REE Ch. 24 - Property Insurance
Property insurance offers protection against the financial loss a property owner might suffer if any of the following events occur:
Fire, windstorm, hail, tornadoes, vandalism, smoke damage and other physical damage to the owner's home or belongings Theft of the owner's personal property Injury of a person on the owner's property due to the negligence of the property owner or a member of the owner's family Damage caused by the policyholder to another's property as a result of negligence.
What type of coverage is always excluded from homeowners' and tenants' policies?
Flood
Which policy is sold much less than other policies.
HO-1
Which policy is the most widely used homeowner's policy?
HO-3
Which policy is written for renters?
HO-4
Which policy is typically added as an endorsement to another policy?
HO-5
Which policy covers condominiums?
HO-6
Which of these policies is a modified version of the basic policy, providing actual cash value coverage in place of replacement cost coverage for a building?
HO-8
Which policy is specifically for older homes whose replacement value exceeds the market value?
HO-8
As a rule, how is coverage for home computers usually handled?
Home computers used for personal use are subject to the limit available for personal property. Some companies may have a separate limit for the home computer. However, if they are used for business, the company will only pay up to $2,500.
If a property owner has a laptop computer used for business purposes that is stolen from an out-of-town hotel room, how much can the owner expect to receive from the insurance company to cover the loss?
$500
Flood insurance is available through
NFIP.
What is the New York Property Insurance Underwriting Association and what does it do?
New York Property Insurance Underwriting Association is a pool of all insurance companies writing fire insurance in New York State. It offers fire and extended coverage, as well as coverage for vandalism, malicious mischief, and sprinkler leakage to consumers who are unable to purchase this type of insurance from individual insurance companies.
New York Property Insurance Underwriting Association is
a pool of all insurance companies writing fire insurance in New York State. It offers fire and extended coverage, as well as coverage for vandalism, malicious mischief, and sprinkler leakage to consumers who are unable to purchase this type of insurance from individual insurance companies.
An umbrella policy is
a type of liability insurance available to individuals and companies to protect them against claims above and beyond the amount covered by their primary policies or for claims not currently covered.
Coastal Market Assistance Program (C-MAP)
a voluntary network of insurers that assists New York homeowners who live in coastal areas to find insurance.
Insurance is designed to
protect both the lender and the property owner in the event of an unforeseen occurrence. Property owners can purchase insurance from independent agents, insurance companies or insurance brokers.
A package policy includes
several different types of coverage, such as property insurance AND liability insurance.
An insurance company may cancel a homeowner's or tenant's policy by issuing a cancellation notice during the first 60 days it is in effect, as long as
the cancellation notice states the specific reason or reasons for the cancellation.
Replacement cost means
the cost to replace the property on the same premises with other property of comparable material and quality used for the same purpose. The replacement cost of a home must be estimated at the time the property owner takes out a homeowner's policy.
In an insurance policy, the deductible is
the portion of any claim that is not covered by the insurance provider.
Actual cash value (ACV), also known as market value, is
the standard that insurance companies prefer when reimbursing policyholders for their losses. Actual cash value is equal to the replacement cost minus any depreciation.
Flood insurance can only be purchased
through federal insurance programs.
A(n) _________________ policy is a type of liability insurance available to individuals and companies to protect them against claims above and beyond the amount covered by their primary policies or for claims not currently covered.
umbrella
Insurance is automatically issued on a replacement cost basis if the owner purchases coverage for at least ______ of the home's replacement cost.
80%
For a hurricane to be covered by a policy with a compulsory windstorm deductible, regardless of the insurer, the storm must
Be classified as a hurricane.
If a policyholder has expensive jewelry, furs, cameras, or a coin collection, he or she should consider insuring them separately with
a personal articles floater.
Generally, personal liability limits of ____________ per occurrence and medical payments limits of __________ per person are sold to the public.
$100,000, $1,000
Sue purchased a homeowner's policy to cover 75% of its replacement value and then experienced a $13,000 loss by vandals. How much can Sue expect to receive from her insurance company to cover the loss?
$12,187.50 75% ÷ 80% = .9375 x $13,000 = $12,187.50 to be paid by insurance.
If Joe insures his home for 60% of its replacement value and suffers a $20,000 loss, how much will the insurance pay?
$15,000
If a property owner has a computer that is used for business purposes, what is the typical coverage limit in New York if the computer is stolen?
$2,500.
The typical coverage limit on the theft of guns with no special endorsement is
$2,500.
Homes in Brooklyn that are eligible for coverage under C-MAP must be located within ________ of the shore.
1 mile
Replacement cost coverage on a home's contents usually costs an additional
10% - 15%.
New York law requires insurers to provide ________ notice of non-renewal of a policy.
45 - 60 days
What is a Homeowners-3 policy?
A Homeowners-3 is a Special Form Policy and is the most widely-used homeowner's policy. This policy covers the owner's property for all risks of physical loss, except those that are specifically excluded, such as flood or earthquake.
What is the difference between a monoline insurance policy and a package policy?
