Presentation is loading. Please wait.

Presentation is loading. Please wait.

Insurance for Consumer Protection What Every Agent Should Know.

Similar presentations


Presentation on theme: "Insurance for Consumer Protection What Every Agent Should Know."— Presentation transcript:

1 Insurance for Consumer Protection What Every Agent Should Know

2 Insurance Basics for Real Estate Licensees uRisk Management uImpact on Real Estate Transactions uInsurance Contracts uFlood Insurance uBusiness Property Issues uImpact of Insurance Industry Changes uInsurance Fraud uRisk Management uImpact on Real Estate Transactions uInsurance Contracts uFlood Insurance uBusiness Property Issues uImpact of Insurance Industry Changes uInsurance Fraud

3 Chapter 1 Insurance Company Background

4 Learning Objectives uName Situations That Cause Financial Problems for Property Owners uIdentify Duties of State Insurance Departments uList Ways to Control Risk uLearn How to Transfer Risk by Buying Insurance uExplain Why to Purchase Insurance Before a Catastrophe uName Situations That Cause Financial Problems for Property Owners uIdentify Duties of State Insurance Departments uList Ways to Control Risk uLearn How to Transfer Risk by Buying Insurance uExplain Why to Purchase Insurance Before a Catastrophe

5 Risk Management uDecision-Making Process lAccept Exposure lReduce Vulnerabilities lMitigate Risk lAvoid Risk lTransfer Risk uTypical Questions uDecision-Making Process lAccept Exposure lReduce Vulnerabilities lMitigate Risk lAvoid Risk lTransfer Risk uTypical Questions

6 Coverage Needed uDamage to Real Property uDamage for Personal Property uLiability for Injury uDamage to Real Property uDamage for Personal Property uLiability for Injury

7 Risk Management uInsurance Specialties lPersonal Lines lCommercial Lines lExcess and Surplus (E&S) uReal Estate Licensees lTransaction Gatekeepers lProvide Guidance lAllow Consumers to Make Decisions uInsurance Specialties lPersonal Lines lCommercial Lines lExcess and Surplus (E&S) uReal Estate Licensees lTransaction Gatekeepers lProvide Guidance lAllow Consumers to Make Decisions

8 Risk Control Techniques uAvoidance lSeparate Exposures lCombine Exposure Units Personal Lines Commercial Lines lSell the Property (Noninsurance Transfer) uAvoidance lSeparate Exposures lCombine Exposure Units Personal Lines Commercial Lines lSell the Property (Noninsurance Transfer)

9 Risk Control Techniques uRetain the Risk lSelf Insure lHigher Deductibles uTransfer the Risk lBuy Insurance lPremiums Create Pool of Money uRetain the Risk lSelf Insure lHigher Deductibles uTransfer the Risk lBuy Insurance lPremiums Create Pool of Money

10 Insurance Companies uState Insurance Regulators lReview Financial Records lReview Available Reserves uDetermine Stability of Insurance Companies lAdmitted lNonadmitted uState Insurance Regulators lReview Financial Records lReview Available Reserves uDetermine Stability of Insurance Companies lAdmitted lNonadmitted

11 Insurance History uEarly Fire Insurance lInfluenced by Benjamin Franklin lFiremarks uMunicipal Fire Companies uEarly Fire Insurance lInfluenced by Benjamin Franklin lFiremarks uMunicipal Fire Companies

12 Regulating Insurance Industry uMcCarran-Ferguson Act uInsurance Service Office (ISO) uState Insurance Commissions lSet Rates lInterpret Policy Language lDetermine Reserves lPolice Sales Activities of Company Representatives uMcCarran-Ferguson Act uInsurance Service Office (ISO) uState Insurance Commissions lSet Rates lInterpret Policy Language lDetermine Reserves lPolice Sales Activities of Company Representatives

13 Regulators Association uNational Association of Insurance Commissioners (NAIC) uProvides Forum for State Regulators lProtect Public Interest lPromote Competitive Markets lFacilitate Fair and Equitable Treatment of Insurance Consumers lPromote Reliability, Solvency, and Financial Solidity of Insurance Institutions uNational Association of Insurance Commissioners (NAIC) uProvides Forum for State Regulators lProtect Public Interest lPromote Competitive Markets lFacilitate Fair and Equitable Treatment of Insurance Consumers lPromote Reliability, Solvency, and Financial Solidity of Insurance Institutions

