Vocabulary
This is the monthly payment you make to maintain insurance coverage.
What is a premium?
This insurance covers your belongings inside an apartment.
What is renters insurance?
You rear-end another car. Who is usually at fault?
The driver in the back.
You have a $500 deductible and $3,000 in damage. How much do you pay?
$500.
This coverage pays for damage you cause to another person’s car.
What is liability coverage
This is the amount you must pay before insurance begins to pay.
What is a deductible?
DAILY DOUBLE
This is a fixed dollar amount you pay for a medical visit.
What is a copay?
You hit a tree. Which coverage applies?
Collision coverage.
You have a $1,000 deductible and $6,000 in damage. How much does insurance pay?
$5,000.
This coverage pays for damage to your car after you hit another vehicle.
What is collision coverage?
This is the maximum amount an insurance company will pay for a claim.
What is a coverage limit?
This insurance replaces part of your income if you cannot work.
What is disability insurance?
A thief steals your car. Which coverage applies?
Comprehensive coverage.
Your liability limit is $25,000. Damages total $40,000. How much does insurance pay?
$25,000.
This coverage applies if a deer hits your car.
What is comprehensive coverage?
This is the concept of sharing financial risk among many policyholders.
What is risk pooling?
Which is typically more expensive: renters insurance or homeowners insurance?
Homeowners insurance.
You cause $10,000 in damage to someone else’s car. Which coverage pays?
Liability coverage.
If you choose a lower monthly premium, what usually happens to your deductible?
It increases.
This coverage protects you if the other driver has no insurance.
What is uninsured/underinsured coverage?
Insurance companies charge higher premiums to high-risk drivers. Why?
Because they are more likely to file claims and cost the company more money.
Why might a healthy 23-year-old choose a high-deductible health plan?
Lower monthly premium and lower expected medical use.
DAILY DOUBLE
A driver decides not to buy insurance and instead saves money. They cause $30,000 in damage. Why is this risky?
An accident can exceed savings quickly, leaving the driver responsible for large financial losses.
A driver has $25,000 liability coverage and causes $40,000 in total damage. How much will insurance pay, and who pays the remaining amount?
Insurance pays $25,000. The at-fault driver pays the remaining $15,000.
DAILY DOUBLE
A driver has liability and comprehensive coverage but no collision. They rear-end someone and damage their own car. What happens and why?
Liability pays for the other driver’s damage. The at-fault driver pays for their own car because comprehensive does not cover collision accidents.