2. The basic principles of property insurance What are the basic principles of property insurance? There are two major types of insurance that protect your real and personal property, and that of others: property insurance and liability insurance. As several of the principles on which property and liability insurance are based differ from those underlying life and health insurance, it is important that you be aware of these differences so that you can structure your coverage and respond to a claim appropriately. and due to The purpose of property insurance is to protect policyholders against losses to their catastrophe and calamity. , for These contracts require policyholders to identify and describe the property that is covered and to specify the causes of loss, called which a policyholder will be compensated in the event of loss. However, instead of protecting against every possible cause of loss, property insurance policies generally restrict their protection to carefully specified causes of loss and specifically exclude causes that the insurance companies don't wish or can't afford to cover. Which of the following are typical causes of loss that are usually limited or excluded from most homeowner's or automobile insurance policies? Check all that apply. Mysterious disappearance O Ordinary wear and tear O Mudslides Theft Property insurance policies are based on the principle of , which maintains that an insured be enriched beyond his or her original financial condition as the result of a loss. This means that a policyholder cannot expect to receive in compensation from the insurance company than As a result of this principle, property insurance policies often limit their reimbursement to the cash value of the damaged or destroyed property, which is calculated by subtracting the value of the item's depreciation from its current depreciation is usually the result of cost. This Akiko's Story : Actual Cash Value vs. Replacement Cost Coverage Akiko owns a house in and last week suffered some damage to her house. Specifically, a portion of her home was damaged by a fire and the damage to the structure and her personal property is expected to have a replacement cost of $5,000. The same items, which had an original cost $1,500 when she'd bought them seven years ago, had an estimated useful life of ten years. After calling her insurance agent, Akiko was reminded that she carries full insurance on, or 80% of the replacement cost value of the house. However, to save $60 per year in her premium, she'd only covered her possessions for their actual cash value. Given this information, Akiko can expect to receive only in compensation for her loss. In contrast, if she had carried replacement cost, instead of actual cash, coverage, then she would have received Property insurance companies retain several rights and can impose several requirements on its policyholders. Among them are: to request reimbursement from either the person who caused the loss or that After it has paid a claim, the right of the person's insurance company. This is called the right of The requirement of , which a policyholder to buy insurance in an amount equal to a specified percentage of the of the property. The clause, which states that if a person has more than one insurance policy, then each company is liable for amount of the loss based on its proportion of the total insurance covering the property. Lauren's two insurance policies Lauren owns a house in Dayton and carries two insurance policies on it. The first policy carries a policy limit of $125,000; the second carries a limit of $95,000. Given a covered loss of $6,000, the first policy will pay a maximum amount of , and the second policy will pay a maximum of 2. The basic principles of property insurance What are the basic principles of property insurance? There are two major types of insurance that protect your real and personal property, and that of others: property insurance and liability insurance. As several of the principles on which property and liability insurance are based differ from those underlying life and health insurance, it is important that you be aware of these differences so that you can structure your coverage and respond to a claim appropriately. and due to The purpose of property insurance is to protect policyholders against losses to their catastrophe and calamity. , for These contracts require policyholders to identify and describe the property that is covered and to specify the causes of loss, called which a policyholder will be compensated in the event of loss. However, instead of protecting against every possible cause of loss, property insurance policies generally restrict their protection to carefully specified causes of loss and specifically exclude causes that the insurance companies don't wish or can't afford to cover. Which of the following are typical causes of loss that are usually limited or excluded from most homeowner's or automobile insurance policies? Check all that apply. Mysterious disappearance O Ordinary wear and tear O Mudslides Theft Property insurance policies are based on the principle of , which maintains that an insured be enriched beyond his or her original financial condition as the result of a loss. This means that a policyholder cannot expect to receive in compensation from the insurance company than As a result of this principle, property insurance policies often limit their reimbursement to the cash value of the damaged or destroyed property, which is calculated by subtracting the value of the item's depreciation from its current depreciation is usually the result of cost. This Akiko's Story : Actual Cash Value vs. Replacement Cost Coverage Akiko owns a house in and last week suffered some damage to her house. Specifically, a portion of her home was damaged by a fire and the damage to the structure and her personal property is expected to have a replacement cost of $5,000. The same items, which had an original cost $1,500 when she'd bought them seven years ago, had an estimated useful life of ten years. After calling her insurance agent, Akiko was reminded that she carries full insurance on, or 80% of the replacement cost value of the house. However, to save $60 per year in her premium, she'd only covered her possessions for their actual cash value. Given this information, Akiko can expect to receive only in compensation for her loss. In contrast, if she had carried replacement cost, instead of actual cash, coverage, then she would have received Property insurance companies retain several rights and can impose several requirements on its policyholders. Among them are: to request reimbursement from either the person who caused the loss or that After it has paid a claim, the right of the person's insurance company. This is called the right of The requirement of , which a policyholder to buy insurance in an amount equal to a specified percentage of the of the property. The clause, which states that if a person has more than one insurance policy, then each company is liable for amount of the loss based on its proportion of the total insurance covering the property. Lauren's two insurance policies Lauren owns a house in Dayton and carries two insurance policies on it. The first policy carries a policy limit of $125,000; the second carries a limit of $95,000. Given a covered loss of $6,000, the first policy will pay a maximum amount of , and the second policy will pay a maximum of