Chapter 14 INSURANCE

“Protection against large financial loss.”

2 principles of insurance-INDEMNITY:restore to financial

position before the loss, not leave you better off, financially.

INSURABLE INTEREST: must have a financial stake in life/property being insured.

What could happen if you don’t wear your seat belt?http://www.youtube.com/watch?v=dhfdt6nFmCM

If you get pulled over….If you get pulled over….

What should you do? NOT do?What should you do? NOT do?

What will the officer ask you for?What will the officer ask you for?

What is the fine in IL if you drive without insurance?What is the fine in IL if you drive without insurance?

It is illegal to drive without insurance.It is illegal to drive without insurance.

Fine in IL$500.00

Fine in IL$500.00

One in 7 drivers have no auto insurance!

So…what are you chances of getting hit by someone without insurance???

One in 7 drivers have no auto insurance!

So…what are you chances of getting hit by someone without insurance???

Auto InsuranceAuto Insurance

“Transferring” the risk“Transferring” the risk

How it works: How it works:

Policy: shows what is and is not coveredClaim: request for payment of a lossEndorsement: riders on policy- add or take

away coverage.Exclusions: specific risks not covered by

insurance. Ex: flood, tornado

Policy: shows what is and is not coveredClaim: request for payment of a lossEndorsement: riders on policy- add or take

away coverage.Exclusions: specific risks not covered by

insurance. Ex: flood, tornado

Premium vs. deductiblePremium vs. deductible

Everyone pays the premium-

Premiums are determines by variety of factors.

Deductible you only pay if you have a claim.

Insurance “deducts” your portion and pays the rest.

HIGHER deductible = LOWER premium!!

Who pays more for car insurance?Who pays more for car insurance?

Young older

Males under 25 Females under 25

Single Married

Sports car sedan

Drive a lot Drive a little

Speeding tickets Clean record

Accidents Accident free

Credit score 580 Credit score 700

Why do people have different rates (premiums)?Why do people have different rates (premiums)?Statistical Data. An Actuary determines your risk.

Statistical Data. An Actuary determines your risk.

Crash DATA:Crash DATA: According to a 2011 CDC report, most traffic

deaths occur in rural areas, and death rates from car crashes progressively increase the more rural (i.e. less populated) an area is.

“It’s really not surprising when you think about it,” says Russ Rader, Insurance Institute of Highway Safety spokesman. “In rural areas, people are generally driving at higher speeds, which means that when they crash, the accident is often more severe.”

According to a 2011 CDC report, most traffic deaths occur in rural areas, and death rates from car crashes progressively increase the more rural (i.e. less populated) an area is.

“It’s really not surprising when you think about it,” says Russ Rader, Insurance Institute of Highway Safety spokesman. “In rural areas, people are generally driving at higher speeds, which means that when they crash, the accident is often more severe.”

Ways to save on auto insurance:

Higher deductible- lower premiumShop around for agentsAsk about discounts i.e good studentDrive lessSafer zip code?Get married

But most of all…..

Keep clean driving record!!!!

Will you be 100+ miles away at school?

If you do not take your vehicle with you– you should be eligible for a discount on your insurance premium.

What it covers….What it covers…. General liability? lawsuits Bodily injury? Medical bills Property damage? Repair damage Collision? Damage to vehicle Comprehensive? Theft, vandalism, weather

Uninsured motorist? No coverage. Underinsured not enough coverageMotorist?

General liability? lawsuits Bodily injury? Medical bills Property damage? Repair damage Collision? Damage to vehicle Comprehensive? Theft, vandalism, weather

Uninsured motorist? No coverage. Underinsured not enough coverageMotorist?

The top 10 most stolen vehicles in Missouri.The top 10 most stolen vehicles in Missouri.

What type of vehicle would most likely be stolen?

Take a guessTruck? Compact? Luxury? Sedan?

SUV…..?

http://www.bizjournals.com/stlouis/blog/2011/08/slideshow-top-10-most-stolen-cars-in.html?s=image_gallery

What type of vehicle would most likely be stolen?

Take a guessTruck? Compact? Luxury? Sedan?

SUV…..?

http://www.bizjournals.com/stlouis/blog/2011/08/slideshow-top-10-most-stolen-cars-in.html?s=image_gallery

6 month premium female 17 yrs.2000 Nissan Maxima6 month premium female 17 yrs.2000 Nissan Maxima

Are you covered? Check your card-Are you covered? Check your card- General liability? Bodily injury? Property damage? Collision? Comprehensive? Uninsured motorist? UnderinsuredMotorist?

General liability? Bodily injury? Property damage? Collision? Comprehensive? Uninsured motorist? UnderinsuredMotorist?

Hit or swerve to miss?Hit or swerve to miss?

