Insurance Basics (Don’t Risk It)

1. Insurance Basics (Don’t Risk It)

2. 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.

3. 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

4. Insurance Terms • Grace Period - if you do not pay your premium before the due date, you have no insurance • Underwriter – Employee of an insurance company who evaluates risk and assigns premium amounts. • Key factors: age, gender, and health • Insurance Agent –representative of an insurance company who sells insurance contracts and provides customer services.

5. Insurance Terms • Actuary – a person with advanced math training that calculates the risks based on loss percentages and determines insurance rates and premiums • Probability –the chance that something happening or not happening within a certain number of occurrences

6. 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

7. 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.)

8. 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)

9. How Does an Insurance Company Set Premiums? • Based on data about past losses and their costs

10. Automobile Insurance-- • Types of Coverage • Bodily injury liability coverage • Property damage liability coverage • Medical payments coverage • Uninsured/underinsured motorist coverage

11. 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?

12. 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.

13. 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”

14. 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

15. Why Does My Insurance Premium Continue to Increase? • Cars are more expensive to repair • Litigation involving medical injuries

16. 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

17. 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

18. 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