Insurance for Consumer Protection
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Transcript of Insurance for Consumer Protection
Insurance for Consumer Protection
Insurance for Consumer Protection
What Every Agent Should Know
What Every Agent Should Know
Insurance Basicsfor Real Estate Licensees
Insurance Basicsfor Real Estate Licensees Risk Management
Impact on Real Estate Transactions
Insurance Contracts
Flood Insurance
Business Property Issues
Impact of Insurance Industry Changes
Insurance Fraud
Risk Management
Impact on Real Estate Transactions
Insurance Contracts
Flood Insurance
Business Property Issues
Impact of Insurance Industry Changes
Insurance Fraud
Chapter 1Chapter 1
Insurance Company BackgroundInsurance Company Background
Learning ObjectivesLearning Objectives
Name Situations That Cause Financial Problems for Property Owners
Identify Duties of State Insurance Departments
List Ways to Control Risk
Learn How to Transfer Risk by Buying Insurance
Explain Why to Purchase Insurance Before a Catastrophe
Name Situations That Cause Financial Problems for Property Owners
Identify Duties of State Insurance Departments
List Ways to Control Risk
Learn How to Transfer Risk by Buying Insurance
Explain Why to Purchase Insurance Before a Catastrophe
Risk ManagementRisk Management
Decision-Making Process Accept Exposure
Reduce Vulnerabilities
Mitigate Risk
Avoid Risk
Transfer Risk
Typical Questions
Decision-Making Process Accept Exposure
Reduce Vulnerabilities
Mitigate Risk
Avoid Risk
Transfer Risk
Typical Questions
Coverage NeededCoverage Needed
Damage to Real Property
Damage for Personal Property
Liability for Injury
Damage to Real Property
Damage for Personal Property
Liability for Injury
Risk ManagementRisk Management
Insurance Specialties Personal Lines
Commercial Lines
Excess and Surplus (E&S)
Real Estate Licensees Transaction Gatekeepers
Provide Guidance
Allow Consumers to Make Decisions
Insurance Specialties Personal Lines
Commercial Lines
Excess and Surplus (E&S)
Real Estate Licensees Transaction Gatekeepers
Provide Guidance
Allow Consumers to Make Decisions
Risk Control TechniquesRisk Control Techniques
Avoidance
Separate Exposures
Combine Exposure Units
• Personal Lines
• Commercial Lines
Sell the Property (Noninsurance
Transfer)
Avoidance
Separate Exposures
Combine Exposure Units
• Personal Lines
• Commercial Lines
Sell the Property (Noninsurance
Transfer)
Risk Control TechniquesRisk Control Techniques
Retain the Risk Self Insure
Higher Deductibles
Transfer the Risk Buy Insurance
Premiums Create Pool of Money
Retain the Risk Self Insure
Higher Deductibles
Transfer the Risk Buy Insurance
Premiums Create Pool of Money
Insurance CompaniesInsurance Companies State Insurance Regulators
Review Financial Records
Review Available Reserves
Determine Stability of Insurance Companies Admitted
Nonadmitted
State Insurance Regulators Review Financial Records
Review Available Reserves
Determine Stability of Insurance Companies Admitted
Nonadmitted
Insurance HistoryInsurance History
Early Fire Insurance
Influenced by Benjamin Franklin
Firemarks
Municipal Fire Companies
Early Fire Insurance
Influenced by Benjamin Franklin
Firemarks
Municipal Fire Companies
Regulating Insurance IndustryRegulating Insurance Industry
McCarran-Ferguson Act
Insurance Service Office (ISO)
State Insurance Commissions
Set Rates
Interpret Policy Language
Determine Reserves
Police Sales Activities of Company Representatives
McCarran-Ferguson Act
Insurance Service Office (ISO)
State Insurance Commissions
Set Rates
Interpret Policy Language
Determine Reserves
Police Sales Activities of Company Representatives
Regulators AssociationRegulators Association
National Association of Insurance Commissioners (NAIC)
Provides Forum for State Regulators Protect Public Interest
Promote Competitive Markets
Facilitate Fair and Equitable Treatment of Insurance Consumers
Promote Reliability, Solvency, and Financial Solidity of Insurance Institutions
