Property Insurance Chapter 39

Home and Property Insurance Home and Property Insurance protects you from three types of economic loss…  Damage to your home or property.  Additional expenses you must pay to live someplace else if your home is badly damaged.  Liability losses related to your property.

Damage to Home or Property Homes and other expensive property should be insured for fire damage, vandalism, unavoidable accidents, and natural disasters.  Fires cause over $12 Billion in damage every year.  Natural Disasters include lighting, earthquake, tornado, wind, and flood.

Additional Living Expenses If your home were not livable while repairs were taking place, and your policy covers Additional Living Expenses than this will help with most of the cost to live in a motel, hotel or furnished apartment.

Liability Protection This is covered under the Personal Liability Coverage Personal Liability Coverage - protects you from claims arising from injuries to other people or damage to other people’s property caused by you, your family, or even your pets.

Property Insurance Policies When considering the purchase of property insurance, you need to decide what should be insured as well as against what perils it should be insured.  Perils - are the caused of loss, such as fire, wind, or theft.  Real Property - property permanently attached to land, such as a house or garage.  Personal Property - property not attached to land, such as furniture or clothing.

Individual Policies Policies to cover against specific perils…  Standard Fire Policy - insures against losses caused by fire or lightning.  Extended Coverage - broadens the coverage to include damage caused by perils such as wind, hail, smoke, and falling aircraft.  Additional coverage can be purchased to cover other perils as well… To protect against floods in a flood-prone area, or To protect against financial loss caused by an earthquake

Homeowners Policies Homeowner Policy - this is a very convenient package-type insurance policy designed to fit the needs of most homeowners wishing to insure their homes and property. There are normally three forms of homeowners insurance  Basic Form  Broad Form  Special Form

Homeowners Insurance

Renters Policies This is a policy created for the renters of apartments, condominiums, and or rented homes.  This policy covers household goods and personal belongings and provides protection against the same kinds of perils covered by homeowners policies.  This policy might include personal liability coverage. However, this does not actually protect the dwelling itself.

Buying Property Insurance Getting the Correct Coverage  Planning for the increase of property value. A $90,000 house, when built, might cost $125,000 to replace it with the increase in property value. Some policies will cover this increase, as long as the insured value is 80% of the replacement value.  Properly estimating the value of personal property Normally, personal property is insure at 50% of the amount that the home is insured for. More coverage is available for a higher premium.

Insurance Premiums Factors used to determine premiums  The number one factor is the estimated danger of loss based on the insurance company’s past experiences.  These are the other factors used in figuring the premium… The value of property insured. The construction of the building; brick, wood, or concrete The type of policy (basic, broad, or special) The number of perils covered The distance to the nearest fire department and water supply The amount of deductible (the higher the deductible, the lower the premium)

Making a Claim Make an Inventory list -  The original cost of each article  When the article was purchased, and  How long the article is expected to last Depreciation - the decrease in value of an insured item. Replacement Insurance - actually replaces the item that has been destroyed. Adjuster - This is the representative of the company that will look at the damaged property, determine the extent of loss, and pay you according to the terms of the policy.