Hit or swerve to miss?Hit or swerve to miss?

If you hit a deer or other animal it is considered COMPREHENSIVE

lower/no deductible

If you swerve and damage your vehicle, it is COLLISION

Higher deductible

Auto insurance worksheetAuto insurance worksheet

Given the choice between $500 and $1000 Deductible– which is cheaper over a 3 year period.

How much do you pay for each of the incidents?

Given the choice between $500 and $1000 Deductible– which is cheaper over a 3 year period.

How much do you pay for each of the incidents?

Real cost of distracted drivingReal cost of distracted driving

http://www.nbcnews.com/nightly-news/infographic-real-costs-distracted-driving-n69506

http://www.nbcnews.com/nightly-news/infographic-real-costs-distracted-driving-n69506

Illinois Minimum coverageIllinois Minimum coverage20/40/15$20,000 bodily injury max/person$40,000 bodily injury max total/accident$15,000 property damage in an accident

Missouri minimums:

25/50/10

*100/300/50 is typical coverage amounts.

20/40/15$20,000 bodily injury max/person$40,000 bodily injury max total/accident$15,000 property damage in an accident

Missouri minimums:

25/50/10

*100/300/50 is typical coverage amounts.

Complete the minimum insurance Worksheet.Complete the minimum insurance Worksheet.Mario has minimum coverage…what is

the risk?

***You can not get license back until all costs have been paid in full.

Mario has minimum coverage…what is the risk?

***You can not get license back until all costs have been paid in full.

Who’s name is on the title of the vehicle you drive?Who’s name is on the title of the vehicle you drive?

Why does it matter?Why does it matter?

Who’s name is on the title of the vehicle you drive?Who’s name is on the title of the vehicle you drive?

Why does it matter? They can be sued for damages.

Why does it matter? They can be sued for damages.

“GAP” Insurance:“GAP” Insurance: Regular auto insurance is designed to pay the

lender the vehicle's current cash value -- not the current loan balance.

Gap covers the difference between what is owed and value of vehicle. (UPSIDE DOWN LOAN)

Most Lenders will this additional insurance for loan.

http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx

Regular auto insurance is designed to pay the lender the vehicle's current cash value -- not the current loan balance.

Gap covers the difference between what is owed and value of vehicle. (UPSIDE DOWN LOAN)

Most Lenders will this additional insurance for loan.

http://www.bankrate.com/calculators/auto/auto-loan-calculator.aspx

Gap insurance example:Gap insurance example: A $25,000 car loan New Car loses about 25% of it’s value first year.

(10-20% loss once paperwork is signed) Now worth $18,750 Balance of loan after one year—

$20,000 Difference of $1,250 to pay off loan( for a vehicle you can not drive.)Plus need to buy another vehicle….

A $25,000 car loan New Car loses about 25% of it’s value first year.

(10-20% loss once paperwork is signed) Now worth $18,750 Balance of loan after one year—

$20,000 Difference of $1,250 to pay off loan( for a vehicle you can not drive.)Plus need to buy another vehicle….

Before you buy a car…Before you buy a car…

Contact your insurance agent for an insurance quote. All they need is the VIN# on the vehicle.

**Sometimes the insurance is more than payments.

Contact your insurance agent for an insurance quote. All they need is the VIN# on the vehicle.

**Sometimes the insurance is more than payments.

Endorsements:Endorsements:

Add on coverage for additional charge. Ex: emergency roadside service Rental car

Exclusions: what is and is not covered on your policy.

Add on coverage for additional charge. Ex: emergency roadside service Rental car

Exclusions: what is and is not covered on your policy.

6 mo.6 mo.

Premium

17 yr.Female2000Nissanmaxima

Premium

17 yr.Female2000Nissanmaxima

What if….

You let a friend borrow your car and he/she has a little fender bender totaling $7000 in damages? No one was hurt. You both have auto insurance so who pays?

What if….

You let a friend borrow your car and they have a little fender bender totaling $7000 in damages? You both have auto insurance so who pays?

Answer: Your auto insurance will pay. Your auto insurance insures your vehicle plus anyone else using your car with your permission.

(You will have to pay the deductible)

Liability Insurance

Liability auto insurance only protects the other party in the accident, not injury to you or your vehicle.

Liability insurance also legal fees if you are sued but won’t cover more than your limit. Your personal assets may be used to cover the additional amount owed.

What is the impact of seat belt use?

Seat belts reduce serious crash-related injuries and deaths by about 50%.

Air bags provide added protection but are not a substitute for seat belts. Air bags plus seat belts provide the greatest protection for adults.

