Insurance

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