Insurance Planning 101

Insurance (Risk Management) is an essential element of Personal Finance. You’ll spend a lot of money buying insurance in your lifetime. So, a little insurance knowledge can help you Make Your Money Count.

This week, we’re focusing on Property and Casualty insurance. In this assignment, you will add insurance to your financial plan. The following information will help you understand Homeowners and Auto Insurance so that you can add the coverage you need to protect your investment (your new home and car).

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Part One: Get Auto Insurance Quote

Obtain One Auto Insurance Quote online (or in a local insurance agency).

You can use your actual car, a family car, or a friend’s car to obtain the quote. Or, feel free to use the car you “pretended” to buy in your credit crush assignment for the auto quote.

Save the quote (PDF) along with your comments related to each coverage you selected – see below, Part Three.

Be sure to address the following coverages in your comments:

— Collision and Deductible (Earn 5 extra points by getting a quote for more than one deductible. How much will you save if you take a $1,000 deductible? Is it worth it? Or, how much more will you pay if you take a $250 deductible?)

— Comprehensive and Deductible

• Consider getting a quote for more than one deductible.

• How much will you save if you take a $1,000 deductible?

• Is it worth it? Or,

• How much more will you pay if you take a $250 deductible?)

— Liability 100/500/100 (address each of these three numbers and what they mean)

— Rental

— Emergency Road Service

— Personal Injury Protection 2500/5000/10000

— Medical Payments Coverage 2500/5000/10000

If you’re employed, you will want PIP (Personal Injury Protection); if you’re unemployed, you will want MPC (Medical Payments Coverage).

— Uninsured

— Underinsured

Also discuss any other coverage offered by the agent you meet with or talk to online. In order to receive full credit for this assignment, you will need to convince me that you understand each of the coverages listed above.

— What is a deductible? How does it work? Explain that, too.

Part Two: Add Auto and Homeowners Insurance to Your Plan

Save a Screenshot for each Insurance Policy Added to Your Plan

Homeowners Insurance Coverage Summary

Section I Coverages: Property

• Coverage A: Dwelling

• Coverage B: Other structures

• Coverage C: Personal property

• Coverage D: Loss of use

• Section II Coverages:

• Coverage E: Personal Liability

• Coverage F: Medical Payments to Others

Coverage A: Dwelling

• Covers repair or replacement of the house, attached structures and building materials on premises.

• Purchase an amount equal to replacement cost (cost to rebuild) of the building.

• Insured must carry at least 80% of replacement cost of the building (coinsurance). See Coinsurance

Actual Cash Value (ACV)

Represents depreciated value of the property.

Replacement Cost (RC)

• Amount necessary to purchase, repair or replace with similar quality at current prices

• Insured must carry 80% of the replacement cost at the time of the loss

Coverage B: Other Structures

• Includes detached garages, storage buildings, etc.

• Limit is usually 10% of the amount of Coverage A.

• Other structures will not be covered if used for business purposes.

Coverage C: Personal Property

• Includes furniture, electronics, clothing, paintings, etc.

• Standard coverage is for actual cash value.

• Limits are placed on certain personal property losses, e.g. cash, coin collections ($200), jewelry ($1,500).

• Limit is usually 50% of Coverage A, but be sure to read the policy.

• Coverage is effective regardless where you property is located.

• Need an endorsement for personal property to have replacement cost rather than actual cash value. If you have a loss you want a new TV, not the depreciated value of your TV.

• Need a rider for high value jewelry because of low policy limits.

Coverage C: Personal Property specifically excluded:

• Animals, birds, and fish

• Articles separately described and specifically insured

• Motorized land vehicles used off premises

• Property of roomers or boarders not related to the insured

• Aircraft and parts

• Furnishings on property rented out to others

• Property held as samples, held for sale, or sold but not delivered

• Business data, credit cards, and funds transfer cards

• Business property held away from the residence premises

Coverage D: Loss of Use

• A combination of additional living expenses and loss of rental income.

• The limit is usually 30% of the Coverage A amount.

• The loss resulting from living in a hotel because residence is damaged or being repaired.