National Association of Insurance Commissioners (NAIC)
Provides Forum for State Regulators Protect Public Interest
Promote Competitive Markets
Facilitate Fair and Equitable Treatment of Insurance Consumers
Promote Reliability, Solvency, and Financial Solidity of Insurance Institutions
Insurance BasicsInsurance Basics Policy Considerations
Coverage Required
Advance Purchase Required
Cancellation
Deductibles
Full Replacement versus Actual Cash Value
Filing a Claim
Services to Expect
Policy Considerations Coverage Required
Advance Purchase Required
Cancellation
Deductibles
Full Replacement versus Actual Cash Value
Filing a Claim
Services to Expect
Chapter 2Chapter 2
Understanding Insurance ContractsUnderstanding Insurance Contracts
Learning ObjectivesLearning Objectives
Compare Aleatory Contract to Contract of Adhesion
Explain Insurable Interest and Insured Value
Discuss Purpose of Coinsurance Clauses
Define Redlining
Name Components of an Insurance Policy
Compare Aleatory Contract to Contract of Adhesion
Explain Insurable Interest and Insured Value
Discuss Purpose of Coinsurance Clauses
Define Redlining
Name Components of an Insurance Policy
Understanding Insurance Contracts
Understanding Insurance Contracts
Contract Essentials Insured Is Property Owner
Insurer Is Insurance Company
Both Parties Must Comply
Generally May Not Be Assigned
Definite Beginning and Ending Dates
Contract Essentials Insured Is Property Owner
Insurer Is Insurance Company
Both Parties Must Comply
Generally May Not Be Assigned
Definite Beginning and Ending Dates
Unique IssuesUnique Issues Aleatory Contracts
Performance Depends on Future Event
Contingency May Not Occur
Contract of Adhesion Insurance Company Writes
Contract
No Negotiation
Aleatory Contracts Performance Depends on
Future Event
Contingency May Not Occur
Contract of Adhesion Insurance Company Writes
Contract
No Negotiation
Kick Me
Issues Unique to Insurance Contracts
Issues Unique to Insurance Contracts
Strict Construction Any Ambiguity
Construed Against Party Drawing Up Contract
Insurer Is Responsible
Strict Construction Any Ambiguity
Construed Against Party Drawing Up Contract
Insurer Is Responsible
Issues Unique to Insurance Contracts
Issues Unique to Insurance Contracts
Contract of Indemnity Compensated Only
for Loss Sustained
Provides Reimbursement, Not Financial Gain
Insurable Interest Insured Person Must
Have Legitimate Financial Interest
Must Be Present at Time of Loss
Contract of Indemnity Compensated Only
for Loss Sustained
Provides Reimbursement, Not Financial Gain
Insurable Interest Insured Person Must
Have Legitimate Financial Interest
Must Be Present at Time of Loss
Issues Unique to Insurance Contracts
Issues Unique to Insurance Contracts
Insured Value Land May Not Be Insured
Insured Value Is Total Value of Claim
Deductibles Initial Portion of Claim Paid by Insured
Discourages Frivolous Filings
Insured Value Land May Not Be Insured
Insured Value Is Total Value of Claim
Deductibles Initial Portion of Claim Paid by Insured
Discourages Frivolous Filings
Issues Unique to Insurance Contracts
Issues Unique to Insurance Contracts
Coinsurance Clause Prevents Underinsurance
Amount Paid Based on Percentage of Insurance to Value
Penalties for Underinsurance
Contract in the Public Interest Insurance Necessary Today
Prohibits Redlining
Coinsurance Clause Prevents Underinsurance
Amount Paid Based on Percentage of Insurance to Value
Penalties for Underinsurance
Contract in the Public Interest Insurance Necessary Today
Prohibits Redlining
Issues Unique to Insurance Contracts
Issues Unique to Insurance Contracts
Guaranteed Replacement Replace as It Had Been
Percentage Caps Today
Special Form Covers Everything Unless Excluded
A Few Exceptions
Named Peril Coverage for Perils Named in Policy
Flood Insurance Always Named Peril
Guaranteed Replacement Replace as It Had Been
Percentage Caps Today
Special Form Covers Everything Unless Excluded
A Few Exceptions
Named Peril Coverage for Perils Named in Policy
Flood Insurance Always Named Peril
