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Basics of Insurance

Basics of Insurance. Unit 6. How Insurance Works. Why do you need insurance? To reduce your financial burden in the event of an accident or disaster How does it work? Everyone pays a little so that no one has to pay a lot Quick video. Important Insurance Terms. Meet Molly…

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Basics of Insurance

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  1. Basics of Insurance Unit 6

  2. How Insurance Works • Why do you need insurance? • To reduce your financial burden in the event of an accident or disaster • How does it work? • Everyone pays a little so that no one has to pay a lot • Quick video

  3. Important Insurance Terms • Meet Molly… • We’re going to learn about some important insurance terms by telling Molly’s unfortunate story

  4. Important Insurance Terms Molly wants car insurance…. She has to pay a premium • Amount you pay to receive insurance coverage • Usually paid every month, 6 months, or year

  5. Important Insurance Terms While Molly was in the insurance agent’s office… A thief broke into her car and stole her 3 year old laptop computer Luckily Molly now had insurance coverage. Molly asked for the $1,000 that the computer cost her 3 years ago, but the insurance company said they could only give her $400 because of indemnity • You are only paid the value of your property at the time of the loss

  6. Important Insurance Terms Molly drove off in a fit of fury which led to…. In order to pay for the other car’s damages, Molly had to use her liability coverage • Pays for damages to other people that are your fault

  7. Important Insurance Terms Molly’s car was also badly damaged and needed $3,000 for repair. In order for her insurance to help pay for her car’s damages, Molly first had to pay her $500 deductible • The amount you pay out of your own pocket before your insurance kicks in

  8. Important Insurance Terms Molly’s neck was also severely hurt in the accident. When she went to the hospital, her medical bill cost her $4,000. Because of her co-insurance, Molly only had to pay 40% of that bill • The split between how much you pay and how much your insurance pays once you have met your deductible

  9. Quick Review • Why is insurance useful? • Lowers your costs after an accident/disaster • What do you have to pay in order to get insurance? • Premiums • What type of coverage takes care of damages that are your fault? • Liability • What do you have to pay before insurance coverage kicks in to help out pay for damages? • Deductible

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