Intro to Business Chapter 34 Property Insurance Intro to Business Chapter 34

Insuring Valuable Property Protect yourself from financial loss on your property with property insurance Almost everyone (at some point) has his/her property damaged or stolen Earth quakes, fires, floods, hurricanes, etc.

Types of Property Insurance Real Property – attached to land, like a house, business, garage Personal Property – can be moved, like furniture, jewelry, electronics, etc.

Renter’s Insurance Building owner will carry property insurance Won’t cover loss or damage to renters property Covers personal property in the apartment such as TV's appliances and furniture Can also include liability protection in case someone is injured in your apartment

Standard Fire Policy Fire accounts for 85% of all property damages Many people buy a standard fire policy to insure against damage due to fire or lightening Can opt for extended coverage to protect against damage from riots, car/plane crash, windstorm, hail or even vandalism

Other Types of Prop Ins Liability Protection – protects you from the costs of injuries to others on your property medical expenses & legal costs Additional Living Expenses – it pays for the cost of renting another place to live if your home is damaged Limited Coverage (10-20%, 6-12 months) Business Insurance – cover the costs of property and liability to protect themselves from claims by anyone injured on the premises

Homeowner’s Policy Homeowner’s Policy – provides protection against loss from the eleven perils. Eleven Perils – the most common causes of property damage or loss

COMPREHENSIVE BASIC BROAD Fire, lightening, windstorm, explosion, riot, aircraft, vehicle, smoke, vandalism, theft, breaking glass

6 types of HO Policies HO-1 Basic Form HO-2 Broad Form Basic, least expensive Protects against 11 perils, covers liability insurance, and temporary living expenses HO-2 Broad Form Most popular, adds 7 additional types of coverage including, ice or snow damage, internal pipe damage causing water damage, electrical fires and falling objects HO-3 Special Form Maximum protection for house itself, less coverage for contents

6 types of HO Policies HO-4 Renter’s Form HO-5 Comprehensive Form Covers personal property HO-5 Comprehensive Form “All-Risks Policy” It insures a building and its contents with maximum coverage, most expensive HO-6 Condo Owner’s Form For condominium owners, covers personal property and anything else inside the unit

Special Coverage Rider – an addition to the policy that covers specific property or damages, often used for jewelry, art or antiques NONE of the homeowner’s policies cover loss from floods, earthquakes, landslides, war or nuclear hazards If you live in a flood zone, you must purchase flood insurance (if you have a mortgage) Special coverage's-Most homeowners policies cover special items such as jewelry for limited amounts. You can buy additional insurance for special items such as coin collections, or other valuables such as antiques.

Amount of Insurance 80% of its market value Recommended by Ins Co. Even floods or fires do not destroy land or foundation As property value increases, so should your amt of ins Insure property for its actual cash value or its replacement cost – full cost of repairing or replacing property

Cost of insurance Similar to Auto Ins # of claims affects the overall cost Premium depends on the amount of coverage and the type of policy you want Factors that affect price: Deductible, location, type of building, preventative measures

Cost of insurance Deductible – amount out of pocket before insurance kicks in higher deductible = lower premium Location – urban areas cost more, access to fire dept. and hydrants Type of building – brick will cost less than a house constructed of wood larger house = higher premium Preventative measures – discounts for burglar alarms or smoke detectors, deadbolts and sprinkler systems

Homeowners quiz I have a really good homeowners policy, so I am covered in case of a flood? My landlord’s insurance covers me, so I don’t need to buy my own policy? The market value of my home is down, so I should reduce the insurance coverage of my house to match it?

Homeowners quiz The damage caused by a tree or a heavy tree limb crashing onto a house is always covered? Does flood insurance cover damage to food in the refrigerator or freezer? Should you keep a copy of your homeowners policy and inventory of personal property in a safe place in your home? During a power outage can you move to a hotel until the power comes back on?