Econ Unit 14

No Fault Insurance

a system of automobile insurance where a party who is injured in an automobile accident recovers damages up to a specific amount against his own insurance company regardless of who was responsible for the accident;

Insurance

an agreement in which a person makes regular payments to a company and the company promises to pay money if the person is injured or dies, or to pay money equal to the value of something (such as a house or car) if it is damaged, lost, or stolen.

Collision:

coverage allows you to file a claim with your car insurance company and have it pay, minus your deductible amount, for damages received in most auto accidents. It will pay out, according to the terms and conditions of your policy, if the other driver is uninsured, underinsured, or unknown -- or even if you are at fault.

Uninsured Motorist

coverage can pay for injuries to you and your passengers, and in some locations damage to your property, when there is an accident and the other driver is both legally responsible for the accident and considered "uninsured" or "underinsured." An uninsured driver is someone who did not have any insurance, had insurance that did not meet state-mandated minimum liability requirements, or whose insurance company denied their claim or was not financially able to pay it. A hit-and-run driver also counts as uninsured as it relates to bodily injury (UMBI).

Comprehensive

covers your insured vehicle for physical damage losses resulting from incidents other than collision. This normally includes coverage for Theft, Vandalism, Glass damage (such as a broken windshield), Damage sustained from hitting an animal or bird, Damage from falling objects or missiles, Fire, Floodwaters, Damage sustained due to severe weather or natural disaster -- such as wind storm, hail, hurricane, tornado, etc.

What are commonly NOT covered by a Homeowners Insurance Policy? READ!!!!

1) Earthquakes, Sinkholes & Other Movements of the Earth 2) Flood & Other Water Damage 3) Windstorms 4) Damage caused by war, nuclear hazard or terrorism 5) Trampoline & Tree house Injuries 6) Separate structures on your premises that are used solely for business 7) Jewelry, Fine Art, Rare Collections 8) Boat Theft 9) Food 10) Death or Injuries from Pools 11) Trees, plants or shrubs are not covered when they are damaged by wind or disease 12) Damage due to neglect and failure to maintain the property

Liability Insurance:

1. Property: pays to repair or replace cars or other property that you damage with your vehicle. 2. Bodily Injury: pays the medical bills of individuals you are found liable for injuring with your car.

Affects Insurance Rates

7 Standard Items that Affect House Insurance Rates 1. Deductible One of the simplest ways to reduce your insurance cost is by increasing your deductible. Of course, you need to find the right amount because you do need money on hand to cover an increased deductible. 2. Security If you have recently changed or upgraded your home security, you should let your insurance company know. The better your security, the lower your rates. 3. Coverage Amount This is another no brainer, but important nonetheless. The more house you insure, the more you'll pay. This, of course, becomes an important factor when house shopping and deciding how much house you can afford. Be aware that you want to have enough coverage to pay for a replacement house. The cost of housing increases dramatically, so you might want to consider being over insured instead of under insured. As an alternative, you can buy a policy that covers a replacement house, not a set dollar amount. 4. Company Most people spend the most time on this point - shopping around looking for the company with the best rates. Since companies have different policies regarding all of these factors, you do need to find the one that has the best policies regarding your specific needs. 5. Company Policy Conditions, Riders, and Exclusions Related to #4, different companies will be willing to cover you in different ways. When comparing the cost of homeowners insurance, you should review all of the policy conditions, riders, and exclusions. I know it will be a boring read, but it is also very important. 6. House structure and age The age and style of your home affects the rates. In some cases, a minor home renovation could actually result in insurance savings. 7. Company Discounts Just like different companies have different exclusions, they also offer different discounts. Here is a list of some discounts your insurance company may offer: Mature-homeowner, Longtime-customer, Multiple policy, Non-smoker

*Variable Life Insurance

: A form of permanent life insurance, this life insurance provides permanent protection to the beneficiary upon the death of the policy holder. This type of insurance is generally the most expensive type of cash-value insurance because it allows you to allocate a portion of your premium dollars to a separate account comprised of various instruments and investment funds within the insurance company's portfolio such stocks, bonds, equity funds, money market funds and bond funds. In addition, because of investment risks, variable policies are considered securities contracts and are regulated under the federal securities laws; therefore, they must be sold with a prospectus.

Insurance Claim

: A formal request to an insurance company asking for a payment based on the terms of the insurance policy. Insurance claims are reviewed by the company for their validity and then paid out to the insured or requesting party (on behalf of the insured) once approved.