• This section only applies to additional living expenses.

• Alternatively, if rental income is lost due to a property being damaged, the insured may collect loss of use.

Section II Coverages: Liability

Coverage E: Personal Liability

• Protects the insured against claims arising out of both bodily injury and property damage.

• The insurer will cover both the damages and the costs of any defense of the claim or suit.

• The minimum amount of coverage is $100,000 per occurrence.

• The Coverage E liability insurance is based on a legal liability to pay.

• The insurer will only pay to the lesser of the damage or the coverage.

• This section excludes professional liability exposures.

Coverage F: Medical Payments to Others

• Includes coverage for the medical payments to others for injuries that arise even where the insured is not liable for the injury.

• Medical expenses include reasonable charges for medical procedures, surgical procedures, hospital stays, ambulances, dental care, X-rays, professional nursing, prosthetic devices, and funeral services.

• It does not apply to the insured or members of the insured’s household.

• This coverage is not liability insurance coverage and is not based on fault.

One of the following conditions must be met for an individual to receive medical payments coverage:

• The injury occurs while the person has permission to be at the insured location.

• The injury occurs while the person is away from the insured location and is caused by a condition at the insured location or on property immediately adjoining the insured location.

• For example, ice on the sidewalk or driveway and someone slips and falls

• The insured injures another person while away from the insured location.

• An animal owned by or in the care of the insured injures an individual off the insured premises.

Medical Payments will not provide coverage for bodily injuries:

• Sustained by the insured or any family member.

• Sustained by a regular resident of an insured location.

• Sustained by a residence employee of the insured that occur outside of the scope of employment.

• Sustained by anyone eligible to receive benefits for their injuries under a workers compensation or similar disability law.

• Resulting from nuclear reaction radiation, etc., regardless of how cause.

Part Three: Submit one PDF Document (Article)

Include the following in your article

A Brief Summary

• How Much Coverage did you add for your Home?

• How did you determine this amount?

• What Auto Coverages did you select for your Auto Insurance Quote:

• • Briefly summarize each coverage you selected and why

  • Include a screenshot of this week’s quiz

Submit one PDF Document for this Assignment

• Include the Auto Quote (or sreenshots)

• Include Screenshots for the insurance you added to your financial plan

• Include your Brief Summary as outlined above

Week 8 Insurance 101

Insurance Policies for Personal Financial Planning

Insurance is a fundamental tool in personal financial planning, primarily serving as a mechanism for risk management. It enables individuals and families to protect against potential financial losses arising from unforeseen events. By transferring the risk of financial loss to an insurance company in exchange for the payment of premiums, individuals can mitigate the impact of these risks on their personal financial situation. Here’s a brief overview of common insurance policies used to manage personal risk, including the types of perils they cover:

1. Health Insurance

• Purpose: Protects against the financial burdens of medical care.

• Covered Perils: Includes hospitalization, surgeries, doctor visits, prescription medications, and sometimes preventive care and mental health services. It may cover chronic illnesses, emergency medical conditions, and sometimes dental or vision care, depending on the policy.

2. Life Insurance

• Purpose: Provides financial support to beneficiaries (e.g., family members) in the event of the policyholder’s death.

• Covered Perils: Death of the policyholder. There are different types of life insurance, such as term life insurance (covering a specific period) and whole life insurance (providing lifelong coverage and including an investment component).

3. Disability Insurance

• Purpose: Offers income protection in case the policyholder is unable to work due to disability.

• Covered Perils: Long-term or short-term disabilities arising from illness or injury that prevent an individual from performing their job. Policies vary in terms of what constitutes disability and the period of coverage.

4. Auto Insurance

• Purpose: Covers the risks associated with owning and operating a vehicle.

• Covered Perils: Includes damage or loss due to accidents, theft, vandalism, and natural disasters. Liability coverage is also a key component, covering damage or injuries the policyholder may cause to others.

5. Homeowners Insurance

• Purpose: Protects against losses to one’s home and possessions within it.