Basic PoliciesBasic Policies
Endorsements
Available Coverages Vary
Cost
Form of Ownership
Occupancy
Real Estate Licensees
Know Differences
Provide Names
Endorsements
Available Coverages Vary
Cost
Form of Ownership
Occupancy
Real Estate Licensees
Know Differences
Provide Names
Overview of an Insurance PolicyOverview of an Insurance Policy Agreement to Insure
Declarations Page
Definitions
Property Coverage Terms
Perils Insured Against Exclusions
Conditions
Endorsements
Agreement to Insure
Declarations Page
Definitions
Property Coverage Terms
Perils Insured Against Exclusions
Conditions
Endorsements
Overview of an Insurance PolicyOverview of an Insurance Policy
Liability Provisions Injury to Others
Insurer Will Defend for Covered Events
Legal Actions by Third Party Bodily Injury
Damage to Others’ Property
Defend or Pay
Insured Has No Say in Matter
Liability Provisions Injury to Others
Insurer Will Defend for Covered Events
Legal Actions by Third Party Bodily Injury
Damage to Others’ Property
Defend or Pay
Insured Has No Say in Matter
Chapter 3Chapter 3
Types of Insurance Policies and Coverage
Types of Insurance Policies and Coverage
Learning ObjectivesLearning Objectives
Identify Insurance Problems With Vacant or Rented Homes
Name Perils Covered by Special Form Policy
Differentiate Among HO-1, HO-2, HO-3, HO-4, and HO-6
List Scheduled Personal Property Items
Explain Why Three Policies Are Necessary for Condo Rentals
Identify Insurance Problems With Vacant or Rented Homes
Name Perils Covered by Special Form Policy
Differentiate Among HO-1, HO-2, HO-3, HO-4, and HO-6
List Scheduled Personal Property Items
Explain Why Three Policies Are Necessary for Condo Rentals
Special Form PoliciesSpecial Form Policies Special Form Policies
Not “All Risks”
Physical Damage Not Excluded
Vary From Company to Company, State to state
Individual Property Issues How Property Used
Who Owns What
What Needs to Be Insured
Special Form Policies Not “All Risks”
Physical Damage Not Excluded
Vary From Company to Company, State to state
Individual Property Issues How Property Used
Who Owns What
What Needs to Be Insured
Special Real Estate SituationsSpecial Real Estate Situations
Vacant Homes Sellers Must Confirm Coverage with Agent
Coverage Reduced within Time Frame
Rental While Home Is On Market Nightmares!
Owner/Occupant Advantages Disappear
Dual Use Dwellings Days Occupied
Be Honest
Vacant Homes Sellers Must Confirm Coverage with Agent
Coverage Reduced within Time Frame
Rental While Home Is On Market Nightmares!
Owner/Occupant Advantages Disappear
Dual Use Dwellings Days Occupied
Be Honest
Owner Occupant PoliciesOwner Occupant Policies
HO-1 (Basic Fire Policy)
HO-2 (Nonrental Secondary Residence Policy)
HO-3 (Homeowners’ Policy)
HO-6 (Condominium Policy)
Flood Insurance ALWAYS a Separate Policy
HO-1 (Basic Fire Policy)
HO-2 (Nonrental Secondary Residence Policy)
HO-3 (Homeowners’ Policy)
HO-6 (Condominium Policy)
Flood Insurance ALWAYS a Separate Policy
Policy for Owner-OccupantsPolicy for Owner-Occupants
HO-1 (Basic Fire) Bare Bones
Named Peril (Fire and Lightning Damage)
Some Limited Endorsements Available
HO-1 (Basic Fire) Bare Bones
Named Peril (Fire and Lightning Damage)
Some Limited Endorsements Available
Policy for Owner-OccupantsPolicy for Owner-Occupants
HO-2 (Nonrental Secondary Residence)
Hunting Lodge, Beach Home
Stepped-Up HO-1
Named Peril
Purchase Additional Endorsements
HO-2 (Nonrental Secondary Residence)
Hunting Lodge, Beach Home
Stepped-Up HO-1
Named Peril
Purchase Additional Endorsements
Policy for Owner-OccupantsPolicy for Owner-Occupants
HO-3 Homeowners’ Policy
Special Form
ONLY for Owner-Occupants
Covers Personal Liability
Most For the Money
HO-3 Homeowners’ Policy
Special Form
ONLY for Owner-Occupants
Covers Personal Liability
Most For the Money
Policy for Owner-OccupantsPolicy for Owner-Occupants
HO-6 (Condo Policy)
Tailored to Meet Association By-Laws
Owner Owns Interior
Shared Ownership for Common Areas
Different Insurance Needs
