ins chapter 1

7/31/2019 Ins Chapter 1

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Contents

Chapter 1: Insurance Basics Chapter 2: Automobile Insurance

Chapter 3: Health Insurance

Chapter4: Workers Compensation andUnemployment Insurance

Chapter 5: Retirement Plan

Chapter 6: Renters and HomeownersInsurance

Chapter 7: Life Insurance

Chapter 8: Be a Wise Consumer


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Chapter 1: Insurance Basics

Risk means the chance of financial loss

resulting from damage, illness, injury, or

death.


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Insurance

is designed to protect

against the risk of financial

loss through compensation.


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Insured

a person who buys

insurance.


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Insurance Company

an organization who is responsible

for collecting the contributions.

responsible forlooking after thefunds collectedand making payment

to those who suffer losses.

Insurer an insurance company.


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Insurance Policy

is a written contract between

the insurer and the insured

which states a specific lossbeing covered by the

insurance company.


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Check the insurance

companys:

1. Financial healththis measures the

insurance companys ability to pay out a

claim.

2. Claim serviceimmediatecompensation3. Price the same amount of coverage may

cost differently depending on which

insurance company you choose.

*Get quotes from different insurance

companies for the same type of policies.


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Claim

is a written request form for

reimbursement to cover

damage or loss thatoccurred from a specific

event.


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Premium

the fee charged for

covering an insured risk.


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How premiums are paid

Monthly

Semi-annually

annually


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The Principles of Insurance

1. Utmost Good Faith

2. Insurable Interest

3. Indemnity

4. Subrogation

5. Contribution

6.Proximate Cause


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The Principles of Insurance

1. Utmost Good Faith an understandingthat both the insurer and the insured haveto disclose truthfully all relevantinformation concerning the insurancecontract.

2. Insurable Interest is for the protection ofthe person insured.

*To have an insurable interest means to be ina position to suffer a financial loss if theitem or person being insured meets anaccident.


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Principles of Insurance

(cont)3. Indemnity a principle of insurance

stating that the insured should not

receive compensation greater than the

value of the loss, if the loss insured

against occurs.

*To indemnify means to restore

someone to the position they were in

before a loss occurred.


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4. Principle of Subrogation

- A principle in which the insurer (insurance

company) takes over the ownership and

legal rights of a property if a total loss

has occured and the indemnity has beenpaid.


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Basic Policies

Property and Casualty Insurance

insurance on homes, cars, andbusinesses.

provides protection against most risks toproperty, such as fire, theft and someweather damage.

- protects a person or business with aninterest in physical property against its lossor the loss of its income.


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Property and Casualty

Insurance

protects a person or business

against legal liability for lossescaused by injury to other

people or damage to the

property of others.


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two main waysOpen perils - cover all the causes of loss

not specifically excluded in the policy(damage resulting from earthquakes,floods, nuclear incidents, acts of

terrorism and war).Named perils - require the actual cause of

loss to be listed in the policy forinsurance to be provided. The more

common named perils include suchdamage-causing events as fire,lightning, explosion and theft.


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Liability

refers to a legal

responsibility toprovide compensation

for certain types ofinjury or loss.


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Real Property

includes permanent

structures and objects such

as buildings, fences, andbuilt-in appliances.


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Personal Property

includes anything that is

not permanently attached

like cars, furniture, clothingand personal items.


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Automobile Insurance

No-fault insurance coverage providescompensation in the case of an accidentregardless of who was at fault.

Uninsurance motorist coverage torecover damages caused by a driver whois not insured.

Under-insured motorist coverage for

amounts not covered by the insurancecompany of the driver at fault because heis under-insured.


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No-fault insurance coverage

is a term used to describe any type ofinsurance contract under which insuredsare indemnified for losses by their owninsurance company, regardless of fault inthe incident generating losses.

a policyholder (and his/her passengers) arenot only reimbursed by the policyholdersown insurance company without proof offault, but also restricted in the right to seekrecovery through the civil-justice system forlosses caused by other parties.


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Uninsurance motorist coverage

provides for a driver to receive damages

for any injury he or she receives from an

uninsured, negligent driver. The owner of

the policy pays a premium to the insurancecompany to include this clause.

the insurance company pays the difference

between what the uninsured driver can pay

and what the injured driver would beentitled to as if the uninsured motorist had

proper insurance.[
http://en.wikipedia.org/wiki/Uninsured_motorist_clausehttp://en.wikipedia.org/wiki/Uninsured_motorist_clause


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Under-insured motorist

coverage An automobile policy option which covers

the person for property damage and bodilyinjury caused by another motorist whosecoverage is insufficient to cover thedamages one has suffered. This policycompensates the injured party for thedifference between the injury suffered andthe liability covered by the insurance of the

driver at fault.


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Over-insurance and Under-

insurance

Over-insurance is the buying of

insurance to cover a value higher than

the actual value of the item insured.

Under-insurance means that the insuredvalue is lower than the actual value.

*If you are under-insured, you would only

receive compensation up to the amountyou were insured for.


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Average Clause

is a clause in an insurance policy which

states that if a partial loss occurs, the

indemnity payable will be proportional to

the ratio of the amount covered by theinsurance to the actual value of the risk.


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Home owners and Renters

Insurance

Coverage may include loss of use of the

property , personal liability and medical

payments in case of an accident on the

property.

* Personal liability to cover against any

claims by a third party who suffers lossto property or personal injuries caused

by the negligence of the insured.


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Life Insurance

pays a set amount of money to specified

beneficiaries upon the insureds death.

Beneficiary - a person who receives

money or property when an insured

dies.


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Health and Medical

Insurance

provide compensationfor medical costs due to

disease or injury


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Social Insurance

Provided through government-

sponsored programs that provide

monthly benefits, benefits to

dependents of deceased workers,and disability benefits.


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Social Security

includes workers andunemployment

compensation.


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Workers compensation

insurance

pays benefits to employees or his

family for work-related bodily

injury, occupational diseases

contracted at the worksite, or awork-related death.


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Unemployment

insurance

Provides temporary incometo eligible unemployed

individuals who meetcertain criteria and laid off.


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Purchasing considerations

Are you insurable?

Insurability is the ability of a person who

has applied for insurance to be accepted

by the insurer where the insurer checks

the factors such as health, occupation,

lifestyle, and age of the person.


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Actuarial/Mortality

table (life table)

- determines deathrate.

mortalit table act arial


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mortality table oractuarialtable

- is a table which shows, for each age, what the probabilityis that a person of that age will die before their nextbirthday. From this starting point, a number of statisticscan be derived and thus also included in the table:

the probability of surviving any particular year of age

remaining life expectancy for people at different ages the proportion of the original birth cohort still alive

estimates of a cohort's longevity characteristics.

Cohort - a group of people who share a common feature or

aspect of behaviour.-a member of a group of people who support anotherperson


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Actuarial/Mortality table


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4 basic steps in making

insurance decisions:

1. Determine what risks you face

2. Determine the causes of the risks

3. Identify ways to handle each risk

4. Make a plan of action


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Product options

- are special features

added to a basic policy.


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Product pricing

Deductible is the amount of money the

insured agrees to pay in the event of a

loss.


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Company rating

- companys financialhealth


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End

of

Chapter 1

ins chapter 1

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