Chapter 10: Personal Property and Liability Insurance Chapter 10 Personal Property and Liability Insurance

 2005 Kaplan Financial 2 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance Homeowners (HO) insurance: basic coverages Section I coverages Coverage A: Dwelling Coverage B: Other structures Coverage C: Personal property Coverage D: Loss of use

 2005 Kaplan Financial 3 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance (cont.) Section II Coverages Coverage E: Personal liability Coverage F: Medical payments to others

 2005 Kaplan Financial 4 Chapter 10: Personal Property and Liability Insurance Broad Named Perils 1. Fire2. Vehicles 3. Lightning4. Smoke 5. Windstorm6. Vandalism 7. Hail8. Explosion 9. Riot10. Theft 11. Aircraft12. Volcano

 2005 Kaplan Financial 5 Chapter 10: Personal Property and Liability Insurance Broad Named Perils (cont.) 13. Falling objects 14. Weight of ice, snow, sleet 15. Accidental overflow of water 16. Sudden bursting of appliances 17. Freezing of system or appliance 18. Damage from electrical current

 2005 Kaplan Financial 6 Chapter 10: Personal Property and Liability Insurance Exclusions for Open Perils Policy Movement of ground Ordinance or law Damage from water War or nuclear hazard Power failure Intentional act Neglect

 2005 Kaplan Financial 7 Chapter 10: Personal Property and Liability Insurance Section I Coverage – Coverage A Coverage A – Dwelling Covers repair or replacement of damage to dwelling Also covers attached structures and building materials on the premises

 2005 Kaplan Financial 8 Chapter 10: Personal Property and Liability Insurance Coinsurance If a loss occurs, the insured will receive the greater of: ACV (Amt. of Ins. ÷ Coinsurance) x Loss

 2005 Kaplan Financial 9 Chapter 10: Personal Property and Liability Insurance Section I Coverage – Coverage B Coverage B – Other Structures Typically 10% of Coverage A (dwelling) limit Includes detached garages, small greenhouses, storage buildings, gazebos, etc.

 2005 Kaplan Financial 10 Chapter 10: Personal Property and Liability Insurance Section I Coverage – Coverage C Coverage C – Personal Property Typically 50% of Coverage A (dwelling) limit Covers belongings possessed by policyowner including personal property of any resident family members Actual cash value – replacement cost minus depreciation

 2005 Kaplan Financial 11 Chapter 10: Personal Property and Liability Insurance Section I Coverage – Coverage D Coverage D – Loss of Use Additional living expenses Loss of fair rental value

 2005 Kaplan Financial 12 Chapter 10: Personal Property and Liability Insurance Section II Coverage – Coverage E Coverage E – Personal Liability Protects homeowner and all family members for bodily injury and property damage for which they are legally responsible

 2005 Kaplan Financial 13 Chapter 10: Personal Property and Liability Insurance Section II Coverage – Coverage F Coverage F – Medical Payments to Others Pays necessary medical expenses of others that result from bodily injury “No-fault” coverage

 2005 Kaplan Financial 14 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance: Forms Available HO-2 Broad form HO-3 Special form HO-4 Contents broad form (tenants) HO-5 Comprehensive form HO-6 Unit owners form (condos) HO-8 Modified form

 2005 Kaplan Financial 15 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance: Available Endorsements Replacement cost for personal property Inflation protection Earthquake insurance Water backup coverage Building law and ordinance coverage Personal injury Open perils

 2005 Kaplan Financial 16 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance Contractual Conditions Section I conditions – Duties after a loss: 1.Give notice immediately to insurance company or agent. 2.Protect the property from any further damage. 3.Prepare an inventory of loss to the building and personal property. 4.File written proof of the loss.

 2005 Kaplan Financial 17 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance Contractual Conditions (cont’d) Loss settlement This condition specifies how certain property items will be valued (ACV basis or a replacement cost basis). The coinsurance provision of the policy is also contained in this clause.

 2005 Kaplan Financial 18 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance Contractual Conditions (cont’d) Section II conditions Limit of liability Duties after a loss Duties of an injured person – Coverage F Payment of claim – Coverage F Bankruptcy of an insurance company

 2005 Kaplan Financial 19 Chapter 10: Personal Property and Liability Insurance Homeowners Insurance Contractual Conditions (cont’d) Sections I and II conditions Concealment or fraud Cancellation and nonrenewal Assignment Subrogation

 2005 Kaplan Financial 20 Chapter 10: Personal Property and Liability Insurance Personal Auto Policy (PAP) Coverages Eligible autos – four-wheel passenger automobiles, pickup trucks, and vans owned by individuals or leased for at least six months. Important policy definitions “Insured” “Covered Auto”

 2005 Kaplan Financial 21 Chapter 10: Personal Property and Liability Insurance PAP Coverages – Policy Definitions Part A – Liability Part B – Medical payments Part C – Uninsured motorists Part D – Damage to your auto Part E – Duties after an accident or loss Part F – General provisions

 2005 Kaplan Financial 22 Chapter 10: Personal Property and Liability Insurance Legal Liability Torts (civil wrongs) Breach of Contract Crimes (public wrongs) Torts Intentional Interference Slander Libel Strict & Absolute Liability Negligence

 2005 Kaplan Financial 23 Chapter 10: Personal Property and Liability Insurance Personal Umbrella Policy (PUP) Purpose To provide a catastrophic layer of liability coverage on top of the individual’s homeowners and automobile insurance policies Standard coverage amount – at least $1 million

 2005 Kaplan Financial 24 Chapter 10: Personal Property and Liability Insurance Business and Professional Use of Property and Liability Insurance Commercial Package Policy (CPP) Inland Marine Policies Business Owner’s Policy (BOP) Business Liability Insurance Workers’ Compensation Business Auto Business Liability Umbrella Malpractice Insurance Errors and Omissions Product Liability