Chapter 10: Protecting your Property Flashcards
insurance that guards against catastrophic losses of real and personal property caused by perils such as fire, theft, vandalism, wind storms, and other calamities.
property insurance
insurance that offers protection against financial consequences that may arise from the insured’s responsibility for personal loss or personal injuries to others.
liability insurance
what are the 2 types of exposures?
- property losses
- liability exposures
what 2 things must one do to obtain proper insurance to protect against property loss?
- inventory property
- identify perils
property inventory is important in case of loss because you must provide “proof of loss” to insurance companies.
true
fill out and safely stash away what form w/ accompanying photos as proof of property ownership?
a personal property inventory form
it’s important to identify perils because…
insurance companies limit certain perils that will be covered.
liability exposures mostly result from…
negligence.
liability insurance protects against losses and high legal fees in lawsuits that result.
true
principle where the insured must not be compensated by the insurance company in an amount exceeding the insured’s economic loss.
principle of indemnity
when the policyholder causes losses to collect insurance payments, this is called…
moral hazard.
- actual cash value
- right of subrogation
- other-insurance clause
These are included in what principle?
principle of indemnity
replacement cost - value of physical depreciation =
actual cash value
allows insurance company to request reimbursement from person who caused loss or their insurance company after they pay out a claim to the one who lost.
right of subrogation
states that if a person has more than one insurance policy on a property, each company is only responsible for a prorated amount of the loss based on its proportion of the total insurance covering the property.
other-insurance clause
requires policy holders to buy insurance in an amount equal toa specified percentage of the replacement value of their property.
co-insurance
homeowner’s insurance policy that covers all perils expect those specifically excluded.
comprehensive policies
homeowner’s insurance that names the particular perils covered.
named peril policies
does Section I or Section II of homeowner’s insurance policies insure perils against which the home and its contents are protected?
section I
does Section I or Section II of a homeowner’s insurance policy include comprehensive personal liability coverage offers protection against personal liability resulting from negligence?
section II
premiums on homeowner’s insurance depend on:
1. structure type
2. location
3. credit score
4. extras: trampolines, dog, pool, etc.
true
the dwelling unit, accompanying structures, and personal property of the owner and their families, including lawn/plants and business property (up to $2,500) are all covered by…
homeowner’s insurance
provides scheduled coverage of items not adequately covered in standard HO policy.
personal property floater (PPF)
does an unscheduled or scheduled personal property floater provide maximum protection?
unscheduled PPF
does an unscheduled or scheduled personal property floater provide supplemental coverage?
scheduled PPF
what HO form is renter’s insurance on personal possessions of the renter inside the rented unit that provides coverage against HO-2 perils (common perils)?
HO-4 form
which HO form is for owners of a condominium and provides a minimum of $1,000 of protection for building alterations?
HO-6 form
pays actual costs of replacing articles w/ comparable ones.
replacement cost insurance
what 3 types of losses are covered by homeowner’s insurance?
- direct property damage
- indirect loss
- additional expenses resulting from loss
covers:
1. cost to defend insured
2. reasonable expenses incurred in helping insurance company’s defense
3. payment of court costs
These are covered by what type of insurance policy?
homeowner’s policy
what persons are covered under homeowner’s insurance?
persons named in policy
residents
family members moved out (limited)
guests (limited)
homeowner’s insurance provides worldwide coverage when off premises temporarily.
true
amount needed to repair, rebuild, or replace an asset at today’s prices.
replacements cost
Coverage A = 10-40%
Coverage B = 10%
Coverage C = 75%
Coverage D = 100%
Coverage E = $100,000
Coverage F = $1,000/person
Liability Coverage = $100,000+
these are the policy limits on homeowner’s insurance
true
reduces insurance premiums by doing away w/ frequent, small-loss claims that are proportionally less expensive to administer.
deductibles
percentage deductibles are more commonly used by insurance companies.
true
what are the 2 types of deductibles?
- percentage
- named peril
each type of property damage coverage is subject to $250+ deductible.
true
adding an inflation rider, increased coverage of replacement value, scheduling items, increasing liability/medical payment limits all increase…
premiums.
increase deductible to reduce…
premiums.
a comprehensive auto policy that is easy to understand.
personal automobile policy (PAP)
what are the 4 parts of a personal automobile policy (PAP)?
- Part A: liability coverage
- part b: medical payments coverage
- part c: uninsured motorists coverage
- part d: coverage for physical damage to vehicle
insurance that pays for collision damage to insured automobile no matter who’s at fault.
collision insurance
insurance that protects against loss to insured auto caused by any peril other than collision.
comprehensive automobile insurance
insurance where each insured party is compensated by their own insurance company regardless of who is at fault.
no-fault automobile insurance
- rating territory (geographic location)
- use of auto (mileage)
- driver’s personal characteristics (age, sex, marital status)
- auto type
- driving record
- personal credit history
These all influence what?
premiums
what 2 things can be used to reduce car insurance premiums?
- discounts
- deductibles
law requiring motorists to buy a specified minimum amount of auto liability insurance or provide other proof of financial responsibility.
financial responsibility laws
laws that require motorists to show evidence of coverage before receiving license plates.
compulsory auto insurance laws
financial responsibility laws require motorists to show coverage after they are involved in an accident.
true
- earthquake insurance
- flood insurance
- transportation insurance
These are examples of supplemental property….
insurance.
policy that provides added liability coverage for homeowner’s and auto insurance for mid- to high-level income/net worth people.
personal liability umbrella policy
you should get insurance protection for losses that seldom occur, but are potentially substantial.
true
insurance agent that represents 1 company.
captive agent
insurance agent that represents 2-10 different companies.
independent agent
who should? :
1. review total property/liability exposures
2. inventory property and identify exposures
3. determine appropriate covered perils, limits, deductibles, and floater policies.
4. have a CPCU or CIC designation
a good insurance agent
- financial soundness of insurance company
- claim-settlement practices
- geographic range of operations
These are all topics you should discuss with?
your insurance agent
What process is this? :
1. Record names, addresses, and phone numbers of all witnesses of accident w/ license plates
2. notify law enforcement and insurance company/agent
3. insurance company investigates
4. show proof of loss (sworn statement)
5. insurer will decide whether they have an obligation to cover the damage
settling claims (process)
when both the insured and insurer bring a 3rd party to solve the dispute on the company’s responsibility to cover damage, they must use…
arbitration.
an insurance specialist who works for the insurance company as an employee, independent adjustor, or for an adjustment bureau.
claims adjustor
whose job is to diligently question/investigate an insurance claim while offering services to minimize settlement delays and financial hardship.
claims adjustor
when insuring property people need to consider not only replacing and restoring actual property in the event of loss, but also the liability arising from the insured’s…
responsibility for property loss.
auto insurance is needed primarily as protection against the cost of significant…
loss.
the reimbursement of the cost of repairing or replacing damaged structures without deducting depreciation.
replacement-cost coverage
a liability suit could result against you if your dog bits your neighbor.
true
For what 2 reasons does it pay to comparison shop insurance policies?
- large variation in premiums
- large variation in services
even though homeowners are eligible for reimbursement on a full replacement-cost basis if they keep their home insured for at least 80% of the amount it would cost to build them today, inflation can cause the actual amount of coverage to fall…
below 80%.
a higher insurance cost may result from a low credit score of the insured.
true
standard homeowner’s policies won’t include coverage for damage done by flood.
true
what does a $300,000/$500,000 bodily injury liability auto policy pay as a total to all injured victims in one accident?
$500,000
