INS 22 Chapter 01

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INS – 22 Personal Insurance

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Chapter 01 – Overview of Personal Insurance

Personal Insurance covers losses to individuals and

families due to death, illness, injury, disability and

unemployment.

Loss exposure presents the possibility of financial

loss, whether or not loss occurs.

Cause of loss: Means by which property is damaged

or destroyed (fire, windstorm etc). This is also called

as Peril

.

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Elements of Property loss exposures

Property exposed to loss

Real property – land, building and other structures embedded in

it or attached to it. E.g.: Underground pipes, foundations, storage

shed, and detached garage.

Personal Property – tangible / intangible property that is not real

property. E.g. Patent, Copyright, Coins

Possible causes of loss – means by which property is

damaged/destroyed (perils)

Financial consequences of loss

Reduction in value of property: preloss value – postloss value

Increased expenses – in addition to normal living expenses

Lost income

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Classification of personal property (Tangible

and Intangible) Dwelling contents:

Broadest category of personal property

Common to the use of dwelling as a home

Items generally insured as a group

High-value personal property:

Silverware, jewellery, furs and firearms

Can be partially covered under dwelling contents, however might

require separate category because of limitations on coverageamount.

To keep premium reasonable for the average customer, might have

to pay additional premium to insure such property

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Classification of personal property Property with unusual or intrinsic value:

Value comes from its unique characteristics

Antiques, work of art, coin or stamp collections

Value is established by appraisal at the time of purchase of insurance

Business personal property

Office furniture, computer equipment for business purpose.

Additional coverage might be necessary for this exposure

Motor vehicles, trailers, watercraft and aircraft Present unique loss exposures – should be separately insured.

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Liability Loss Exposures

Elements of Liability loss exposures

Liability loss is a claim for money damages because of injury to another

party or its property.

Claims are governed by civil law – the legal foundation of insurance. Financial consequences that might occur

Cost of investigation and defense

Money damages awarded if defense is unsuccessful

Civil law deals with rights and duties of citizens regarding one another.

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Types of claims

Tort L iabi l i ty

Con tractual Liabi l ity

Statuto ry Liabi l ity

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Types of claims Tort Liability:

Tort – a wrongful act other than a crime or breach of

contract. Negligence – failure to act in a reasonably prudent manner

A duty to act

Breach of duty

Injury or damage

Breach of duty – the direct cause of injury/damage

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contract. Intentional torts – regardless of whether harm is intended –

deliberate act

Libel – written or printed untrue statement

Slander – oral untrue statement

Assault – intentional and unlawful threat of bodily harm Battery – unlawful physical contact

Trespass – unauthorized possession or use of land.

Nuisance – violation of a person’s right to enjoy use of property

without disruption from outside sources

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contract. Absolute liability- dangerous activities/defective products, regardless

of degree of care, it does not require proof of negligence.

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Types of claims

Contractual Liability

Liability assumed under any contract

Breach of warranty

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Types of claims

Statutory Liability

No- fault auto laws

Workers compensation laws

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Risk Management

Carrying out decisions that will decrease the adverse

effects of potential losses is risk management.

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Basics of Personal Risk Management (risk

management applied to loss exposures of individuals

and families)It involves the following steps:

Identifying loss exposures

Analyzing loss exposures

Examining various techniques

Choosing the appropriate technique

Implementing the chosen technique

Monitoring and revising the plan.

Errors and omissions: Negligent act (error) or failure to act (omission) while

conducting insurance business. – Can lead to legal liability of damages

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Techniques to treat loss exposures Loss Control

Loss prevention: control frequency of loss

Loss reduction: controls severity of loss

Avoidance: by choosing not to own a particular property or engage in

particular activity

Noninsurance Transfer: transfers loss from one party to another party

that is not an insurer.

Retention: no transfer of loss exposures to insurance company or

anyone else.

Intentional Unintentional.

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Types of Personal Insurance Policies

Package policy includes two or more lines

of insurance.

Examples: Homeowners, Personal Auto

Policy, Life and Health

INS 22 Chapter 01

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Transcript of INS 22 Chapter 01