*Credit Life Insurance:

: A life insurance policy designed to pay off a borrower's debt if that borrower dies. The face value of a credit life insurance policy decreases proportionately with an outstanding loan amount as the loan is paid off over time until both reach zero value.

Level Term Insurance

: A type of term life insurance for which the premiums remain the same throughout the duration of the contract. The premium paid on this type of policy will be higher at the beginning of its life but lower towards the end of its life as compared to term policies that have rising premium rates.

4. Disability Insurance

: Disability insurance can replace a portion of the salary you were making before you became disabled and were unable to work after a serious injury or illness.

*Limited Pay Insurance

A contract provision used in insurance to limit the amount that can be paid in the policy period. An aggregate limit is the maximum dollar amount your insurer will pay to settle your claims. Often the limit is referred to as an annual aggregate limit, which is just the total amount your insurer will pay in a single year.

Homeowner's Insurance

A form of property insurance designed to protect an individual's home against damages to the house itself, or to possessions in the home. This also provides liability coverage against accidents in the home or on the property.

Renters Insurance:

A form of property insurance that provides coverage for a policy holder's belongings and liability within a rental property. Renter's insurance applies to persons renting or subletting a single family home, apartment, duplex, condo, studio, loft or townhome. The policy protects against losses to the tenant's personal property within the rented property. In addition, a renter's insurance policy protects against losses resulting from liability claims, such as injuries occurring on the premises that are not due to a structural problem with the property.

Insurance Claim

A formal request to an insurance company asking for a payment based on the terms of the insurance policy. Insurance claims are reviewed by the company for their validity and then paid out to the insured or requesting party (on behalf of the insured) once approved.

*Whole Life Insurance

A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against.

Primary Care Physician:

A physician, such as a family practitioner or internist who is chosen by an individual to provide continuous medical care, trained to treat a wide variety of health-related problems, and responsible for referral to specialists as needed.

Property Insurance:

A policy that provides financial reimbursement to the owner or renter of a structure and its contents, in the event of damage or theft. It can include homeowners insurance, renters insurance, flood insurance and earthquake insurance. Personal property is generally covered by a homeowners or renters policy, unless it is of particularly high value, in which case it can usually be covered by purchasing an addition to the policy called a "rider". (http://www.investopedia.com/video/play/home-insurance/)

*Term Insurance

A policy with a set duration limit on the coverage period. Once the policy is expired, it is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage end.

Actuary

A professional statistician working for an insurance company. They evaluate your application and medical records to project how long you will live. They are intensively educated and their knowledge is used in many different fields in order to predict future events based upon past occurrences.

Riders (Floaters

A provision of an insurance policy that is purchased separately from the basic policy and that provides additional benefits at additional cost. Standard policies usually leave little room for modification or customization, beyond choosing deductibles and coverage amounts. Riders help policyholders create insurance products that meet their specific needs.

It covers losses to personal property

A renter's insurance policy protects against losses to your personal property, including clothes, jewelry, luggage, computers, furniture, and electronics.

Double Indemnity: (Accidental Death And Dismemberment Insurance - AD&D)

A rider attached to a life or health insurance policy. AD&D covers death by accidental means (rather than natural causes) and dismemberment, which includes loss of the use of certain body parts (including limbs or eyesight.) These riders are usually written in such a way that the insurer must pay double the amount payable otherwise, or a specific amount of continuous income payments, and are sometimes called double indemnity riders. AD&D insurance is often offered by employers as an extra option on group health plans.

*Decreasing Term Insurance

A type of annual renewable term life insurance that provides a death benefit that decreases at a predetermined rate over the life of the policy. Premiums are usually constant throughout the contract, and reductions in policy payout will typically occur monthly or annually. Term lengths can range anywhere between one and 30 years.

*Universal Life Insurance

A type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance) which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder's circumstances change. In addition, unlike whole life insurance, this life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums.

PPO

A type of health insurance arrangement that allows plan participants relative freedom to choose the doctors and hospitals they want to visit. Obtaining services from doctors within the health insurance plan's network, called "preferred providers", results in lower fees for policyholders; however, out-of-network doctors are still covered. Coverage under a preferred provider organization (PPO) requires ongoing payment of premiums by policyholders to the insurance company.

3. Health Insurance

A type of insurance coverage that pays for medical and surgical expenses that are incurred by the insured. Health insurance can either reimburse the insured for expenses incurred from illness or injury or pay the care provider directly. Health insurance is often included in employer benefit packages as a means of enticing quality employees.

