PERF Objective 6.03-CInsurance & Housing Options

Students will understand the need for PROPERTY INSURANCE to

protect their assets.

Handling Risk

• What are the options for handling risk associated with owning property?

• Avoid risk- own nothing• Retain risk- if it is destroyed, breaks, burns

I accept the loss• Reduce risk- have smoke detectors in

home as warnings • Transfer risk- pay an insurance company

to take part of the risk

Property/Casualty Insurance

• An insurance policy is a transfer of risk

• Types of policies for property :– Fire policies

• owner pays when renter living in his property

– Renter’s policies• renter covers own personal items

– Homeowner’s policies• Covers house, contents & liability when own home

http://www.griffithfoundation.org/uploads/classroom.wmv

Video Clip: The basic concept of insurance

Property and Casualty Insurance

• Covers – Real Property: Houses, apartments, condos,

office buildings and other structures• Land and anything permanently attached

– Personal property: Jewelry, furniture, clothing, equipment, artwork and other valuables

• Moveable property

Barn and land is real property Contents are personal property

Fire Policy

• A very basic policy covering loss resulting directly or proximately from an unfriendly fire.– Unfriendly or hostile fire is uncontrollable or

has escaped from the place where it should be.

– A friendly fire is a bonfire, furnace fire, fire in a fireplace unless it gets out of control.

Fire Policy• Owner of property (landlord) who rents to

others (tenants) protects investment in structure with a fire policy

• Owner insures real property, but not tenant’s property

• Landlord Examples: Tenant examples:– Apartment -Furniture– Condo -Clothes– Office building -Office equipment

Renter’s Insurance

• Person who rents real estate from another but has personal contents on premise carries renter’s insurance to insure:– personal contents-

furniture, TV, clothes, computer, collectibles, etc

– against liability risk of a guest getting hurt by your negligence

• Note: • You can only

insure your own property, not another’s property.

• Renter insures his personal items.

• Landlord insures structure.

Renter’s Insurance

• Protection includes:– Personal contents of tenant in an apartment, condo,

mobile home or house– Personal liability if others sue tenant for injuries

• Examples:• Lightning strikes and damages TV owned by

tenant • Neighbor breaks leg when he steps on child’s

skate left on steps and sues tenant for negligence (not being careful and causing loss)

Homeowner’s Policy

• Provides coverage for:– Home - Primary structure– Personal property - Contents– Related structures – Outbuildings, if any– Loss of Use - Living expenses if insured can

not live there due to covered damage– Premise personal liability – for injuries to

others who were on your property

Homeowner’s (HO) Policy

• Riders may extend policy for additional coverage for items such as:

• Boats• Jewelry• Furs• Artworks• Antiques• And other special collectibles owned by a

homeowner

Cost Factors of Property Insurance

• Limit of coverage for property– $50,000 $250,000 $500,000

• Location of property – fire district, city, county, state

• Structural material - brick, block, frame

• Previous claims filed

• Company chosen

Perils Insured Against

• Fire

• Theft

• Vandalism

• Hail

• Windstorm

FLOOD & EARTHQUAKE

• NOT COVERED UNDER HO POLICY– Must buy separate flood insurance coverage– Must buy separate earthquake coverage

Lloyd’s of London

• An insurance company that covers unique property and liability risks that are difficult to insure.

• Examples: – An opera singer’s vocal chords– Life insurance on insured with extremely risky

occupations– Comprehensive and collision auto insurance on

drivers with numerous tickets and accidents.– Jennifer Lopez’s posterior

Filing a Claim

• Call insurance company• Provide Proof of loss

– Take pictures, video of damage– File police report if applicable (theft)– Inventory list of property owned and/or damaged

• Secure property from further loss• Get estimates of repair cost from professionals