Chapter © 2010 South-Western, Cengage Learning Property and Liability Insurance 26.1 26.1Property...
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Chapter © 2010 South-Western, Cengage Learning Property and Liability Insurance 26.1 26.1 Property Insurance 26.2 26.2 Automobile and Umbrella Insurance 26
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Transcript of Chapter © 2010 South-Western, Cengage Learning Property and Liability Insurance 26.1 26.1Property...
Chapter
© 2010 South-Western, Cengage Learning
Property and Liability Insurance
26.126.1 Property Insurance
26.226.2 Automobile and Umbrella Insurance
26
© 2010 South-Western, Cengage Learning SLIDE 2
Chapter 26
Lesson 26.1
Property Insurance
GOALSExplain the purpose and provisions of
renter’s insurance.Describe the need for and coverage
provided by homeowner’s insurance.
© 2010 South-Western, Cengage Learning SLIDE 3
Chapter 26
Renter’s Insurance
A renter’s policy is insurance that protects renters from property and liability risks.
Personal propertyLiabilityExtended coverage
© 2010 South-Western, Cengage Learning SLIDE 4
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.
© 2010 South-Western, Cengage Learning SLIDE 5
Chapter 26
How Much Coverage Do You Need?
Household inventoryExclusionsOverinsuringReplacement valueIndemnification
© 2010 South-Western, Cengage Learning SLIDE 6
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.
© 2010 South-Western, Cengage Learning SLIDE 7
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.
© 2010 South-Western, Cengage Learning
Co-Insurance Clause100,000 house with 80% co-insurance
insured at 80,000 will cover 100% of lossIncur 10,000 in damages -- 10,000 covered
Insured at 70,000 only covers 70% of 80% req.Incur 10,000 in damages -- only 8,750 covered10,000 x (70% / 80%)= 8,750
Problem 8 p. 602
SLIDE 8
Chapter 26
© 2010 South-Western, Cengage Learning SLIDE 9
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.
© 2010 South-Western, Cengage Learning SLIDE 10
Chapter 26
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.
(continued)
© 2010 South-Western, Cengage Learning SLIDE 11
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.
© 2010 South-Western, Cengage Learning SLIDE 12
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.
© 2010 South-Western, Cengage Learning SLIDE 13
Chapter 26
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.
(continued)
© 2010 South-Western, Cengage Learning SLIDE 14
Chapter 26
Homeowner’s Policy Coverage
HO-1 Basic CoverageHO-2 Broad FormHO-3 Special FormHO-4 Renter’sHO-5 ComprehensiveHO-6 Condominium Owner’sHO-7 Mobile HomesHO-8 Older Homes
© 2010 South-Western, Cengage Learning SLIDE 15
Chapter 26
Lesson 26.2
Automobile andUmbrella Insurance
GOALSDiscuss common types of automobile
insurance coverage.Explain the concept of umbrella liability
insurance.
© 2010 South-Western, Cengage Learning SLIDE 16
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.
© 2010 South-Western, Cengage Learning SLIDE 17
Chapter 26
Cost of Automobile InsurancePremiums are based on a number of
factors, such as:Model, style, and age of carDriver classification Location of driver and carDistances drivenPurpose of drivingAge, sex, and marital status of other regular
drivers of the carCredit report
© 2010 South-Western, Cengage Learning SLIDE 18
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.
© 2010 South-Western, Cengage Learning SLIDE 19
Chapter 26
Types of Automobile Insurance Coverage
There are five basic types of automobile insurance.LiabilityCollisionComprehensivePersonal injury protection (PIP)Uninsured/underinsured motorist
© 2010 South-Western, Cengage Learning SLIDE 20
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.
100/300/50 100,000 per person300,000 total for all50,000 property damage
© 2010 South-Western, Cengage Learning SLIDE 21
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.
© 2010 South-Western, Cengage Learning SLIDE 22
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.
© 2010 South-Western, Cengage Learning SLIDE 23
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.
© 2010 South-Western, Cengage Learning SLIDE 24
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.
© 2010 South-Western, Cengage Learning SLIDE 25
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.
© 2010 South-Western, Cengage Learning SLIDE 26
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.
© 2010 South-Western, Cengage Learning SLIDE 27
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.
© 2010 South-Western, Cengage Learning
assignment
Page 593 questions 1-9Page 600 Questions 1-8
SLIDE 28
Chapter 26
