Property and Liability Insurance (Lesson 3) Flashcards
What does property insurance protect
- financial protection for losses on house, condominiums, automobiles, boats, and other property assets
What does liability insurance protect
- financial loss associated with legal action, due to property damage, personal injury, or loss of income
What type of liability does homeowners or automobile insurance protect against
- Property and liability
What are the three basic forms of coverage offered by homeowners policys
- Basic coverage
- Broad coverage
- Open coverage
What is basic coverage for HO
- Protects the homeowner from losses associated with 12 named perils
- Fire, vehicles, lighting, smoke, windstorm, vandalism or malicious mischief, hail, explosions, riots or civil commotion, theft, aircraft, and volcanic eruption
What is broad coverage for HO
- Provides protection from losses associated with 18 named perils
- Includes the 12 named perils plus losses associated with these 6 additional perils
- Falling objects
- weight of ice, snow, sleet
- accidental discharge or overflow of water or steam
- sudden 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 open perils coverage for HO
- Provides protection from losses associated with all perils, except those that are specifically excluded
- More coverage than the basic and broad
Are movement of the ground covered (earthquake) under a policy usually under HO
No
Is damage from rising water covered usually from HO
No
Are nuclear hazards covered under normal HO
No
Are intentional acts and neglect covered under HO
No
What is an endorsement for HO and what does it cover
- Some perils that the standard HO doesn’t cover can be covered by purchase of endorsement
- Supplement to an existing policy that provides additional coverage
- Perils that would be covered with an endorsement are:
- Sink hole collapse
- Earthquake
- Sewage backup
- Refrigerated property coverage
What does section 1 of property insurance include
- Coverage A: Dwelling
- Coverage B: Other Structures
- Coverage C: Personal Property
- Coverage D: Loss of use
What does Coverage A: Dwelling cover
- pays for repairs and replacement for damage to the house and any attached structures
- also covers building materials on the premises
- Losses paid on a replacement cost basis
What is replacement cost
- Amount necessary to repair or replace the dwelling with materials of the same or similar quality at current market price
- does NOT account for depreciation
What is the coinsurance coverage formula
(Amount of insurance / Coinsurance requirement ) x amount of loss - deductible
What does Coverage B: Other Structures cover
- Detached structures on the property
- Detached garages
- greenhouses
- storage buildings
- Insured on a replacement cost basis
What is the limit usually for coverage B
- usually 10% of Coverage A
Is property used for business on your property covered by homeowners insurance
No
What does Coverage C: Personal property cover
- includes tangible moveable property owned by the insured
- Insured on Actual cash value basis (replacement cost endorsement can be purchased)
What is typically the limit for Coverage C
- 50 % of Coverage A
What is usually the limit on coverage for money, coin collection, bank notes
$200
What is usually the limit on coverage for securities, bills, evidence of debt airline tickets, manuscripts
$1,500
What is usually the limit on coverage for jewelry, watches, gems, precious metals, and real furs
$1,500