Risk Management
• What is Risk Management?
• Standard 2.5 – Analyze personal risk
management (insurance)
Risk Management
• Refers to how you deal with the chance of
a potential personal or financial loss.
• What kind of risk are you?
• Name 2 characteristics that make your
best friend a driving risk?
What affects Risk
• Name factors that affect the price of auto
insurance.
• Share with the person beside you.
1. Age
• The younger you are, the higher the
premium.
• Young drivers have more accidents.
True or False
• Sixteen year old drivers have crash rates
that are three times greater than those of
17 year old drivers and five times greater
than those of 18 year old drivers
True
2. Gender
• Males under the age of 25 have
significantly higher accident rates than
females under the age of 25. So they pay
more.
3. Marital Status
• Married people are more careful drivers
because they tend to have fewer
accidents.
4.Type of Car
• The value, size, weight, age of your
vehicle, and even the cost of replacement
parts are essential to determining your
premium payment.
• The Model of your car is also a factor.
• Safety features can reduce your premium.
5. How often you drive
• The more you drive a car, the more likely
you are to be involved in an accident.
6. Location
• The odds of an accident occurring are
statistically greater in a highly populated
city than in a small rural town.
7. Driving Record
• Getting speeding tickets and other traffic
violations makes you a riskier driver to
insure.
True or False
• Using lap and shoulder safety belts
reduces the risk of fatal injury to front seat
auto occupants by 45% and the risk of
moderate to critical injury by 50%?
True
• Use your seat belt!
8. Claim Record
• Insurance companies believe drivers with
histories of accidents are more likely to be
involved in future accidents.
9. Credit History
• Insurance companies believe that people
who are responsible with their finances
tend to be more responsible with
managing their risk.
Other Random Risk Factors
• Attention
• Appearance
True of False
• Nearly 80% of crashes and 65% of near
crashes involve some form of driver
inattention in the 3 seconds before the
event.
True
• Don’t use your cell phone
while driving!
Let’s play the Price is Right
• Go to Groups.
• Use the 12 drivers and rank them in order
from highest risk to lowest risk. #1 being
the biggest risk.
• You have 10 minutes.
• At the end of 10 we will reveal the winners.
Individual Activity
• What type of automobile coverage should
a risky driver have?
• Research and explain in paragraph form.
• Prelude to tomorrow’s lesson.
Day 2
Why do we purchase insurance?
• Explain.
• Standard 2.5 – Analyze personal risk
management (insurance)
Key words for insurance
• Premium – the rate paid for insurance
• Deductible – is the amount of a loss you
must pay out of your own pocket before
the insurance company will step in and
pay the rest.
• Coverage limit – is the maximum amount
the insurance company will pay if you file a
claim
Insurances to Consider
• What are some?
Health Insurance
• Is to cover medical expenses.
• Most used.
Life Insurance
• Is insurance that provides funds to the
beneficiaries when the insured dies.
• Insurers us mortality rates, to determine
risk. This determines rate.
• Most common form –
1) Term Life Insurance – remains in effect
for a specific time.
Homeowners Insurance
• Is insurance that protects property
owners from property and liability risks.
1) Hazards – fire, water, wind, etc
2) Criminal Activity
3) Liability
Renters Insurance
• Is insurance that protects renters from
property and liability risks.
• A renter’s policy will protect your personal
possessions inside the rental from loss
due to fire, smoke and other types of
damage such as water, freezing, or heat.
• If you are liable for injury it will pay medical
cost for guest.
Disability Insurance
• Is an insurance plan that makes regular
payments to replace income lost when
illness or injury prevents the insured from
working.
• Often overlooked insurance.
Long-term care Insurance
• Insurance to cover additional expenses
not covered by other insurances.
• Long-term care insurance generally covers
home care, assisted living, adult daycare,
respite care, hospice care, nursing home
and Alzheimer's facilities.
Auto Insurance Coverage
• There are different types of coverage.
1. General Liability
2. Medical Payments
3. Collision
4. Comprehensive
5. Uninsured Motorist
6. Underinsure Motorist
General Liability
• Covers damage you cause to other
people’s property (car) and bodily injuries
you cause to people outside of your car.
• Is required in the state of Tennessee.
Medical Payments
• While general liability covers bodily injuries
you cause to people outside of your car,
medical payments cover immediate
compensation for bodily injury expenses to
you and your passengers regardless of
who is at fault.
Collision
• Covers repairs for damage you cause to
your car caused by an accident, whether it
involves another vehicle or an object, such
as a tree.
Comprehensive
• This covers fire damage to your vehicle,
break-ins, vandalism, or theft, as well as
natural disasters such as earthquakes,
hail, hurricane, or flood.
• Basically it covers everything except an
actual collision.
Uninsured Motorist
• This covers your lost wages and medical
expenses if you are in an accident with
someone who doesn’t have auto
insurance.
Underinsured Motorist
• This coverage is slightly different in that it
covers you when the cost of repairs from
an accident caused by another driver
exceeds his or her coverage limits.
Price is right – Only Liability
Coverage
• Go to Groups.
• Use the 12 drivers and rank them in order
from highest risk to lowest risk. #1 being
the biggest risk.
• You have 5 minutes.
• At the end of 5 we will reveal the winners.
Summarization
• Write down 2 types of auto insurance
coverage.
• When should a person purchase life
insurance?
• Why should a person purchase disability
insurance?
• Turn in for assessment. You have 5
minutes.
Test Tomorrow