HO-6 (Condo Policy)
Tailored to Meet Association By-Laws
Owner Owns Interior
Shared Ownership for Common Areas
Different Insurance Needs
Basic HO-3 CoveragesBasic HO-3 Coverages Coverage A: Dwelling
Coverage B: Other Structures
Coverage C: Personal Property Actual Cash Value (ACV) or
Depreciated Amount
Replacement Cost Coverage
Scheduled Personal Property (SPP)
Coverage A: Dwelling
Coverage B: Other Structures
Coverage C: Personal Property Actual Cash Value (ACV) or
Depreciated Amount
Replacement Cost Coverage
Scheduled Personal Property (SPP)
Basic HO-3 CoveragesBasic HO-3 Coverages
Coverage D, Loss of Use Partial Loss
Total Loss
Coverage E, Personal Liability Personal Umbrella Policy
Exclusions for Business Use
Special Situations (e.g., Golf Cart Use)
Coverage D, Loss of Use Partial Loss
Total Loss
Coverage E, Personal Liability Personal Umbrella Policy
Exclusions for Business Use
Special Situations (e.g., Golf Cart Use)
Basic HO-3 CoveragesBasic HO-3 Coverages
Coverage F, Medical Payments No-Fault Medial Coverage
Invited or Noninvited Guests
Exclusions
• Housekeepers
• Tree Trimmers
• Lawn Care Personnel
Coverage F, Medical Payments No-Fault Medial Coverage
Invited or Noninvited Guests
Exclusions
• Housekeepers
• Tree Trimmers
• Lawn Care Personnel
Types of Property InsuredTypes of Property Insured
Town House Own Land Above,
Below, and Behind
HO-3
Cooperative Leaseholder Is
Stockholder
Coop Association Owns Building
Ownership of Fixtures Vary
Town House Own Land Above,
Below, and Behind
HO-3
Cooperative Leaseholder Is
Stockholder
Coop Association Owns Building
Ownership of Fixtures Vary
Types of Property InsuredTypes of Property Insured
True Condominium Single Entity
Bare Walls In
Condominium Master Policy
Unit Assessment Insurance
True Condominium Single Entity
Bare Walls In
Condominium Master Policy
Unit Assessment Insurance
HO-6 (Condominium Policy)HO-6 (Condominium Policy)
Building Alterations and Additions Original Coverage
Additional Endorsement
Valuable Additions to Standard Coverage Water and Sewer Backup
Earthquake Insurance
Personal Articles Floater or Scheduled Personal Property
Building Alterations and Additions Original Coverage
Additional Endorsement
Valuable Additions to Standard Coverage Water and Sewer Backup
Earthquake Insurance
Personal Articles Floater or Scheduled Personal Property
HO-6 (Condominium Policy)HO-6 (Condominium Policy)
Separate Policies Umbrella Liability
Flood Insurance
Loss Assessment Coverage
Assessments Not Covered Improvements
Damages Above the Limits
Debris Cleanup
Separate Policies Umbrella Liability
Flood Insurance
Loss Assessment Coverage
Assessments Not Covered Improvements
Damages Above the Limits
Debris Cleanup
HO-6 (Condominium Policy)HO-6 (Condominium Policy)
Separate Policies Needed for Association
Coverage for Investors and Their Tenants Master Policy
Renters’ Policy
HO-6 Policy Purchased by Owner
Separate Policies Needed for Association
Coverage for Investors and Their Tenants Master Policy
Renters’ Policy
HO-6 Policy Purchased by Owner
Policies Available for Rental PropertiesPolicies Available for Rental Properties
HO-4 (Renters’ Policy) Excludes Dwelling
Limits Coverage to Renters’ Personal Property and Liability Exposures
Rental Home or Landlord’s Policy Little Personal Property Coverage
Written in Personal Lines
Business Properties
Other Structures
HO-4 (Renters’ Policy) Excludes Dwelling
Limits Coverage to Renters’ Personal Property and Liability Exposures
Rental Home or Landlord’s Policy Little Personal Property Coverage
Written in Personal Lines
Business Properties
Other Structures
Personal Property Used for Business
Personal Property Used for Business
Two Exclusions Excludes Anything Used At All for Business
Limits Coverage to $250
Correct These Limits Adaptable Electronic Apparatus Coverage
Increased Limits on Business Property
Personal Liability for the Home Office No Coverage for
Business from Home
Commercial Insurance Required
Two Exclusions Excludes Anything Used At All for Business
