e 8.02 Insurance-property

7/31/2019 e 8.02 Insurance-property

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Objective 08.02Interpret the nature, theory, and

different types of insurance

PROPERTY AND CASUALTY

& OTHER INSURANCES


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Property/Casualty Insurance

Types of policies :

Fire policies

Renters policies

Homeowners policies

*Supplemental - marine insurance


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Property and CasualtyInsurance

Covers both individual and businessproperty such as:

Real Property: Houses, apartments, condos,office buildings and other structures

Personal property: Jewelry, furniture, clothing,equipment, artwork and other valuables


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Fire Policy

A very basic policy covering loss resultingdirectly or proximately from an unfriendlyfire.

Unfriendly or hostile fire is uncontrollable orhas escaped from the place where it shouldbe.

A friendly fire is a bonfire, furnace fire, fire in afireplace unless it gets out of control.


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Fire Policy

Owner of property rented to othersprotects investment in structure with a firepolicy. Owner has insurable interest in theproperty, but not in tenants property.

Examples:

Apartment

Condo

Office building


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Renters Insurance

Covered under Homeowners 4 Form

Person who rents real estate from anotherbut has personal contents on premise

carries renters insurance to insure: personal contents

against liability risk

Insurable Interest law applies. A personcan only insure his own property, notanothers property.


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Renters Insurance

Protection includes: Personal contents of tenant in an apartment, condo,

mobile home or house

Personal liability if others sue tenant for injuries

Examples:

Lightning strikes and damages TV owned bytenant

Neighbor breaks leg when he steps on childsskate left on steps and sues tenant fornegligence


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Homeowners Policy

Provides coverage for:

Home - Primary structure

Personal property - Contents

Related structures Outbuildings, if any

Loss of Use - Living expenses if insured cannot live there due to covered damage

Premise personal liability for injuries toothers who were on your property


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Homeowners (HO) Policy

Riders may extend policy for additionalcoverage for items such as:

Boats

Jewelry

Furs

Artworks

Antiques

And other special collectibles owned by ahomeowner


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Homeowners Insurance

Must own home to carry policy forms: HO-1 Basic - covers limited perils

HO-2 Broad covers extended perils

HO-3 Special - covers most perils withspecified exclusions

HO-6 Condominium Owners coverage likean HO-3, but for homes with common walls

Peril a cause of loss


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Co-insurance

Homeowners policies require the insuredto carry a minimum of 80% of the value ofthe home (called co-insurance) to get full

reimbursement for a claim made. Most claims are partial losses leading

policyholders to insure a home for less than

value since risk of total loss is low.


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Cost Factors of PropertyInsurance

Limit of coverage for property

Location of property fire district, city,county, state

Structural material - brick, block, frame

Previous claims filed

Company


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FLOOD & EARTHQUAKE

NOT COVERED UNDER HO POLICY

Must buy separate flood insurance coverage

Must buy separate earthquake coverage


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Co-Insurance Clause* Supplemental*

In property insurance, there is a high probabilityof a partial loss claim. The insurance policyrequires actual value of property be insured.

Co-insurance requires an insured to cover aminimum of 80% of the value of the property

If less than 80%, the claim amount is reduced atthe time of payment.

Example: Insuring a $100,000 home for$50,000 because the premium is cheaper andchances are there will ever be a total loss.


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Marine Insurance*Supplemental*

Covers property exposed to perils of seatransport: The vessel

The cargo

Other property

Liability for the vessel

One of first types of insurance covering ancient

traders in the Mediterranean Sea. The term underwriter coined from the processof insuring the ships and cargo.


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Inland Marine*Supplemental*

Covers personal property that is beingtransport over land

Transportation methods include:

TRUCK TRAIN

AIRPLANE

Also covers property such as jewelry, furs,fine arts, musical instrument etc whereverlocated and during their transport.


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Fidelity and Surety Bonds*Supplemental*

An insurance policy against a financialloss due to dishonesty Pays the employer money in the case of theft

by employees Guarantees the honesty of employees who:

Handle large sums of money

Have access to customers money or assets

Example: A company that cleans offices afterhours might have a fidelity bond.


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Lloyds of London*Supplemental*

An insurance company that covers uniqueproperty and liability risks that are difficultto insure.

Examples: An opera singers vocal chords

Life insurance on insured with extremely riskyoccupations

Comprehensive and collision auto insuranceon drivers with numerous tickets andaccidents.

Documents

e 8.02 Insurance-property