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Summary Lesson 7 chap 8 Fina200 Econcordia notes
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Lesson 7 chap 8 Fina200 Econcordia notes
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FINA200 Personal Finance ©Lesson 7 – Chapter 8 Auto and Homeowner’s Insurance
Lesson/Chapter sections not subject to examination:
LO 1. Explain the role of risk management
Quote:
“You don’t buy life insurance because you are going to die, but because those you love
are going to live.” – Unknown author
Lesson Objectives
1. Outline typical provisions of auto insurance (LO 2)
2. Describe financial coverage provided by homeowner’s insurance (LO 3)
Background on insurance
Primary function of insurance: maintain your existing level of wealth by protecting you
against potential financial losses or liability as a result of unexpected events.
Benefits of insurance: peace of mind knowing that your assets are protected should you
suffer a loss.
Various insurances:
Health covers health care needs
Disability ensures monthly income if unable to work as a result from injury or illness
Critical illness ensures access to benefits to life-threatening illness
Life ensures financial support for dependants/others should you die
© May not be copied or duplicated
without the permission of the owner. 1
, LO 2: Outline typical provisions of auto insurance
Auto insurance:
Insures against the legal liability (as a car owner) that may arise
from causing death or injury to others.
The expense associated with providing medical care to you, your passengers, and other
persons outside your vehicle.
The costs associated with damage to your automobile.
Limits your potential liabilities (expenses due to an accident) and also protects one of
your main assets (your car).
If you own or drive a car, you are required to have a minimum level of auto insurance.
Depending upon your province of residence, auto insurance is provided through a
government agency or private property and casualty (P&C) insurance companies.
Policy specifies the amount of coverage if you are legally liable for bodily injury, if you
and your passengers incur medical bills or if your car is damaged as the result of an
accident or some other event (e.g. tree falling).
Auto Insurance Policy Provisions:
Contract between an insurance company and the policy owner
Specifies the coverage (including dollar limits) provided by an insurance company for a
particular individual and vehicle
Contract identifies the policy owner and family members who are also insured if they
use the vehicle
Three sections to an Auto Insurance Policy:
Section A: Third Party Liability Coverage
A legal term that describes the person(s) who have experienced loss because of the
insured (coverage is MANDATORY).
Two key components:
Bodily injury liability coverage: protects you against liability associated with injuries
you (or family members listed on the policy) cause to others.
© May not be copied or duplicated
without the permission of the owner. 2
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