• Covered Perils: Covers damage from fire, storms, theft, vandalism, and other specified events. It also typically includes liability insurance, which protects against injuries that occur on the property.

6. Renters Insurance

• Purpose: Offers protection for tenants against loss or damage to personal belongings within a rented property.

• Covered Perils: Similar to homeowners insurance, it covers theft, fire, and other damages to personal property. It also can provide liability coverage.

7. Long-term Care Insurance

• Purpose: Covers the cost of long-term care services not covered by regular health insurance or Medicare.

• Covered Perils: Provides for the cost of care in a nursing home, assisted living facility, or in-home care for individuals with chronic illnesses, disabilities, or other conditions that require long-term assistance with daily activities.

8. Umbrella Insurance

• Purpose: Provides additional liability coverage beyond what is included in auto, homeowners, and other insurance policies.

• Covered Perils: Covers a wide range of potential liabilities that exceed the limits of the policyholder’s other insurance policies. It can protect against major lawsuits and claims.

Risk Management Strategy

Incorporating these insurance policies into a personal financial plan involves assessing your specific risk exposures and determining the appropriate level and type of insurance coverage needed to mitigate these risks.

Regularly reviewing and adjusting insurance coverage is essential as one’s life circumstances and financial situation change.

Insurance to Transfer Risk

Insurance, as a risk management tool, does not eliminate risk but effectively spreads the financial impact of risks over a larger entity (the insurance company) and over time (through premium payments). This approach allows individuals to manage the uncertainty of life events with greater financial security and peace of mind.

Insurance from the perspective of transferring risk involves the process by which individuals or businesses shift the financial burden of loss to an insurance company. By paying a premium, the insured party receives protection against specified risks, effectively managing potential financial impacts. Understanding key terms is essential for anyone looking to be a well-informed consumer of insurance products. Here’s a brief summary of these terms:

1. Premium

• Definition: The amount of money that an individual or business pays for an insurance policy. The premium is essentially the cost of transferring the risk to the insurance company.

2. Deductible

• Definition: The amount that the policyholder must pay out-of-pocket before the insurance company pays a claim. Deductibles can apply per-policy or per-claim depending on the insurer and the type of insurance. Higher deductibles generally lower the premium but increase the financial responsibility of the insured on each claim.

3. Exclusions

• Definition: Specific conditions or circumstances that are not covered by the insurance policy. Exclusions are critical to understand, as they define the policy’s limitations and the instances where the insurer will not pay for damages or losses.

4. Liability

• Definition: The legal responsibility for damages or injuries to another person or property. Liability insurance is designed to offer protection against claims resulting from injuries and damage to people and/or property.

5. Negligence

• Definition: The failure to exercise the care that a reasonably prudent person would exercise in like circumstances. In the context of insurance, negligence often relates to claims for liability where the insured party is found to be at fault due to careless actions.

6. Coverage Limits

• Definition: The maximum amount an insurance company will pay under a policy for a covered loss. Coverage limits can be set per occurrence, per year, or over the life of the policy, depending on the terms and conditions.

7. Policyholder

• Definition: The individual or entity listed on the policy who owns the insurance coverage. The policyholder is responsible for paying the premiums and adhering to the policy terms.

8. Claim

• Definition: A request made by the policyholder to the insurance company for payment of a loss covered by the policy. The insurer will assess the claim against the policy terms to determine if it is valid and how much is payable.

9. Underwriting

• Definition: The process by which insurers evaluate the risk of insuring a home, car, individual, or entity. Based on this risk assessment, the insurer decides whether to offer insurance and at what premium rate.

10. Rider (or Endorsement)

• Definition: An addition to an insurance policy that changes the terms or scope of the original coverage. Riders can add, modify, or exclude coverage for specific items or conditions.

Understanding Insurance as Risk Management

In personal financial planning, insurance is a strategic tool to manage the risk of financial loss. By understanding these key terms and how insurance policies work, individuals can make informed decisions about the types and amounts of insurance coverage that best suit their needs. This knowledge enables policyholders to optimize their risk management strategies, ensuring that they are adequately protected without overpaying for unnecessary coverage.

