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Chapter © 2010 South-Western, Cengage Learning Property and Liability Insurance 26.1 Property Insurance 26.2 Automobile and Umbrella Insurance 26
Chapter
© 2010 South-Western, Cengage Learning
Property and Liability Insurance
26.1 Property Insurance26.2 Automobile and Umbrella Insurance
26
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Chapter 26
Lesson 26.1
Property Insurance
GOALSExplain the purpose and provisions of
renter’s insurance.Describe the need for and coverage
provided by homeowner’s insurance.
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Chapter 26
Renter’s Insurance
A renter’s policy is insurance that protects renters from property and liability risks. Personal propertyLiabilityExtended coverage
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Chapter 26
Homeowner’s Insurance
A homeowner’s policy is insurance that protects property owners from property and liability risks.
Homeowner’s policies typically cover property owners’ losses from these three types of risks:Hazards—fire, water, wind, and smoke that may
cause physical damages.Crimes—criminal activity, such as robbery, burglary,
arson, and vandalism. Liability—the cost of another person’s losses for
injuries at your property.
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Chapter 26
How Much Coverage Do You Need?Household inventoryExclusionsOverinsuringReplacement value Indemnification
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Chapter 26
Endorsement
An endorsement is a written amendment to an insurance policy. Policyholders often use endorsements to
add coverage to their policy for an additional premium. For example, you can add flood or
earthquake insurance as an endorsement to your homeowner’s policy.
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Chapter 26
Co-Insurance Clause
Most property insurance policies contain a co-insurance clause.
A co-insurance clause is a provision requiring policyholders to insure their building for a stated percentage of its replacement value in order to receive full reimbursement for a loss. The percentage is usually at least 80 percent. Insurers do not require 100 percent coverage
because even if your property is completely destroyed, the land and the building foundation will probably still be usable.
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Chapter 26
Physical Damage Coverage
Hazards such as fire, wind, water, and smoke may damage or destroy your home or cause you to temporarily lose use of it. The main component of homeowner’s
insurance is protection against financial loss due to damage or destruction.
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Chapter 26
Physical Damage Coverage
Detached structures on the property, such as a garage or shed, as well as trees, plants, and fences are also covered. If damage from a covered hazard
prevents you from using your property while it is being repaired or replaced, your homeowner’s policy will pay for temporary housing for a limited time.
(continued)
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Chapter 26
Theft and Vandalism Coverage
Theft and vandalism coverage protects your personal belongings against loss from criminal activity, such as robbery and physical damage from vandals. It covers your property when it is in your
home or with you when you are away.A personal property floater is insurance
coverage for the insured’s moveable property wherever it may be located.
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Liability Coverage
Liability coverage is insurance to protect against claims for bodily injury to another person or damage to another person’s property.
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Chapter 26
Liability Coverage
Homeowners are responsible for acts occurring on their property, both for guests and for uninvited guests. An uninvited guest is presumed to have
permission to be on your property, such as door-to-door solicitors or delivery people.
An attractive nuisance is a dangerous place, condition, or object that is particularly attractive to children, such as a swimming pool.
(continued)
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Chapter 26
Homeowner’s Policy Coverage
HO-1 Basic CoverageHO-2 Broad FormHO-3 Special FormHO-4 Renter’sHO-5 ComprehensiveHO-6 Condominium Owner’sHO-7 Mobile HomesHO-8 Older Homes
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Chapter 26
Lesson 26.2
Automobile andUmbrella Insurance
GOALSDiscuss common types of automobile
insurance coverage.Explain the concept of umbrella liability
insurance.
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Chapter 26
Automobile Insurance
Most states require minimum automobile insurance.
Automobile insurance covers costs of damage to the vehicle, its owner, and any passengers. It also covers costs of repairs to other vehicles, medical expenses of occupants in other vehicles, and property damage caused by an accident.
Standard policies also cover theft of the vehicle and/or its contents.
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Chapter 26
Cost of Automobile Insurance
Premiums are based on a number of factors, such as:Model, style, and age of carDriver classification Location of driver and carDistances drivenPurpose of drivingAge, sex, and marital status of other regular
drivers of the car
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Driving Record
Your driving record includes the number and type of traffic tickets you’ve received for driving infractions and misdemeanors along with the number of accidents in which you’ve been involved.
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Chapter 26
Types of Automobile Insurance CoverageThere are five basic types of automobile
insurance.LiabilityCollisionComprehensivePersonal injury protection (PIP)Uninsured/underinsured motorist
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Chapter 26
Liability Coverage
Most states require all drivers to carry liability insurance. The purpose of liability coverage is to
protect the insured against claims for bodily injury to another person or damage to another person’s property.
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Chapter 26
Collision Coverage
Collision coverage is automobile insurance that protects your own car against damage from accidents or vehicle overturning. This coverage will pay for the damage to
your car in the event you are at fault and the other driver’s liability insurance does not have to pay. Most collision coverage has a deductible.
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Comprehensive Coverage
Comprehensive coverage protects you from damage to your car from causes other than collision or vehicle overturning. The causes might be fire, theft, tornado,
hail, water, falling objects, natural disasters, and acts of vandalism.
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Personal Injury Protection (PIP)
Also known as medical coverage insurance, personal injury protection(PIP) is automobile insurance that pays for medical, hospital, and funeral costs of the insured and his or her family and passengers, regardless of fault. If the insured is injured as a pedestrian or
bicyclist, this insurance will pay the medical costs.
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Chapter 26
Uninsured/Underinsured Coverage
Uninsured/underinsured coverage is automobile insurance that pays for your injuries when the other driver is legally liable but unable to pay. In other words, if the other driver is
legally at fault for the accident but has no insurance or insurance that is insufficient to cover the costs, your insurer will pay your medical costs.
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Chapter 26
No-Fault Insurance
No-fault insurance laws set up a system of compensation for auto accidents that does not require a legal determination of who was at fault before claims are paid. No-fault insurance is automobile
insurance in which drivers receive reimbursement for their expenses from their own insurer, no matter who caused the accident.
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Chapter 26
Assigned-Risk Policies
Every state has an assigned-risk pool that consists of people who are unable to obtain automobile insurance due to the high risk they present.
The state assigns these people to different insurers in the state.
The insurers must then provide coverage. The insurance premiums will cost the insured
several times the normal rate.
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Chapter 26
Umbrella Liability Insurance
Umbrella liability insurancesupplements your basic auto and property liability coverage by expanding limits and including additional risks.This type of policy protects you from
extraordinary losses, which are extremely high claims because of unusual circumstances.
