Property Insurance Section 35.3. Understanding Business and Personal Law Property Insurance Section...

Property Insurance Property Insurance Section 35.3Section 35.3

Understanding Business and Personal Law


Insurance Protection

What You’ll Learn

How to identify what kinds of loss are How to identify what kinds of loss are covered by homeowner’s insurance and covered by homeowner’s insurance and fire insurance (pp. 762 & 763)fire insurance (pp. 762 & 763)




What You’ll Learn

How to calculate the amounts recoverable How to calculate the amounts recoverable by homeowners under coinsurance by homeowners under coinsurance clauses (p. 763)clauses (p. 763)

How to describe the coverage of marine How to describe the coverage of marine insurance (p. 765)insurance (p. 765)




Why It’s Important

Understanding property insurance will help Understanding property insurance will help you protect your property at the lowest cost.you protect your property at the lowest cost.




Legal Terms

property insurance (p. 762)property insurance (p. 762)binder (p. 762)binder (p. 762)floater policy (p. 762)floater policy (p. 762)homeowner’s insurance (p. 762)homeowner’s insurance (p. 762)renter’s insurance (p.762)renter’s insurance (p.762)




Legal Terms

fire insurance (p. 763)fire insurance (p. 763)coinsurance (p. 763)coinsurance (p. 763)ocean marine insurance (p. 765)ocean marine insurance (p. 765)inland marine insurance (p. 765) inland marine insurance (p. 765)




Property Insurance Homeowner’s and Renter’s Insurance Fire Insurance

Section OutlineSection Outline




Coinsurance Clauses Marine Insurance

Section OutlineSection Outline




Pre-Learning Question Pre-Learning Question

What is property insurance?




Property Insurance Property Insurance

Property insuranceProperty insurance is a contract in is a contract in which the insurer promises, for a which the insurer promises, for a stated premium, to pay you a sum of stated premium, to pay you a sum of money if a particular piece of real or money if a particular piece of real or personal property is damaged or personal property is damaged or destroyed.destroyed.





The policy becomes effective as soon The policy becomes effective as soon as the insurer accepts your as the insurer accepts your application, or even sooner if a binder application, or even sooner if a binder is issued. A is issued. A binderbinder gives you gives you temporary protection until a policy is temporary protection until a policy is issued.issued.





A A floater policyfloater policy is one that insures is one that insures property that cannot be covered by property that cannot be covered by specific insurance because it is specific insurance because it is constantly changing in value or constantly changing in value or location. location.





A personal property floater, for A personal property floater, for example, can cover a bicycle or laptop example, can cover a bicycle or laptop computer, no matter where the items computer, no matter where the items are located.are located.





What does homeowner’s and renter’s insurance cover?




Homeowner’s and Renter’s Homeowner’s and Renter’s Insurance Insurance

Homeowner’s insuranceHomeowner’s insurance protects protects against most types of losses and against most types of losses and liabilities related to home ownership.liabilities related to home ownership.




Homeowner’s Insurance Covers Homeowner’s Insurance Covers

firefirewindstormwindstormvandalismvandalismburglaryburglaryinjuries suffered by other persons injuries suffered by other persons while on the property while on the property




Homeowner’s Insurance Covers Homeowner’s Insurance Covers

With certain limitations, homeowner’s With certain limitations, homeowner’s policies cover your personal property policies cover your personal property anywhere in the world.anywhere in the world.




Homeowner’s and Renter’s Homeowner’s and Renter’s Insurance Insurance

Renter’s insuranceRenter’s insurance protects you protects you against loss of personal property, against loss of personal property, liability for a visitor’s personal injury, liability for a visitor’s personal injury, and liability for negligent destruction of and liability for negligent destruction of the rented premises.the rented premises.





What does fire insurance cover?




Fire Insurance Fire Insurance

Fire insuranceFire insurance covers loss resulting covers loss resulting directly from an unfriendly or hostile directly from an unfriendly or hostile fire. fire.




Fire Insurance Fire Insurance

Damages that result from trying to put Damages that result from trying to put out a fire, or from theft or breakage out a fire, or from theft or breakage while attempting to remove insured while attempting to remove insured goods to a safe location are goods to a safe location are considered directly related to the fire considered directly related to the fire and are usually covered.and are usually covered.





What is coinsurance?




Coinsurance Clauses Coinsurance Clauses

CoinsuranceCoinsurance is a provision in an is a provision in an insurance policy that limits your insurance policy that limits your liability for a loss if the property is not liability for a loss if the property is not insured for its full replacement value.insured for its full replacement value.