Homeowners Insurance Basics

Homeowners insurance is a form of property insurance designed to protect homeowners against losses and damages to their home and assets in the home. It also provides liability coverage against accidents in the home or on the property. In Texas, as in many other states, homeowners insurance policies come with a variety of coverages that are categorized into two main sections: Section One (Property Coverages) and Section Two (Liability Coverages). Here’s a summary of the broadest coverages available in a Texas policy, common policy endorsements, and an explanation of Replacement Cost coverage vs. Actual Cash Value (ACV) and the coinsurance clause.

Section One: Property Coverages

1. Dwelling Coverage (Coverage A): This covers the physical structure of your home, including the foundation, walls, and roof, against perils like fire, windstorms, hail, and vandalism.

2. Other Structures (Coverage B): Provides protection for structures on your property that are not attached to your dwelling, such as fences, detached garages, and sheds.

3. Personal Property (Coverage C): Covers the contents of your home, such as furniture, electronics, and clothing, against theft, fire, and other covered perils. There’s usually a limit for high-value items.

4. Loss of Use (Coverage D): If your home is uninhabitable due to a covered loss, this coverage pays for your additional living expenses (e.g., hotel bills, meals) while your home is being repaired or rebuilt.

Section Two: Liability Coverages

1. Personal Liability (Coverage E): Protects you if you’re legally responsible for someone else’s injury or property damage. This can cover legal fees, medical bills, and damages.

2. Medical Payments to Others (Coverage F): Pays for medical expenses of guests who are accidentally injured on your property, regardless of fault.

Common Policy Endorsements

1. Scheduled Personal Property: Provides additional coverage for high-value items such as jewelry, art, and collectibles, which exceed the typical personal property coverage limits.

2. Water Backup: Covers damage caused by the backup of sewers or drains.

3. Identity Theft Protection: Offers coverage for expenses related to restoring your identity following identity theft.

4. Green Rebuilding: Increases your coverage to rebuild or repair your home using environmentally friendly materials.

Replacement Cost vs. Actual Cash Value (ACV)

• Replacement Cost: This coverage pays the cost to replace damaged property with new property of similar quality and type, without deduction for depreciation.

• Actual Cash Value (ACV): This pays the cost to replace or repair your property minus depreciation. ACV is essentially the market value of the item at the time of loss, taking into account age and wear and tear.

Coinsurance Clause

The coinsurance clause is a policy provision that requires the policyholder to carry insurance equal to a specified percentage (usually 80%) of the value of the property to receive full payment on a loss. If the amount of insurance is less than the specified percentage, the payment for a loss can be reduced, leaving the policyholder responsible for a portion of the repair or replacement costs.

Understanding these elements of homeowners insurance in Texas can help homeowners make informed decisions about their coverage options, ensuring they have adequate protection for their home, personal property, and against liability risks.

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Homeowners Insurance Coverages Defined

The insuring agreement in a homeowners policy, particularly in the context of a “broad form” policy, outlines the scope of coverage provided by the insurance company to the policyholder. This agreement specifies the types of risks covered, the property insured, and the conditions under which the insurance company will compensate the homeowner for losses. The coverage can be structured as “named perils” or “all risk” (also known as “open perils”) coverage, especially relevant to Coverage A (Dwelling Coverage).

All Risk of Physical Loss (Open Perils)

• Definition: Under “all risk” or “open perils” coverage, the policy protects against all risks of physical loss to the property, except for those explicitly excluded in the policy. This means the insurer covers all forms of damage or loss unless the policy specifically mentions them as exclusions.

• Coverage A Implication: For Coverage A, “all risk” coverage ensures the structure of the home is protected against a wide range of potential damages, offering broad protection. The homeowner doesn’t need to prove that the cause of the damage is one of the named perils; instead, the burden is on the insurer to prove that an exclusion applies if they deny a claim.

Named Perils

• Definition: Contrary to “all risk” coverage, “named perils” policies only cover losses caused by perils specifically listed in the policy. If a loss occurs due to a peril not named, then the policy does not cover it.

