PERF Objective 6.03-C Insurance & Housing Options Students will understand the need for PROPERTY...
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Transcript of PERF Objective 6.03-C Insurance & Housing Options Students will understand the need for PROPERTY...
PERF Objective 6.03-CInsurance & Housing Options
Students will understand the need for PROPERTY INSURANCE to
protect their assets.
Handling Risk
• What are the options for handling risk associated with owning property?
• Avoid risk- own nothing• Retain risk- if it is destroyed, breaks, burns
I accept the loss• Reduce risk- have smoke detectors in
home as warnings • Transfer risk- pay an insurance company
to take part of the risk
Property/Casualty Insurance
• An insurance policy is a transfer of risk
• Types of policies for property :– Fire policies
• owner pays when renter living in his property
– Renter’s policies• renter covers own personal items
– Homeowner’s policies• Covers house, contents & liability when own home
http://www.griffithfoundation.org/uploads/classroom.wmv
Video Clip: The basic concept of insurance
Property and Casualty Insurance
• Covers – Real Property: Houses, apartments, condos,
office buildings and other structures• Land and anything permanently attached
– Personal property: Jewelry, furniture, clothing, equipment, artwork and other valuables
• Moveable property
Barn and land is real property Contents are personal property
Fire Policy
• A very basic policy covering loss resulting directly or proximately from an unfriendly fire.– Unfriendly or hostile fire is uncontrollable or
has escaped from the place where it should be.
– A friendly fire is a bonfire, furnace fire, fire in a fireplace unless it gets out of control.
Fire Policy• Owner of property (landlord) who rents to
others (tenants) protects investment in structure with a fire policy
• Owner insures real property, but not tenant’s property
• Landlord Examples: Tenant examples:– Apartment -Furniture– Condo -Clothes– Office building -Office equipment
Renter’s Insurance
• Person who rents real estate from another but has personal contents on premise carries renter’s insurance to insure:– personal contents-
furniture, TV, clothes, computer, collectibles, etc
– against liability risk of a guest getting hurt by your negligence
• Note: • You can only
insure your own property, not another’s property.
• Renter insures his personal items.
• Landlord insures structure.
Renter’s Insurance
• Protection includes:– Personal contents of tenant in an apartment, condo,
mobile home or house– Personal liability if others sue tenant for injuries
• Examples:• Lightning strikes and damages TV owned by
tenant • Neighbor breaks leg when he steps on child’s
skate left on steps and sues tenant for negligence (not being careful and causing loss)
Homeowner’s Policy
• Provides coverage for:– Home - Primary structure– Personal property - Contents– Related structures – Outbuildings, if any– Loss of Use - Living expenses if insured can
not live there due to covered damage– Premise personal liability – for injuries to
others who were on your property
Homeowner’s (HO) Policy
• Riders may extend policy for additional coverage for items such as:
• Boats• Jewelry• Furs• Artworks• Antiques• And other special collectibles owned by a
homeowner
Cost Factors of Property Insurance
• Limit of coverage for property– $50,000 $250,000 $500,000
• Location of property – fire district, city, county, state
• Structural material - brick, block, frame
• Previous claims filed
• Company chosen
FLOOD & EARTHQUAKE
• NOT COVERED UNDER HO POLICY– Must buy separate flood insurance coverage– Must buy separate earthquake coverage
Lloyd’s of London
• An insurance company that covers unique property and liability risks that are difficult to insure.
• Examples: – An opera singer’s vocal chords– Life insurance on insured with extremely risky
occupations– Comprehensive and collision auto insurance on
drivers with numerous tickets and accidents.– Jennifer Lopez’s posterior