INSURANCE BASICS (DON T RISK IT)
WHAT IS INSURANCE? Risk management tool that limits financial loss due to illness, injury or damage in exchange for a premium Shared Risk- Insurance company collects premiums from several people and use these premiums to pay losses of another policyholder.
INSURANCE TERMS Premium regular payment you make to an insurance company Policy legal contract you sign when you buy insurance Policy holder what you become when you buy insurance Claim formal request for payment from an insurance company Risk - the chance that you will suffer a financial loss Grace Period - if you do not pay your premium before the due date, you have no insurance
INSURANCE TERMS Liability the section of the property policy that pays for damages that you may have unintentionally caused; it also pays for personal damage or injuries to others Comprehensive auto insurance coverage that pays you if your car is stolen or for any acts of nature Collision auto insurance coverage that pays you to fix your car if you are at fault of an accident or the other guy doesn t have insurance Uninsured motorist a person that does not have insurance
INSURANCE TERMS Discount Good driver, good student, member and multiple policies are things that can bring down the cost of insurance Deductible a clause in your insurance policy that states that you will pay for a specific amount of claim before the company pays Financial responsibility Being able to pay for the damage you are legally liable for Appraisal an expert s determination of the value of a piece of property Rider a special addition to an insurance policy that covers a specific type of loss (such as jewelry, guns, etc.)
TYPES OF INSURANCE Property Insurance (protection from financial loss when things you own are stolen, damaged, or destroyed) Liability Insurance (protects you from loss that you cause others) Personal Insurance -Health and Life (protects you and your family from loss due to illness, disability, or death)
HOW DOES AN INSURANCE COMPANY SET PREMIUMS? Based on data about past losses and their costs
AUTOMOBILE INSURANCE-- Types of Coverage Bodily injury liability coverage Property damage liability coverage Medical payments coverage Uninsured/underinsured motorist coverage
LIABILITY INSURANCE Pays for someone else s property or injuries if you are liable, or at fault, in an accident Every driver in Mississippi must carry liability insurance state law Minimum liability amounts in an auto insurance policy are: $25,000 for bodily injury per person $50,000 for bodily injury per accident $10,000 for property damage Referred to as 25/50/10 Before you get in an accident, you may wish to carry more than the minimum. How many cars on the road today cost more than $10,000?
COMPREHENSIVE INSURANCE Pays you if your car is stolen or damaged by basic acts of nature (hail storm, fire, wind, flood, etc). Collision coverage Pays to fix your car whether you are at fault or not if other person has no insurance. Deductible comprehensive and collision carries an amount you pay before the insurance company pays anything The higher the deductible the lower your premium. If you have an auto loan, you must carry comprehensive and collision insurance.
FACTORS AFFECTING YOUR PREMIUM Driver classification (age, gender, and marital status) Rating territory Driving record (accidents and traffic violations) ( Points added for these will increase your premium by about 10 percent. Too many points and your company will drop you.) Type of car Claims history Your grades good student discount
STEPS YOU CAN TAKE TO MINIMIZE YOUR COST OF INSURANCE Have a good driving record Choose a less expensive car Good grades and driver s education training
WHY DOES MY INSURANCE PREMIUM CONTINUE TO INCREASE? Cars are more expensive to repair Litigation involving medical injuries
CLAIMS If you re in an accident and your car is totaled most insurance companies pay the Actual Cash Value (ACV) or book value of your vehicle. Book value determined by: Kelly s Blue Book NADA Market value is amount items are worth now (not what you owe) Replacement value is cost of replacing regardless of value
WHAT DO I DO IF I GET INTO AN ACCIDENT? Make sure everyone in your car is OK Check the other car to see if they are OK Call the police Get the following information from the other driver: name, address, telephone number, license plate number, drivers license number, insurance information Give the same information to the other driver Get the name and phone number of any witnesses Keep a disposable camera in your car and take accident pictures Call your insurance agent as soon as possible
WHAT ABOUT GIVING OTHERS MY KEYS? Did you know that if your friend wrecks your car, the accident is on you? You are responsible for who drives your car As far as your insurance company is concerned, the accident will go on your insurance record and you will pay the charges even if your friend has insurance Be careful who you give your keys to