14 Insurance Basics uPolicy Considerations lCoverage Required lAdvance Purchase Required lCancellation lDeductibles lFull Replacement versus Actual Cash Value lFiling a Claim uServices to Expect uPolicy Considerations lCoverage Required lAdvance Purchase Required lCancellation lDeductibles lFull Replacement versus Actual Cash Value lFiling a Claim uServices to Expect

15 Chapter 2 Understanding Insurance Contracts

16 Learning Objectives uCompare Aleatory Contract to Contract of Adhesion uExplain Insurable Interest and Insured Value uDiscuss Purpose of Coinsurance Clauses uDefine Redlining uName Components of an Insurance Policy uCompare Aleatory Contract to Contract of Adhesion uExplain Insurable Interest and Insured Value uDiscuss Purpose of Coinsurance Clauses uDefine Redlining uName Components of an Insurance Policy

17 Understanding Insurance Contracts uContract Essentials lInsured Is Property Owner lInsurer Is Insurance Company lBoth Parties Must Comply lGenerally May Not Be Assigned lDefinite Beginning and Ending Dates uContract Essentials lInsured Is Property Owner lInsurer Is Insurance Company lBoth Parties Must Comply lGenerally May Not Be Assigned lDefinite Beginning and Ending Dates

18 Unique Issues uAleatory Contracts lPerformance Depends on Future Event lContingency May Not Occur uContract of Adhesion lInsurance Company Writes Contract lNo Negotiation uAleatory Contracts lPerformance Depends on Future Event lContingency May Not Occur uContract of Adhesion lInsurance Company Writes Contract lNo Negotiation Kick Me

19 Issues Unique to Insurance Contracts uStrict Construction lAny Ambiguity Construed Against Party Drawing Up Contract lInsurer Is Responsible uStrict Construction lAny Ambiguity Construed Against Party Drawing Up Contract lInsurer Is Responsible

20 Issues Unique to Insurance Contracts uContract of Indemnity lCompensated Only for Loss Sustained lProvides Reimbursement, Not Financial Gain uInsurable Interest lInsured Person Must Have Legitimate Financial Interest lMust Be Present at Time of Loss uContract of Indemnity lCompensated Only for Loss Sustained lProvides Reimbursement, Not Financial Gain uInsurable Interest lInsured Person Must Have Legitimate Financial Interest lMust Be Present at Time of Loss

21 Issues Unique to Insurance Contracts uInsured Value lLand May Not Be Insured lInsured Value Is Total Value of Claim uDeductibles lInitial Portion of Claim Paid by Insured lDiscourages Frivolous Filings uInsured Value lLand May Not Be Insured lInsured Value Is Total Value of Claim uDeductibles lInitial Portion of Claim Paid by Insured lDiscourages Frivolous Filings

22 Issues Unique to Insurance Contracts uCoinsurance Clause lPrevents Underinsurance lAmount Paid Based on Percentage of Insurance to Value lPenalties for Underinsurance uContract in the Public Interest lInsurance Necessary Today lProhibits Redlining uCoinsurance Clause lPrevents Underinsurance lAmount Paid Based on Percentage of Insurance to Value lPenalties for Underinsurance uContract in the Public Interest lInsurance Necessary Today lProhibits Redlining

23 Issues Unique to Insurance Contracts uGuaranteed Replacement lReplace as It Had Been lPercentage Caps Today uSpecial Form lCovers Everything Unless Excluded lA Few Exceptions uNamed Peril lCoverage for Perils Named in Policy lFlood Insurance Always Named Peril uGuaranteed Replacement lReplace as It Had Been lPercentage Caps Today uSpecial Form lCovers Everything Unless Excluded lA Few Exceptions uNamed Peril lCoverage for Perils Named in Policy lFlood Insurance Always Named Peril

24 Basic Policies uEndorsements uAvailable Coverages Vary lCost lForm of Ownership lOccupancy uReal Estate Licensees lKnow Differences lProvide Names uEndorsements uAvailable Coverages Vary lCost lForm of Ownership lOccupancy uReal Estate Licensees lKnow Differences lProvide Names

