1. Home Insurance

2. Important Insurance Terms
Risk – Chance of loss or injury
Peril – Anything that may cause a loss
Hazard – Anything that increases the likelihood of loss through peril
Negligence – Failure to take ordinary or reasonable care to prevent accidents

3. Risk Management Methods
Risk Avoidance
Avoid risks, but may have serious trade-offs
Can avoid traffic accident by not driving, but may not be able to get to work
Risk Reduction
Decrease the likelihood of harm or risk
Can reduce accident injury by wearing a seatbelt

4. Risk Management Methods
Risk Assumption
Taking responsibility for negative results of a risk
Makes sense to assume risk when the possible loss is small like not fully insuring an old car
Self-insurance is another option; set up a savings acct. to cover loss
Risk Shifting
Use an insurance company
May have a deductible, a combination of risk assumption and shifting, which is a set amount the policyholder must pay on a loss

5. Property and Liability Insurance
Natural disasters as well as injuries and property damage cost billions of dollars a year
Two types of risk related to home
1) Risk of damage to or loss of property
2) Risk of responsibility for injuries to other
people or damage to their property

6. Property and Liability Insurance
Property Damage or Loss
Two basic types of risks for property owners
Physical damage such as wind, fire, flooding
Loss or damage caused by criminal behavior such as robbery, burglary, vandalism, and arson
Liability
Legal responsibility for the financial cost of another person’s losses or injuries, even is it is not your fault
Usually found responsible because negligence on your part helped cause the mishap

8. Homeowners Insurance
A binding, legal contract between the insured and the insurer to protect their home and belongings if they are damaged or destroyed
Provides against losses caused by fire, water damage, storms, theft, and other perils
Provides against monetary losses as a result of negligence for medical bills, legal fees, death benefits

9. Who/What Do HO Policies Protect?
Anyone named in the policy
Spouse
Children
Other residents
Guests
Also covers garages, sheds, pools, landscaping

10. What isn’t Protected
Cars, boats, ATVs – things that would have its own insurance
One of a kind items like jewelry, art, and collections – must purchase additional coverage for these items
In areas prone to natural disasters, additional coverage is needed

11. Renter’s Insurance
Protects those who live in a “home” owned by someone else
Inexpensive to purchase
Covers your belongings which are not covered under the owners insurance
Protects against theft, loss of personal property, and loss of use

12. What Renters Insurance Covers
Personal possessions
Loss of use (pays for you to live elsewhere)
Medical payments for those injured there
Doesn’t Cover
Structural damage caused by carelessness

13. Homeowners Policies
Most homeowners insurance are package policies with the following coverages
Property/Structure
Property/Personal belongings
Liability protection
Loss of use

14. Property/Structure Coverage
Repair or rebuild your home if damaged or destroyed by fire, hurricane, hail, lightning or other disasters listed in your policy
Will not pay for damage caused by a flood, earthquake or routine wear and tear
Always purchase enough coverage to rebuild your home

15. Property/Personal Belongings Coverage
Furniture, clothes, and personal items stolen or destroyed by insured disasters
Most cover 50-70% of the cost of your dwelling limit, so if your house is insured at $200,000, and they pay 50%, the payout limit would be $100,000
Covers items you take on vacation or use at school

16. How Much Will You Get? Actual Cash Value vs Replacement Cost
Actual cash value only pay for what the property was worth at the time of the loss (depreciated value)
Replacement cost coverage will pay what it actually costs to replace the items you lost
Both involve paying a deductible first

17. Liability Insurance Protects you when you are at fault or sued
Covers bodily injury for those hurt at your home
Covers property damage liability for damage done to building or belongings
Most policies cover behavior of household pets

18. Loss of Use Insurance
Pays for you to stay somewhere else while home is being rebuilt or repaired
May limit coverage to 10 to 20% of home’s total coverage
May limit the payment period to 6 to 9 months

19. Personal Property Floaters
Extra coverage for valuable items
Jewelry
Furs
Fine arts
Musical instruments
Collections
Guns

20. Household Inventories
Documentation of personal belongings with purchase dates and cost information
Should keep receipts, serial numbers, brand names, proof of value
Video of home including closets and storage areas
Photographs with dates and values on back
Keep in fireproof box or safe deposit box and update regularly

