Personal Property & Liability Insurance _ Social Security Flashcards
What are the 3 basic forms of coverage offered by homeowners policies?
- Basic
- Broad
- Open
What is covered under Basic Homeowners Coverage?
- Fire
- Vehicles (damaged caused by vehicles)
- Lightning
- Smoke
- Windstorm
- Vandalism or malicious mischief
- Hail
- Explosions
- Riots or civil commotion
- Theft
- Aircraft
- Volcanic Eruptions
What is covered under Broad Homeowners Coverage?
Basic perils are covered plus six additional named perils:
- Falling objects
- The weight of ice, snow, sleet
- Accidental discharge or overflow of water or steam
- Sudden and accidental cracking, burning, bulging of appliances
- Freezing of plumbing, heating, air conditioning, fire sprinkler system, or appliance
- Sudden and accidental damage from artificially generated electrical currents
What is covered under Open Peril Homeowners Coverage?
Provides protection from losses associated with all perils, except those that are specifically excluded.
What are general exclusions from most homeowners policies?
- Movement of the ground (earthquake, ground movement from volcanic eruption, mud/landslide, and sink hole)
- Ordinance or law regulating the construction, repair, or demolition of a building or structure
- Damage from rising water (including floods; surface and tidal water; waves; water below the surface that exerts pressure on buildings, structures and improvements; and water backing up through drains and sewers)
- Nuclear hazards (including radiation or radioactive contamination)
- Power failure caused by an uninsured peril (such as spoilage due to a freezer thawing out)
- Intentional acts
- Neglect
What are excluded perils that may be covered by an endorsement?
- Sink hole collapse
- Earthquake
- Sewage backup
- Refrigerated property damage
- Floods (separate policy from the National Flood Insurance Program)
What is covered under Section I of most homeowners policies?
Property Insurance coverage
Coverage A: Dwelling
Coverage B: Other Structures
Coverage C: Personal Property
Coverage D: Loss of Use
What is paid for under Coverage A: Dwelling?
repair and replacement for damage to the house and any attached structures
building materials on premises
losses paid for on a replacement cost basis (same or similar quality materials at current material prices)
= [Amount of Insurance Carried / Coinsurance Requirement] X Amount of Loss - Deductible
= (insurance I have ÷ insurance I should have) x Loss - Deductible
** Having full home value amount will cover a full loss less the deductible
What is paid for under Coverage B: Other Structures?
- detached garages
- greenhouses
- storage buildings
typically coverage limit is 10% of Coverage A: Dwelling
losses insured on a replacement cost basis
** structures used for business purposes must have separate business coverage
What is paid for under Coverage C: Personal Property?
tangible moveable property owned by the insured (such as furniture, entertainment equipment, music collections, videos, paintings, lamps, books, clothing, etc.)
typically coverage limit is 50% of Coverage A: Dwelling
losses insured on actual cash value basis
replacement cost endorsement can be purchased to enhance personal property coverage
What are typical limits on personal property items?
$200 - money, bullion, coin collections, and bank notes
$1,500 - securities, bills, evidence of debt, airline tickets, and manuscripts, theft of jewelry, watches, gems, precious metals, and real furs, watercraft (including trailers [not boat affiliated]) and equipment
$2,500 - theft of firearms, silverware, gold-ware, pewter-ware, and similar property
** special endorsement with scheduled items have no deductible and are valued at agreed-upon values
What certain types of personal property are excluded from coverage on a homeowners policy?
- animals, birds, fish
- articles separately described and specifically insured
- motorized land vehicles used off premises
- property of roomers or boarders not related to the insured
- aircraft and parts
- furnishings on property rented out to others
- property held as samples, held for sale, or sold but not delivered
- business data, credit cards, and fund transfer cards
- business property held away from the residence premises
What is paid for under Coverage D: Loss of Use?
additional living expenses incurred when the insured is unable to occupy the dwelling due to damages caused by a covered peril
may also pay for lost rental income during the period in which the property is uninhabitable
typically limit of coverage is 30% of Coverage A: Dwelling (HO-2, HO-3, HO-4, and HO-5 policies)
HO-6 has 50% of Coverage C
HO-8 has 10% of Coverage A
What is covered under Section II of most homeowners policies?
