Unit 9 Insurance:

Objective: Compare different types of insurance plans. Identify types of insurance plans,( home, car, health, life, ). How insurance works. Evaluate insurance plans based on different people’s situations.

Insurance is essentially a contract between you the consumer (insured) and your company (insurer).

You the insured are betting that some type of accident may happen to you: illness, damage to your car or home, or damage to someone else’s due to negligence.

The insurance company on the other hand, is betting that you will not have such a problem. It bases its judgment on complicated formulas of probable RISK ( the amount an insurer stands to lose)

I: How insurance works.

A: Premium: money paid to the insurance company for a policy that covers you and your losses. The amount the insurance company pays out could be many times what you paid in premiums.◦ 1. If you remain accident free- the company

makes money. It uses part of that money to pay policy holders who do sustain some type of loss.

II: Insurance costs: “We hate to pay for it, but we’re sometimes glad we did.”

B:Deductible: an amount of expenses that you must pay before the insurer will cover any expenses. For example: if your car insurance policy has a $1,000 deductible, you will have to pay the first $1,000 in damages yourself, then the insurance company will pay the rest, up to a certain point.

C: Copayment: The amount of money paid to a health provider (doctor, dentist, pharmacy) for a visit or prescription you pay out of pocket.

Before buying any type of insurance, read the fine print and ask questions.

Find out if the policy covers replacement costs ( the amount needed to buy a new item to replace the lost, stolen, or damaged one).

The ACV (actual cover value) is what the item would have been worth on the market before the accident, theft or loss.

For example, if your 2 yr. old computer is stolen, its ACV is not nearly as much as it would cost you to buy a new computer because computers lose their value quickly.

Get estimates from several companies and compare before making a decision from which one to buy from.

III: Types of Insurance

1. Collision insurance: covers damage to your vehicle regardless of who is at fault in an accident.

2. Comprehensive insurance: pays for other types of damage to your car, such as theft, broken glass, vandalism, and natural disasters.

A: Auto Insurance: Insurance on your car. Most all states require (mandatory) that you auto is insured.

3. Liability insurance: covers property damage and bodily injuries to people who are not on your policy, as well as your court costs.

NOTE: The State of NC requires all drivers to carry liability insurance.◦ If you buy automobile insurance in North Carolina, your

policy must include minimum liability coverage of: $30,000/$60,000 for bodily injury $25,000 for property damage $30,000/$60,000 uninsured/underinsured motorist bodily

injury, and $25,000 uninsured/underinsured motorist property damage

liability .

Auto insurance cont.