21. Personal Liability and Related Coverages
Amounts of coverages
Most policies cover liability up to $100,000
Supplement with an umbrella policy to add protection for all kinds of personal injury claims – if someone sues you for slander (writing or saying something untrue)
More expensive policies are available for the wealthy
Medical payments coverage pays cost of minor accidental injuries to visitors on your property
Supplemental coverage could cover damage you do to other people’s property

22. What Isn’t Covered Jewelry, furs, boats, electronics Animals and fish
Motorized vehicles not licensed for road use, except those used for home maintenance
Sound devices in motor vehicles
Aircraft parts
Property belonging to tenants
Property in rentals
Business property

23. Other Coverages Credit card fraud, check forgery, counterfeit money
Removal of damaged property
Emergency removal of property to protect it from damage
Temporary repairs after a loss to prevents further damage
Fire department user fees

24. How much coverage do you need?
80% to full coverage for homes
Must have coverage if borrowing money from bank
Coverage for personal belongings is usually 55 to 75% of insurance you have on your home
Claim settlements
Actual cash value – receive replacement cost minus depreciation
Replacement value – receive full cost of repairing or replacing item

25. Home Insurance Cost Factors
Location – water supply, fire hydrant, crime, weather
Type of Structure – wood, brick
Price, Coverage Amount, Policy Type – higher deductible means lower premiums
Home Insurance Discounts – smoke detectors, fire extinguisher, dead bolts
Company Differences – compare companies

26. Location Those close to water supply or hydrant get discount
Those near high crime, severe weather pay more

27. Condition, Materials, and Age
Newer houses have lower premiums
Higher premiums for an older home or one that is not well maintained

28. Policy Type More coverage, more costly
Get auto and home insurance from the same place to get a discount
Floaters or special coverage cost more

29. Lower Deductibles
Decreases cost because insurance company pays less out because you are assuming more financial reasonability

30. Discounts Smoke detectors Fire extinguisher Sprinkler system Deadbolts
Alarm system

31. Selecting Insurance Companies
Consider prices, but also service and coverage
Not all settle claims in the same way

32. Credit Score
Better credit score means lower premiums

33. Attractive Nuisances
An attractive nuisance is an object, structure or condition that is both dangerous and irresistibly inviting or intriguing to children.
Name some attractive nuisances

34. What is an Attractive Nuisance
Unenclosed swimming pool, goldfish pool, idling lawnmower, paint sprayer, table saw, construction sites, and equipment
Most natural conditions are not considered attractive nuisances
To be liable for injury, an owner must create or maintain the harmful object
Attractive nuisance doctrine arises when the child doesn’t realize the extent of the danger

35. Typical Local Laws Pools – fences and locks
Discard Refrigerators – removal of doors
Fences – barbed wire below a certain height
Old Cars and Other Junk – must be fenced in
Chemicals – discard of pesticides, paints, etc.
Dangerous Dogs

36. Landowner can be held responsible if a child is injured by an "artificial condition" and all five of the following criteria are met:
1) Landowner knows (or should know) that children are likely to trespass on the property
2) The condition has the potential to cause death or serious bodily harm to children
3) The children involved are too young or inexperienced to understand the risk presented by the condition

37. Landowner can be held responsible if a child is injured by an "artificial condition" and all five of the following criteria are met:
4)The benefit of maintaining the condition or the cost required to remedy the condition is minimal compared with the risk to children.
5)The landowner fails to take reasonable measures to eliminate the danger posed by the condition.

38. Who is Protected
Example 1 – 12 year old child climbed onto the roof of building and fell 3 stories to the ground.
Owner was liable because
1. Children were known to play in area
2. Roof had an area that was sloped and
slippery – something a child might not notice
3. Owner could’ve locked door to the roof

39. Who is Protected
Example 2 – A 10 year old fell 3 stories from a roof after climbing up and playing on it.
Owner was not liable because
1. This owner had no reason to know that
children would play on the roof
2. No hidden danger on the roof itself
caused the all

40. Who Is Protected
Example 3: During construction of a house, a contractor left sheetrock propped against a wall and unattended. An 11 year old girl investigating the building site was injured when the sheetrock tumbled down on her.
Owner was liable because:
1. Children were likely to come onto the building site
2. The sheetrock was left unattended for days
3. It could have easily been stacked in a safer manner