Condominium: 'Single Entity Coverage':

A type of insurance policy that covers all real property in a condominium, including both the common areas shared by all property owners as well as the individual units. Single entity coverage is used for condominiums (or condos), a type of residential property in which some common elements, such as the entryway or light fixtures, are used by all residents of the building, while other elements are only used by the condo unit owner.

Co-Pay

A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such as doctor visits and prescriptions drugs at the time the service is rendered, with the insurer paying the remaining costs. However, unlike coinsurance, where the insured is required to pay a certain percentage of the covered costs, co-pay plans require the insured to pay a specified dollar amount

POS

A type of managed-care health insurance plan that provides different benefits depending on whether the policyholder uses in-network or out-of-network health care providers. A point-of-service plan (POS) combines the features of the two most common types of health insurance plans, the health maintenance organization (HMO) and the preferred provider organization (PPO). POS plans only represent a small share of the health insurance market; most policyholders have either HMO or PPO plans.

Your Age, Sex, And Marital Status

Accident rates are higher for all drivers under age 25, especially young males and single males. Insurance prices in most states reflect these differences.

Endorsements

An attachment to a document that amends or adds to it. Typically, it is an added provision to an insurance policy. Also referred to as a "rider".

*Straight Life Insurance

An insurance product that makes periodic payments to the annuitant until his or her death, at which point the payments stop completely. These products do not allow annuitants to designate a beneficiary.

HMO

An organization that provides health coverage with providers under contract. A Health Maintenance Organization (HMO) differs from traditional health insurance by the contracts it has with its providers. These contracts allow for premiums to be lower, because the health providers has the advantage of having patients directed to them; but these contracts also add additional restrictions to the HMO's members.

Permanent Insurance:

An umbrella term for life insurance plans that do not expire (unlike term life insurance) and combine a death benefit with a savings portion. This savings portion can build a cash value - against which the policy owner can borrow funds, or in some instances, the owner can withdraw the cash value to help meet future goals, such as paying for a child's college education. The two main types of this life insurance are whole and universal life insurance policies.

Dental Care

As in medical insurance, the choice often comes down to a dental health maintenance organization (HMO or DHMO) or a preferred dental provider organization (PPO or PDO). Dental Insurance is somewhat different than regular health insurance because it focuses on preventative care such as regular check-ups and cleanings (which often carry no copays) rather than repair which is delivered at a discounted price but can be expensive procedures.

Your Coverage And Deductibles

Auto insurance providers allow you to choose your deductible and decide whether to add additional coverage that isn't necessarily required by the laws in your state. The specifics of your coverage and deductibles play a major role in your monthly payment. Typically, choosing a higher deductible means a lower monthly payment; choosing a lower deductible means a higher monthly payment. Additional coverage gives you added financial protection, depending on the claim, but will also add to your monthly costs.

How do Insurance Companies make money?

Because claims are not filed on any sort of regular timetable, there are times when the insurance company will have more cash come in reserve than it needs to pay claims. An insurance company's reserves are not held in a savings account. Rather, the insurance company invests those reserves. If the insurance company makes a positive return on those investments, then that money would be a profit. So, if the company makes a 10 percent return on the $4,500 before it needs that money to pay out claims, then it would make $450 in "extra" profit just by holding its reserves.

How does insurance work?

Because the number of insured individuals is so large, insurance companies can use statistical analysis to project what their actual losses will be within the given class. They know that not all insured individuals will suffer losses at the same time or at all. This allows the insurance companies to operate profitably and at the same time pay for claims that may arise.

What You Drive

By collecting a large amount of data from customer claims and analyzing industry safety reports, auto insurance providers often develop vehicle safety ratings and offer discounts to customers who drive safer vehicles. Some insurers increase premiums for cars more susceptible to damage, occupant injury, or theft, and lower rates for those that fare better than the norm. 2010 Toyota 4Runners, for example, rate highly in terms of driver protection and passenger protection, which means discounts on insurance. And while two-door Honda Civics are one of the country's most popular vehicles, their lower-than-average safety ratings and desirability to car thieves make them more expensive to insure.

Your Driving Record

Drivers who cause accidents generally must pay more than those who are accident-free for several years. Remain vigilant and maintain your good driving habits. And even though you can't rewrite your driving history, having an accident on your record can be an important reminder always to drive with caution and care. As time goes on, the effect of past accidents on

It may cover additional living expenses.

If your home becomes uninhabitable due to one of the covered perils, your renter's insurance policy may cover "additional living expenses," including the cost associated with living somewhere else temporarily, food and more.

