COA 4131 1st Edition Lecture 15 Outline of Last Lecture I. Before MarriageII. Divorce Outline of Current Lecture I. Introduction to Insurance and Personal Risk ManagementII. Planning a Personal Insurance Program III. The Insurance Management Process Current LectureA. Introduction to Insurance and Personal Risk Management a. Insurancei. Always for protection to prevent financial loss1. For assets, family, yourself, your goods, ectii. Premiums1. Amount of money policy holder is charged for an insurance policy2. Life insurance is once a year3. Other insurances can be once a monthiii. Risk management1. Organized strategy for protecting assets and people b. Personal Risk Managementi. Risk1. Chance or uncertainty of lossa. Also used to mean “the insured”ii. Pure risk1. There is only a chance of loss 2. Also called insurable risk3. Can be about money or other things a. Smoke detectors are used to reduce riskb. Can transfer risk to other people iii. Speculative risk 1. There is a chance of either gain or loss 2. Money risks c. Exposuresi. Sources of risk1. Lots of flying or driving 2. Living next to a nuclear riskii. Depends on person and their lifestyled. Perils i. The cause of a potential loss ii. Example1. Item: car2. Exposure: driving3. Peril: accident e. Property risksi. Property that might be exposed to damage, destroyed, or stolenii. Has a financial impactiii. Catastrophic storm damage to property1. Fire2. Theft iv. Repair or replacement cost of theftf. Liability risks i. Claims and settlement costs ii. Lawsuits and legal expensesiii. Loss of personal assets and income g. The insurance industryi. Insurer1. An insurance companyii. Insured1. A person covered by an insurance policy iii. Agentiv. Pooling h. Typical coveragei. Other insurance fundamentalsi. Policy1. Written contract for insurance2. Policy holdera. A person who owns an insurance policy3. Under the policy (contract)a. Insurance company agrees to assume the risk for a fee thatthe insured/policyholder pays periodicallyi. The premium ii. Declarationsiii. Agreementsiv. Exclusions1. What they are not going to pay for2. Flood 3. Hurricane wind damage4. Usually natural disasters5. If you live in South Florida on the beach, read carefully!v. Conditions1. How you are supposed to act and how they are supposed to act2. 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 up1. More for boys than girls b. Later stages i. After 30, car insurance can go down C. The Insurance Management Process a. Four Stepsi. Awarenessii. 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 normiv. Evaluation 1. Accidental death and dismemberment a. Chances are almost nothing for mostb. Stunt man would be more
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