Property and Liability Insurance

26 Property and Liability Insurance 26.1 Property Insurance 26.2 Automobile and Umbrella Insurance

Lesson 26.1Property Insurance GOALS • Explain the purpose and provisions of renter’s insurance. • Describe the need for and coverage provided by homeowner’s insurance. Chapter 26

Renter’s Insurance • A renter’s policy is insurance that protects renters from property and liability risks. • Personal property • Liability • Extended coverage Chapter 26

Homeowner’s Insurance • A homeowner’s policy is insurance that protects property owners from property and liability risks. • Homeowner’s policies typically cover property owners’ losses from these three types of risks: • Hazards—fire, water, wind, and smoke that may cause physical damages. • Crimes—criminal activity, such as robbery, burglary, arson, and vandalism. • Liability—the cost of another person’s losses for injuries at your property. Chapter 26

How Much Coverage Do You Need? • Household inventory • Exclusions • Overinsuring • Replacement value • Indemnification Chapter 26

Endorsement • An endorsement is a written amendment to an insurance policy. • Policyholders often use endorsements to add coverage to their policy for an additional premium. • For example, you can add flood or earthquake insurance as an endorsement to your homeowner’s policy. Chapter 26

Co-Insurance Clause • Most property insurance policies contain a co-insurance clause. • A co-insurance clause is a provision requiring policyholders to insure their building for a stated percentage of its replacement value in order to receive full reimbursement for a loss. • The percentage is usually at least 80 percent. • Insurers do not require 100 percent coverage because even if your property is completely destroyed, the land and the building foundation will probably still be usable. Chapter 26

Physical Damage Coverage • Hazards such as fire, wind, water, and smoke may damage or destroy your home or cause you to temporarily lose use of it. • The main component of homeowner’s insurance is protection against financial loss due to damage or destruction. Chapter 26

(continued) Physical Damage Coverage • Detached structures on the property, such as a garage or shed, as well as trees, plants, and fences are also covered. • If damage from a covered hazard prevents you from using your property while it is being repaired or replaced, your homeowner’s policy will pay for temporary housing for a limited time. Chapter 26

Theft and Vandalism Coverage • Theft and vandalism coverage protects your personal belongings against loss from criminal activity, such as robbery and physical damage from vandals. • It covers your property when it is in your home or with you when you are away. • A personal property floater is insurance coverage for the insured’s moveable property wherever it may be located. Chapter 26

Liability Coverage • Liability coverage is insurance to protect against claims for bodily injury to another person or damage to another person’s property. Chapter 26

(continued) Liability Coverage • Homeowners are responsible for acts occurring on their property, both for guests and for uninvited guests. • An uninvited guest is presumed to have permission to be on your property, such as door-to-door solicitors or delivery people. • An attractive nuisance is a dangerous place, condition, or object that is particularly attractive to children, such as a swimming pool. Chapter 26

Homeowner’s Policy Coverage • HO-1 Basic Coverage • HO-2 Broad Form • HO-3 Special Form • HO-4 Renter’s • HO-5 Comprehensive • HO-6 Condominium Owner’s • HO-7 Mobile Homes • HO-8 Older Homes Chapter 26

Lesson 26.2Automobile andUmbrella Insurance GOALS • Discuss common types of automobile insurance coverage. • Explain the concept of umbrella liability insurance. Chapter 26

Automobile Insurance • Most states require minimum automobile insurance. • Automobile insurance covers costs of damage to the vehicle, its owner, and any passengers. It also covers costs of repairs to other vehicles, medical expenses of occupants in other vehicles, and property damage caused by an accident. • Standard policies also cover theft of the vehicle and/or its contents. Chapter 26

Cost of Automobile Insurance • Premiums are based on a number of factors, such as: • Model, style, and age of car • Driver classification • Location of driver and car • Distances driven • Purpose of driving • Age, sex, and marital status of other regular drivers of the car Chapter 26

Driving Record • Your driving record includes the number and type of traffic tickets you’ve received for driving infractions and misdemeanors along with the number of accidents in which you’ve been involved. Chapter 26

Types of Automobile Insurance Coverage • There are five basic types of automobile insurance. • Liability • Collision • Comprehensive • Personal injury protection (PIP) • Uninsured/underinsured motorist Chapter 26

Liability Coverage • Most states require all drivers to carry liability insurance. • The purpose of liability coverage is to protect the insured against claims for bodily injury to another person or damage to another person’s property. Chapter 26

Collision Coverage • Collision coverage is automobile insurance that protects your own car against damage from accidents or vehicle overturning. • This coverage will pay for the damage to your car in the event you are at fault and the other driver’s liability insurance does not have to pay. • Most collision coverage has a deductible. Chapter 26

Comprehensive Coverage • Comprehensive coverage protects you from damage to your car from causes other than collision or vehicle overturning. • The causes might be fire, theft, tornado, hail, water, falling objects, natural disasters, and acts of vandalism. Chapter 26

Personal Injury Protection (PIP) • Also known as medical coverage insurance, personal injury protection (PIP) is automobile insurance that pays for medical, hospital, and funeral costs of the insured and his or her family and passengers, regardless of fault. • If the insured is injured as a pedestrian or bicyclist, this insurance will pay the medical costs. Chapter 26

Uninsured/Underinsured Coverage • Uninsured/underinsured coverage is automobile insurance that pays for your injuries when the other driver is legally liable but unable to pay. • In other words, if the other driver is legally at fault for the accident but has no insurance or insurance that is insufficient to cover the costs, your insurer will pay your medical costs. Chapter 26

No-Fault Insurance • No-fault insurance laws set up a system of compensation for auto accidents that does not require a legal determination of who was at fault before claims are paid. • No-fault insurance is automobile insurance in which drivers receive reimbursement for their expenses from their own insurer, no matter who caused the accident. Chapter 26

Assigned-Risk Policies • Every state has an assigned-risk pool that consists of people who are unable to obtain automobile insurance due to the high risk they present. • The state assigns these people to different insurers in the state. • The insurers must then provide coverage. • The insurance premiums will cost the insured several times the normal rate. Chapter 26

Umbrella Liability Insurance • Umbrella liability insurance supplements your basic auto and property liability coverage by expanding limits and including additional risks. • This type of policy protects you from extraordinary losses, which are extremely high claims because of unusual circumstances. Chapter 26

Property and Liability Insurance