Where You Drive

Generally, due to higher rates of vandalism, theft, and accidents, urban drivers pay more for auto insurance than do those in small towns or rural areas.

Trampoline

I suspect you're starting to notice a theme here - items that are the source of frequent accidents are not popular with insurance companies. However, if you own a trampoline your insurance company should know about it or it might become an issue if you file a claim in the future.

. Breeds of Dogs - Rottweilers, Doberman Pinschers, Pit

If you have certain 'dangerous' breeds of dogs, your insurance company should know about it, or you might not be covered in a claim that involves the dogs. Of course, the insurance company could increase your rates or exclude anything related to the dogs.

5. Professional Liability Insurance:

Insurance that protects professionals such as accountants, lawyers and physicians against negligence and other claims initiated by their clients. It is required by professionals who have expertise in a specific area because general liability insurance policies do not offer protection against claims arising out of business or professional practices such as negligence, malpractice or misrepresentation.

Insurance Pool

Insurance works by pooling risk. What does this mean? It simply means that a large group of people who want to insure against a particular loss pay their premiums into what we will call the insurance pool.

It provides liability coverage

Liability coverage is also included in standard renter's insurance policies. This provides protection if someone is injured while in your home or if you (or another covered person) accidently injure someone.

Medicaid

Medicaid is a federal-state cooperative program designed to ensure that people with low incomes or disabilities regardless of age can receive health care. Each state decides who is eligible for Medicaid benefits and what services will be included.

Personal Injury (Medical)

Medical payments coverage is an alternative to personal injury protection coverage that also pays for medical expenses you have after an accident regardless of who is at fault. Medical payments coverage is more limited than PIP coverage because it only covers medical expenses and funeral costs.

Medicare

Medicare is the federal health insurance program for the elderly and for those under age 65 with certain disabling conditions. It consists of two parts: (1) Hospitalization Insurance which is financed by a payroll tax on all workers and employers and (2) Supplementary Medical Insurance which is financed with premiums paid by those who participate in the program and from general tax revenues.

How Often, And How Far, You Drive

People who use their car for business and long-distance commuting normally pay more than those who drive less. The more miles you drive in a year, the higher the chances of an accident - regardless of how safe a driver you are. Consider joining a car or van pool, riding your bike, or taking public transportation to work. If you reduce your total annual driving mileage enough, you may lower your premiums.

Prescription Coverage:

Plans that pay for pharmaceuticals; lower copays with generic.

It covers your belongings when you travel.

Renter's insurance covers your personal belongings, whether they are in your home, car, or with you while you travel. Your possessions are covered from loss due to theft and other covered losses anywhere you travel in the world.

Risk Management

Simply put, this is a two-step process - determining what risks exist in and then handling those risks in a way best-suited to your objectives.

Social Security Disability:

Social security disability benefits are paid to workers who are: (1) covered under social security (2) have been disabled at least five months (3) whose disability is expected to last at least twelve months and (4) who are unable to do any work whatever. If you're eligible, disability income benefits are paid to you, your spouse, and your dependent children.

Insurance Deductible

The amount you have to pay out-of-pocket for expenses before the insurance company will cover the remaining costs. If you get into an accident and your medical expenses are $2,000 and your deductible is $300, then you would have to pay the $300 out-of-pocket first before the insurance company paid the remaining $1,700. However, if your accident only resulted in $300 in medical expenses, then you would pay the $300 deductible and the insurance company would pay nothing.

It's affordable.

The average renter's insurance policy costs $187 a year

Out of Pocket Expenses

The health insurance out-of-pocket maximum is the largest amount of money you pay toward the cost of your healthcare each year. After you've paid enough in deductibles, copays, and coinsurance to reach your out-of-pocket maximum, your health insurance company pays for all of the rest of your healthcare that year.

Insurance Premium

The specified amount of payment required periodically by an insurer to provide coverage under a given insurance plan for a defined period of time.This is paid by the insured party to the insurer, and primarily compensates the insurer for bearing the risk of a payout should the insurance agreement's coverage be required.

Outpatient Care

This care describes medical care or treatment that does not require an overnight stay in a hospital or medical facility. This care may be administered in a medical office or a hospital, but most commonly, it is provided in a medical office or surgery center.

Vision Care

This insurance will often cover routine eye health expenses such as eye exams, contact lens fittings, contact lenses and eyeglass lenses and frames and may provide a discount on LASIK procedures. The plan may cover the cost of these items in full, up to a preset limit, or may require the policyholder to pay a flat fee or percentage fee to share the expense with the insurer.