25 Overview of an Insurance Policy uAgreement to Insure uDeclarations Page uDefinitions uProperty Coverage Terms uPerils Insured Against lExclusions lConditions lEndorsements uAgreement to Insure uDeclarations Page uDefinitions uProperty Coverage Terms uPerils Insured Against lExclusions lConditions lEndorsements

26 Overview of an Insurance Policy uLiability Provisions lInjury to Others lInsurer Will Defend for Covered Events uLegal Actions by Third Party lBodily Injury lDamage to Others’ Property lDefend or Pay lInsured Has No Say in Matter uLiability Provisions lInjury to Others lInsurer Will Defend for Covered Events uLegal Actions by Third Party lBodily Injury lDamage to Others’ Property lDefend or Pay lInsured Has No Say in Matter

27 Chapter 3 Types of Insurance Policies and Coverage

28 Learning Objectives uIdentify Insurance Problems With Vacant or Rented Homes uName Perils Covered by Special Form Policy uDifferentiate Among HO-1, HO-2, HO-3, HO-4, and HO-6 uList Scheduled Personal Property Items uExplain Why Three Policies Are Necessary for Condo Rentals uIdentify Insurance Problems With Vacant or Rented Homes uName Perils Covered by Special Form Policy uDifferentiate Among HO-1, HO-2, HO-3, HO-4, and HO-6 uList Scheduled Personal Property Items uExplain Why Three Policies Are Necessary for Condo Rentals

29 Special Form Policies uSpecial Form Policies lNot “All Risks” lPhysical Damage Not Excluded lVary From Company to Company, State to state uIndividual Property Issues lHow Property Used lWho Owns What lWhat Needs to Be Insured uSpecial Form Policies lNot “All Risks” lPhysical Damage Not Excluded lVary From Company to Company, State to state uIndividual Property Issues lHow Property Used lWho Owns What lWhat Needs to Be Insured

30 Special Real Estate Situations uVacant Homes lSellers Must Confirm Coverage with Agent lCoverage Reduced within Time Frame uRental While Home Is On Market lNightmares! lOwner/Occupant Advantages Disappear uDual Use Dwellings lDays Occupied lBe Honest uVacant Homes lSellers Must Confirm Coverage with Agent lCoverage Reduced within Time Frame uRental While Home Is On Market lNightmares! lOwner/Occupant Advantages Disappear uDual Use Dwellings lDays Occupied lBe Honest

31 Owner Occupant Policies uHO-1 (Basic Fire Policy) uHO-2 (Nonrental Secondary Residence Policy) uHO-3 (Homeowners’ Policy) uHO-6 (Condominium Policy) uFlood Insurance ALWAYS a Separate Policy uHO-1 (Basic Fire Policy) uHO-2 (Nonrental Secondary Residence Policy) uHO-3 (Homeowners’ Policy) uHO-6 (Condominium Policy) uFlood Insurance ALWAYS a Separate Policy

32 Policy for Owner-Occupants uHO-1 (Basic Fire) lBare Bones lNamed Peril (Fire and Lightning Damage) lSome Limited Endorsements Available uHO-1 (Basic Fire) lBare Bones lNamed Peril (Fire and Lightning Damage) lSome Limited Endorsements Available

33 Policy for Owner-Occupants uHO-2 (Nonrental Secondary Residence) lHunting Lodge, Beach Home lStepped-Up HO-1 lNamed Peril lPurchase Additional Endorsements uHO-2 (Nonrental Secondary Residence) lHunting Lodge, Beach Home lStepped-Up HO-1 lNamed Peril lPurchase Additional Endorsements

34 Policy for Owner-Occupants uHO-3 lHomeowners’ Policy lSpecial Form lONLY for Owner-Occupants lCovers Personal Liability uMost For the Money uHO-3 lHomeowners’ Policy lSpecial Form lONLY for Owner-Occupants lCovers Personal Liability uMost For the Money

