COA 4131 1st Edition Lecture 15 Outline of Last Lecture I Before Marriage II Divorce Outline of Current Lecture I Introduction to Insurance and Personal Risk Management II Planning a Personal Insurance Program III The Insurance Management Process Current Lecture A Introduction to Insurance and Personal Risk Management a Insurance i Always for protection to prevent financial loss 1 For assets family yourself your goods ect ii Premiums 1 Amount of money policy holder is charged for an insurance policy 2 Life insurance is once a year 3 Other insurances can be once a month iii Risk management 1 Organized strategy for protecting assets and people b Personal Risk Management i Risk 1 Chance or uncertainty of loss a Also used to mean the insured ii Pure risk 1 There is only a chance of loss 2 Also called insurable risk 3 Can be about money or other things a Smoke detectors are used to reduce risk b Can transfer risk to other people iii Speculative risk 1 There is a chance of either gain or loss 2 Money risks c Exposures i Sources of risk 1 Lots of flying or driving 2 Living next to a nuclear risk ii Depends on person and their lifestyle d Perils i The cause of a potential loss ii Example 1 Item car 2 Exposure driving 3 Peril accident e Property risks i Property that might be exposed to damage destroyed or stolen ii Has a financial impact iii Catastrophic storm damage to property 1 Fire 2 Theft iv Repair or replacement cost of theft f Liability risks i Claims and settlement costs ii Lawsuits and legal expenses iii Loss of personal assets and income g The insurance industry i Insurer 1 An insurance company ii Insured 1 A person covered by an insurance policy iii Agent iv Pooling h Typical coverage i Other insurance fundamentals i Policy 1 Written contract for insurance 2 Policy holder a A person who owns an insurance policy 3 Under the policy contract a Insurance company agrees to assume the risk for a fee that the insured policyholder pays periodically i The premium ii Declarations iii Agreements iv Exclusions 1 What they are not going to pay for 2 Flood 3 Hurricane wind damage 4 Usually natural disasters 5 If you live in South Florida on the beach read carefully v Conditions 1 How you are supposed to act and how they are supposed to act 2 Arson a If you can t pay rent you can t just burn it down to get insurance b They will investigate vi Endorsements 1 Aka Riders and Floaters 2 Extra things B Planning a Personal Insurance Program a Early stages i Once you get a license car insurance goes up 1 More for boys than girls b Later stages i After 30 car insurance can go down C The Insurance Management Process a Four Steps i Awareness ii Analysis 1 What are you going to insure 2 Make sure it is a legitimate company and its quality iii Action 1 Minimal insurance is usually the norm iv Evaluation 1 Accidental death and dismemberment a Chances are almost nothing for most b Stunt man would be more likely
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