Property and Liability Insurance MYPF 4/13/2018 22 Property and Liability Insurance 22.1 Property Insurance 22.2 Auto and Umbrella Insurance © 2016 South-Western, Cengage Learning   Chapter 1

Lesson 22.1 Property Insurance Learning Objectives LO 1-1 Explain the purpose and provisions of renters insurance. LO 1-2 Describe the need for and coverage provided by homeowners insurance. Chapter 22 © 2016 South-Western, Cengage Learning  

Renters Insurance Renters insurance is insurance that protects renters from property and liability risks. Personal property Personal liability Extended coverage Chapter 22 © 2016 South-Western, Cengage Learning  

Homeowners Insurance Homeowners insurance is insurance that protects property owners from property and liability risks. Homeowners policies typically cover property owners’ losses from 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. Chapter 22 © 2016 South-Western, Cengage Learning  

Homeowners Policy Coverage (page 530) HO-1 Basic Coverage HO-2 Broad Form HO-3 Special Form HO-4 Renters HO-5 Comprehensive HO-6 Condominium Owner’s HO-7 Mobile Homes HO-8 Older Homes Chapter 22 © 2016 South-Western, Cengage Learning  

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 homeowners insurance is protection against financial loss due to damage or destruction. Chapter 22 © 2016 South-Western, Cengage Learning  

Physical Damage Coverage (continued) 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 homeowners policy will pay for temporary housing for a limited time. Chapter 22 © 2016 South-Western, Cengage Learning  

Theft and Vandalism Coverage Theft and vandalism coverage protects your personal belongings against loss from criminal activity, such as robbery or 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. Chapter 22 © 2016 South-Western, Cengage Learning  

Liability Coverage Liability coverage is insurance to protect against claims for bodily injury to another person or damage to another person’s property. An attractive nuisance is a dangerous place, condition, or object that is particularly attractive to children, such as a swimming pool. Chapter 22 © 2016 South-Western, Cengage Learning  

Liability Coverage (continued) Homeowners are responsible for acts occurring on their property, both for guests and for uninvited guests. A guest is someone you specifically ask to your house. An uninvited guest is presumed to have permission to be on your property, such as door-to-door solicitors or delivery people. In most cases, homeowners are not responsible for damages or injuries by unlawful intruders or trespassers. Chapter 22 © 2016 South-Western, Cengage Learning  

What’s Not Covered? An endorsement is a written amendment to an insurance policy that reflects changes to it. 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 homeowners policy. Chapter 22 © 2016 South-Western, Cengage Learning  

How Much Coverage is Needed? Household inventory – typically insure for half the value of the building Overinsuring refers to buying more insurance than is necessary, and should be avoided. Replacement value is the cost of replacing an item regardless of its actual cash (market) value. Indemnification – generally reimburse cash value of loss Chapter 22 © 2016 South-Western, Cengage Learning  

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. Chapter 22 © 2016 South-Western, Cengage Learning  

Cost of Homeowners Insurance As with renters insurance, rates for homeowners insurance vary from state to state. The priciest states to insure your home are the states most susceptible to large-scale natural disasters, such as tornadoes and hurricanes. The cost of homeowners insurance also depends on the insurance company that you select, how much coverage you opt to have, and the amount of your deductible. Chapter 22 © 2016 South-Western, Cengage Learning  

Assignment: 22.1 Assessment Questions; 1-10 FULL questions AND answers Turned into basket by the end of the block Chapter 26