35 Policy for Owner-Occupants uHO-6 (Condo Policy) lTailored to Meet Association By-Laws lOwner Owns Interior lShared Ownership for Common Areas lDifferent Insurance Needs uHO-6 (Condo Policy) lTailored to Meet Association By-Laws lOwner Owns Interior lShared Ownership for Common Areas lDifferent Insurance Needs

36 Basic HO-3 Coverages uCoverage A: Dwelling uCoverage B: Other Structures uCoverage C: Personal Property lActual Cash Value (ACV) or Depreciated Amount lReplacement Cost Coverage lScheduled Personal Property (SPP) uCoverage A: Dwelling uCoverage B: Other Structures uCoverage C: Personal Property lActual Cash Value (ACV) or Depreciated Amount lReplacement Cost Coverage lScheduled Personal Property (SPP)

37 Basic HO-3 Coverages uCoverage D, Loss of Use lPartial Loss lTotal Loss uCoverage E, Personal Liability lPersonal Umbrella Policy lExclusions for Business Use lSpecial Situations (e.g., Golf Cart Use) uCoverage D, Loss of Use lPartial Loss lTotal Loss uCoverage E, Personal Liability lPersonal Umbrella Policy lExclusions for Business Use lSpecial Situations (e.g., Golf Cart Use)

38 Basic HO-3 Coverages uCoverage F, Medical Payments lNo-Fault Medial Coverage lInvited or Noninvited Guests lExclusions Housekeepers Tree Trimmers Lawn Care Personnel uCoverage F, Medical Payments lNo-Fault Medial Coverage lInvited or Noninvited Guests lExclusions Housekeepers Tree Trimmers Lawn Care Personnel

39 Types of Property Insured uTown House lOwn Land Above, Below, and Behind lHO-3 uCooperative lLeaseholder Is Stockholder lCoop Association Owns Building lOwnership of Fixtures Vary uTown House lOwn Land Above, Below, and Behind lHO-3 uCooperative lLeaseholder Is Stockholder lCoop Association Owns Building lOwnership of Fixtures Vary

40 Types of Property Insured uTrue Condominium lSingle Entity lBare Walls In uCondominium Master Policy uUnit Assessment Insurance uTrue Condominium lSingle Entity lBare Walls In uCondominium Master Policy uUnit Assessment Insurance

41 HO-6 (Condominium Policy) uBuilding Alterations and Additions lOriginal Coverage lAdditional Endorsement uValuable Additions to Standard Coverage lWater and Sewer Backup lEarthquake Insurance lPersonal Articles Floater or Scheduled Personal Property uBuilding Alterations and Additions lOriginal Coverage lAdditional Endorsement uValuable Additions to Standard Coverage lWater and Sewer Backup lEarthquake Insurance lPersonal Articles Floater or Scheduled Personal Property

42 HO-6 (Condominium Policy) uSeparate Policies lUmbrella Liability lFlood Insurance lLoss Assessment Coverage uAssessments Not Covered lImprovements lDamages Above the Limits lDebris Cleanup uSeparate Policies lUmbrella Liability lFlood Insurance lLoss Assessment Coverage uAssessments Not Covered lImprovements lDamages Above the Limits lDebris Cleanup

43 HO-6 (Condominium Policy) uSeparate Policies Needed for Association uCoverage for Investors and Their Tenants lMaster Policy lRenters’ Policy lHO-6 Policy Purchased by Owner uSeparate Policies Needed for Association uCoverage for Investors and Their Tenants lMaster Policy lRenters’ Policy lHO-6 Policy Purchased by Owner

44 Policies Available for Rental Properties uHO-4 (Renters’ Policy) lExcludes Dwelling lLimits Coverage to Renters’ Personal Property and Liability Exposures uRental Home or Landlord’s Policy lLittle Personal Property Coverage lWritten in Personal Lines uBusiness Properties uOther Structures uHO-4 (Renters’ Policy) lExcludes Dwelling lLimits Coverage to Renters’ Personal Property and Liability Exposures uRental Home or Landlord’s Policy lLittle Personal Property Coverage lWritten in Personal Lines uBusiness Properties uOther Structures

