renters Insurance

36. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Homeowners Insurance: The Basics Mobile Home Apartment House Condominium

37. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Homeowners Insurance: The Basics Homeowners policies also protect anyone named in the policy including:Homeowners policies also protect anyone named in the policy including:  spouse  children  other residents  guests Also covers detached structures such as:Also covers detached structures such as:  garages  sheds  pools

38. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Homeowners Insurance: The Basics

39. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Renters Insurance So, you’re movin’ out and goin’ to get your own place. Do you really need Property Insurance? Whether headed out on your own, going to college, or planning a military career, you need to have your stuff covered with renters insurance. So, you’re movin’ out and goin’ to get your own place. Do you really need Property Insurance? Whether headed out on your own, going to college, or planning a military career, you need to have your stuff covered with renters insurance.

40. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Renters Insurance Renters insurance protects individuals who live in a house, mobile home, condominium, or apartment that is owned by another personRenters insurance protects individuals who live in a house, mobile home, condominium, or apartment that is owned by another person Protects against:  Theft  Loss of personal property  Loss of use Similar to homeowners insurance except the building is owned by ANOTHER PERSON!!!Similar to homeowners insurance except the building is owned by ANOTHER PERSON!!!

41. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Renters Insurance Renters Insurance Covers:  Personal possessions such as furniture, CDs, electronics and clothing  Loss of use  Medical payments Renters Insurance does not cover:  Structural damage caused by carelessness such as damage by animals

42. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 If you’re headed to college…

43. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 This is what your policy covers: Personal Items – your stuff at home is covered in case of fire or theft. Estimate and itemize the dollar value of the things you own, once a year. Put that information in a safe place away from your home, like at your parent’s house or in a safety deposit box in a bank.

44. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 This is what your policy covers :

45. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 This is what your policy covers:

46. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 This is what your policy covers:

47. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 You can get additional coverage for a specific piece of property… Renters policies may limit coverage or exclude coverage on certain types of valuables. If you have something of particular value, for example, over $500, you will want to make sure that the company covers it. If not, look into getting a separate endorsement for that valuable item. Car Stereo Equipment Engagement Ring Antiques Baseball Card Collection Coin Collection Computer

48. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What you should know…

49. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 What you should know…

50. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Listen UP! Here’s the facts… Small Claims Can Hurt – Stolen property = $350 Renters Insurance deductible = $250 Insurance Company pays claim = $100 The severity of a claim does not matter to some insurance companies, simply the number of claims. Most insurance companies will look at your claims record for the previous 5 years. Many companies will not insure those who have had 2-3 claims in 3 years, no matter the amount of these claims.

51. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Listen UP! Here’s the facts…

52. © Family Economics & Financial Education – Updated January 2009 – Insurance Unit – Types of Insurance Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona 1.10.1.G1 Application Process: Ways to Reduce your Premium Raise your deductibleRaise your deductible Buying homeowners and automobile insurance from the same companyBuying homeowners and automobile insurance from the same company Fire resistant structures, sprinkler systems, or smoke detectorsFire resistant structures, sprinkler systems, or smoke detectors Tiedowns for mobile homesTiedowns for mobile homes 55 years of age, or older and retired55 years of age, or older and retired Original ownerOriginal owner New homeNew home Non-smokerNon-smoker Security systemSecurity system