Limits Coverage to $250
Correct These Limits Adaptable Electronic Apparatus Coverage
Increased Limits on Business Property
Personal Liability for the Home Office No Coverage for
Business from Home
Commercial Insurance Required
Chapter 4Chapter 4
Floods and Other HO ExclusionsFloods and Other HO Exclusions
Learning ObjectivesLearning Objectives
Define Flooding
Name Causes of Flooding
Explain Circumstances When Lender Must Require Flood Insurance
Discuss Assistance Provided by Some States
Identify Areas Prone to Earthquakes and Volcanic Action
Define Flooding
Name Causes of Flooding
Explain Circumstances When Lender Must Require Flood Insurance
Discuss Assistance Provided by Some States
Identify Areas Prone to Earthquakes and Volcanic Action
Property DamageProperty Damage
Fires
Floods
Earthquakes
Others Requiring Special Insurance
Tornadoes
Volcanoes
Terrorism
Fires
Floods
Earthquakes
Others Requiring Special Insurance
Tornadoes
Volcanoes
Terrorism
FloodsFloods
Flooding Definitions Overflow of Inland or Tidal Waters
Accumulation or Runoff of Surface Waters
Mudflows Caused by Flooding
Everyone Lives in a Flood Zone Every State
Some Floods Are Multistate
Flooding Definitions Overflow of Inland or Tidal Waters
Accumulation or Runoff of Surface Waters
Mudflows Caused by Flooding
Everyone Lives in a Flood Zone Every State
Some Floods Are Multistate
Special Flood Hazard Areas(SFHAs)
Special Flood Hazard Areas(SFHAs)
Determined by Flood History and Location
Used to Determine Flood Insurance Premiums
Zones A Inland Areas
Zones V Coastal Areas
Determined by Flood History and Location
Used to Determine Flood Insurance Premiums
Zones A Inland Areas
Zones V Coastal Areas
Impact on Real Estate Transactions
Impact on Real Estate Transactions
For Federally-Related Loans
Before Quote Elevation Certificate
Community Member
Flood Zone
Base Flood Elevation (BFE)
Lowest Floor Elevation; Qualified Openings?
Year that Dwelling Was Built
Can “Assign” Flood Insurance Policy to Buyer
For Federally-Related Loans
Before Quote Elevation Certificate
Community Member
Flood Zone
Base Flood Elevation (BFE)
Lowest Floor Elevation; Qualified Openings?
Year that Dwelling Was Built
Can “Assign” Flood Insurance Policy to Buyer
Major Causes of FloodsMajor Causes of Floods
Hurricanes
Storm Damages Increasing
Tidal Surges Cause Most Damage
Homeowners’ Insurance Excludes Floods
Hurricane Warnings and Watches Affect Real Estate Closings
Hurricanes Impact the Insurance Industry
Hurricanes
Storm Damages Increasing
Tidal Surges Cause Most Damage
Homeowners’ Insurance Excludes Floods
Hurricane Warnings and Watches Affect Real Estate Closings
Hurricanes Impact the Insurance Industry
Other Causes of FloodingOther Causes of Flooding
Water Main Breaks
Considered Surface Water
Not Covered by Homeowners
or Flood Insurance
Storm Water Runoff
Dam Bursts
Water Main Breaks
Considered Surface Water
Not Covered by Homeowners
or Flood Insurance
Storm Water Runoff
Dam Bursts
Teton Dam Burst – Utah usbr.govTeton Dam Burst – Utah usbr.gov
Flood InsuranceFlood Insurance
Required for Federally-Related Transaction
If Located in Special Flood Hazard Area (SFHA)
Burden Placed on Lenders
Required for Federally-Related Transaction
If Located in Special Flood Hazard Area (SFHA)
Burden Placed on Lenders
HUD Statement RequirementsHUD Statement Requirements
Flood Certificate Required Special Flood Hazard Area (SFHA)
OR
Nonspecial Flood Hazard Area
If SFHA Flood Insurance Required
Elevation Certificate Required for Quote
Every Property Can Flood
Flood Certificate Required Special Flood Hazard Area (SFHA)
OR
Nonspecial Flood Hazard Area
If SFHA Flood Insurance Required
Elevation Certificate Required for Quote
Every Property Can Flood
Lenders Require Flood Insurance
Lenders Require Flood Insurance
Any Federally Related Loans
Secured by Property in A, V, AV
Enforced by FDIC
Lenders May Lose FDIC Insurance
Any Federally Related Loans
Secured by Property in A, V, AV
Enforced by FDIC
