© 2013 Pearson Education, Inc. All rights reserved.10-1 Chapter 10 Property and Liability Insurance

© 2013 Pearson Education, Inc. All rights reserved.10-2 Protecting Your Home The first type of homeowner’s insurance, fire insurance. The first modern homeowner’s policy was sold in –Before, separate policies were needed for every peril. Peril—an event or happening, whether natural or man-made, that causes a financial loss.

© 2013 Pearson Education, Inc. All rights reserved.10-3 Table 10.1 Comparing Homeowner’s Insurance Policies

© 2013 Pearson Education, Inc. All rights reserved.10-4 Table 10.1 Comparing Homeowner’s Insurance Policies (cont.)

© 2013 Pearson Education, Inc. All rights reserved.10-5 Table 10.1 Comparing Homeowner’s Insurance Policies (cont.)

© 2013 Pearson Education, Inc. All rights reserved.10-6 Table 10.1 Comparing Homeowner’s Insurance Policies (cont.)

© 2013 Pearson Education, Inc. All rights reserved.10-7 Table 10.1 Comparing Homeowner’s Insurance Policies (cont.)

© 2013 Pearson Education, Inc. All rights reserved.10-8 Table 10.1 Comparing Homeowner’s Insurance Policies (cont.)

© 2013 Pearson Education, Inc. All rights reserved.10-9 Section I: Property Coverage Coverage A: Dwelling Coverage B: Other structures Coverage C: Personal property Coverage D: Loss of use

© 2013 Pearson Education, Inc. All rights reserved Section II: Personal Liability Coverage Protects policyholder and family from financial loss if someone is injured on their property or as a result of their actions. Protects against liability suits Also covers medical expenses of anyone hurt by policyholder, their family, or pet

© 2013 Pearson Education, Inc. All rights reserved Supplemental Coverage Endorsement—written attachment to an insurance policy to add or delete coverage. Personal articles floaters Earthquake coverage Flood protection

© 2013 Pearson Education, Inc. All rights reserved Supplemental Coverage Inflation Guard Personal Property Replacement Cost Coverage Added Liability Insurance—personal umbrella policy

© 2013 Pearson Education, Inc. All rights reserved Your Insurance Needs How much insurance do you need? Need for inflation guard coverage and need for replacement cost coverage on possessions Need enough insurance for full replacement in the event of a total loss.

© 2013 Pearson Education, Inc. All rights reserved Coinsurance and the “80-Percent Rule” Coinsurance provision—requirement of homeowner’s insurance that the insured pay a portion of the claim if he or she purchased in inadequate amount of insurance (less than 80% of replacement cost). 80-percent rule—homeowner’s insurance rule that the replacement cost coverage is in effect only if the home is insured for at least 80% of its replacement cost.

© 2013 Pearson Education, Inc. All rights reserved The Bottom Line How much homeowner’s insurance do you need? Needs some thought and foresight. Assets and possessions are always changing so are your insurance needs. Revisit your insurance needs from time to time.

© 2013 Pearson Education, Inc. All rights reserved Keeping Your Costs Down – Insurance Credit Scoring Insurance credit score—based on the same information as your traditional credit score, used in determining what your home and auto insurance rates will be The lower your insurance credit score, the higher your rates will be. Managed your insurance credit score to keep your costs of insurance down.

© 2013 Pearson Education, Inc. All rights reserved Keeping Your Costs Down – Discounts and Savings High deductible discounts Security system/smoke detector discounts Multiple policy discounts Pay your insurance premiums annually. Other discounts Consider a direct writer Shop around Double-check your policy

© 2013 Pearson Education, Inc. All rights reserved Automobile Insurance Personal Automobile Policy (PAP)— standardized for an individual or family Part A: Liability Coverage Part B: Medical Expense Coverage Part C: Uninsured Motorist’s Protection Coverage Part D: Damage to Your Automobile Coverage

© 2013 Pearson Education, Inc. All rights reserved Table 10.2 The Personal Automobile Policy (PAP) Coverage Description Individuals Covered

© 2013 Pearson Education, Inc. All rights reserved No-Fault Insurance Type of auto insurance in which your insurance company protects you in the case of an accident regardless of who is at fault. Over half the states have no-fault system. Imposes limits on medical expenses and other claims which may not be enough to cover all medical expenses.

© 2013 Pearson Education, Inc. All rights reserved Determinants of the Cost of Automobile Insurance Type of automobile Use of automobile Driver’s personal characteristics Driver’s driving record Where you live Discounts that you qualify for Insurance credit score

© 2013 Pearson Education, Inc. All rights reserved Table 10.3 Common Automobile Insurance Discounts

© 2013 Pearson Education, Inc. All rights reserved Keeping Your Costs Down Shop comparatively Consider only high quality insurers Take advantage of discounts Buy a car that is relatively inexpensive to insure Improve your driving record Raise your deductibles Keep adequate liability insurance

© 2013 Pearson Education, Inc. All rights reserved Filing a Claim “To-do” list if involved in a car accident: 1.Get help for the injured. 2.Move car to a safe place. 3.Get identification of witnesses. 4.Cooperate with police. 5.Take a test for alcohol if you believe the other driver is under the influence. 6.Write down your recollection of accident.

© 2013 Pearson Education, Inc. All rights reserved Filing a Claim 7.Don’t sign anything or admit guilt. 8.Get a copy of the police report and make sure it is accurate. 9.Call your insurance agent as soon as possible. 10.Cooperate with your insurer. 11.Keep records of all expenditures associated with the accident. 12.If a serious accident, then meet with a lawyer to know your rights.