economic education for consumers ○ chapter 14 what’s ahead 14.1 insurance basics 14.2 automobile...
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
WHAT’S AHEAD14.1 Insurance Basics14.2 Automobile Insurance14.3 Home Insurance Coverage14.4 Providers and the Claims Process
ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
LESSON 14.1
Insurance BasicsGOALSGOALS►Describe how insurance works to protect
consumers.►Explain the basic kinds of insurance and
how to determine the amount to buy.
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
KEY TERMSKEY TERMS
insurance premium policy claim shared risk insurable interest
appraisal rider property insurance liability insurance personal insurance
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
Risk – the chance of financial loss resulting from damage, illness, injury or death.Insurance – risk management tool that lim its financial loss in exchange for a premium.Premium – regular payment required to purchase insurance.Policy – legal insurance contract.Claim – Formal request for payment from the insurance company.
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
Key TermsShared Risk – insurance principle of using premiums from many policyholders to reimburse the losses of a few so that no one suffers a financially devastating loss.Insurable Interest – something of value that, if lost, would cause you financial harm.Appraisal – expert’s determination of the value of property used for insurance. (e.g, value of a diamond ring).Rider – special addition to an insurance policy covering a specific type of loss.Liability Insurance – protects you from losses that you cause to others.
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
Key termsProperty Insurance – protects you from financial loss when things you own are stolen, damaged or destroyed. (homes, cars, valuable possessions).Market Value – amount an item is worth now.Replacement Value – cost of replacing an item regardless of its market value at the time of the loss.Personal Insurance – protects you and your family against loss due to illness, disability or death.
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
How Insurance Works►Risk management
►Life is full of Risks►You can’t eliminate risk, but you can
manage it
►Premiums and statistics►Statistics from past events predict future
losses and determine premiums.
►What insurance protects►The insurance trade-off►Role of insurance in the economy
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
Types of Insurance►Property insurance
►Homes, Cars and valuable possessions.► Market value► Replacement value (higher premiums than
market value)
►Liability insurance►Losses that you cause to others.
►Personal Insurance►Losses from illness, disability or death.
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
How does insurance protect individuals from losses they cannot handle on their own?
What are the three basic types of insurance? What does each one cover?
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
How does insurance protect individuals from losses they cannot handle on their own?
• Insurance provides protection through the principle of shared risk.
• The insurance company collects premiums from many policyholders and uses these funds to pay insured people for their covered losses.
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ECONOMIC EDUCATION FOR CONSUMERS ○ Chapter 14
What are the three basic types of insurance? What does each one cover?
• Property insurance protects against financial loss when your things are stolen, damaged, or destroyed.
• Liability insurance protects against financial loss if your actions cause other people to suffer.
• Personal insurance protects you and members of your family from financial loss due to illness, disability, or death.
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