45 Personal Property Used for Business uTwo Exclusions lExcludes Anything Used At All for Business lLimits Coverage to $250 uCorrect These Limits lAdaptable Electronic Apparatus Coverage lIncreased Limits on Business Property uPersonal Liability for the Home Office lNo Coverage for Business from Home lCommercial Insurance Required uTwo Exclusions lExcludes Anything Used At All for Business lLimits Coverage to $250 uCorrect These Limits lAdaptable Electronic Apparatus Coverage lIncreased Limits on Business Property uPersonal Liability for the Home Office lNo Coverage for Business from Home lCommercial Insurance Required

46 Chapter 4 Floods and Other HO Exclusions

47 Learning Objectives uDefine Flooding uName Causes of Flooding uExplain Circumstances When Lender Must Require Flood Insurance uDiscuss Assistance Provided by Some States uIdentify Areas Prone to Earthquakes and Volcanic Action uDefine Flooding uName Causes of Flooding uExplain Circumstances When Lender Must Require Flood Insurance uDiscuss Assistance Provided by Some States uIdentify Areas Prone to Earthquakes and Volcanic Action

48 Property Damage uFires uFloods uEarthquakes uOthers Requiring Special Insurance lTornadoes lVolcanoes lTerrorism uFires uFloods uEarthquakes uOthers Requiring Special Insurance lTornadoes lVolcanoes lTerrorism

49 Floods uFlooding Definitions lOverflow of Inland or Tidal Waters lAccumulation or Runoff of Surface Waters lMudflows Caused by Flooding uEveryone Lives in a Flood Zone lEvery State lSome Floods Are Multistate uFlooding Definitions lOverflow of Inland or Tidal Waters lAccumulation or Runoff of Surface Waters lMudflows Caused by Flooding uEveryone Lives in a Flood Zone lEvery State lSome Floods Are Multistate

50 Special Flood Hazard Areas (SFHAs) uDetermined by Flood History and Location uUsed to Determine Flood Insurance Premiums uZones A Inland Areas uZones V Coastal Areas uDetermined by Flood History and Location uUsed to Determine Flood Insurance Premiums uZones A Inland Areas uZones V Coastal Areas

51 Impact on Real Estate Transactions uFor Federally-Related Loans uBefore Quote lElevation Certificate lCommunity Member lFlood Zone lBase Flood Elevation (BFE) lLowest Floor Elevation; Qualified Openings? lYear that Dwelling Was Built uCan “Assign” Flood Insurance Policy to Buyer uFor Federally-Related Loans uBefore Quote lElevation Certificate lCommunity Member lFlood Zone lBase Flood Elevation (BFE) lLowest Floor Elevation; Qualified Openings? lYear that Dwelling Was Built uCan “Assign” Flood Insurance Policy to Buyer

52 Major Causes of Floods uHurricanes lStorm Damages Increasing lTidal Surges Cause Most Damage lHomeowners’ Insurance Excludes Floods lHurricane Warnings and Watches Affect Real Estate Closings uHurricanes Impact the Insurance Industry uHurricanes lStorm Damages Increasing lTidal Surges Cause Most Damage lHomeowners’ Insurance Excludes Floods lHurricane Warnings and Watches Affect Real Estate Closings uHurricanes Impact the Insurance Industry

53 Other Causes of Flooding uWater Main Breaks lConsidered Surface Water lNot Covered by Homeowners or Flood Insurance uStorm Water Runoff uDam Bursts uWater Main Breaks lConsidered Surface Water lNot Covered by Homeowners or Flood Insurance uStorm Water Runoff uDam Bursts Teton Dam Burst – Utah usbr.gov

54 Flood Insurance uRequired for Federally-Related Transaction uIf Located in Special Flood Hazard Area (SFHA) uBurden Placed on Lenders uRequired for Federally-Related Transaction uIf Located in Special Flood Hazard Area (SFHA) uBurden Placed on Lenders

55 HUD Statement Requirements uFlood Certificate Required lSpecial Flood Hazard Area (SFHA) OR lNonspecial Flood Hazard Area uIf SFHA lFlood Insurance Required lElevation Certificate Required for Quote uEvery Property Can Flood uFlood Certificate Required lSpecial Flood Hazard Area (SFHA) OR lNonspecial Flood Hazard Area uIf SFHA lFlood Insurance Required lElevation Certificate Required for Quote uEvery Property Can Flood

