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Chapter 22
Homeowners and Auto Insurance
Risk-Management Methods
Section 1 Insurance and Risk Management
Chapter
22
Home and Motor Vehicle Insurance
Methods of Risk-Management
RiskAvoidance
RiskReduction
RiskAssumption
RiskShifting
Types of Risk
Section 1 Insurance and Risk Management
Chapter
22
Home and Motor Vehicle Insurance
Personal risks, property risks,and liability risks
are insurable.
Speculative risks are not insurable.
Planning an Insurance Program
Section 1 Insurance and Risk Management
Chapter
22
Home and Motor Vehicle Insurance
1
2
3
4
Set Insurance Goals
Develop a Plan
Put Your Plan into Action
Review Your Results
Steps to Planning an Insurance Program
Chapter
22
Home and Motor Vehicle Insurance
Homeowners Policy Coverage
Property and Liability Insurance
Section 1 Insurance and Risk Management
Chapter
22
Home and Motor Vehicle Insurance
Two Types of Risks for Property Owners
Physical Damage Caused by Perils
Loss or Damage Caused by Criminal Behavior
Renters Insurance
Section 2 Home and Property Insurance
Chapter
22
Home and Motor Vehicle Insurance
Renters Insurance
Does not provide coverage on the building or other structures
Protects personal property
No coverage under the landlords policy unless the landlord is liable for damage
Inexpensive
Home Insurance Policy Forms
Section 2 Home and Property Insurance
Chapter
22
Home and Motor Vehicle Insurance
Home Insurance Cost Factors
Section 2 Home and Property Insurance
Chapter
22
Home and Motor Vehicle Insurance
Factors Affecting the Cost of Home
Insurance
Location ofHome
Type ofStructure
Price, CoverageAmount, Policy
Type
Home InsuranceDiscounts
CompanyDifferences
Many insurance companies will not want to sell homeowners insurance policies to everyone in the same neighborhood. Infer why this might be the case.
Responses might include that if a natural disaster were to occur it would be too expensive for one company to cover all the repairs and living expenses necessary for an entire neighborhood.
Section 2 Home and Property Insurance
Chapter
22
Home and Motor Vehicle Insurance
The Need for Auto Insurance
Chapter
22
Home and Motor Vehicle Insurance
Section 3 Motor Vehicle Insurance
Every state in the United States has a
financial responsibility law.
Liability
• covers you for injury to others or damage to their property
• Most states (including Michigan) require you to buy liability to legally drive
• Liability includes coverage for:– Bodily injury of another person– Damage to another persons property
The Need for Auto Insurance
Chapter
22
Home and Motor Vehicle Insurance
Section 3 Motor Vehicle Insurance
Motor Vehicle Bodily Injury Coverage
Chapter
22
Home and Motor Vehicle Insurance
Section 3 Motor Vehicle Insurance
Premiums• Your yearly premium is the amount you pay per year.• depends on coverage (bodily + property)• What is your yearly premium if you buy 100/300/50
liability coverage?
$176.80 + 89.90 = $266.70
Collision and Comprehensive Insurance
• Collision – coverage for damage to your car by an accident
• Comprehensive – coverage for fire, theft, vandalism, and weather
• Deductibles – amount you pay before the insurance company pays
• Your premium depends on your deductible (higher deductible = lower premium)
Collision and Comprehensive Insurance
Example:You buy $200-deductiable collision insurance
and $100-deductible comprehensive insurance. What is the total yearly premium?
$56.90 + $141.71 = $198.61
Premium Ratings
• Insurance premiums depend on ratings.• Your rating depends on your age, gender,
record, vehicle and the purpose for driving.• Total premium = base rating ∙
Premium Ratings
Other Motor Vehicle Insurance Coverages
Chapter
22
Home and Motor Vehicle Insurance
Section 3 Motor Vehicle Insurance
RentalReimbursement
Coverage
Wage-LossInsurance
Towing andEmergency RoadService Coverage
Motor Vehicle Insurance Costs
Chapter
22
Home and Motor Vehicle Insurance
Section 3 Motor Vehicle Insurance
Amount of Coverage
Legal Concerns
Property Values
