Vocabulary
An agreement where a company agrees to guarantee payment for a loss, as long as you pay a premium.
What is insurance?
Your car starts making a loud noise out of the blue, and your friend who's into cars says you lost your muffler. You need to get it repaired.
You will pay for this repair. There was no accident that you know of.
A hailstorm causes damage to the aging roof on your house.
Your home insurance will cover it -- you've already been paying a higher premium due to the age of your roof.
You are 35 years old and have never gotten a ticket for any reason.
Your auto insurance premium will be affected, and you will pay less.
Your are buying a second car and will own two cars.
You need auto insurance even though you already have it for your other car.
The amount you pay for an insurance policy (usually paid monthly).
What is a premium?
Someone backs into your parked car in a grocery store parking lot, causing damage to both cars.
The other driver's auto insurance company will pay for the damage to both cars.
You totaled your car in an accident that was your fault. No one is able to drive you around until you can buy a new car, so you need a rental.
Most auto insurance plans cover rental cars, but you should check and make sure it's in your coverage!
Your house is the only one on your street that is painted a shade of green.
Your home insurance premium will not be affected.
You are getting an apartment and want to make sure you can pay for anything the landlord refuses to cover.
You need renter's insurance.
What you will be responsible to pay before your insurance pays for damages that have occurred after there's been an accident/disaster.
What is a deductible?
You are driving on the highway, when suddenly the car in front of you stops very suddenly. Even though you were following at a safe distance, you still hit the other car, damaging both cars.
Your auto insurance company will pay for the damages to both cars, minus your deductible.
A nearby lake overflows due to an amount of rain that has never been seen before in your county. The walls in your basement, along with several of your belongings, are completely ruined.
These damages are not covered by home insurance. You would have had to buy flood insurance ahead of time in order to get help with paying for the damage.
Your roof is about 15 years old, but it looks fine!
Your home insurance premium will be affected, and you will pay more.
Your parents are buying a summer home down south.
They will need to buy home insurance for that house.
The things included under the insurance policy that the insurance company has agreed to pay for if they are affected in an accident/disaster.
What is coverage?
A tree falls on your garage after a violent wind storm.
Your home insurance company will pay for the damages, minus your deductible.
Your rental apartment becomes infested with termites. They have eaten away almost an entire wall in your bedroom.
Rental insurance does not cover this, unfortunately. It's not looking good for you!
Your car is painted a color that stands out, with extra paint on the sides to make it look even flashier.
Your auto insurance premium will be affected, and you will pay more.
Your parents just bought a car for you! You're too young to drive it right now, so it will stay in a garage for a few years.
You still need auto insurance for the car, even if it isn't being driven.
The steps you take to make sure you're prepared for any negative events that could happen to things that are valuable to you (like your house or your car).
What is risk management?
A motorcyclist speeds past your car as it is parked in front of your house on your street, completely taking out your side mirror. You don't get a good look at the license plate, and the cyclist doesn't turn around and come back.
Your auto insurance company will pay for the damage to your car because the motorcyclist did not stop to provide his/her insurance information.
You have some of your friends over, and you're playing in the backyard. One of your friends who was climbing a tree falls and breaks his arm.
This will be covered by your parents' home insurance policy. This will be used before any health insurance policies.
Your car is 15 years old and isn't in the best shape, but it gets you where you need to go!
Your auto insurance premium will be affected, and you will pay less.
(This is because the insurance company won't pay as much for damage done to an older car that isn't worth as much as a newer car.)
Your dad is really into antique cars. He has a storage facility where he stores several antique cars he has bought. He never drives them, but he shows them to friends sometimes.
Your dad still needs auto insurance to own the antique cars, but some insurance companies offer a special type of "antique car" insurance.