Who is least likely to wear a seat belt? Adults age 18-34 are less likely to wear seat belts

than adults 35 or older. (CDC, 2010, unpublished data)

Men are 10% less likely to wear seat belts than women. (CDC, 2010, unpublished data)

Adults who live in rural areas are 10% less likely to wear seat belts (78% use) than adults who live in urban and suburban areas (87% use). (CDC, 2010, unpublished data)

What if:

You borrow someone’s car and while your texting, you smash into another car at an intersection causing serious bodily injury and property damage? Who’s insurance pays?

Answer: The (driver’s) policy covers driver and all passengers in vehicle for bodily injury. The (car owner’s) covers property damage caused by the car.

What should you do if you have an accident??? Pg. 367What should you do if you have an accident??? Pg. 367

What should you NEVER do if you have an accident???What should you NEVER do if you have an accident???

Admit fault,

Leave scene of accident.

http://www.bnd.com/2012/12/03/2415368/granite-city-woman-charged-in.html

Providing false information can result in $500 fine and 30 day sentence.

http://www.bnd.com/2012/12/03/2415368/granite-city-woman-charged-in.html

Providing false information can result in $500 fine and 30 day sentence.

Consumer tips for filing claims:Consumer tips for filing claims:Page 368 When should you contact your

insurance agent? a ___________ _________ will handle your claim.

They determine how much will be paid.

BE PREPARED TO STATE YOUR CASE if results are not to your satisfaction.

Page 368 When should you contact your

insurance agent? a ___________ _________ will handle your claim.

They determine how much will be paid.

BE PREPARED TO STATE YOUR CASE if results are not to your satisfaction.

Write an accident ReportWrite an accident Report

You are sitting at red light in the white pick up truck.(the person on your left will not see video)Write/sketch a description of what happens. Have

person on your left read it before seeing video.How accurate was your description?

**Rate 1-5 What was missing on the report? Add additional

info if needed.http://www.youtube.com/watch?

NR=1&v=WfjqMuR8oYo

You are sitting at red light in the white pick up truck.(the person on your left will not see video)Write/sketch a description of what happens. Have

person on your left read it before seeing video.How accurate was your description?

**Rate 1-5 What was missing on the report? Add additional

info if needed.http://www.youtube.com/watch?

NR=1&v=WfjqMuR8oYo

What if the driver that caused the accident was uninsured?

What if they were underinsured?

What if their vehicle malfunctioned causing the wreck?

What if the driver that caused the accident was uninsured?

What if they were underinsured?

What if their vehicle malfunctioned causing the wreck?

AUTO INSURANCE REVIEW:AUTO INSURANCE REVIEW:1)List 5 factors that are used to determine your

insurance premium?2) Use an example to explain the 2 principles of

insurance 3)Who needs “gap”auto insurance?4)If you have an accident with $5000 damage to

your car, and a $500 deductible, how much will insurance pay?

5) List a pro and con of having 20/40/15 coverage.6) How can you find out how much auto insurance

will cost before you purchase a car? Why do you want to know?

1)List 5 factors that are used to determine your insurance premium?

2) Use an example to explain the 2 principles of insurance

3)Who needs “gap”auto insurance?4)If you have an accident with $5000 damage to

your car, and a $500 deductible, how much will insurance pay?

5) List a pro and con of having 20/40/15 coverage.6) How can you find out how much auto insurance

will cost before you purchase a car? Why do you want to know?

How much do you know about protecting your property?How much do you know about protecting your property?Number paper from 1- 8Number paper from 1- 8

14.3 Home Insurance Homeowners or renters Protects personal possessions from fires,

floods, theft, etc.

Anyone that lives on their own should have insurance for their belongings.

Price varies depending on coverage and location.

Home Insurance Needs Real Property- Structure such as

house, garage.

Personal property: anything that can be moved.

Liability: medical bills if someone is injured on your property.

5 ways renter’s insurance can protect you…

Loss of property- owned or used by you- anywhere in the world.

Loss of use- Pay for extra costs you would incur to live somewhere else while rental is being fixed.

Personal liability- lawsuits, bodily injury Medical payments- limited $. Damage to property of others. Limited $

Renter’s InsuranceRenter’s InsuranceWhy do you need it?It is cheap and well worth it…Avg. value of apartment contents: $20,000

How could you afford to replace everything?

Get it at your auto insurance company“Multi line” discount.

http://www.youtube.com/watch?v=V5X-mO_WRkU http://www.youtube.com/watch?

v=m7eXzuPXYms&feature=related

Why do you need it?It is cheap and well worth it…Avg. value of apartment contents: $20,000

How could you afford to replace everything?

Get it at your auto insurance company“Multi line” discount.

http://www.youtube.com/watch?v=V5X-mO_WRkU http://www.youtube.com/watch?

v=m7eXzuPXYms&feature=related

Only 34% of renters have insuranceOnly 34% of renters have insurance

TOO EXPENSIVE?No- average renter's policy costs just $185 a year.