Lenders May Lose FDIC Insurance
Katrina - Biloxi, Miss fema.govKatrina - Biloxi, Miss fema.gov
National Flood Insurance ProgramNational Flood Insurance Program Federally-Backed Flood Insurance
Required for Federally Related Loans
Enforced by FDIC
Premium Discounts Available
Community Must Implement Floodplain Regulations
Only Covers Flooding
Federally-Backed Flood Insurance Required for Federally
Related Loans
Enforced by FDIC
Premium Discounts Available
Community Must Implement Floodplain Regulations
Only Covers FloodingUSGS.GOV
National Flood Insurance Program
National Flood Insurance Program
Community Rating System (CRS) Offers Premium Reductions
Public Information
Floodplain Mapping and Regulations
Flood Damage Reduction Measures
Flood Preparedness Criteria
Community Rating System (CRS) Offers Premium Reductions
Public Information
Floodplain Mapping and Regulations
Flood Damage Reduction Measures
Flood Preparedness Criteria
Flood Coverage Requirements Flood Coverage Requirements
Excess Water Result from Unusual and Rapid Accumulation
Affecting More Than One Property
Temporary
Inundation of Normally Dry Land
Source Must Be Defined in Policy and Sudden for Insured
Excess Water Result from Unusual and Rapid Accumulation
Affecting More Than One Property
Temporary
Inundation of Normally Dry Land
Source Must Be Defined in Policy and Sudden for Insured
Flood Insurance CoverageFlood Insurance Coverage
Rising Water or Swell Building Property
Construction Materials
Personal Property as Contents
Debris Demolition and Removal Coverage
Does NOT Cover All Water-Related Problems
Rising Water or Swell Building Property
Construction Materials
Personal Property as Contents
Debris Demolition and Removal Coverage
Does NOT Cover All Water-Related Problems
Flood Insurance ClaimsFlood Insurance Claims Losses Covered by Flood Insurance
Building Property
Construction Materials
Personal Property as Contents
Debris Demolition and Removal Coverage
Losses NOT Covered by Flood Insurance
Losses Covered by Flood Insurance Building Property
Construction Materials
Personal Property as Contents
Debris Demolition and Removal Coverage
Losses NOT Covered by Flood Insurance
Rapid River Flood, 1972Rapid River Flood, 1972
Flood Insurance CrisisFlood Insurance Crisis
Paying Out More than Taking In Canceling Policies
Increasing Premiums
More Carry Flood Insurance
Any License Insurance Agent Can Write Policy Write Excess Limits with Private Insurance
Policy Not Canceled When NFIP Pays Claim
Paying Out More than Taking In Canceling Policies
Increasing Premiums
More Carry Flood Insurance
Any License Insurance Agent Can Write Policy Write Excess Limits with Private Insurance
Policy Not Canceled When NFIP Pays Claim
State Assistance ProgramsState Assistance Programs
Joint Underwriting Associations (JUAs)
Programs Vary
Joint Underwriting Associations (JUAs)
Programs Vary
Other Catastrophic EventsOther Catastrophic Events
Earthquakes Special Rider or Endorsement Needed
Earthquake Insurance Considerations
Earthquake Insurance Costs
Volcanoes Few Definitions
Little Interest by Insurance Companies
Earthquakes Special Rider or Endorsement Needed
Earthquake Insurance Considerations
Earthquake Insurance Costs
Volcanoes Few Definitions
Little Interest by Insurance Companies
Acts of TerrorismActs of Terrorism Terrorism Risk
Insurance Act (TRIA) Applies to Terrorist
Event Causing $5M or More
Included in Most Commercial Policies
Homeowners Include Under Special Endorsement
Terrorism Risk Insurance Act (TRIA) Applies to Terrorist
Event Causing $5M or More
Included in Most Commercial Policies
Homeowners Include Under Special Endorsement
Chapter 5Chapter 5
Preparing for Disasters and Filing Claims
Preparing for Disasters and Filing Claims
Learning ObjectivesLearning Objectives
Describe Importance of Off-Site Storage of Important Documents
Plan a Disaster Checklist
List Supplies to Stockpile
Summarize Information to Tenants
Explain Importance of Securing Property