Social Security Disability

This provides benefits to disabled persons if they cannot currently work due to a medical condition that is expected to last at least one year. Family members of disabled workers may also be eligible to receive money. Applicants for this must generally meet a minimum threshold of years worked.

Long Term Disability:

This type of coverage protects for a longer time period (on average more than six months), often until age 65 or for life.

Short term Disability

This type of coverage provides coverage for disabilities of up to two years, but most policies pay up to six months on average.

Worker's Compensation

This type of insurance provides disability benefits, loss-of-income, medical care payments, and death benefits for workers who are hurt, become ill, or are killed on the job. Coverage and compensation amounts vary from state to state. Payment for this insurance is made entirely by employers through a payroll tax.

Distance from fire station

Though you likely would not move because of this factor, it might be a reason to buy one house over the other. Homes that are closer to fire stations can see a lower premium than homes that are a long way from fire stations. 5. Credit Rating Your credit score does matter when it comes to house insurance rates. Hey, I'm one of these folks that thinks that is a little ridiculous, but what can you do? When insurance companies start noticing statistical trends, they change the price accordingly. Statistically, those with lower credit scores make more claims, so the higher your credit score, the lower your premiums.

Assigned Risk:

Type of auto insurance plan that gives the ability to obtain insurance from a pool of insurers to individuals that have previously been denied insurance coverage based on risk factors. All licensed insurers must participate in this type of plan and are allowed to determine their own rates. Individuals cannot be denied for this type of plan and the fees are usually much higher than regular auto insurance plans.

• Who has to have insurance?

Virginia law requires that all drivers have a way to pay for injuries or property damage resulting from a car accident. You can satisfy this financial responsibility law by EITHER: o Purchasing car insurance. OR o Paying Virginia's Department of Motor Vehicles to drive uninsured. If you choose to purchase auto insurance to fulfill your financial responsibility, you must buy Virginia liability car insurance to help cover the costs of injuries and property damage to others you caused in a car accident.

Swimming Pool

When people do a cost analysis of putting in a pool, they often forget to include the insurance impact. If you are looking at buying a house or adding on a pool, call your insurance company and see how the pool will affect your rates.

Why get Renter's insurance?

While 95% of homeowners have a homeowner's insurance policy, only 37% of renters have renter's insurance, according to a 2014 Insurance Information Institute poll conducted by ORC International.

Fee for Service Health Insurance

With this insurance plan, you choose the doctor, the clinic, or the hospital you want and they bill for the services they provide. You're required to pay a deductible before the insurance company begins paying. After you've paid the deductible, the coinsurance provision goes into effect and expenses are divided between you and the insurance company. The most common coinsurance is 80%-20% which means the insurance company pays 80% of the covered expenses and you pay the remaining 20%.

Worker's Compensation

Workers' compensation should not be confused with disability insurance or unemployment income; it only pays workers who are injured on the job, while disability insurance pays out regardless of when or where the insured is injured or disabled. Workers' compensation also does not cover unemployment. Unlike unemployment income or disability benefits, workers' compensation is always tax-free.

Diagnostic Services

X-rays, MRI, Cat Scan, EKG, EEG, Lab tests; if approved they are covered with a copay.

Your landlord might require it.

Your landlord's insurance covers the structure itself and the grounds, but not your belongings.

The following minimums apply to your liability coverage

o $25,000 for injuries per person per accident. o $50,000 for total injuries per accident. o $20,000 for property damage per accident.

Temporary Insurance

provides protection for a specified period of time only, like a term of 10, 20, or 30 years. Term is the most affordable coverage because it doesn't have any fancy features—all it offers is a pure death benefit. The price, or premium, typically stays the same each year during the term.

Inpatient Care

the care of patients whose condition requires admission to a hospital. Progress in modern medicine and the advent of comprehensive out-patient clinics ensure that patients are only admitted to a hospital when they are extremely ill or are have severe physical trauma.

Insurance Risk

the chance of loss or the perils to the subject matter of an insurance contract; the degree of probability of such loss; a person or thing that is a specified hazard to an insurer; an insurance hazard from a specified cause or source

Major Medical

this type of medical insurance is designed to insure against catastrophic loss. There are two types of major medial plans, Supplemental (rarely used today) and Comprehensive (the most common form of health insurance).

Beneficiary:

typically refers to someone who is eligible to receive distributions from a trust, will or life insurance policy. Beneficiaries are either named specifically in these documents or they have met the stipulations that make them eligible for whatever distribution is specified.