UA CSM 204 - Final Exam Study Guide (18 pages)

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Final Exam Study Guide

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Final Exam Study Guide


Exam #4 Study Guide-Study Guide for Chapters 10-12 &18-19

Study Guide
University of Alabama
Csm 204 - Intro Personl Finan Plan
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CSM 204 Exam 4 Study Guide Chapters 10 12 and 18 19 CSM 204 Exam 4 Review Sheet Definitions types and examples of risk peril and hazard Insurance Protection against possible financial loss Insurer The insurance company Insured The person or thing the insurance is protecting Premium The amount of money you pay for insurance Policy A written contact for insurance Risk Chance or uncertainty of loss Types of Risk Speculative risk Chance of either loss or gain Uninsurable Pure Risk Chance of only loss if the specified events occur Accidental or unintentional Can be predictable in nature Peril What you are insuring against The bad thing that can happen Example Car Insurance Accidents Vandalism Example Home Insurance Fire Burglary Example Health Insurance Disease Injuries Example Life Insurance Death Hazard A factor that increases the likelihood of loss through some peril Risk management methods Risk Avoidance Totally avoiding doing certain hazardous actions Example Avoiding death by plane crash You decide never to fly in planes therefore you could never die or sustain injuries by being in a plane that crashed Risk Reduction Getting partially rid of certain hazards by reducing the risk Keeps insurance costs lower Example Car Insurance Having a navigator in your car Wearing a seat belt Abiding by the speed limit Example Home Insurance Having fire extinguishers Having dead bolts Having fire alarms Example Health Insurance Exercising regularly Getting regular health check ups Not participating in activities with higher injury rates Risk Assumption Making the conscious decision to assume the risk Risk can be assumed by accident such as when someone fails to buy insurance by simply forgetting to purchase it Self insurance The process of establishing a monetary fund to cover the cost of a loss as opposed to purchasing insurance Risk Shifting Shifting the burden of the consequences associate with perils off of us on onto other people by purchasing insurance Liability negligence and vicarious liability Liability Legal responsibility for the financial cost of another person s losses or injuries Vicarious Liability A situation in which a person is held legally responsible for the actions of another person Example Parents that are vicariously liable for the actions of their children Companies that are vicariously liable for the actions of its employees Strict Liability A situation in which a person is held responsible for intentional or unintentional actions Negligence Failure to take ordinary or reasonable care in a situation Prudent Man Rule Would a prudent reasonable person do the same thing Homeowners Coverages Covers House and other structures Additional living expenses Pays for the cost of living in a temporary location while your home is being repaired Personal Property Household belongings Personal Property Floater Additional property insurance to cover the damage or loss of a specific item of high value Household Inventory A list or other documentation of personal belongings With purchase dates and cost information Personal Liability Coverage Medical Payments If someone is injured on your property Personal Liability If someone s stuff gets damaged on your property Umbrella Policy Personal Catastrophe Policy Supplementary personal liability coverage Other Check card fraud Forgery Counterfeit money Cost of removing damaged property Temporary repairs Fire department charges Emergency removal of property to protect it from damage Not Covered Flood Natural rising water Sold by the government Earthquake Cost varies by how close you live to places with reoccurring earthquakes War Not available Nuclear Accidents Not avaliable Specialized Coverage Homeowner s insurance does not usually cover losses from floods and earthquakes Endorsements An addition of coverage to a standard insurance policy Renters insurance Covers your belongings inside the building not the building itself Things Covered Personal property loss of damage Additional living expenses Personal liability Automobile insurance coverages Financial Responsibility Laws State legislation that requires drivers to prove their ability to cover the cost of damage or injury caused by an automobile accident Bodily Injury Coverage Bodily Injury Liability Coverage for the risk of financial loss due to legal expenses medical costs lost wages and other expenses associated with injuries caused by an automobile accident for which the insured was responsible Meaning primarily to the people in the vehicle whose driver did not cause the accident Provided by the insurance of the one liable for the accident Medical Payments Coverage Automobile insurance that covers medical expenses for people injured in one s car of as a pedestrian Meaning primarily to the people including the driver of the car that caused the wreck Provided by the insurance of the one liable for the accident Uninsured underinsured Motorist Protection Automobile insurance coverage for the cost of injuries to a person and members of his or her family caused by a driver with inadequate insurance or by a hit and run driver Meaning covers you if you are involved in an accident you did not cause if the other person in uninsured of underinsured Property Damage Coverage Property Damage Liability Automobile insurance coverage that protects a person against financial loss when that person damages the property of others Types of Coverage Collision Automobile insurance that pays for damage to the insured s car when it is involved in an accident Hitting another vehicle Non moving item Rolling your car Comprehensive Automobile insurance that covers financial loss from damage to a vehicle caused by a risk other than a collision Risks Covered Fire Theft Glass Breakage Falling Objects Vandalism Wind Hail Flood Tornado Lightning Earthquake Avalanche Damage cause by hitting an animal Amount of Coverage 100 300 50 100 000 limit will be paid to one person in an accident in the form of bodily injury liability 300 000 limit will be paid to all persons in an accident in the form of bodily injury liability 50 000 limit will be paid for damage of the property of others in the form of property damage liability Importance of health care insurance If something major were to happen to you and you didn t have health insurance your finances would become very damaged due to high medical costs What you can do to reduce health care costs Review fees and charges Seek preventive care Ask for generic drugs As opposed to

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