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Protecting Your Property. #10. Learning Goals. Property Insurance Basics. Property insurance Protects real and personal property from losses from various perils. Liability insurance Protects against financial consequences from insured’s responsibility to others. Types of Exposure.
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Property Insurance Basics • Property insurance • Protects real and personal property from losses from various perils • Liability insurance • Protects against financial consequences from insured’s responsibility to others
Types of Exposure • Property loss • Economic loss due to property that is damaged, destroyed or stolen • Inventory property • Identified potential perils
Types of liability protection: Types of Exposure Liability-damage you cause others, either through actions or negligence
Principle of Indemnity Most property and liability insurance contracts are based on this principle Insured may not be compensated by insurance company an amount exceeding economic loss
Concepts Related to Indemnity • Actual cash value • Value assigned to insured property • Replacement cost less depreciation • Right of Subrogation • Insurer’s right to request reimbursement from person who caused the loss or that person’s insurer
Insurance companies do not want you to profit from a loss Concepts Related to Indemnity Other insurance clause - When multiple companies insure a property, together they will not pay more than the economic loss
Homeowner's Insurance • Homeowners • HO-1—Basic Form • HO-2—Broad Form • HO-3—Special Form • HO-8—Modified Form • Renters • HO-4—Renter’s Form • HO-6—Condominium Form
Policy states conditions (perils) under which it will pay Stipulate property covered and extent of coverage Peril—a cause of loss such as fire, lightning, windstorm Homeowner's Insurance
Property Covered • Section I- • Loss to property conditions under which it will be covered, extent of coverage • Perils rarely covered: flood, earthquake, acts of war • Section II- • Liability which may arise in connection to either property, either through your actions or negligence
Personal Property Floater Provides blanket or scheduled coverage of expensive personal property not adequately covered by standardized homeowner’s policy
Persons and Locations Covered • Policy states who is covered • Coverage for guests and students at college may be limited. • Most homeowner’s policies offer coverage worldwide • Second home may be an exception
Limitations on Payments • Replacement cost • Amount necessary to repair, replace, or rebuild an insured asset at today's prices • Policy limits • Placed on covered property and depend on amount of home coverage
Deductibles keep insurance costs down by eliminating frequent small loss claims that are proportionately more expensive to administer Deductibles Deductible - amount paid out of pocket on covered losses
Part A: Persons Insured • Insured Person • The named insured • Family members • Any person using covered auto • Any person or organization responsible for insured’s actions • Covered Auto • Listed on declaration page • Acquired during policy period • Any vehicle temporarily used while auto is being repaired
Pays when other driver has no insurance or if hit-and-run Usually pays for bodily injuries, not property damage Additional coverage available to protect against underinsured motorists Must meet criteria: Another driver at fault Other motorist uninsured Damages were incurred Part C: Uninsured Motorists
Part D: Physical Damage to a Vehicle Collision
Part D: Physical Damage to a Vehicle Comprehensive
Financial Responsibility Laws Require motorists to buy a minimum amount of auto liability insurance
Supplemental Property Insurance Coverage Personal liability umbrella - additional liability coverage for homeowner and auto insurance
Property and Liability Insurance Agents • Captive agent • Represents one insurance company • Independent agent • Represents multiple insurance companies • Before selecting • Review total property and liability exposures • Inventory property and identify exposures • Determine appropriate covered perils, limits, deductibles, and floater policies
Buying Insurance and Settling Claims • After an accident be sure to get: • Names, addresses, phone numbers • Driver’s license, auto license, insurance policy numbers • Vehicle description for all involved • Remember to- • Get names, addresses, phone number of witnesses • Contact police and insurance agent • Do NOT leave the scene of the accident
Steps in Claim Settlement • Claims adjuster will: • Evaluate claim • Recommend • Settlement of amount requested • Settlement of a lesser amount • Denial of claim • Notice to insurance company • Investigation • Proof of loss