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Presented by: ASPIRA Financial Education Program on Insurance Slide 2 Auto Insurance Presented by: ASPIRA Slide 3 RISK: WHAT IS IT? Risk = the possibility of financial loss Slide 4 Why is risk important for insurance? Risk is what makes you decide whether or not you need insurance. Risk is what insurance companies measure when determining whether to offer you insurance and how much it will cost. Slide 5 What is Insurance? Insurance is a legal contract that transfers risk from a policyholder to an insurance provider. Slide 6 Insurance Provider Premiums Claims HOW INSURANCE WORKS Slide 7 WHAT TYPES OF RISKS DOES INSURANCE COVER? RiskInsuranceCoverage 1. You lose your jobMortgage and CreditWill cover your debts for a fixed period while you are unemployed 2. Your stocks lose valueNone 3. You have a car accidentAutoWill pay for damage to your car and other damaged vehicles and property. Will pay for medical expenses for you and other parties. Slide 8 WHAT TYPES OF RISKS DOES INSURANCE COVER? (Cont.) RiskInsuranceCoverage 1. Your friend falls in your home and breaks his leg Homeowners, renters, condo owners Will pay fixed amount for his medical expenses 2. A pipe bursts in your apartment building and ruins your sofa RentersWill pay to replace your sofa or for the sofas value 3. The police give you a speeding ticket None 4. You are hurt on the jobDisability; workers compensation Disability: Will pay your lost wages and medical expenses Slide 9 WHAT TYPES OF RISKS DOES INSURANCE COVER? (Cont.) Risk Insurance Coverage 1. A necklace is stolen from your home Homeowners; renters/ condo; mobile home Will pay to replace your necklace up to a fixed amount 2. You dieLife InsuranceWill distribute money to your benefactors and cover household expenses 3. Other suggestions???? Slide 10 Risk factors determine whether you will be able to buy a policy and how much it will cost. Generally speaking: > Risk = > Cost Slide 11 Risk Factors: Auto Insurance Age of driver Gender of driver Number of drivers on policy Accident / Incident history Where auto is parked Annual mileage Number of traffic violations Prior insurance record Years of driving experience Zip code / state How auto is used (commute, business, pleasure) Mileage per year Year, make and model of car Special safety features in car Owned or financed Academic performance (if currently in school) Credit rating of policyholder **Amount of coverage required** Slide 12 LIFE EVENT CHALLENGES Become a driver Graduate from high school Get engaged or married Move to own apartment Have a baby Graduate from college Turn 25 Get a new job Buy a car Buy a home Move to a new city Slide 13 Are you ready to drive? Ask yourself Do I know what Im doing? Can I afford it? Am I covered by auto insurance? Slide 14 Why do I need insurance? 1)Its the law! 2)There are risks you cant afford to take. What happens if: o You have an accident that causes damage? o You hurt yourself or someone else? o Your car is damaged when youre not driving it? (by weather, vandalism or a hit-and-run fender bender) o Your car is stolen? o Your car breaks down and needs to be towed? Slide 15 How to Handle an Accident: 1.CALL THE POLICE !!! 2.Complete an accident report; 3.Exchange contact and insurance information with the other driver; 4.DO NOT ADMIT FAULT !!! 5.Be ready to describe the accident and provide the other drivers information; 6.Report the claim to your insurance provider; 7.Send your insurance provider any paperwork you receive regarding the accident. Slide 16 Practice Shopping for a Policy http://www.nationwide.com