Insurance auto, life, health, home, Renters, ID, flood, Claim process
A brief history of insurance • In the 15th century Rome and Greece offered Maritime Insurance to cover ships and cargo that perished at sea. It would also cover funeral cost of fallen sailors. • The great London fire of 1666 destroyed much of the city, from that Fire Departments were developed to help fight fires as well as Fire Insurance. • In 1752 Benjamin Franklin helped popularize the development of property insurance to protect people from fire in America. • In 1760 the Presbyterians developed life insurance for the poor children of Philadelphia and New York. • Car insurance came much later, 1898 a liability policy was sold for $1,000 for the first time.
Insurance basics • Insurance is protection for individuals against possible financial losses • Protects against many risks such as property loss, illness and injury • Acts like a safety net • Insurance companies hope to pay out less then what they bring in. If they are successful at doing that they will make a profit.
Insurance basics • Coverage – is provided by the insurance company to a policyholder to cover a risk • Policy – the insurance contract that spells out all the details • Premium – The fee a policyholder pays to the insurance company in order to be insured for a defined period of time (typically one year)
Insurance basics • Deductible – the portion of a claim the policyholder must pay before the insurance company provides the benefits of the policy. The portion of the loss you pay. • If you have a $1000 deductible and wreck your car, you pay the first $1000 in damages then the insurance company pays the rest (or up to your coverage amount).
Insurance basics • Risk – the chance of loss or injury • Pure Risk – purely accidental and unintentional, most of these are covered by insurance. • Speculative Risks – carry chance of loss or gain, such as opening a new business. Not covered by insurance. • If you are engaging in illegal or negligent behavior, don’t expect the insurance to always pay. They can and will reject claims.
Automobile insurance • Reduces the financial impact of an auto accident • Required by Financial Responsibility Laws – Texas requires every driver to have proof of liability insurance at all times
Automobile insurance • Bodily Injury Liability – covers physical injuries caused by an auto accident. Also covers the cost in case you hit a pedestrian or other drivers. DOES NOT COVER INJURIES TO THE POLICYHOLDER • Property Damage Liability – covers damages caused to other peoples property. In case you hit another car, house, fence, etc. If you borrower someone's car and wreck it, it will cover those damages as well.
Automobile insurance Medical Payments Coverage – covers medical expenses of anyone who is injured in the policy holders auto in case of a wreck. Uninsured Coverage – covers cost in case you are hit by someone that has no insurance Collision Insurance – Covers damage to the policyholder’s car when it’s involved in an accident. This is required when you have a car that is financed or leased.
Automobile insurance Comprehensive Insurance – Covers physical damages to a car which occurs as a result of a non-collision incident. • Example: Fire, flood, wind, trees, animals, theft, vandalism. • Required when a car is financed or leased • Comprehensive and Collision insurance combined is known as full coverage insurance or no fault insurance
Automobile insurance Insurance Prices based on: • Amount of coverage • Vehicle type (sports cars are more) • Territory you live in (cheaper in rural areas) • Drivers age, sex and driving record (typically higher until you are 24 years old) • Previous insurance claims (don’t file claims on low $ amounts)
Automobile insurance Assigned Risk Pools • Consists of people who cannot obtain an insurance policy from regular carriers due to poor driving record or other factors. • Texas has a SR22, it’s just liability insurance for really bad drivers that regular insurance won’t take and it’s very expensive. • DWI (driving while intoxicated) can increase your insurance rates by $3,000 to $4,000 in addition to what you were paying.
Health insurance Protection which eases financial burden people may experience as a result of medical expenses. • Typically includes a deductible • Typically includes an “out of pocked expense”
Health insurance Protection which eases financial burden people may experience as a result of medical expenses. • Typically includes a deductible • Typically includes an “out of pocked expense” a flat fee you pay to visit a doctor
Health insurance Group Health Insurance – employer-sponsored insurance that is fairly low cost. Most popular model Individual Health Insurance – you purchase insurance directly that meets your needs, typically a higher cost. COBRA – Consolidated Omnibus Budget Reconciliation Act of 1986, allows you to keep a former employer’s group coverage for a set period of time. Protects your insurance when you lose your job.
