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Topic 8 Homeowners Insurance

Topic 8 Homeowners Insurance. BUS 200 Introduction to Risk Management and Insurance Fall 2008 Jin Park. Overview. Risks faced by homeowners Types of Homeowners Policy Structure of Homeowners Policy Coverage Property Coverage Liability Coverage Medical Coverage.

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Topic 8 Homeowners Insurance

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  1. Topic 8Homeowners Insurance BUS 200 Introduction to Risk Management and Insurance Fall 2008 Jin Park

  2. Overview • Risks faced by homeowners • Types of Homeowners Policy • Structure of Homeowners Policy • Coverage • Property Coverage • Liability Coverage • Medical Coverage

  3. Risks Faced by Homeowners • Damage to or destruction of the home • Damage to or loss of personal property • Loss of use of the home • Liability • Injury to others • Damage to property of others • Defective title

  4. Types of Homeowners Policy • Homeowner’s policy is a package policy! • Property coverage • Liability coverage • Limited health coverage • Homeowner’s Insurance policies are • For Owner-Occupant • For Tenants • For Condominium unit owners • cf: condominium commercial-unit owners.

  5. Structure of Homeowners Policy

  6. Section I – Property Coverages • Coverage A – Dwelling • Coverage B – Other Structures • Coverage C – Personal Property • Anywhere in the world • Personal property at other residences • 10% of the limit of insurance on Coverage C or $1,000, whichever is greater • Special limits on certain types of personal property • Coverage D – Loss of Use • Additional living expenses, Fair rental value • Coverage E – Additional Coverages • Debris Removal • Reasonable Repairs • Trees, Shrubs, and Other Plants • And more…

  7. Section II – Liability Coverages • Coverage E – Personal Liability • Legal (defense) costs • Bodily injury, Property damage of others • Coverage F – Medical Payments to Others • Medical expenses • No-Fault basis

  8. Factors Affecting HO Premium • Property characteristics • Property location • HO policy type • Deductible • Insurance score • Claim history

  9. Premium Earned $100 Property Damage $ 47 Liability $ 3 Costs to Settle $ 8 Expenses Commissions $ 22 Others $ 6 S. Taxes, Fees $ 3 Total Paid $ 89 Investment Gain $ 7 Federal Taxes $ 6 Net Income $ 12 Source: iii.org Where the Revenue Dollar Goes

  10. Average Premiums for HO & Renter Source: NAIC

  11. Some Stats • In 2005, The most expensive states for • HO: ___ ($1,372), ___ ($1,114), ___ ($1,083), OK, DC, … • Renter: TX (269), CA (257), MS (253), LO, OK, … • In 2005, The least expensive states for • HO: … DE, WI, ___ (491), ___ (477), ___ (457) • Renter: … UT, IA, ND (128), WI (126), SD (124) • Average HO’s & Renter’s Premium for IL is $660 (30), $174 (26), respectively. • In 2006, 96% of homeowners had HO’s insurance while 43% of renters had renters insurance. (Insurance Research Council) • The percentage of homes that are underinsured ranges from 73% in 2002 to 66% in 2007. (Marshall & Swift/Boechk) • About 5% of insured homes had a claim in 2006. (ISO)

  12. HO Insurance Losses Source: iii.org

  13. Source: iii.org

  14. Leading Writers of HO Insurance, by DPW 2007 ($000) Source: iii.org

  15. Insurance-to-Value source: iii.org

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