Do Now1. List 5 risks that a typical person

faces everyday.

2. List 3 kinds of insurance you have heard of.

RiskThe chance of loss from some kind of

dangerWe ALL face risk, EVERYDAY!

For example:Getting into a car accidentLosing your wallet/purseGetting caught “cheating” on a test

??AVOIDAVOIDNIGHTNIGHT

DRIVINGDRIVING

ALWAYSALWAYSWEARWEAR

SEATBELTSSEATBELTS????

??

??OBEYOBEY

SPEEDSPEEDLIMITSLIMITS

MA

NA

GIN

G L

OS

SM

AN

AG

ING

LO

SS F

RO

M IN

JUR

YF

RO

M IN

JUR

Y

INJURYINJURYIN AIN ACARCAR

ACCIDENTACCIDENT

6-C6-C

Avoid itAvoid itReduce itReduce it

Share it Share it (transfer it)(transfer it)

Managing the Possibility Managing the Possibility of Lossof Loss

Accept itAccept it

6-D6-D

“Sharing” the RiskGet insurance! - A way to guarantee your

financial protection against various risksYou will get an insurance policy when you

pay for insuranceInsurance policy- A written contract

detailing what an insurance company will cover, how much IT will pay, and how much YOU will pay

Insurance, cont.You must PAY for insurance! This bill

is called the insurance premiumInsurance premium- The amount you

pay for an insurance policyFactors that may affect how much you

pay:Age, marital status, where you live,

credit score

A few more definitions… Coverage limit- the maximum amount the

insurance company will pay if you file a claim It can vary from 1,000’s – millions! The HIGHER the coverage limit, the MORE you pay.

Deductible- The amount of loss a person must pay out of your own pocket before the insurance company will step in and pay the rest This also varies. It can be from $100 - $1000 The HIGHER the deductible you have, the LESS you

pay in your premium (bill)

Auto (car) Insurance

Very expensive for teenagers– In the first year of driving, one in five 16-year-old drivers has an accident!

In the state of Michigan, you MUST have auto insurance to drive. It is the law!

Your auto insurance premium (your bill) is based on the type of coverage and your driving track record.

Factors Affecting Automobile Insurance Costs

Your ageYour age

Make of carMake of car

Marital statusMarital status

Do you take the car to work?Do you take the car to work?

If you’re a good studentIf you’re a good student

GenderGenderWhere you liveWhere you live

How much How much you use the you use the

carcarCredit ratingCredit rating

Driver’s educationDriver’s education

Driving recordDriving record

Type of carType of car

6-F6-F

Types of auto coverage

General liability- Covers damage you cause to other people’s property and bodily injuries you cause to people OUTSIDE of your car.

Medical Payments- Covers bodily injury expenses to you and your passengers, and any injuries you receive because of a car (example:getting hit by a car riding a bike)

Types of auto coverageCollision- Covers

repairs for damage you cause to your car caused by an accident

Comprehensive-This covers fire damage, break-ins, vandalism, theft, natural disaster damage (basically everything is covered except an actual collision)

Types of auto coverage, cont.

Uninsured motorist- This covers your lost wages and medical expenses if you are in an accident with someone who doesn’t have insurance

Underinsured motorist- This covers you when the cost of repairs from an accident caused by another driver exceeds his or her coverage limit.

5 other common types of insurance

1. Health (medical) ins.-pays medical bills2. Property ins.-protects your possessions3. Life ins.- provides financial support for the

people who depend on you financially in the event of your death (a young married couple with kids MOST needs life insurance)

4. Disability ins.- pays your income when an illness or injury prevents you from working for several works or even years

5. Liability ins.- protects you if you are sued

5 other common types of insurance, cont.

The two most important types of insurance you need at a young age are: Health insurance & Auto insurance

The two types of insurance most employers provide are: Health (medical) insurance & Disability insurance

You can insure just about anything!

Boat insuranceTravel insuranceWedding insuranceMalpractice

insurance

Errors and omissions insurance

Pet health insurance

Kidnap and ransom insurance

Insurance coverage

If you don’t have enough insurance you may: Not meet your long-

term financial goals Not be able to have a

car Have a poor credit

rating Not be able to stick with

your budget

Assignment

1. List 10 risks a student might face in a typical day (could be physical, financial, social, etc.). Examples a student runs the risk of choking when eating breakfast.

2. For EACH of the 10 risks, brainstorm 3 practical actions you can take to lower your chance of loss from that risk.

For example

Risk: getting into a car accident on the way to school

Actions to reduce risk: walk, wear a seatbelt, obey speed limit