PFIN 4 Protecting Your Property 10 Copyright ©2016 Cengage Learning. All Rights Reserved. May not...
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Transcript of PFIN 4 Protecting Your Property 10 Copyright ©2016 Cengage Learning. All Rights Reserved. May not...
PFIN 4
Protecting Your Property
10
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
GITMAN/ JOEHNK/ BILLINGSLEY
2Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
1 Discuss the importance and basic principles of property insurance, including types of exposure, indemnity, and co-insurance
2 Identify types of coverage provided by home owner’s insurance
3 Select the right home owner’s insurance policy for your needs
4 Analyze the coverage in a personal automobile policy (PAP) and choose the most cost-effective policy
LEARNING OUTCOMES
PFIN4 | CH10
3Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5 Describe the other types of property and liability insurance
6 Choose a property and liability insurance agent and company, and settle claims
LEARNING OUTCOMES (continued)
PFIN4 | CH10
Basic Principles of Property Insurance
4Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Property insurance• Protects real and personal property from losses
caused by various perils• Liability insurance• Protects against financial consequences from
the insured’s responsibility for property loss
PFIN4 | CH10
Types of Exposure
5Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Exposure to property loss• Property insurance contracts define:
• Property covered • Perils: Cause of loss
• Property inventory• Identifying perils• Liability
• Negligence: Failing to act in a reasonable manner
PFIN4 | CH10
Principle of Indemnity
6Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• States that an insured may not be compensated with an amount exceeding the insured’s economic laws• Actual cash value: Value assigned to an
insured property determined by subtracting the amount of physical depreciation from its replacement cost
• Right of Subrogation: Insurer’s right to request reimbursement from person who caused the loss or that person’s insurer
Principle of Indemnity
7Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Other insurance clause • States that if a person has more than one
insurance policy on a property, each company is liable for only a prorated amount of the loss
Exhibit 10.2
8Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. MKTG4 | CH10
A Guide to Home Owner’s Policies
Property and Liability Insurance Policies
9Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
Perils Covered
10Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Section I• Perils against which the home and its contents
are insured• Section II
• Includes a coverage called comprehensive personal liability • Offers protection against personal liability
resulting from negligence • Provides limited amount of medical coverage
Factors Affecting Home Insurance Costs
11Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
Property Covered
12Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Home owner’s policy offers property protection under Section I for:• Dwelling unit• Accompanying structures• Personal property of home owners and their
families
Personal Property Floater (PPF)
13Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Provides blanket or scheduled coverage of expensive personal property not adequately covered in a home owner’s policy
Renter’s Insurance
14Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Form HO-4• Covers contents of a house but not the
structure itself • Form HO-6
• Required by the owners of condominium units• Includes a minimum of $1000 in protection for
any building alterations paid for by the policy holder
Coverage
15Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Types of losses covered• Direct loss of property• Indirect loss occurring due to loss of damaged
property• Additional expenses resulting from direct and
indirect losses • Section I
• Damage of the house by an insured peril leads to the insurer paying reasonable living expenses
Coverage
16Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Section II• Home owner’s policy covers:
• Cost of defending the insured • Reasonable expenses incurred by an insured
in helping the insurance company’s defense• Payment of court costs
Coverage
17Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Persons covered• Persons named in the policy and members of
their families residing in the house• Guests of the insured with limited coverage
• Locations covered• Extended worldwide when off premises
temporarily
Factors Influencing Insurance Payment Amount for a Loss
18Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Replacement cost• Amount necessary to repair, rebuild or
replace an asset at current prices• Policy limits• Deductibles
Personal Automobile Policy (PAP)
19Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Designed to be easily understood by the typical insurance purchaser• Liability coverage
• Bodily injury liability losses: Protects the insured against claims made for bodily injury
• Property damage liability losses: Protects the insured against claims made for damage to property
• Medical payments coverage
Personal Automobile Policy (PAP)
20Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Uninsured motorists coverage: Serves the victims of accidents injured by uninsured, underinsured, or hit-and-run motorists• Underinsured motorists coverage: Covers
damages in accidents involving liable underinsured motorist
Personal Automobile Policy (PAP)
21Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Coverage for damage to the vehicle• Collision insurance: Pays for collision
damage to an insured automobile• Comprehensive automobile insurance:
Protects against loss to an insured automobile caused by any peril other than collision
Factors Affecting Automobile Insurance Premiums
22Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Rating territory• Amount of use the automobile receives • Personal characteristics of the driver• Type of automobile• Insured’s driving record
Financial Responsibility Laws
23Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Require motorists to:• Buy a specified minimum amount of
automobile liability insurance• Provide other proof of comparable financial
responsibility
Other Property and Liability Insurance
24Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Supplemental property insurance coverage• Earthquake insurance• Flood insurance• Other forms of transportation insurance
• Personal liability umbrella policy• Provides excess liability coverage and
additional coverage for home owner’s and automobile insurance
Property and Liability Insurance Agents
25Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Captive agent: Represents a single insurance company and is its employee
• Independent agent: Places coverage with any company with which he or she has an agency relationship
• Selecting an agent involves questions to be asked about the company’s:• Financial soundness• Claims-settlement practices• Geographic range of operations
First Steps Following an Accident
26Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
Steps in Claim Settlement
27Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
Claims Adjustment
28Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH10
• Insurance company will assign a claims adjustor if the loss is complex• Claims adjustor: Insurance specialist who
works for the insurance company or for an adjustment bureau
29Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Property insurance• Liability insurance• Peril• Negligence• Principle of indemnity• Actual cash value• Right of subrogation• Co-insurance• Comprehensive policy• Named peril policy
KEY TERMS
• Personal property floater (PPF)
• Replacement cost• Personal automobile
policy (PAP)• Bodily injury liability
losses• Property damage
liability losses• Uninsured motorists
coverage
PFIN4 | CH10
30Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
• Underinsured motorists coverage
• Collision insurance• Comprehensive
automobile insurance• No-fault automobile
insurance• Financial
responsibility laws• Personal liability
umbrella policy• Captive agent
KEY TERMS
• Independent agent• Claims adjustor
PFIN4 | CH10
31Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SUMMARY
• Property insurance covers against losses of real and personal property caused by calamities
• Comprehensive policies cover all perils but only individual perils are covered in named peril policies• Home owners can choose HO-1, HO- 2, HO-3,
HO-5, or HO-8 to suit their needs• Types of automobile insurance
• Personal automobile policy, collision insurance, and comprehensive automobile insurance PFIN4 | CH10
32Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
SUMMARY
• Other property and liability insurance• Supplemental property insurance coverage• Personal liability umbrella policy
• Steps to claim settlement• Provide notice to the insurance company• Investigation by company personnel• Provide proof of loss
PFIN4 | CH10