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csr 103 purdue

csr 103 purdue

Description

School: Purdue University
Department: Consumer Sciences
Course: Introduction To Personal Finance
Professor: Michael roe
Term: Spring 2017
Tags: Personal, finance, intro, CSR, Chapter8, booknotes, Book, and notes
Cost: Free
Name: CSR 103 Chapter 8 Notes
Description: These notes are from Chapter 8 from the "Focus on Personal Finance" Class is Intro to Personal Finance
Uploaded: 02/28/2017
6 Pages 242 Views 2 Unlocks
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What kind of insurance should you buy?




How much should you insure it for?




What do you need to insure?



Percent of Personal Property Coverage 1. Prepare household inventory 2. Compare insurance companies and coverage levels 3. Determine if you need more personal property coverage What is Insurance? ● Insurance: Protection against possible financial loss.  ○ Unexpected property loss, illness, or injury ● Insurance Company: Aka insurer. Risk sharing business thatDon't forget about the age old question of What name is given to the process in which pre-mRNA is edited into mRNA?
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We also discuss several other topics like what is the unique structural modification in lymphatic capillaries that increases their permeability?
Don't forget about the age old question of the main chemical stimulus for cerebral autoregulation is
We also discuss several other topics like What happens in the depolarization of a single cardiomyocyte?
 agrees to pay for  losses that may happen to someone it insures ● Policy: Contract for insurance. Company agrees to take on the risk ● Policyholder: Purchaser of the policy ● Premium: Fee policyholder is charged for coverage ● Insured: People protected by the policy Types of Risk ● Risk: Chance or uncertainty of loss/injury  ○ Aka insured person or property ● Peril: Anything that may possible cause a loss ○ Reason for taking out insurance ○ Examples: fire, windstorm, explosion, robbery, accident, etc.  ● Hazard: Anything that increases likelihood of loss through some peril ○ Examples: defective house wiring ● Most Common Risks ○ Personal: loss of income/life due to illness, disability, old age, or  unemployment ○ Property: Losses to property caused by perils, such as fire, death,  or hazards ○ Liability: Loss caused by negligence that leads to injury or  property damage ○ Negligence: Failure to take ordinary/reasonable care to prevent  accidents ● Speculative Risk: Carries a chance of either loss or gain ○ Examples: starting a small business ○ NOT insurable risks Risk Management Methods ● Organized plan for protecting yourself, family, and property ● Long term planning ● Changes throughout your life ● General Techniques: ○ Risk Avoidance: May have serious trade offs. Can be practical. ○ Risk Reduction: Decrease likelihood ○ Risk Assumption: Taking on responsibility for negative results of a  risk. ■ Self insurance is one example ○ Risk Shifting: Most common technique ■ Transfer it to an insurance company ■ In exchange for fee you pay, insurance company  agrees to pay for your losses ■ Deductibles: Set amount that policyholder must pay per loss on an insurance policy Planning an Insurance Program ● Personal Insurance program should change with your needs and goals 1. Step 1: Set Income Goals a. Main goal: reduce personal, property, and liability risks b. Factors: income, age, family size, lifestyle, experience, and  responsibilities  2. Step 2: Develop a Plan a. Determine risks you face and what risks you can afford to take b. What resources can help decrease damage c. Key Questions i. What do you need to insure? ii. How much should you insure it for? iii. What kind of insurance should you buy? iv. Who should you buy it from? 3. Step 3: Put Your Plan into Action a. Flexible plan is best b. Adjust as you go/need changes in protection 4. Step 4: Check Your Results a. Review your plan every 2­3 years, or when your family  circumstances change Property/Liability Insurance ● Claims: Request for payment to cover financial losses  ● Think of the price you pay for home/vehicles as an investment, and insurance  protects those investments ● 2 Main Types of Risks Associated with Auto/Home ○ Damage/loss of property ○ Responsibility for injuries to other people or damage to their  property Two Types of Risk1. Physical damage caused by perils 2. Loss/damage caused by criminal behavior Liability Protection ● Liability: Legal responsibility for financial cost of another person’s losses/injuries ○ Liable = legally responsible ○ Usually due to negligence Homeowner’s Insurance ● Coverage for your place of residence and its associated financial risks ● What it Covers ○ Building in which you live and any other structures on the property ○ Additional living expenses  ■ Pay for you to live somewhere else while home is  being repaired ○ Personal Property ■ Furniture, appliance, clothing, rental items such as a rug doctor ○ Specialized coverage ● Household Inventory: List or other docs of personal belongings with purchase  dates and cost info ○ Items of special value, receipts, serial #s, brand names, and proof  of value ○ Can include video/photos ● Personal Property Floater: Additional property insurance that covers the  damage/loss of a specific item of high value ○ Appraisal required Personal Liability/Related Coverage ● Not all visitors to your home are covered ● Personal liability portion of your policy protects you and members of your family  if others sue you ● Umbrella Policy: Supplements your basic personal liability coverage ○ Aka Personal Catastrophe Policy ○ Useful for the wealthy and business owners ● Medical Payments Coverage: Home insurance that pays the cost of minor  accidental injuries on one’s property ○ Also covers you, your family, and pets away from home Specialized Coverage ● Flood/Earthquake insurance ○ National Flood Insurance Program○ FEMA ● Endorsement: Addition of coverage to a standard policy Renter’s Insurance Two Types 1. Broad Form: Covers personal property against perils specified on the policy 2. Comprehensive Form: Protects your personal property against all perils a. Pays only actual cash value (ACV) Home Insurance Policy Forms ● HO­1: Protects against perils  ○ Basic form ● HO­2: Covers wider range of perils ○ Broad form ● HO­3: Covers all basic/broad form risks, plus any other risks except ones  excluded on the policy  ○ Example: nuclear disaster ● HO­4: Protects against personal property of renter ● HO­5: Expands coverage of HO­3 ● HO­6: Condo owner’s insurance ○ Protects personal property and any additions/improvements made  to the living unit What Home Insurance Covers ● Credit card fraud, check forgery, counterfeit money ● Cost of removing damaged property ● Emergency removal of property to protect it from damage ● Temporary repairs after a loss to prevent further damage ● Fire department charges Home Insurance Cost Factors ● Insurance should be based on amount of money you would need to rebuild/repair  your home ○ NOT what you paid for the home ● Increase in construction costs = Increase in coverage ● Claim Settlement Methods:  ○ Actual Cash Value (ACV): Payment you receive is based on  replacement cost of an item minus the depreciation ○ Replacement Value: Receive full cost of repairing/replacing of  items ■ Depreciation NOT consideredHome Insurance Cost Factors ● Location, type of building and construction materials ● Amount of coverage and type of policy purchased ● Different companies (comparison shopping) ● Deductible/premium amounts ● Increase deductible = Decrease premium Company Differences ● Can save 30% or more comparison shopping ● Agents who work for 1 company vs. Independent agents ● Consider service/coverage ● Consumer Reports  Auto Insurance Coverages ● Financial Responsibility Law: US Law that requires drivers to prove that they can pay for damage/injury ○ Must have auto insurance in US ● 2 Categories ○ Protection for bodily injury ○ Protection for property damage ● Bodily Injury Coverage: Main types of coverage are bodily injury liability,  medical payments, and uninsured motorists protection ● Medical Payments Coverage: Applies to medical expenses of anyone injured in  your car, including you ● Uninsured Motorist Protection: Covers you and your family if you are involved in in an accident with an uninsured driver or hit and run driver ● Property Damage Liability: Auto insurance that applies when you damage the  property of others ○ Applies when driving someone else’s car ● Collision Insurance: Covers damage to your vehicle when it is involved in an  accident  ○ Allows you to collect no matter who’s at fault for accident ● No Fault System: Drivers in accidents collect medical expenses, lost wages, and  related injury costs from their insurance companies ○ Does NOT matter who caused the accident Auto Insurance Premium Factors ● Vehicle type ○ Year, make, model● Rating territory ○  Place of residence ● Driver classification ○ Age, sex, marital status, driving record/habits ● Assigned Risk Policy: All the people who can’t get car insurance due to poor  driving record or accidents ○ Must obtain coverage at higher rates through state programs Reduce Auto Insurance Premiums 1. Comparison Shopping a. Consumer Reports 2. Premium Discounts a. Maintain good driving record b. Choose car type carefully c. Good grades

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