56 Lenders Require Flood Insurance uAny Federally Related Loans uSecured by Property in A, V, AV uEnforced by FDIC uLenders May Lose FDIC Insurance uAny Federally Related Loans uSecured by Property in A, V, AV uEnforced by FDIC uLenders May Lose FDIC Insurance Katrina - Biloxi, Miss fema.gov

57 National Flood Insurance Program uFederally-Backed Flood Insurance lRequired for Federally Related Loans lEnforced by FDIC lPremium Discounts Available lCommunity Must Implement Floodplain Regulations uOnly Covers Flooding uFederally-Backed Flood Insurance lRequired for Federally Related Loans lEnforced by FDIC lPremium Discounts Available lCommunity Must Implement Floodplain Regulations uOnly Covers Flooding USGS.GOV

58 National Flood Insurance Program uCommunity Rating System (CRS) Offers Premium Reductions lPublic Information lFloodplain Mapping and Regulations lFlood Damage Reduction Measures lFlood Preparedness Criteria uCommunity Rating System (CRS) Offers Premium Reductions lPublic Information lFloodplain Mapping and Regulations lFlood Damage Reduction Measures lFlood Preparedness Criteria

59 Flood Coverage Requirements uExcess Water Result from Unusual and Rapid Accumulation uAffecting More Than One Property uTemporary uInundation of Normally Dry Land uSource Must Be Defined in Policy and Sudden for Insured uExcess Water Result from Unusual and Rapid Accumulation uAffecting More Than One Property uTemporary uInundation of Normally Dry Land uSource Must Be Defined in Policy and Sudden for Insured

60 Flood Insurance Coverage uRising Water or Swell lBuilding Property lConstruction Materials lPersonal Property as Contents lDebris Demolition and Removal Coverage uDoes NOT Cover All Water-Related Problems uRising Water or Swell lBuilding Property lConstruction Materials lPersonal Property as Contents lDebris Demolition and Removal Coverage uDoes NOT Cover All Water-Related Problems

61 Flood Insurance Claims uLosses Covered by Flood Insurance lBuilding Property lConstruction Materials lPersonal Property as Contents lDebris Demolition and Removal Coverage uLosses NOT Covered by Flood Insurance uLosses Covered by Flood Insurance lBuilding Property lConstruction Materials lPersonal Property as Contents lDebris Demolition and Removal Coverage uLosses NOT Covered by Flood Insurance Rapid River Flood, 1972

62 Flood Insurance Crisis uPaying Out More than Taking In lCanceling Policies lIncreasing Premiums lMore Carry Flood Insurance uAny License Insurance Agent Can Write Policy lWrite Excess Limits with Private Insurance lPolicy Not Canceled When NFIP Pays Claim uPaying Out More than Taking In lCanceling Policies lIncreasing Premiums lMore Carry Flood Insurance uAny License Insurance Agent Can Write Policy lWrite Excess Limits with Private Insurance lPolicy Not Canceled When NFIP Pays Claim

63 State Assistance Programs uJoint Underwriting Associations (JUAs) uPrograms Vary uJoint Underwriting Associations (JUAs) uPrograms Vary

64 Other Catastrophic Events uEarthquakes lSpecial Rider or Endorsement Needed lEarthquake Insurance Considerations lEarthquake Insurance Costs uVolcanoes lFew Definitions lLittle Interest by Insurance Companies uEarthquakes lSpecial Rider or Endorsement Needed lEarthquake Insurance Considerations lEarthquake Insurance Costs uVolcanoes lFew Definitions lLittle Interest by Insurance Companies

65 Acts of Terrorism uTerrorism Risk Insurance Act (TRIA) lApplies to Terrorist Event Causing $5M or More lIncluded in Most Commercial Policies uHomeowners Include Under Special Endorsement uTerrorism Risk Insurance Act (TRIA) lApplies to Terrorist Event Causing $5M or More lIncluded in Most Commercial Policies uHomeowners Include Under Special Endorsement