Describe Importance of Off-Site Storage of Important Documents
Plan a Disaster Checklist
List Supplies to Stockpile
Summarize Information to Tenants
Explain Importance of Securing Property
Basic Insurance ResponsibilitiesBasic Insurance Responsibilities
Maintain the Right Policy
Avoid Nonrenewal or Cancellation
Avoid Filing Claims
Maintain Adequate Coverage
Know the Deductible
Maintain Inventory Lists
Maintain the Right Policy
Avoid Nonrenewal or Cancellation
Avoid Filing Claims
Maintain Adequate Coverage
Know the Deductible
Maintain Inventory Lists
Preparing for a DisasterPreparing for a Disaster
Recordkeeping Systems Record Backups and Protection
Insurance Policies
Contact Information
Recordkeeping Systems Record Backups and Protection
Insurance Policies
Contact Information
Preparing for a DisasterPreparing for a Disaster
Disaster Checklist
Office and Administrative Tasks
Supplies and Equipment
Building and Grounds
Codes and Policy Requirements Warnings to Tenants
Renter’s Insurance Issues
Disaster Checklist
Office and Administrative Tasks
Supplies and Equipment
Building and Grounds
Codes and Policy Requirements Warnings to Tenants
Renter’s Insurance Issues
Steps to Perform After a Disaster
Steps to Perform After a Disaster
Secure the Property
From Intruders
From Further Damage
Possibly from Tenants
Temporary Repairs
Photograph the Damage
Document Receipts
Assessing the Damage
Secure the Property
From Intruders
From Further Damage
Possibly from Tenants
Temporary Repairs
Photograph the Damage
Document Receipts
Assessing the Damage
Steps to Perform After a Disaster
Steps to Perform After a Disaster
Contact All Relevant Parties Emergency Personnel
Insurance Carrier
Owners
Tenants
Contractors
Employees
Utility Companies
Others?
Establish a Command Center
Secure Records
Contact All Relevant Parties Emergency Personnel
Insurance Carrier
Owners
Tenants
Contractors
Employees
Utility Companies
Others?
Establish a Command Center
Secure Records
Insurance ClaimsInsurance Claims
Deciding to File a Claim Document Damage
Make Temporary Repairs
Get Estimates
Assess personal Property Losses
Keep Records
Be Patient
Deciding to File a Claim Document Damage
Make Temporary Repairs
Get Estimates
Assess personal Property Losses
Keep Records
Be Patient
Chapter 6Chapter 6
Working with Insurance AgentsWorking with Insurance Agents
Learning ObjectivesLearning Objectives Compare Independent Agents to Captive
Agents (Direct Writers)
Identify Licensing Requirements for Insurance Agents
List Prohibited Activities for Insurance Agents
Discuss Topics Insurance Agents Should Explain to Residential Buyers
Explain Importance of Insurance Availability Contingency in Purchase Agreement
Compare Independent Agents to Captive Agents (Direct Writers)
Identify Licensing Requirements for Insurance Agents
List Prohibited Activities for Insurance Agents
Discuss Topics Insurance Agents Should Explain to Residential Buyers
Explain Importance of Insurance Availability Contingency in Purchase Agreement
Types of Insurance AgentsTypes of Insurance Agents
Independent Agents
Captive Agents and Direct Writers
Independent Agents
Captive Agents and Direct Writers
Agent Licensing RequirementsAgent Licensing Requirements
Successfully Pass State Insurance Exam
Generally Complete Continuing Education Requirements
Successfully Pass State Insurance Exam
Generally Complete Continuing Education Requirements
Professional DesignationsProfessional Designations
Voluntary
Offered by Trade Associations
Not Required by State Licensing Requirements
Require Additional Study
Voluntary
Offered by Trade Associations
Not Required by State Licensing Requirements
Require Additional Study
Insurance in Real Estate Transactions
Insurance in Real Estate Transactions
Real Estate Licensees Direct Buyers to Insurance Agents
Encourage Honesty
Be Aware of Contingency Implications
Insurance Agents Thoroughly Explain Insurance Basics
Proactive in Contacting Tenants
Real Estate Licensees Direct Buyers to Insurance Agents
Encourage Honesty