Health insurance Basic Health Insurance – includes hospital expense coverage, surgical expenses and physician expense coverage. (Routine Doctor Visits) Major Medical Expense Insurance – pays for long hospital stays (expensive)
Health insurance Dental – includes dental expenses, typically reimbursement model that pays a percentage of the costs. Vision – pays for eye doctor visits, contacts, glasses, eye surgery, etc.
Health insurance Long Term Care – provides coverage for the expenses of daily help when a person becomes disabled or unable to care for themselves. (nursing home) Prescription – provides coverage for drugs prescribed by a doctor.
Health insurance Cancer Insurance – provides coverage for the expenses of cancer treatment. Covers the costs that regular health insurance doesn’t cover. Cannot be denied if you had any previous conditions.
Health insurance HMO Health Maintenance Organizations – health insurance plans which directs you to certain doctors to provide health services. You select from a list of approved doctors and you must visit that same doctor (*Primary Care Physician*) first before you can see a specialist to treat anything. PPO Preferred Provider Organizations – Allows patients to visit any medical provider without having to get a referral. Typically costs more then the HMO but allows you more freedom to choose.
Health insurance PSP Point of Service Plans – combines the features of a HMO and PPO plan. Uses a network of participating physicians to provide services. You can select a doctor outside of the network for an additional cost. You still have to see your primary doctor to get a referral but it can be to an out of network doctor.
Health insurance Government Health Care • Medicare – federally funded health insurance for people over 65 or with certain disabilities • Medicaid – medical assistance offered to low-income families (administered by states but funded by the feds)
Life insurance Life Insurance Policy • Protects the people who depend upon the policyholder from extreme financial losses caused by the policyholders death • Money is given to the beneficiary* of the policyholder *person who receives the benefits of insurance policy
Life insurance Term Life – provides protection against loss of life for a specified period of time. Only pays if an individual dies during the period in which the policy are covered. Whole Life – covers you for your entire life, you pay a premium each year for the duration of your life. Cost of life insurance increases the longer you wait to get it ***Variable Life – a type of whole life policy
Life insurance Universal Life – flexible premium and you can adjust the benefits as your needs change. Disability Insurance – covers some of your income in case you become unable to work due to illness or injury. Worker’s Compensation – Covers workers who are injured or become ill do to workplace conditions. Guaranteed Renewability – allows an individual to still be covered as long as he or she pays the premium. (causes higher premiums)
Home insurance • Coverage which provides protection for an insured home and its associated financial risks. • Compensates for loss of personal property associated with the home (furniture, electronics, clothing, etc.) • Location, structure type, coverage amount and policy type all affect the price of home insurance
Home insurance Types of Home Insurance Policy • HO-1protects against perils such as volcanoes, hail, lightning • HO-2 covers a wider range of perils such as snow or ice • HO-3 covers all basic risks except flood, earthquakes, war and nuclear accidents • HO-5 expands the coverage of HO-3 (includes replacement coverage)
Home insurance One of the biggest concerns of insurance companies are dog bites and personal injuries. They generate a number of trips to the hospital. This is covered under the MEDICAL PAYMENTS COVERAGE.
Home insurance Personal Property is covered with homeowners insurance. However if you have something that is very valuable you must purchase a personal property floater (separate policy). Insurance will not cover super high end goods with normal policies.
Home insurance Umbrella Policy - Insurance supplement to the policyholder’s personal liability coverage to protect against personal catastrophe.
Renters insurance Renters Insurance provides protection for a renter’s personal property. Very inexpensive way to protect your stuff. Types of Renters Policy: • HO-4 protects personal property listed of a renter, does not include coverage of the building or structure. • HO-6 is specifically for condominium owners/renters