66 Chapter 5 Preparing for Disasters and Filing Claims

67 Learning Objectives uDescribe Importance of Off-Site Storage of Important Documents uPlan a Disaster Checklist uList Supplies to Stockpile uSummarize Information to Tenants uExplain Importance of Securing Property uDescribe Importance of Off-Site Storage of Important Documents uPlan a Disaster Checklist uList Supplies to Stockpile uSummarize Information to Tenants uExplain Importance of Securing Property

68 Basic Insurance Responsibilities uMaintain the Right Policy uAvoid Nonrenewal or Cancellation uAvoid Filing Claims uMaintain Adequate Coverage uKnow the Deductible uMaintain Inventory Lists uMaintain the Right Policy uAvoid Nonrenewal or Cancellation uAvoid Filing Claims uMaintain Adequate Coverage uKnow the Deductible uMaintain Inventory Lists

69 Preparing for a Disaster uRecordkeeping Systems lRecord Backups and Protection lInsurance Policies lContact Information uRecordkeeping Systems lRecord Backups and Protection lInsurance Policies lContact Information

70 Preparing for a Disaster uDisaster Checklist 4 Office and Administrative Tasks 4 Supplies and Equipment 4 Building and Grounds uCodes and Policy Requirements lWarnings to Tenants lRenter’s Insurance Issues uDisaster Checklist 4 Office and Administrative Tasks 4 Supplies and Equipment 4 Building and Grounds uCodes and Policy Requirements lWarnings to Tenants lRenter’s Insurance Issues

71 Steps to Perform After a Disaster uSecure the Property lFrom Intruders lFrom Further Damage lPossibly from Tenants uTemporary Repairs lPhotograph the Damage lDocument Receipts uAssessing the Damage uSecure the Property lFrom Intruders lFrom Further Damage lPossibly from Tenants uTemporary Repairs lPhotograph the Damage lDocument Receipts uAssessing the Damage

72 Steps to Perform After a Disaster uContact All Relevant Parties lEmergency Personnel lInsurance Carrier lOwners lTenants lContractors lEmployees lUtility Companies lOthers? uEstablish a Command Center uSecure Records uContact All Relevant Parties lEmergency Personnel lInsurance Carrier lOwners lTenants lContractors lEmployees lUtility Companies lOthers? uEstablish a Command Center uSecure Records

73 Insurance Claims uDeciding to File a Claim lDocument Damage lMake Temporary Repairs lGet Estimates lAssess personal Property Losses lKeep Records uBe Patient uDeciding to File a Claim lDocument Damage lMake Temporary Repairs lGet Estimates lAssess personal Property Losses lKeep Records uBe Patient

74 Chapter 6 Working with Insurance Agents

75 Learning Objectives uCompare Independent Agents to Captive Agents (Direct Writers) uIdentify Licensing Requirements for Insurance Agents uList Prohibited Activities for Insurance Agents uDiscuss Topics Insurance Agents Should Explain to Residential Buyers uExplain Importance of Insurance Availability Contingency in Purchase Agreement uCompare Independent Agents to Captive Agents (Direct Writers) uIdentify Licensing Requirements for Insurance Agents uList Prohibited Activities for Insurance Agents uDiscuss Topics Insurance Agents Should Explain to Residential Buyers uExplain Importance of Insurance Availability Contingency in Purchase Agreement

76 Types of Insurance Agents uIndependent Agents uCaptive Agents and Direct Writers uIndependent Agents uCaptive Agents and Direct Writers

77 Agent Licensing Requirements uSuccessfully Pass State Insurance Exam uGenerally Complete Continuing Education Requirements uSuccessfully Pass State Insurance Exam uGenerally Complete Continuing Education Requirements

78 Professional Designations uVoluntary uOffered by Trade Associations lNot Required by State Licensing Requirements lRequire Additional Study uVoluntary uOffered by Trade Associations lNot Required by State Licensing Requirements lRequire Additional Study

79 Insurance in Real Estate Transactions uReal Estate Licensees lDirect Buyers to Insurance Agents lEncourage Honesty lBe Aware of Contingency Implications uInsurance Agents lThoroughly Explain Insurance Basics lProactive in Contacting Tenants uReal Estate Licensees lDirect Buyers to Insurance Agents lEncourage Honesty lBe Aware of Contingency Implications uInsurance Agents lThoroughly Explain Insurance Basics lProactive in Contacting Tenants