For example, if your insurance policy For example, if your insurance policy has an 80 percent coinsurance has an 80 percent coinsurance clause, your house must be insured clause, your house must be insured for 80 percent of its replacement value for 80 percent of its replacement value to receive full reimbursement for a to receive full reimbursement for a loss.loss.




35.335.3


COINSURANCE CLAUSECOINSURANCE CLAUSE

““The insurance company will pay that part of a loss that the insurance The insurance company will pay that part of a loss that the insurance

carrier bears to 80 percent of the replacement cost of the building.”carrier bears to 80 percent of the replacement cost of the building.”

It would cost $100,000 to replace Zelia’s house. If she insured it for $60,000, the It would cost $100,000 to replace Zelia’s house. If she insured it for $60,000, the

insurance company would pay only three-fourths of any loss, computed as follows:insurance company would pay only three-fourths of any loss, computed as follows:

$60,000$60,000 $60,000$60,000 33

80% of $100,00080% of $100,000 $80,000$80,000 44

A fire partially destroys the building, causing $40,000 worth of damage. Because A fire partially destroys the building, causing $40,000 worth of damage. Because

of the coinsurance clause, Zelia would recover $30,000 (3/4 of the loss) from the of the coinsurance clause, Zelia would recover $30,000 (3/4 of the loss) from the

insurance company.insurance company.





What does marine insurance cover?




Marine Insurance Marine Insurance

Marine insurance is one of the oldest Marine insurance is one of the oldest kinds of insurance coverage, dating kinds of insurance coverage, dating back to Venetian traders who sailed back to Venetian traders who sailed the Mediterranean Sea. the Mediterranean Sea.




Marine Insurance Marine Insurance

Ocean marine insuranceOcean marine insurance covers covers ships at sea.ships at sea.Inland marine insuranceInland marine insurance covers covers goods that are moved by land goods that are moved by land carriers such as trains, trucks, and carriers such as trains, trucks, and airplanes.airplanes.




Name the insurance being described.

1.1. _____ insurance protects you from _____ insurance protects you from financial loss if real or personal financial loss if real or personal property is destroyed or damaged.property is destroyed or damaged.

2.2. _____ insurance covers ships at _____ insurance covers ships at sea sea




ANSWERANSWER

1.1. Property.Property.2.2. Ocean marine.Ocean marine.




Name the insurance being described.

3.3. _____ insurance covers goods that _____ insurance covers goods that are moved by land.are moved by land.

4.4. _____ insurance protects you from _____ insurance protects you from losses and liabilities related to losses and liabilities related to home ownership.home ownership.




ANSWERANSWER

3.3. Inland marine.Inland marine.4.4. Homeowner’s.Homeowner’s.




Reviewing What You Learned

1. What types of losses are covered by homeowner’s insurance? Fire insurance?

Section 35.3 Assessment





Homeowner’s insurance covers losses from fire, windstorm, vandalism, burglary, and injuries suffered by other persons while on the property.


Answer





With certain limitations, homeowner’s policies cover personal property owned by the insured anywhere in the world. Fire insurance covers loss resulting directly from an unfriendly or hostile fire.


Answer





2. What is a coinsurance clause? What does it mean if your policy has an 80 percent coinsurance clause?






Coinsurance is a provision in an insurance policy that limits the insurer’s liability for a loss if the property is not insured for its full replacement value.


Answer





If your policy has an 80 percent coinsurance clause, your house must be insured for 80 percent of its replacement value to receive full reimbursement for a loss.


Answer





3. Explain marine insurance coverage.






Ocean marine insurance covers ships at sea. Inland marine insurance covers goods that are moved by land carriers such as rail, truck, and airplane.


Answer





Critical Thinking ActivityRenter’s Insurance If you decide to go away to college, you will probably rent a dorm room or an apartment. Should you buy renter’s insurance? Why or why not?





Critical Thinking Activity AnswerRenter’s Insurance Answers may vary but should explain the purpose of renter’s insurance.





Legal Skills in ActionInsurance Coverage Lois and Ed carry homeowner’s and fire insurance. One day, they put a small pizza in their toaster oven and went outside to chat with neighbors.





Legal Skills in ActionInsurance Coverage They forgot about the pizza, which caused a fire in the kitchen. The kitchen was destroyed and the rest of the house was damaged by smoke and ash.





Legal Skills in ActionInsurance Coverage With a partner, debate whether Lois and Ed’s loss will be covered by either policy.





Legal Skills in Action AnswerInsurance Coverage Debates will vary but should include that homeowner’s insurance protects against most types of losses and liabilities related to home ownership, including fire.

Property Insurance Property Insurance End of Section 35.3End of Section 35.3

Property Insurance Section 35.3. Understanding Business and Personal Law Property Insurance Section...

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