About $15/month.

http://abcnews.go.com/Business/survey-shows-renters-insurance/story?id=18685618#.UYAFvVtOjJo

TOO EXPENSIVE?No- average renter's policy costs just $185 a year.

About $15/month.

http://abcnews.go.com/Business/survey-shows-renters-insurance/story?id=18685618#.UYAFvVtOjJo

Other types of insurance What else do you need to protect from

large financial loss??

Tuition Refund /Reimbursement Insurance

Typical coverage is about $15,000 a year. general coverage includes: Medical Disability: "If a student has to withdraw due to their

accidental death, verified illness or an unforeseen physical disability (as defined by a physician) incurred after the policy goes into effect, the Plan will reimburse 100 percent of covered expenses up to the policy limits.

Death of a tuition payer: "If a student has to completely withdraw due to the death of a tuition payer, the plan will pay 100 percent of covered fees."

But experts caution that tuition insurance typically doesn't cover costs if a student decides to just up and quit school, gets kicked out or is homesick.

EX: Kenyon College, OH The cost is $220.00 per semester and

protects you from the loss of funds you havepaid for tuition, room and fees, if applicable.

Tuition/room board is $55,000/yr.

http://www.collegerefund.com/

Disability Insurance Protects you earning power. It pays you an income when an illnessor injury prevents you from working.

Sometimes employers offer disability insurance and you can purchase more if necessary.

***Becoming more important than Life Insurance.

When will you need life insurance?

When will you most likely be contacted by an agent?????

Do you need life insurance for your entire life?

Life Insurance Provides financial support for people who depend on you.

People who need it: anyone who has dependents: spouse, kids.

Some life insurance policies grow in value

Like an investment. (whole life).

Beneficiaries? Who will get the money if you die?

Who determines your beneficiaries?

Two basic types of Life Insurance:

Term Life Cheaper, only purchased for set amount of time. If you die after term expires no benefit paid.

Permanent Life (whole life): Has an investment component as well, premiums are higher but will remain same for entire life as long as you keep paying premiums. Pay out at time of death.

https://www.youtube.com/watch?v=AIdG7cwHo04

How much life insurance do you need?

Depends on amount of debt, dependents.

Insurance industry estimates 8-10 times annual income. What other factors will influence how much you need?

Life insurance quotes $$ What information will be asked to determine life insurance premiums?

https://www.metlife.com/individual/insurance/life-insurance/term-life-insurance/term-life-quote/quote.html?hp-premium=MzguOTk=&otherP

Health insurance ???

• 1) Our population is getting _____________(older or younger).

• • 2) An estimated 1 in 88 babies are born with

____________________. A generation ago it was 1 in 10,000.

• 3) By 2018, it is estimated that 43% of American adults will be _______________ and will cost us $344 billion in health related expenses.

• 4) As many as 1 in 3 U.S. adults could have _______________ by 2050 if current trends continue.

• 5) About 41% of Americans will get _________________ in their lifetime and approximately 21% will die from it.

• 6) 1 in ______ kids live in a family struggling with health care bills

Health care costs…

How much do you think the following procedures would cost?

If you call the doctor, what is the first ? they will ask you?

Health insurance

• Everyone needs health insurance.• Fewer Americans Have Employer-

Based Health Insurance• Price and amount of coverage varies

greatly.• What is 9.5% of your estimated

income?• http://finance.yahoo.com/news/

millions-cant-afford-doctor-041400851.html

Affordable Care Act

• 43% of America's working-age adults, didn't go to the doctor or access other medical services last year because of the cost.

• Nearly half of all working-age adults, went without health insurance for a time in 2013. WHY?

2014 Affordable Care Act:

• You may stay on parents’ family healthcare plan until your 26th birthday.

ACA--3 Things that determine your premiums:

Age•Geographic location•History of tobacco use

•Healthcare Exchanges use your income to help determine if you are eligible for financial help (subsidy)•9.5% of household income is maximum you will pay for premiums…Your income counts along with parents’ for household income.

Healthcare deductibles…

• The maximum out-of-pocket cost limit for any individual Marketplace plan for 2014 can be no more than $6,350 for an individual plan and $12,700 for a family plan.

• Affordable Care Act

Fine for no Healthcare Insurance:

Texting and driving…http://www.youtube.com/watch?

NR=1&v=z28jmp3vfag&feature=endscreen

Save your life and the lives of others! This impressive graphic video sends a clear message to drivers addicted to texting and using mobile phones while driving.

UK public service annoucement. How many victims???

What if:

Missouri driver sent and received 11 texts before deadly school bus crash.