Module 10 Property & Liability Insurance

1. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMFinancial Planning Process & Insurance Module 10Property & Liability Insurance

2. Learning Objectives 10-1: Analyze a P&L policy declarations page to determine the adequacy of the insurance coverage provided. 10-2: Compare the characteristics of various forms in the homeowners insurance series. 10-3: Explain the characteristics of a given general liability policy used to protect individuals against legal liability. 10-4: Explain the different types and characteristics of professional liability insurance. 10-5: Explain the characteristics of umbrella liability insurance. 10-6: Explain the purpose of title insurance. 10-7: Explain the characteristics and uses of inland marine coverage. 10-8: Explain a characteristic of personal auto policy coverage. 10-9: Explain a characteristic related to commercial property or commercial liability coverage.

3. Questions to Get Us Warmed Up

4. Learning Objectives 10-1: Analyze a P&L policy declarations page to determine the adequacy of the insurance coverage provided. 10-2: Compare the characteristics of various forms in the homeowners insurance series. 10-3: Explain the characteristics of a given general liability policy used to protect individuals against legal liability. 10-4: Explain the different types and characteristics of professional liability insurance. 10-5: Explain the characteristics of umbrella liability insurance. 10-6: Explain the purpose of title insurance. 10-7: Explain the characteristics and uses of inland marine coverage. 10-8: Explain a characteristic of personal auto policy coverage. 10-9: Explain a characteristic related to commercial property or commercial liability coverage.

5. Property & Liability Insurance Accident Claim Quotes Coming home I drove into the wrong house and collided with a tree I don't have. I was on my way to the doctor with rear end trouble when my universal joint gave way causing me to have an accident. To avoid hitting the bumper of the car in front, I struck the pedestrian. The guy was all over the road. I had to swerve a number of times before I hit him. The pedestrian ran for the pavement, but I got him.

6. Video • Play Video • House on Fire • 1:40 minutes • Play video from Video Layout Text chat or other questions

7. Homeowners Insurance Forms: Perils Insured Against

8. Homeowners Coverages: Sections I & II

9. Question 1 - Homeowners General Exclusions Which of the following is not one of the eight general exclusions that apply to all standard ISO homeowners policies? • vandalism • earth movement • war • neglect

10. Coinsurance for Property Coverage (coinsurance penalty) Coinsurance requirement* usually 80% of replacement cost. This is primarily a concern in the event of a partial loss. *Insurance required is generally 80% of current replacement cost, but can vary on a company-specific basis from 70% to 90%.

11. Replacement Cost or Actual Cash Value

12. Personal Liability Coverage General • Personal liability • Non-business • Non-automobile • Medical payments to others Additional • Claim expense • First aid expense • Damage to property of others • Loss assessment coverage

13. Comprehensive Personal Liability (CPL) & Umbrella Liability Coverages

14. Question 2 - Comprehensive Personal Liability Comprehensive personal liability coverage (CPL) can be acquired in all of the following ways except as • an individual CPL policy. • part of a homeowners policy. • an endorsement to a monoline dwelling form. • an endorsement to a personal auto policy (PAP)

15. Learning Objectives 10-1: Analyze a P&L policy declarations page to determine the adequacy of the insurance coverage provided. 10-2: Compare the characteristics of various forms in the homeowners insurance series. 10-3: Explain the characteristics of a given general liability policy used to protect individuals against legal liability. 10-4: Explain the different types and characteristics of professional liability insurance. 10-5: Explain the characteristics of umbrella liability insurance. 10-6: Explain the purpose of title insurance. 10-7: Explain the characteristics and uses of inland marine coverage. 10-8: Explain a characteristic of personal auto policy coverage. 10-9: Explain a characteristic related to commercial property or commercial liability coverage.