Liability and medical payment coverage
Coverage E: Personal Liability
Coverage F: Medical Payments to Others
What is covered under Section II Coverage E: Personal Liability?
- claims from bodily injury and property damage to others when insured or insured family members are responsible
Min coverage is $100K per occurrence
Insurer will also pay for legal defense and settlement costs associated with a claim
What is covered under Section II Coverage F: Medical Payments to Others?
pays all necessary medical expenses without regard to liability for others arising out of the insured’s activities, premises, or animals
- expenses must be incurred w/in 3 yrs of the accident
- limit of $1,000 to $5,000 is common up to $10,000 for some companies
- does not pay for expenses incurred by the insured or a member of the insured’s HH unless a residence employee
What are the different Homeowners (HO) Insurance Policy Forms?
HO-2 Broad Form = 18 named broad perils
HO-3 Special Form = open perils or “all-risks”
- personal property protection on broad perils
HO-4 Renters Policy
- minimum amount of personal contents (Coverage C) sold is $6,000
- provides for loss of use of premises = 30% personal property coverage
HO-5 Comprehensive Form = open perils or “all-risks”
- personal property protection on open perils
HO-6 Condominium Owners Form
- inside structure of their unit and all of its contents
- same perils as HO-2 and HO-4
- loss of use (Coverage D) limited to 50% of Coverage C limit
HO-8 Modified Coverage Form
- “functional replacement cost” coverage
- used for older homes
Section I HO Insurance Coverage Different Forms
Automobile insurance coverages are usually sold in a package insurance policy. What are the parts of a Personal Auto Policy (PAP)?
Part A - liability coverage
Part B - medical payments coverage
Part C - uninsured motorists coverage
Part D - coverage for damage to the insured’s automobile
Part E - duties after an accident or loss
Part F - general provisions
What do the split limits mean in Part A - Liability Coverage (Bodily Injury and Property Damage) for auto policies?
50/100/50
$50,000 of bodily injury coverage per person
$100,000 of bodily injury coverage per accident
$50,000 of property damage coverage
** combined single limit policy has a fixed amount of coverage whether the loss is bodily injury or property damage
Auto Part B - Medical Payments Coverage specifies what two groups of insured persons?
- the insured and members of the insured’s family
- if hurt while driving a covered auto or as a passenger in a covered auto
- if insured as a pedestrian when struck by an auto - other persons who occupy the insured’s covered auto
- if hurt as a passenger in the insured’s own covered auto
** Part B does not extend to passengers in a non-owned auto driven by the insured
** coverage limits significantly less than liability limits
What is covered under Part D - Coverage For Damage to the Insured’s Automobile?
comprehensive and collision are designed to repair or replace the insured’s auto when it is dmaaaged
- accident w/ another vehicle or object like a fence, tree, garage door, lake, etc.
- single car accident rollover due to ice or heavy rain
- stolen or damaged in a non-collision incident = fire, theft, vandalism, weather-related (falling tree, flood, earthquake, hail, hurricane, sinkhole), running into animals, riots, falling objects
What is covered under Part E - Duties After an Accident or Loss?
Insured is contractually required to fulfill a number of obligations before a loss can be settled.
Immediately after a loss, the insured must:
- give insurance company notice of the time, place, and circumstances of the occurrence as well as names and addresses of any claimants and witnesses
- protect the auto and equipment from further loss
- file written proof of the loss w/ the insurance company consistent w/ time constraints per the policy
What factors affect auto insurance premiums?
Age for younger drivers
Marital status
Credit score
Driving record and claims history
Location where car is kept
Type of car
Use of car and mileage
Possibly the credit score of the insured
Policy coverages and deductibles
What are the 3 general types of torts (civil wrongs) related to liability?
- Intentional interference
- Strict and absolute liability - injury responsibility does not matter (e.g., worker’s compensation)
- Negligence - courts use the “prudent man” standard
What are other types of negligence?
Res ispa loquitur = “the act speaks for itself”, (e.g., plane crashes because planes just don’t fall from the sky)
Negligence per se = the act itself constitutes negligence, e.g., drunk driving)
Burden of proof = standard of proof is the preponderance of evidence (more than 50%)
What does a Personal Liability Umbrella Policy do?
provides protection for higher types of claims
covers excess liability of the underlying liability coverage for auto and home policies
supplements home and auto of $1 million or more
do not cover all liabilities
- NO for criminal and intentional acts
- YES for slander and libel
What are the Social Security benefits tax amounts paid by both the employee and employer?
