What Causes Insurance Premiums to change?

1. What Causes Insurance Premiums to change?

2. General Insurance Terms--REVIEW • Loss: • an accident or illness that you have experienced which causes a financial setback. • Claim • a request that the insurance company pay you for your loss. Usually, a company will not seek you out to offer payment for your loss; you must file a claim for payment. • Proof of loss • when you have a claim you must be able to prove you had a loss. You can’t just say that the only thing the robber took was a $100 pair of shoes. You’re going to have to produce some kind of proof that you owned that pair of shoes.

3. Insurance terms—REVIEW: • Policy • Contract between the individual and insurer specifying terms of the insurance • Deductible • a clause in your insurance policy that indicates the portion of loss/claim that is not paid by the insurance company. The deductible is subtracted from the amount that the company is going to pay. Generally, the higher your deductible, the lower your premium. • AMOUNT PAID BY THE POLICY HOLDER • Liability: • a person’s legal responsibility to others for the damage you have caused. When discussing liability, for example, think about who is at fault in an accident. • Premium • fee paid to the insurer to be covered under the specified terms

4. Auto Insurance Rate Influences • Insurance rates are determined for individual cases – these factors influence the rates: • Age • People under age 25 pay higher premiums • People over 70 pay higher premiums • Gender • Men have more accidents, rates may be higher • Marital status • Married drivers have fewer accidents, so rates are lower

5. Influences on Auto • Driving record • Safe drivers have lower rates • Number and type of tickets will raise rates • Number and severity of accidents will raise rates • Type and age of vehicle • Newer, more expensive, and higher repair cost vehicles have higher rates • Safety ratings—antilock breaks • Frequently stolen vehicles have higher rates • Color of vehicle does not matter

6. Influences on Auto • Vehicle use • Rates are usually higher when driving more than 7,500 miles a year • The more one drives, the greater the chance of an accident • Credit History—can you pay your bills! • Place of Residence • Rates vary among states • People in large cities usually pay more than in rural or suburban areas because there is less theft and accidents

7. Influences on Auto • Number of drivers on the policy • Additional drivers raise the premium • Costs a driver under the age of 25 less to be added to his/her parents’ policy than to purchase a separate policy • Number of claims • Expensive claims = increase • Too many claims = dropped policy • Driver training/Driver’s Education • May receive a discount for having taken a driver’s education course

8. Good student discount May receive a discount for good grades in school Multiple car discount May receive a discount for having two or more vehicles on the same policy Anti-theft systems May receive a discount for anti-theft devices such as car alarms Influences on Auto

9. Influences Auto and Home • Multiple policies with the same company • Having both auto and home insurance • Long-time customers • Some companies might offer discounts to long-time customers

10. Influences on Homeowner’s • Personal Property Floaters—covers high priced items like guns, paintings, jewelry, furs, electronic equipment, etc. • Umbrella policy—supplement to personal liability coverage • Specialized coverage • Endorsements like Earthquake and Flood

11. Influences on Homeowner’s • Location of the home • Cheaper if close to fire department or fire hydrant • Higher rates where crime is high • Areas with severe weather • Type of structure • Brick home usually cost less for general insurance • Brick home usually cost more for earthquake • Older homes may cost more because of the cost to restore • Price, Coverage Amount, and Policy Type • How much you pay for the home or the appraised value • The amount of the deductible: a $1000 deductible will be less than a $500 deductible

12. Influences on Homeowner’s • Discounts • Smoke detectors • Alarm system • Dead-bolt locks

13. Influences on Life Insurance • Current health conditions • Weight , blood pressure, cholesterol • Maybe even your driving record • They want to make sure you are safe! • Statistics • Smoking • Age at the time of purchase • Family history • Possibly your occupation • The dollar amount purchased • Depending on the policy, the company and the dollar amount may require a physical The Life Insurance Company uses statistics to see if you are high risk, in other words, will they really have to pay money out to a beneficiary

14. Influences on Health Insurance • Current health conditions • Weight , blood pressure, cholesterol, medications, cancer • Pre-existing conditions • Family history • Smoking • Age • The type of coverage—co-pays and deductibles

15. What do I do if I get into an accident? • Make sure that everyone in your car is not hurt • Check the other car to see if they are OK • Call the police • Get the following information from the other driver: name, address, telephone number, license plate number, drivers license number, insurance information. • Give the same information to the other driver. • Get the name and phone number of any witnesses • Keep a disposable camera in your car and take accident pictures • Call your insurance agent as soon as possible