Property and Liability Insurance презентация

Learning Objectives
Understand, buy, and maintain homeowner’s insurance in a cost-effective way.
Recover on a liability or a loss to your property.
Buy the automobile insurance policy that is right for you.
File a claim on your automobile insurance.

Protecting Your Home
The first type of homeowner’s insurance, fire insurance, was offered in 1735.
The first modern homeowner’s policy was sold in 1958.
Until then, separate policies were needed for every peril.

Packaged Policies: HO’s
6 basic homeowner’s policies:
HO-1: Basic form homeowner’s insurance – very narrow coverage, not available in most states.
HO-2: Broad form homeowner’s insurance – covers a set of perils such as fire, lightning, etc.
HO-3: Special form homeowner’s insurance – most comprehensive because it covers all direct physical losses to your home.

Packaged Policies: HO’s
HO-4: Renter’s or tenant’s insurance - same as the HO-2 but aimed at renters.
HO-6: Condominium owner’s insurance – covers the personal property of a co-op or condo owner.
HO-8: Modified coverage – older homes homeowner’s insurance – insures older homes for the repair costs or actual cash value rather than replacement cost.

Section I: Property Coverage
Within Section I of all HO policies (except HO-4) there are 4 basic coverages:
Coverage A: Dwelling – protects house and attachments, such as attached garage.
Coverage B: Other structures – protects unattached structures on the property, such as detached garage or landscaping.

Section I: Property Coverage
4 basic coverages in Section I of all HO policies (except HO-4):
Coverage A: Dwelling – protects house and attachments, such as attached garage.
Coverage B: Other structures – protects unattached structures, such as detached garage or landscaping.
Coverage C: Personal property – protects personal property used by policyholder regardless of location.
Coverage D: Loss of use – provides benefits if your house can’t be used due to an insured loss.

Section II: Personal Liability Coverage
Protects policyholder and family from financial loss if someone is injured on their property or as a result of their actions.
Covers the medical expenses of anyone injured by the policyholder, their family, or by their animal.
Like a small medical insurance policy, covering up to $1000 for medical expenses to non-family members who are injured in your home.

Supplemental Coverage
Coverage C of Section I provides protection for your personal property.
Additional coverage can be added through an endorsement.
Written attachment to an insurance policy to add or delete coverage.

Supplemental Coverage
Personal Articles Floaters – extended coverage for all personal property regardless of location (except kids at school).
Earthquake Coverage – specifically excluded from coverage in standardized HO policies, supplemental earthquake insurance is an important addition in high risk areas.
Flood Protection – includes coverage from flood and water damage from storms.

Supplemental Coverage
Inflation Guard – updates coverage based on an index of replacement costs that continually updates the cost of the home.
Personal Property Replacement Cost Coverage – pay actual cash value of the loss.
Added Liability Insurance – raise above $100,000.
Personal umbrella policy protects against lawsuits and judgments up to $10 million.

Coinsurance and the
“80-Percent Rule”
Coinsurance provision requires you pay a portion of your losses if you don’t have adequate insurance.
Companies use the 80% rule, requiring you carry 80% of the home’s replacement cost.
This relates to losses on the dwelling only, not on personal property.

The Bottom Line
How much homeowner’s insurance do you need?
Cover the replacement of your home if complete loss
Protection against inflation eroding coverage
Special disaster coverage in flood or earthquake areas
Home office coverage
Adequate personal property coverage
Possessions needing special coverage (coins, jewelry)
Additional liability coverage if assets are greater than liability limits

Keeping Your Costs Down –
Insurance Credit Scoring
There appears to be a link between your credit score and your insurance loss ratio.
Insurance loss ratio measures claim frequency and cost for homeowner’s and auto insurance.
The lower your insurance credit score, the higher your homeowner’s rate will be.
To manage your insurance score, improve your credit score.

Keeping Your Costs Down –
Insurance Credit Scoring
Using your credit score when setting insurance rates is legal.
The Fair Credit Reporting Act allows insurance companies to obtain credit reports and use them to set insurance rates.
Fair Isaac provides information on how it calculates your insurance credit score.