Be Aware of Contingency Implications
Insurance Agents Thoroughly Explain Insurance Basics
Proactive in Contacting Tenants
Policy ListPolicy List
Important Issues Policy Limits for Theft
Other Limits (Business Property)
Replacement Costs
Deductibles
Trees
Home Must Be Owner-Occupied
Additional Coverages
Important Issues Policy Limits for Theft
Other Limits (Business Property)
Replacement Costs
Deductibles
Trees
Home Must Be Owner-Occupied
Additional Coverages
Insurance Agent GuidelinesInsurance Agent Guidelines
Prohibited Activities
Blank Applications
Rebates
Gifts
Prohibited Activities
Blank Applications
Rebates
Gifts
Insurance Agent GuidelinesInsurance Agent Guidelines
Permitted Activities No Minimum Amount of Production
to Enter
All Agents May Share Equally
Permitted Activities No Minimum Amount of Production
to Enter
All Agents May Share Equally
Obtaining a Price QuoteObtaining a Price Quote
States Regulate Insurance Companies Companies May File for Deviations and
Discounts
Availability and Cost Affected by Claim History of Applicant and Property
Importance of Insurance Contingency in Purchase Agreement
States Regulate Insurance Companies Companies May File for Deviations and
Discounts
Availability and Cost Affected by Claim History of Applicant and Property
Importance of Insurance Contingency in Purchase Agreement
Chapter 7Chapter 7
Recent Changes and Industry TrendsRecent Changes and Industry Trends
Learning ObjectivesLearning Objectives
Name Stringent Underwriting Guidelines
Compare Guaranteed Replacement Cost vs. Replacement Caps
Discuss Use of Credit Scores and Use of Insurance Financial Scores (IFS)
Explain Why IFS and Previous Claims History Affect Buyers
Describe Impact of Comprehensive Loss Underwriting Exchange (CLUE) on Listings
Name Stringent Underwriting Guidelines
Compare Guaranteed Replacement Cost vs. Replacement Caps
Discuss Use of Credit Scores and Use of Insurance Financial Scores (IFS)
Explain Why IFS and Previous Claims History Affect Buyers
Describe Impact of Comprehensive Loss Underwriting Exchange (CLUE) on Listings
Catastrophic LossesCatastrophic Losses
Most Costly Catastrophes
Acts of God
Insurance Industry Ability to Pay Claims
Most Costly Catastrophes
Acts of God
Insurance Industry Ability to Pay Claims
Changes as a Result of Catastrophic Losses
Changes as a Result of Catastrophic Losses
Replacement Caps
Premiums Closely Aligned with Potential Total Loss
Replacement Caps
Premiums Closely Aligned with Potential Total Loss
Stronger Underwriting Guidelines
Stronger Underwriting Guidelines
Credit Scoring and IFS
Fair Credit Reporting Act (FCRA)
How Mortgage Companies Use
Credit Scores
How Insurance
Companies Use IFS
Credit Scoring and IFS
Fair Credit Reporting Act (FCRA)
How Mortgage Companies Use
Credit Scores
How Insurance
Companies Use IFS
Changes in IndustryChanges in Industry Impact of Claims History
Comprehensive Loss Underwriting Exchange (CLUE)
Impact of Claims History Comprehensive Loss Underwriting
Exchange (CLUE)
Higher Deductibles
Property Inspection Prior to Issuing Policy
Prior Water-Related Claims
Higher Deductibles
Property Inspection Prior to Issuing Policy
Prior Water-Related Claims
I Have noCLUE
Impact on Real Estate Transactions
Impact on Real Estate Transactions
Sellers Obtain CLUE Early to Correct Any Errors
Insurance Companies Interpret Data Differently
Buyers Obtain Credit Scores and Insurance
Scores Early
Insurance Agent Can File for CLUE Report of Property
Sellers Obtain CLUE Early to Correct Any Errors
Insurance Companies Interpret Data Differently
Buyers Obtain Credit Scores and Insurance
Scores Early
Insurance Agent Can File for CLUE Report of Property
Impact on Real Estate Transactions
Impact on Real Estate Transactions
Contingency Clauses
Monthly Insurance Premiums Impact Buyers’ Debt-to-Income Ratios
Buyer May Not Be Able to Buy
Report Any Errors
Contingency Clauses
Monthly Insurance Premiums Impact Buyers’ Debt-to-Income Ratios
Buyer May Not Be Able to Buy
Report Any Errors