• Difference from All Risk: The key difference is in the scope of coverage. Named perils require the cause of loss to be specifically listed for coverage to apply, making it more restrictive compared to the broader protection under “all risk” coverage, where everything is covered except for explicitly listed exclusions.

Exclusions in Coverage A

Exclusions are conditions or occurrences not covered by the insurance policy. In the context of Coverage A (Dwelling Coverage) under an “all risk” policy, common exclusions include:

1. Ordinance or Law: Losses due to enforcement of building codes and similar regulations.

2. Earth Movement: Includes earthquakes, landslides, and sinkholes. Often, separate policies are required for these perils.

3. Water Damage: This typically refers to floods, sewer backups, and water below the surface; again, separate flood insurance is needed for natural flood events.

4. Power Failure: Off-premises power failure is not covered.

5. Neglect: Failure to take reasonable steps to protect property from damage.

6. War: Damage from war or war-like actions.

7. Nuclear Hazard: Damage from nuclear reaction, radiation, or contamination.

8. Intentional Loss: Damage or loss resulting from intentional acts by the policyholder.

Understanding the difference between “all risk” and “named perils” coverage is crucial for homeowners. “All risk” offers more comprehensive coverage, making it preferable for many homeowners, but it’s also important to be fully aware of the policy exclusions. By knowing what is and isn’t covered, homeowners can make informed decisions about additional coverages or endorsements they might need to fully protect their home and assets.

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Car Insurance

Car insurance is essential for protecting yourself financially in case of accidents, theft, or other incidents involving your vehicle. In Texas, as in many other places, auto insurance policies are comprised of various coverages, each designed to offer protection in different scenarios. These coverages can be categorized into two main sections: Section One (First Party Coverages) and Section Two (Liability Coverages).

Section One: First Party Coverages

First party coverages are designed to protect the policyholder and their property.

1. Collision Coverage

   • Covers damage to your car resulting from a collision with another vehicle or object, regardless of who is at fault.

2. Comprehensive Coverage

   • Provides coverage for damage to your vehicle from non-collision events, such as theft, vandalism, fire, natural disasters, and contact with animals.

3. Personal Injury Protection (PIP)

   • Pays for medical expenses, and sometimes lost wages and other damages, regardless of who is at fault in an accident. PIP is required in some states, including Texas, but policyholders can waive it in writing.

4. Medical Payments Coverage

   • Covers medical and funeral expenses incurred by you or passengers in your vehicle in an accident, regardless of fault.

5. Uninsured/Underinsured Motorist Coverage (UM/UIM)

   • Provides protection if you’re in an accident with a driver who either doesn’t have insurance or whose insurance is insufficient to cover your losses. This covers both bodily injury and, in some cases, property damage.

Section Two: Liability Coverages

Liability coverages protect the policyholder against financial loss if they are found legally responsible for causing injury to others or damage to their property.

1. Bodily Injury Liability

   • Covers medical expenses, lost wages, and other damages for injuries you cause to someone else in an auto accident where you are found at fault.

2. Property Damage Liability

   • Pays for damage you cause to another person’s property, typically their vehicle, but also includes damage to other types of property, such as fences or buildings.

Additional Considerations

• Deductibles: A deductible is the amount you agree to pay out of pocket before your insurance coverage kicks in. Deductibles typically apply to collision and comprehensive coverages.

• Limits: Each coverage has its own limit, which is the maximum amount your insurance company will pay for a covered loss. Higher limits offer more protection but also come with higher premiums.

Texas-Specific Requirements

Texas requires drivers to carry minimum amounts of liability insurance, known as the 30/60/25 coverage:

• $30,000 for bodily injury per person,

• $60,000 for bodily injury per accident, and

• $25,000 for property damage per accident.

However, given the cost of medical care and vehicle repairs, these minimums may not be sufficient to fully protect you from financial liability in the event of a serious accident. It’s often advisable to carry higher limits and consider adding first-party coverages for more comprehensive protection.

Understanding these coverages and how they apply can help you make informed decisions about your auto insurance policy, ensuring you’re adequately protected while driving in Texas or anywhere else.

