Chapter 8 - Home and automobile insurance. In this chapter, you will learn to: Identify types of risks and risk management methods and develop a risk management plan, assess the insurance coverage and policy types available to homeowners and renters, analyze the factors that influence the amount of coverage and cost of home insurance. | 8 Home and Automobile Insurance Insurance Protection against possible financial loss Provides peace of mind Insurance company (insurer) Risk-sharing firm that assumes financial responsibility for losses from an insured risk Procedure Purchase a policy known as coverage Insurance firm assumes a risk for a fee Insured policyholder pays a periodic premium 8- Objective 1 Identify Types of Risks and Risk Management Methods and Develop a Risk Management Plan Risk Chance of loss or injury Uncertainty or lack of predictability Peril Anything that may cause a loss Fire, windstorm, robbery, or accidents Hazard Anything that increases the likelihood of a loss For example, driving drunk, defective house wiring 8- Most Common Types of Risk Personal Risks Loss of income or life Caused by illness, disability, old age, or unemployment Property Risks Losses to property Caused by perils such as fire or theft Liability Risks Losses caused by negligence Resulting in injury or property damage Pure Risk = Insurable Accidental, unintentional Nature and financial loss of the risk can be predicted Speculative Risk = Uninsurable Chance of loss or gain Starting a small business, gambling, or investing 8- Risk Avoidance Risk Shifting Risk Assumption Risk Reduction Ways to Manage Risk Don’t stop at a convenience store in a bad part of town after midnight Wear seatbelts Install an alarm system Buy Insurance Self Insurance 8- Planning an Insurance Program Set insurance goals to reduce possible loss of: Income due to premature death, illness, accident or unemployment Property caused by perils Income, savings and property due to personal negligence Develop a plan to reach your goals What do you need to insure? How much should you insure it for? What kind of insurance should you buy? Who should you buy insurance from? Put your plan into action Check your results Insurance needs and goals change 8- Property and Liability Insurance Potential property losses Home, automobiles, . | 8 Home and Automobile Insurance Insurance Protection against possible financial loss Provides peace of mind Insurance company (insurer) Risk-sharing firm that assumes financial responsibility for losses from an insured risk Procedure Purchase a policy known as coverage Insurance firm assumes a risk for a fee Insured policyholder pays a periodic premium 8- Objective 1 Identify Types of Risks and Risk Management Methods and Develop a Risk Management Plan Risk Chance of loss or injury Uncertainty or lack of predictability Peril Anything that may cause a loss Fire, windstorm, robbery, or accidents Hazard Anything that increases the likelihood of a loss For example, driving drunk, defective house wiring 8- Most Common Types of Risk Personal Risks Loss of income or life Caused by illness, disability, old age, or unemployment Property Risks Losses to property Caused by perils such as fire or theft Liability Risks Losses caused by negligence Resulting in injury or property damage .
