6.4

Property Owners Insurance PremiumsTerms to know:

Homeowner InsuranceDwellingOther StructuresPersonal PropertyAdditional Living ExpensePersonal LiabilityMedical Payments to OthersReplacement Cost PoliciesInsurance Premium

Insurance Premium (Example)You insure your house for $89,000 at an annual

rate of $0.51 per $100.

1.Find the number of $100 units in the insured amount

$89,000/$100 = 890 (# of $100 units)

2.# of $100 units x rate = premium (round to nearest $)

890 x $0.51 = $453.90 = $454

Insurance Premium (A)You insure your house for $61,000 at an annual

rate of $0.46 per $100.

1.Find the number of $100 units in the insured amount

$61,000/$100 = 610 (# of $100 units)

2.# of $100 units x rate = premium (round to nearest $)

610 x $0.46 = $280.60 = $281

Insurance Premium (B)You insure your house for $43,000 at an annual

rate of $0.74 per $100.

1.Find the number of $100 units in the insured amount

$43,000/$100 = 430 (# of $100 units)

2.# of $100 units x rate = premium (round to nearest $)

430 x $0.74 = $318.20= $318

Renters Insurance PremiumsRenters PolicyExample….(page 244)Check your understanding ( page 244-245)

Collecting on Insurance ClaimsTerms/Formulas to know:

DeductibleFiling a claimAdjusterFace valueCoinsurance Policy

Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss

Collecting on Insurance Claims (Example)The Face value of your policy is $30,000 with

a $1,000 deductible. If your loss was $7,800 how much would you receive from the insurance company?

Loss – Deductible = Amount insurance company pays

$7,800 - $1,000 = $6,800

Collecting on Insurance Claims (E)The Face value of your policy is $18,000 with

a $250 deductible. If your loss was $10,200 how much would you receive from the insurance company?

Loss – Deductible = Amount insurance company pays

$10,200 - $250 = $9,950

Collecting on Insurance Claims (F)The Face value of your policy is $70,000 with

a $500 deductible. If your loss was $82,000 how much would you receive from the insurance company?

Loss – Deductible = Amount insurance company pays

$70,000 - $500 = $69,500

Collecting on Insurance Claims (Example 2)Building value of $50,000 is insured for $24,000 under

an 80% coinsurance policy. The building had damages of $7,200. What amount did the insurance company pay?

Value x coinsurance % = required amount of coinsurance

$50,000 x 80% = $40,000

Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss

($24,000/$40,000) x $7,200 = $4,320

Collecting on Insurance Claims (G)Building value of $65,000 is insured for $41,600 under

an 80% coinsurance policy. The building had damages of $4,000. What amount did the insurance company pay?

Value x coinsurance % = required amount of coinsurance

$65,000 x 80% = $52,000

Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss

($41,600/$52,000) x $4,000 = $3,200

Collecting on Insurance Claims (H)Building value of $90,000 is insured for $46,800 under

an 80% coinsurance policy. The building had damages of $42,000. What amount did the insurance company pay?

Value x coinsurance % = required amount of coinsurance

$90,000 x 80% = $72,000

Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss

($46,800/$72,000) x $42,000 = $27,300