Risky Business

We had the unfortunate opportunity to talk with our kids about car insurance. My husband was rear-ended while stopped to take a left turn into a parking lot to drop off my son for lacrosse practice. Thankfully no one was hurt.

(There was the added lesson of reminding our new teen permit driver not to text while driving…the young woman who hit my husband’s car was texting!)

This became a great opportunity to talk about Risk Management or better known as Insurance.

My kids bombarded us with all sorts of questions such as: whose fault was it, who has to pay to fix our car, and what if we’d been hurt? When we answered “We have car insurance to cover the damage”…they asked “What’s that?”

Even for adults, insurance can be confusing at best. It’s important for your kids and teens to get the basic idea that insurance is to protect your family from an unexpected large loss that would be hard to pay for with the regular family savings. You are transferring the risk (the responsibility to pay for the losses) to the insurance company in exchange for you paying the insurance company a premium (an annual payment).

You can discuss the different types of insurance that the family has:

Property and Casualty Insurance:
• Auto insurance
• House insurance
• Umbrella insurance

Health Insurance:
• Medical insurance
• Dental insurance
• Disability insurance

Life insurance:
• Term Life insurance
• Whole or Universal Life Insurance

Of course, the discussion will bring up all sorts of lovely insurance terms: premium, claim, insurer, coverage, term, policy holder, etc.

To help you: The Insurance Information Institute has a nice glossary and CarInsurance.com has a comprehensive dictionary for auto insurance terms.

And while you’re at it – you can take the No Phone Zone pledge!