Introduction to Financial Literacy: Insurance

Vocabulary flashcards defining fundamental insurance terms, risk management strategies, auto policy components, homeowner policy types (HO-1 through HO-8), and supplemental liability coverage.

Property Insurance

Insurance that ensures damages to your auto and home are covered and protects your personal assets from liability.

Liability

The amount that you may be required to pay someone for damages that you caused.

Risk

Exposure to events or perils that can cause financial loss.

Risk Management

Decisions about whether and how to protect against risk.

Premium

The cost of obtaining insurance.

Underwriters

Individuals hired by an insurance company to calculate the risk of specific insurance policies, decide what policies to offer, and determine what premiums to charge.

Insurance Agent

A professional who recommends insurance policies for customers.

Captive Insurance Agent

An insurance agent who works for one particular insurance company; also known as an exclusive agent.

Independent Insurance Agent

An insurance agent who represents many different insurance companies.

No-Fault Insurance Program

An insurance arrangement that does not hold a specific driver liable for causing an accident; in Florida, it pays up to $\\text{\$10,000}$ for damages and up to $80\%$ of medical expenses to the insured only.

Insurance Policy

A contract between an insurance company and a policyholder.

Auto Insurance Policy

A contract specifying the coverage provided by an insurance company for a particular individual and vehicle.

Bodily Injury Liability Coverage

A component of auto liability coverage that protects against financial liability associated with injuries caused by the policyholder.

Property Damage Liability Coverage

A component of auto liability coverage that protects against losses resulting from damage caused by the policyholder to another person's property with their car.

Financial Responsibility Laws

Laws that require individuals who drive cars to purchase a minimum amount of liability insurance.

Medical Payments Coverage (Coverage B)

Auto insurance coverage that insures against the cost of medical care for you and other passengers in your car when you are at fault in an accident.

Uninsured Motorist Coverage

Auto insurance coverage that protects against the cost of bodily injury when an accident is caused by a driver who carries no insurance.

Underinsured Motorist Coverage

Auto insurance coverage that protects against bodily injury costs when an accident is caused by a driver with insufficient coverage.

Collision Insurance

Auto insurance coverage that insures against the costs of damage to your car resulting from an accident in which the policyholder is at fault.

Comprehensive Coverage

Auto insurance coverage that insures against damage to your car resulting from non-accident events such as floods, theft, fire, hail, explosions, and riots.

Deductible

A set dollar amount that the policyholder is responsible for paying before any insurance coverage is provided by the insurer.

HO-1

A basic homeowner's policy protecting against fire, lightning, explosions, hail, riots, vehicles, aircraft, smoke, vandalism, theft, malicious mischief, and glass breakage.

HO-2

A homeowner's policy protecting against all HO-1 perils plus falling objects, weight of ice, snow, or sleet, building collapse, water/steam overflow, power surges, and plumbing/heating system explosions or freezing.

HO-3

A homeowner's policy protecting the home and other property structures against all events except specific exclusions (such as earthquakes, floods, termites, war, and nuclear accidents), while protecting personal assets against HO-2 perils.

HO-4

Renter's insurance policy that protects personal assets from events such as theft, fire, vandalism, and smoke.

HO-5

A homeowner's policy protecting the home, other property structures, and personal assets against all events except specified exclusions, providing slightly more personal asset coverage than HO-3.

HO-6

Condominium owner's insurance policy that protects personal assets from events such as theft, fire, vandalism, and smoke.

HO-7

A homeowner's policy specifically intended to cover mobile homes and house trailers.

HO-8

A homeowner's policy protecting the home from HO-1 perils based on cash values or repair costs rather than replacement costs.

Renter's Insurance

An insurance policy that covers your possessions within a rented house, condo, or apartment, and covers liability from damages to a person on your property.

Umbrella Personal Liability Policy

A supplement to auto and homeowner's insurance that provides additional personal liability coverage beyond standard policy limits.