CC3152_L07_ch10+ - LECTURE 7 PROPERTY LIABILITY INSURANCE...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
CC3152 Principles of Financial Planning LECTURE 7 PROPERTY & LIABILITY INSURANCE
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5-2 (I) Property Insurance Basics [LG1] 1. Types of Exposure 1. Property loss —economic loss because your property is damaged, destroyed, or stolen. Obligations of property owner: Inventory your property. Show proof of loss A guide for selecting appropriate coverage Identify desired perils (cause of loss) to be insured against.
Image of page 2
5-3 Types of liability protection: Homeowner’s policy Automobile policy Umbrella policy 2. Liability —damage you cause others, either through your actions or negligence.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5-4 2. Principle of Indemnity The insured is entitled to payment from the insurance company only if a loss covered by the policy has been suffered. The amount of payment should not be greater than the economic value of the loss.
Image of page 4
5-5 Concepts Related to Indemnity Actual cash value: value assigned to an insured property determined by subtracting the amount of physical depreciation from its replacement cost. (unless replacement cost provision) Right of Subrogation: right of an insurer who has paid an insured’s claim to request reimbursement from either the person who caused the loss or that person’s insurer. (cannot collect losses from both)
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
5-6 Insurance companies do not want you to be able to profit from a loss Other insurance clause: If multiple companies insure the property, the companies together will not pay more than the economic loss. i.e. each insurer only pay a prorated amount of loss based on its proportion of total insurance over the property.
Image of page 6