1. 20 Insurance 20-1 Vehicle Insurance 20-2 Property Insurance
C H A P T E R 20
Insurance
20-1 Vehicle Insurance
20-2 Property Insurance
20-3 Life Insurance
20-4 Health Insurance

2. MOTOR VEHICLE RISKS
Financial responsibility
Compulsory insurance

3. Checkpoint  What are financial responsibility laws?
Financial responsibility laws protect the public from the financial loss caused by uninsured drivers by making drivers legally responsible for any injuries or property damage they cause.

4. AUTOMOBILE INSURANCE COVERAGE
Personal injury coverage – includes bodily injury liability, medical payments, and uninsured motorist protection (main source of money paid in claims by automobile insurance companies)
Bodily injury liability – insurance that protects a driver from claims resulting from injuries or deaths for which the insured is at fault
Medical payments coverage – when policyholders and family members are covered if they are injured while riding in their car or another car
Uninsured motorist coverage – protection for injuries caused by hit and run drivers or by drivers without insurance or money to pay claims

5. AUTOMOBILE INSURANCE COVERAGE CONTINUED
Property damage coverage – automobile insurance that protects you from economic loss as a result of property damage
Property damage liability – insurance that protects a driver against claims if they insured’s car damages someone else’s property and the insured is at fault
Collision coverage – insurance that protects a car owner against financial loss resulting from a collision or rollover
Deductible – amount that must be paid before the insurance company pays a claim
Comprehensive coverage – protects the insured against almost all damage losses except those caused from a collision or rollover

6. AUTOMOBILE INSURANCE COVERAGE

7. AUTOMOBILE INSURANCE COSTS
Insurance rate factors:
Your age and other characteristics
Purpose for which you use your car
Number of miles you drive each year
Value and type of your car
Community in which you live
Amount of coverage and deductibles
Reducing auto insurance costs
Selecting a company
Assigned-risk plans
Insurance for other vehicles

8. KEY TERMS
Personal liability coverage – covers claims from injuries to people or damage to property caused by you, your family, or even your pets
Homeowners policy – the most common form of home and property insurance policy sold; provides a very convenient package-type insurance policy designed to insure homes
Depreciation – decrease in property value; may affect the amount an insurance company will pay if the property is destroyed

9. PROPERTY INSURANCE COVERAGE
Damage to home or property
Additional living expenses
Liability losses

10. PROPERTY INSURANCE POLICIES
Homeowners policies
Renters policies
Special coverage
Making a claim

11. HOME AND PROPERTY INSURANCE

12. PROPERTY INSURANCE COSTS
Coverage selection
Insurance premium determining factors:
Insurance company’s past experiences
The value of property insured
Construction of the building
Number of claims on the property
Type of policy
Distance to the nearest fire department and water supply
Amount of deductible
Credit rating of the insured

13. KEY TERMS
Beneficiary – the person named in the policy to receive the insurance benefits
Term life insurance – insurance that provides financial protection from losses resulting from a death during a definite period, or term
Permanent life insurance – life insurance that has cash value and an investment feature

14. LIFE INSURANCE PRINCIPLES
The life insurance policy
Beneficiary selection

15. TYPES OF LIFE INSURANCE
Term life insurance
Permanent life insurance
Whole life insurance
Variable life insurance
Universal life insurance
Group life insurance – an insurance policy that covers a group of people; the group acts as single unit in buying the insurance

16. TYPES OF LIFE INSURANCE POLICIES

17. Checkpoint  What is the difference between term and permanent life?
Term insurance
Less expensive
No savings or investment features
Expires at the end of the term
Permanent life insurance
Policyholder can cash in policy for its cash value
Policyholder can borrow up to the amount of the policy’s cash value.

18. Checkpoint  What factors affect the need for life insurance?
Factors include the number of dependents who rely on the person, the amount of savings the person has to leave to those dependents and the amount of the person’s debts.

19. KEY TERMS
Hospital insurance – insurance that usually pays most or all hospital charges if an illness or injury requires the insured to be hospitalized
Surgical insurance – insurance that covers all or part of the surgeon’s fees for an operation
Regular medical insurance – insurance that covers fees for nonsurgical care given in the doctor’s office, the patient’s home, or a hospital
Major medical insurance – protection against the high costs of serious illness or injuries

20. KEY TERMS CONTINUED
Coinsurance – the sharing of expenses by the policyholder and the insurance company
Comprehensive medical policy – a policy that combines the features of hospital, surgical, regular, and major medical insurance
Disability income insurance – insurance that replaces income that is lost when the insured cannot work because of an illness or injury

21. OTHER HEALTH INSURANCE COVERAGE
Dental insurance – usually includes exams, X-rays, cleaning, and fillings
Vision care insurance – policies cover eye exams, prescription lenses, frames, and contact lenses

22. HEALTH INSURANCE PROVIDERS
Group health insurance – companies pay part or all of the insurance premiums for their employees
Individual health insurance – policies that are available to individuals and are adapted to individual needs; usually expensive
Managed care plans
Health Maintenance Organization (HMO)
Preferred Provider Organization (PPO)

23. HEALTH INSURANCE PROVIDERS CONTINUED
State government assistance
Federal government assistance – Social Security provided insurance including Medicare
Cost reduction actions
Buy only the insurance you need
Don’t use medical benefits unnecessarily
Obtain second opinions
Use outpatient services as much as possible

24. DISABILITY AND LONG-TERM CARE INSURANCE
Disability income insurance
Long-term care insurance – provides long-term care which is daily assistance needed because of a long-term illness or disability (nursing home care or at home care)