80 Policy List uImportant Issues lPolicy Limits for Theft lOther Limits (Business Property) lReplacement Costs lDeductibles lTrees uHome Must Be Owner-Occupied uAdditional Coverages uImportant Issues lPolicy Limits for Theft lOther Limits (Business Property) lReplacement Costs lDeductibles lTrees uHome Must Be Owner-Occupied uAdditional Coverages

81 Insurance Agent Guidelines uProhibited Activities lBlank Applications lRebates lGifts uProhibited Activities lBlank Applications lRebates lGifts

82 Insurance Agent Guidelines uPermitted Activities lNo Minimum Amount of Production to Enter lAll Agents May Share Equally uPermitted Activities lNo Minimum Amount of Production to Enter lAll Agents May Share Equally

83 Obtaining a Price Quote uStates Regulate Insurance Companies lCompanies May File for Deviations and Discounts lAvailability and Cost Affected by Claim History of Applicant and Property uImportance of Insurance Contingency in Purchase Agreement uStates Regulate Insurance Companies lCompanies May File for Deviations and Discounts lAvailability and Cost Affected by Claim History of Applicant and Property uImportance of Insurance Contingency in Purchase Agreement

84 Chapter 7 Recent Changes and Industry Trends

85 Learning Objectives uName Stringent Underwriting Guidelines uCompare Guaranteed Replacement Cost vs. Replacement Caps uDiscuss Use of Credit Scores and Use of Insurance Financial Scores (IFS) uExplain Why IFS and Previous Claims History Affect Buyers uDescribe Impact of Comprehensive Loss Underwriting Exchange (CLUE) on Listings uName Stringent Underwriting Guidelines uCompare Guaranteed Replacement Cost vs. Replacement Caps uDiscuss Use of Credit Scores and Use of Insurance Financial Scores (IFS) uExplain Why IFS and Previous Claims History Affect Buyers uDescribe Impact of Comprehensive Loss Underwriting Exchange (CLUE) on Listings

86 Catastrophic Losses uMost Costly Catastrophes uActs of God uInsurance Industry Ability to Pay Claims uMost Costly Catastrophes uActs of God uInsurance Industry Ability to Pay Claims

87 Changes as a Result of Catastrophic Losses uReplacement Caps uPremiums Closely Aligned with Potential Total Loss uReplacement Caps uPremiums Closely Aligned with Potential Total Loss

88 Stronger Underwriting Guidelines uCredit Scoring and IFS uFair Credit Reporting Act (FCRA) uHow Mortgage Companies Use Credit Scores uHow Insurance Companies Use IFS uCredit Scoring and IFS uFair Credit Reporting Act (FCRA) uHow Mortgage Companies Use Credit Scores uHow Insurance Companies Use IFS

89 Changes in Industry uImpact of Claims History lComprehensive Loss Underwriting Exchange (CLUE) uImpact of Claims History lComprehensive Loss Underwriting Exchange (CLUE) lHigher Deductibles lProperty Inspection Prior to Issuing Policy lPrior Water-Related Claims lHigher Deductibles lProperty Inspection Prior to Issuing Policy lPrior Water-Related Claims I Have no CLUE

90 Impact on Real Estate Transactions uSellers lObtain CLUE Early to Correct Any Errors lInsurance Companies Interpret Data Differently uBuyers lObtain Credit Scores and Insurance Scores Early lInsurance Agent Can File for CLUE Report of Property uSellers lObtain CLUE Early to Correct Any Errors lInsurance Companies Interpret Data Differently uBuyers lObtain Credit Scores and Insurance Scores Early lInsurance Agent Can File for CLUE Report of Property

91 Impact on Real Estate Transactions uContingency Clauses lMonthly Insurance Premiums Impact Buyers’ Debt-to- Income Ratios lBuyer May Not Be Able to Buy uReport Any Errors uContingency Clauses lMonthly Insurance Premiums Impact Buyers’ Debt-to- Income Ratios lBuyer May Not Be Able to Buy uReport Any Errors


Download ppt "Insurance for Consumer Protection What Every Agent Should Know."

Similar presentations


Ads by Google