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Collision and Comprehensive Coverages

Collision Coverage and Comprehensive Coverage are two key components of auto insurance, each addressing different types of risks and damages to your vehicle. Understanding these coverages and their applicability can significantly impact how you manage financial losses due to vehicle damage or loss.

Collision Coverage

Definition: Collision coverage pays for damage to your vehicle resulting from a collision with another vehicle or object (like a tree or guardrail), or in cases where your vehicle flips over. It is applicable regardless of who is at fault.

Common Examples:

1. Hitting Another Car: You rear-end another vehicle at a stoplight, causing significant damage to your car’s front end.

2. Colliding with a Pole: You slide on ice and collide with a light pole, resulting in damage to the side of your vehicle.

3. Single-Car Rollover Accident: You swerve to avoid hitting an animal on the road, causing your car to roll over and sustain damage.

Comprehensive Coverage

Definition: Comprehensive coverage, also known as “other than collision” coverage, pays for damage to your vehicle caused by events other than collisions. This includes incidents such as theft, vandalism, natural disasters, and encounters with animals.

Common Examples:

1. Theft: Your car is stolen and not recovered. Comprehensive coverage would cover the loss of the vehicle.

2. Vandalism: Someone spray-paints the side of your car, causing damage that needs repainting.

3. Hail Damage: A severe hailstorm leaves dents and broken glass on your parked car.

Examples of Deductibles and Their Application

A deductible is the amount you pay out of pocket before your insurance coverage pays for the remainder of a covered claim. Common deductible amounts include $500, $1,000, and $1,500. Here’s how they might be applied:

1. Collision Deductible – Hitting Another Car Scenario:

   • Damage to Your Car: $4,000

   • Your Deductible: $500

   • Insurance Pays: $3,500 ($4,000 – $500 deductible)

2. Comprehensive Deductible – Hail Damage Scenario:

   • Damage to Your Car: $2,500

   • Your Deductible: $1,000

   • Insurance Pays: $1,500 ($2,500 – $1,000 deductible)

3. Comprehensive Deductible Waived – Total Loss Due to Theft in Texas:

   • Value of Your Stolen Car: $15,000

   • Your Deductible: $1,000 (Typically waived for total loss due to theft in Texas)

   • Insurance Pays: $15,000

   • In Texas, and some other jurisdictions, the comprehensive deductible is often waived for claims involving the total loss of the vehicle due to theft. This means you would not pay the deductible, and the insurance would cover the entire value of the lost vehicle as determined by the policy.

Understanding the differences between collision and comprehensive coverage, along with how deductibles apply to each, enables policyholders to make informed decisions about their auto insurance. This knowledge ensures you’re not only choosing the right coverages for your needs but also understand how claims will be handled financially.

The Insuring Agreement

The Insuring agreement in the Comprehensive Coverage of a car insurance policy is designed to cover damages to your vehicle that are not caused by a collision. It is often referred to as “other than collision” coverage due to its broad scope, covering a range of events that could cause damage to your vehicle. The reason it’s called “comprehensive” coverage is because it encompasses a wide array of non-collision incidents that could harm your car, including natural disasters, theft, vandalism, and interactions with animals, making it one of the most inclusive types of auto insurance coverage available.

Broadness of Comprehensive Coverage

Comprehensive coverage is considered broad because it protects against so many different types of risks that can damage your vehicle outside of a standard accident. This extensive protection is crucial for covering scenarios that would otherwise leave a policyholder with significant out-of-pocket expenses.

Comparison with All Risk of Physical Damage in Homeowners Policy

Comparing comprehensive coverage to the All Risk of Physical Damage provided in Coverage A on a Texas Broad Form Homeowners policy, both offer broad protections against a wide range of risks. The homeowners’ policy “all risk” coverage applies to all forms of physical damage to the home not specifically excluded, similar to how comprehensive coverage applies to various non-collision damages to a vehicle. However, the key difference lies in the nature of the assets protected (home vs. vehicle) and the specific list of exclusions pertinent to each type of policy.

