Property & Liability Flashcards
3 types of homeowners insurance
Basic
Broad
Open
Difference in the 3 types of homeowners insurance - Number of Perils
Basic (12 named perils)
Broad (6 additional perils from basic)
Open (All perils unless specifically excluded)
Basic and broad policies are “named perils” polices. Losses resulting from perils not specifically “named” are not covered. An open perils (or “all-risks) policy covers “all perils” except those that are specifically excluded.
Rule of thumb for general exclusions from most homeowners policies
A ‘rule of thumb” is that covered losses must result from something that is “sudden and accidental.” Losses associated with neglect and intentional acts of the insured are not cov
Endorsement definition
Perils excluded by HO policy but can purchased on the side
- Sink hole collapse
- Earthquake
- Sewage backup
- Refrigerated property coverage
Section I Coverages
Coverage A: Dwelling
* Coverage B: Other Structures
* Coverage C: Personal Property
* Coverage D: Loss of Use
Section I - Coverage A
Dwellings
Pays for repair and replacement for damage to the house and any attached structures. It also coverages building mate-rials on the premises.
No deduction for depreciation is taken (Replacement cost basis
Section I - Coverage B
Other Structures
Typically the limit of this coverage is 10 percent of the Coverage A (dwelling) limit
Replacement cost basis
Section I - Coverage C
Personal Property - Tangible, moveable property
Typical limit is 50% of coverage A
ACV Basis (accounts for depreciation); Value today - Depreciation cost
Section I - Coverage D
Loss of Use - pays for additional living expenses incurred when the insured is unable to occupy the dwelling due to damages caused by a covered peril
Typically 30% of Coverage A
Section II coverages
Coverage E - Personal Liability
Coverage F - Medical Payments to Others
Section II coverage - E
Personal Liability - Occurs if injury to others & insured is responsible
Min coverage is $100k per occurrence
Section II coverage - F
Medical Payments to Others - Pays all necessary medical expenses without regard to liability
within 3 years
Auto Insurance Parts
Part A - liability coverage * Part B - medical payments coverage * Part C - uninsured motorist coverage * Part D - coverage for damage to the insured’s automobile * Part E - duties after an accident or loss * Part F - general provisions
Auto insurance; Part A
Liability Coverage (bodily injury and Property damage)
50/100/50 means:
$50,000 of bodily injury coverage per person
$100,000 of bodily injury coverage per accident
$50,000 of property damage coverage
Difference in collision and comprehensive auto coverage
Collision coverage pays if the automobile is damaged in an accident with another vehicle or an object such as a fence, tree, garage door, lake, etc.
Comprehensive coverage helps pay to repair or replace a vehicle that is stolen or is damaged in an incident that is not a collision.
Types of Legal Liability that individuals are expose to
Torts (civil wrongs) - Legal liab covers certain class
Breach of contract -Legal liab does not cover
Criminal offenses -Legal liab does not cover
3 types of torts
*Intentional interference - Slander (spoken) & Libel (Written) are covered)
*strict and absolute liability - Legislation in which one party is held legally liable regardless of who is responsible for the injury
*negligence - failure to act with appropriate care
Negligence “Prudent Man” Standard
standard is met if a reasonable person confronted with the same circumstances would have performed the same acts.
Negligence - Vicarious liability
Vicarious liability: an individual is held at least partially responsible for negligent acts performed by someone else.
Examples:
o Parents may be held liable for the acts of their children.
o Employers may be held liable for the acts of the employees
Collateral Source Rule
Holds that damages assessed against a negligent party should not be reduced simply because the injured party has other sources of recovery available such as insurance or employee benefits (health or disability insurance)
Umbrella policy considerations when choosing plan
Earning power and Net worth.
Homeowners Insurance Policy Forms
HO-2 - Broad Form :Coverage on broad perils basis
HO-3 - Special Form: Open Perils or all risks
HO-4 - Renters: Renters & tenants, not insured dwelling
HO-5 - Comprehensive: Similar to HO - 3 but provides personal property protection on open perils instead of broad perils
HO-6 - Condo owners: Coverage for inside unit & all contents
HO-8 - Modified Coverage: Provides functional repair cost coverage