A monoline policy contains only one type of coverage, such as liability insurance. A package policy includes several different types of coverage, such as property insurance AND liability insurance.
What type of policy would pay a homeowner for the full cost of the repair or replacement without deduction for depreciation?
A replacement cost policy which insures the home for at least 80% of its replacement cost.
What does a liability policy cover?
Bodily Injury
How is actual cash value determined?
By determining replacement cost minus depreciation.
Outside of New York City, rating territories are based on the quality of the community's public fire protection, with a _________ having the least amount of protection.
Class 8
The C-MAP program can help homeowners find insurance for what type of area?
Coastal
What does Commercial General Liability (CGL) coverage do for businesses?
Commercial General Liability (CGL) coverage protects business organizations against liability claims for bodily injury, property damage, personal injury and advertising injury.
How does the Homeowners-5 policy differ from the Homeowners-3 policy?
Homeowners-5 protects a home against the same perils as the HO-3 policy. However, it adds coverage for the owner's personal possessions for all risks of physical loss, except those risks that are specifically excluded.
Property insurance is protection for whom?
Insurance protects both the lender and the property owner in the event of an unforeseen occurrence.
List three factors that can influence the cost of insurance.
Location Age and type of building Choice of deductibles
The cost of homeowners and tenants insurance premiums vary widely from company to company, depending on a number of factors including:
Location Age and type of building The use of the building, such as residence and/or commercial enterprise Local fire protection Choice of deductibles Application of discounts Scope and amount of insurance coverage purchased
What kind of policy is a Business Owner's Policy (BOP)?
Package
National Flood Insurance Program (NFIP)
Property owners can purchase flood insurance through the NFIP if they reside in a community which has been designated as a special flood hazard area which implements and enforces measures to reduce future flood risks.
Under what conditions can property owners purchase flood insurance through the NFIP?
Property owners can purchase flood insurance through the NFIP if they reside in a community which has been designated as a special flood hazard area which implements and enforces measures to reduce future flood risks.
What is meant by replacement cost?
Replacement cost means the cost to replace the property on the same premises with other property of comparable material and quality used for the same purpose.
_____________ coverage is more expensive than ___________ coverage.
Replacement cost, actual cash value
The real estate agent has an important role with consumers regarding property insurance.
The agent should explain the purpose and costs of property insurance to the buyer. The agent should explain the lender's interest in property insurance The agent should explain the escrow of property insurance along with property taxes. The agent should explain when to obtain property insurance if the purchase is a cash sale.
If an HO-6 policy covers the contents of a condominium, how are the condo building and common areas covered?
The condo association must carry policies to cover those areas.
How would a homeowner be reimbursed if he or she had an actual cash value policy?
The homeowner would receive an amount equal to the replacement cost minus any depreciation. It represents the dollar amount an owner could expect to receive for an item if he or she sold it in the marketplace.
Which type of coverage is NOT available through the New York Property Insurance Underwriting Association?
Theft
Hurricanes
These approved programs provide windstorm coverage that is subject to certain compulsory deductibles depending on the geographical location of the risk.
Homeowners-5 (HO-5)
This Comprehensive Form Policy protects a home against the same perils as the HO-3 policy, plus the owner's personal possessions.
Homeowners-8 (HO-8)
This Market Value Policy is a modified version of the HO-1 policy, providing actual cash value coverage in place of replacement cost coverage for a building.
Homeowners-3 (HO-3)
This Special Form Policy is the most widely-used homeowner's policy.
Homeowners-1 (HO-1)
This is a Basic Policy.
Homeowners-2 (HO-2)
This is a Broad Form Policy.
When does an umbrella policy provide coverage?
When the liability on other policies has been exhausted
A policy that has several types of coverage in one policy is
a package policy.
Commercial General Liability (CGL)
coverage protects business organizations against liability claims for bodily injury, property damage, personal injury and advertising injury. Commercial insurance may be available in an affordable, General Liability and property package policy known as a Business Owner's Policy, or BOP.
Tenants or Cooperative Owners Policies (HO-4) and Condominium Unit Owners Policies (HO-6) are policies that
insure against damage to the contents of the apartment, cooperative or condominium and for personal liability of the insured when people are injured or suffer property damage in the insured unit.
A Homeowners-1 (HO-1) , or Broad Form policy, would insure against
damage from fire.
For consumers who are unable to purchase insurance from individual insurance companies, the New York Property Insurance Underwriting Association (NYPIUA) offers policies for
fire coverage.
Due to _____________ the replacement cost of a home generally increases each year.
inflation
An __________________ primary obligation is to the client, not the insurance company.
insurance agent's
New York Property Insurance Underwriting Association (NYPIUA)
is a pool of all insurance companies writing fire insurance in New York State. It offers fire and extended coverage.
There is ______________ coverage under a homeowner's policy for day care activities which result from a mutual exchange of services (e.g. watching your neighbor's children while she runs errands).
limited liability
When insurance policies are sold they are issued as either a
monoline policy or a package policy.
A monoline policy contains
only one type of coverage, such as liability insurance.