Chapter 8

In-Class Notes

Background on Insurance and Managing Risks• Types of insurance• Property insurance (auto and home insurance)• Health insurance (physician, dental, and vision care)• Disability insurance (provides income continuation)• Critical illness insurance (provides lump sum benefits)• Long-term care insurance (covers added cost of living)• Life insurance (provides financial support to

dependants)

• Risk management options• Avoid, reduce, accept, and/or share risk

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Auto Insurance and Factors That Affect Your Auto Insurance Premiums• Auto insurance features• Third party liability coverage (bodily injury and

property damage liability)• Accident benefits (medical care)• Loss of or damage to insured automobile (collision and

comprehensive coverage)

• Factors that affect auto insurance premiums• How you use your vehicle• Value and repair record of your car• Your location (except in Saskatchewan)• Your driver training and driving record• Your age, sex, and driving distance (in some provinces)

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Homeowner’s Insurance and Policy Provisions• Peril• The cause of a financial loss (e.g., flood)

• Types of coverage• All perils coverage• Named perils coverage

• Policy provisions• What is covered? (e.g., building, contents, liability of

homeowner)• Types of policies (comprehensive, basic, broad)• Cash value policy vs. replacement cost policy

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Homeowner’s Insurance Premiums• Factors That Affect Homeowner’s

Insurance Premiums

• Value and location of insured home

• Deductible

• Degree of protection desired

• Discounts offered

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Homeowner’s Insurance Premiums (Continued)• Reduce Your Homeowner’s Insurance

Premium

• Increase deductible

• Improve protection (security system, fire extinguisher)

• Use one company for all insurance and establish a long-term relationship with it

• Shop around

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Filing a Claim• Contact your insurance company

immediately

• Provide claims adjuster with your home inventory

• Obtain an independent estimate of repair costs

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Tenant’s Insurance and Umbrella Personal Liability Policy• Tenant’s insurance• Does not insure the structure• Covers personal assets• Can cover living expenses

• Umbrella personal liability policy• Provides additional personal liability insurance beyond

the coverage available in your homeowner’s insurance or renter’s insurance policy

• Useful when you have a desire to protect additional assets from personal liability

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