6.2% on wages up to the wage base = $160,200 for 2023
1.45% on all wages
Paid by EE only: 0.9% Medicare surtax on wages and self-employment income over the annual thresholds (OASDI)
What is the social security normal or FRA?
Born before 1938 = 65 years
Between 1938 and 1942: add 2 months per year
Between 1943 and 1954 = 66 years old
Between 1955 and 1959: add 2 months per year
Born 1960 and later = 67 years
What are the reduced social security retirement benefits for early retirement at Age 62?
If FRA is age 65, then age 62 is 80% of FRA.
If FRA is age 66, then age 62 is 75% of FRA.
If FRA is age 67, then age 62 is 70% of FRA.
Benefits are reduced by 5/9 of 1% for each month for the first 3 years a worker retires early.
Benefits are then reduced by 5/12 of 1% for each month beyond 3 years.
What is social security retirement eligibility?
must be “fully insured” = earn 40 quarters of coverage
1 quarter = $1,640 in wages subject to Social Security
Increase in monthly benefits by delaying each month after reaching FRA.
What is considered combined income for taxation of Social Security benefits?
AGI
Nontaxable interest (muni bonds)
Foreign earned income
1/2 of retirement benefit
MFJ / Single
1st Hurdle = $32,000 / $25,000
2nd Hurdle = $44,000 / $34,000
What qualifies a person for Social Security Disability?
severe physical or mental impairment for 5 months expected to prevent worker from performing substantial work for at least one year or result in death
benefits begin in the 6th month
- Age 31+, worker is fully insured and earned 20 quarters in the last 40 quarters
- Ages 24-30, worked earned 1/2 of quarters available since age 21 to disability
- Ages 21-24, worker has earned 6 quarters in the last 12 quarters
How are children covered under Social Security Survivor benefits?
children under 18 (under 19 if in secondary school) are always covered as are caretakers of children under 16
What are the three parts to Medicare?
Part A
Part B
Part D
What is covered under Medicare Part A, the benefit periods, deductibles, and coinsurance amounts?
Hospital Insurance (covers places)
benefit period begins on 1st day insured in hospital and ends after 60 days of no further skilled care
deductible is $1,600 per benefit period (1st 60 is just the deductible)
coinsurance amounts after 1st 60 days
- $400/day for days 61-90
- $800/day for days 91-150 for each lifetime reserve day (only total of 60 lifetime reserve days)
- $200/day for skilled nursing care days 21-100 (1st 20 days following a hospital stay covered 100%)
- no custodial services provided
What is covered under Medicare Part B, the benefit periods, deductibles, and coinsurance amounts?
doctor visits, lab tests, ambulance, outpatient therapy, clinical research, durable medical equipment (wheel chairs, hospital beds, walkers, oxygen), mental health (inpatient, outpatient, partial hospitalization), getting 2nd opinion before surgery, and home health care
covers initial preventative visit and annual wellness visit
DOES NOT COVER:
- dental care, dentures
- cosmetic surgery
- hearing aids
- eye exams
automatically enrolled unless opts out
standard premium is $164/mo, deducted from Social Security (higher premiums w/ income > $97K Single, $194K MFJ)
deductible is $226/yr then B covers 80%, no stop loss limit
How does Medicare Part C work?
must own and pay for Parts A & B
coverage similar to HMO, PPO, or POS plan
coverage is regional, emergency care provided outside coverage area
includes vision, dental, and hearing
What is Medicare Supplemental Insurance?
provides Rx benefits
wide variation across plans
most require a premium and have deductibles and co-pays
What are the three exceptions to Medicare in foreign countries?
most situations Medicare does not provide health care coverage for services received outside the US
3 exceptions:
1. You’re in the US when you have a medical emergency and the foreign hospital is closer than the nearest US hospital.
- You’re traveling thru Canada w/out reasonable delay by the most direct route between Alaska and another state when medical emergency occurs and Canadian hospital closer than nearest US hospital
- You live in the US and the foreign hospital is closer to your home than the nearest US hospital regardless of emergency or not
Social Security Retirement, Survivorship & Disability Benefits Summary