Keeping Your Costs Down – Discounts and Savings
3 factors determine the cost of your homeowner’s policy:
Location of your home
Type of structure
Level of coverage and policy type
Keep costs down by selecting a financially sound insurer with low comparative rates.

Keeping Your Costs Down – Discounts and Savings
High deductible discounts – pay less for larger deductibles.
Security system/smoke detector discounts – save 2-5%.
Multiple policy discounts – discount for more than one policy with insurer.
Pay your insurance premiums annually.

Keeping Your Costs Down – Discounts and Savings
Other discounts – fire-resistant homes, age over 55, long-time policyholder.
Consider a direct writer – no agents, so no salaries or commissions.
Shop around – premiums vary by 25%.
Double-check your policy – don’t want errors once you file a claim.

What To Do in the Case of a Loss
Checklist 10.2
Report your loss immediately.
Make temporary repairs to protect your property.
Make a detailed list of everything lost or damaged.
Maintain records of the insurance settlement process.
Confirm the adjuster’s estimate.

Personal Automobile Policy
Personal automobile policy (PAP) contains liability and property damage coverage:
Part A: Liability Coverage
Part B: Medical Expense Coverage
Part C: Uninsured Motorist’s Protection Coverage
Part D: Damage to Your Automobile Coverage

Personal Automobile Policy
Part A: Liability coverage – protection if you’re legally liable for bodily injury and property damage caused by your vehicle.
Combined single limit – applies to both bodily injury and property damage liability.
Split-limit coverage – separate coverage for bodily injury and property damage.

Personal Automobile Policy
Part B: Medical expense coverage – pays medical bills and funeral expenses within 3 years by those injured in an accident involving your vehicle.
Policy limits range from $1000 - $10,000 per person, with no limit on the number of individuals covered in an accident.

Personal Automobile Policy
Part C: Uninsured motorist’s protection coverage – protects you against an uninsured driver, a negligent driver with insolvent insurance, or a hit-and-run driver.
It is important to have uninsured motorist driver’s protection because 15% of all drivers don’t have any insurance.

Personal Automobile Policy
Part D: Damage to your automobile coverage including both collision loss and comprehensive coverage.
The collision loss portion provides benefits to cover damages resulting from an accident with another vehicle or object.
Comprehensive physical damage coverage covers damage from fire, theft, larceny, etc.

Exclusions
The PAP provides broad coverage, but there are exceptions. You’re not covered if:
There is intentional injury or damage.
You’re using a vehicle without owner’s consent.
You’re driving another’s car on a regular basis.
You own the car but it is uninsured.
You are carrying fee-paying passengers.
You are driving in a speed contest or race.

No-Fault Insurance
Based on the idea that your insurance company should pay for your losses, regardless of who is at fault.
Over half the states have no-fault insurance.
Imposes limits on medical expenses and other claims.

Determinants of the Cost of Automobile Insurance
Type of automobile: the sportier car, the higher the insurance cost.
Use of automobile: the less you use your car, the lower the cost of insurance.
Driver’s personal characteristics: unmarried males pay the highest rates - age, sex, and marital status affect rates.

Determinants of the Cost of Automobile Insurance
Driver’s driving record: if you have received tickets or had accidents, you’ll pay a higher price.
Where you live: urban areas with more accidents and theft will have higher insurance costs.

Determinants of the Cost of Automobile Insurance
Discounts that you qualify for: cars with safety features and drivers that have been identified as safe drivers will receive discounts.
Insurance credit score: if you have a lower credit score, you’ll pay a higher rate.

Keeping Your Costs Down
Shop comparatively
Consider only high quality insurers
Take advantage of discounts
Buy a car that is relatively inexpensive to insure
Improve your driving record
Raise your deductible
Keep adequate liability insurance

Filing a Claim
Your “to-do” list if involved in a car accident:
Get help for the injured.
Move car to a safe place.
Get identification of witnesses.
Cooperate with police.
Take a test for alcohol if you believe the other driver is under the influence.