Examples of Comprehensive Coverage in Action

1. Hitting a Bear and Totaling Your Car

   • Scenario: While driving at night, you hit a bear, causing significant damage to your car, leading to a total loss.

   • Coverage: Comprehensive coverage applies as hitting an animal is a covered peril.

   • Deductible Application: Assuming the value of your car is determined to be $20,000:

     • Your Deductible: $500

     • Insurance Pays: $19,500 ($20,000 – $500 deductible)

2. Friend Burns Up Wiring Harness Trying to Jump Start

   • Scenario: A friend accidentally causes a fire in your car by incorrectly attempting to jump-start it with his welding truck, burning up the wiring harness.

   • Coverage: The accidental fire caused by a non-collision event is covered under comprehensive.

   • Deductible Application: Assuming the cost to repair the damage is $5,000:

     • Your Deductible: $500

     • Insurance Pays: $4,500 ($5,000 – $500 deductible)

3. Hitting an Object Falling Off a Big Truck

   • Scenario: You hit an object that falls off a big truck while driving down the interstate, causing $7,500 damage to your car and requiring towing costs of $575.

   • Coverage: Damage caused by hitting an object and the towing costs are covered under comprehensive.

   • Deductible Application:

     • Damage Repair Costs: $7,500

     • Towing Costs: $575 (may be covered under comprehensive or additional towing and labor coverage if you have it)

     • Your Deductible: $500

     • Insurance Pays for Damage: $7,000 ($7,500 – $500 deductible) plus towing costs depending on your policy terms.

In each of these scenarios, comprehensive coverage provides financial protection against a variety of incidents that could lead to significant financial loss. The $500 deductible is the policyholder’s share of the cost of the loss, which is subtracted from the total payout by the insurance company, demonstrating how deductibles are applied to comprehensive claims.

Adding Car and Home Insurance to Your Plan

PLEASE TAKE A FEW MINUTES TO REVIEW YOUR HOME AND AUTO INSURANCE “DATA CARDS”. WHEN I REVIEW YOUR ASSIGNMENT, I’M LOOKING AT WHAT YOU ADDED TO YOUR PLAN TO MAKE SURE YOU’RE UNDERSTANDING THE BASIC IDEAS OUTLINED IN THIS WEEK’S HOMEWORK ASSIGNMENT.

Part Two: Add Auto and Homeowners Insurance to Your Plan

Save a Screenshot for each Insurance Policy Added to Your Plan. In the image below, I’ve highlighted a few of the fields in the Auto and Home Insurance “Data Cards” and if you pay attention to the details below, you should be able to quickly identify the problems:

Auto

• Annual Premium Amount and Coverages… If you added this data to your plan, you can expect a deduction in your assignment – because you’re missing important information.

Home

• Your home insurance should be based on the cost of your home.

• Your premium (cost of insurance) is something you will need to research.

• If your Home insurance “data card” looks like the one below, you can expect deductions on your assignment.

Note: These Deductions will also be applied to your Capstone!

 

Be sure to address the following coverages in your comments:

— Collision and Deductible (Earn 5 extra points by getting a quote for more than one deductible. How much will you save if you take a $1,000 deductible? Is it worth it? Or, how much more will you pay if you take a $250 deductible?)

— Comprehensive and Deductible

• Consider getting a quote for more than one deductible.

• How much will you save if you take a $1,000 deductible?

• Is it worth it? Or,

• How much more will you pay if you take a $250 deductible?)

— Liability 100/500/100 (address each of these three numbers and what they mean)

— Rental

— Emergency Road Service

— Personal Injury Protection 2500/5000/10000

— Medical Payments Coverage 2500/5000/10000

If you’re employed, you will want PIP (Personal Injury Protection); if you’re unemployed, you will want MPC (Medical Payments Coverage).

— Uninsured

— Underinsured

Also discuss any other coverage offered by the agent you meet with or talk to online. In order to receive full credit for this assignment, you will need to convince me that you understand each of the coverages listed above.

— What is a deductible? How does it work? Explain that, too.