16. Professional Liability Insurance • Covers failure to use due care in professional practice • Malpractice: physicians, surgeons, dentists • Errors and Omissions: insurance agents, attorneys, accountants, etc. • Occurrence basis • policy in place when event happened will pay • Claims made basis • policy in place when claim is made pays

17. Title Insurance • Protects against defective title to land and improvements • Defects discovered by title insurance company are listed and excluded—suits from undiscovered defects will be defended • Policy term indefinite—terminates when property is sold by insured • Attorney’s abstract (opinion) not a good substitute • The Torrens System: an alternative to title insurance, only used in a few states

18. Inland Marine Insurance (Personal Property) Personal Property Floater • Provides open perils-level coverage Broad coverage for: • Articles that may be moved or are in transit • Examples: jewelry, furs, silverware • Purpose: to cover articles excluded or limited on homeowners policies • Not used for installed property (e.g., wall-to-wall carpet) • May be purchased as a separate policy or by endorsement on homeowners policy as Scheduled Endorsement • Also known as: Personal Articles Floater

19. Question 3 - Inland Marine or Personal Articles Floater Personal property floater (inland marine) policies are available for which of the following items? • silverware • musical instruments • golfing equipment • installed carpeting • I and II only • II and III only • I, II, and III only • I, II, III, and IV

20. Learning Objectives 10-1: Analyze a P&L policy declarations page to determine the adequacy of the insurance coverage provided. 10-2: Compare the characteristics of various forms in the homeowners insurance series. 10-3: Explain the characteristics of a given general liability policy used to protect individuals against legal liability. 10-4: Explain the different types and characteristics of professional liability insurance. 10-5: Explain the characteristics of umbrella liability insurance. 10-6: Explain the purpose of title insurance. 10-7: Explain the characteristics and uses of inland marine coverage. 10-8: Explain a characteristic of personal auto policy coverage. 10-9: Explain a characteristic related to commercial property or commercial liability coverage.

21. Video Play Video • Tomorrow’s Drivers • 54 seconds • Play video from Video Layout Text chat or other questions

22. Automobile Liability Coverage • Liability coverage does not protect against loss to your own property (i.e., you cannot be liable to yourself) • Typical split-limit liability auto coverage example: 25/50/10 • Bodily injury (liability to others) covered up to $25,000 per person • Bodily injury (liability to others) covered up to $50,000 per accident • Property damage (liability to others)covered up to $10,000 • State minimum coverage is generally inadequate coverage to meet liabilities

23. State Plans Used to Compensate Victims of Auto Accidents

24. No-Fault Plans

25. The Personal Auto Policy (PAP)

26. Question 4 - Coverage for the “Borrowed” Automobile The PAP endorsement that covers people who borrow cars is known as • extended liability coverage. • the named non-owner endorsement. • the motor home endorsement. • the miscellaneous-type vehicle endorsement.

27. Business Owner Exposures • Commercial automobile • Liability • Medical payments • Physical damage • Truckers • Garage • Commercial liability • Dishonesty • Employee • Customer • Property-related 10-27

28. Commercial Insurance • Mostly mono-line coverage • Two Primary Packages • Commercial Package Policy (CPP) • larger firms • Basic package of property and liability coverages • Business customizes coverages based on needs • Business-Owner’s Policy (BOP) • smaller firms

29. Commercial Property Coverages

30. Question 5 - Commercial Liability Packages Which of the following is not a part of a Business Owner’s Policy (BOP)? • common policy conditions • property coverage • causes of loss and exclusion • commercial package policy

31. Additional Commercial Property Coverages

32. Other Commercial Liability Coverages

33. Question 6 - Professional Liability All of the following professionals would be likely to purchase errors and omissions insurance except • financial planners. • accountants. • physicians. • attorneys.

34. Question 7 - Handling Auto Claims Which of the following systems of handling automobile claims does not allow an insured to sue another driver or the other driver’s insurance company? • traditional tort system • pure no-fault • modified no-fault • expanded no-fault

35. Question 8 - Homeowners Policy Forms Which HO policy form, or combination of forms, provides the highest level of building and personal property coverage? • HO 00 02 • HO 00 03 • HO 00 15 • HO 00 05 • I only • III only • II and IV only • II, III, and IV only

36. Question 9 - Comprehensive Personal Liability Which of the following is not generally excluded from coverage in Comprehensive Personal Liability (CPL) policies? • the use of automobiles • renting a room in a house to a single tenant • liabilities incurred by physicians • the use of boats (with some exceptions)

37. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMFinancial Planning Process & Insurance Module 10End of Slides