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CHAPTER 11 property, home and automobile insurance.docx

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Ryerson University
FIN 502
Steve Joyce

CHAPTER 11 property home and automobile insurancePROPERTY INSURANCEProperty insurance insures your physical propertieshome clothing furniture appliances jewellery and so onagainst damage or destructionHOME INSURANCEHome insurance protects the family against the risk of loss damage or destruction of the home its related outbuildings its contents and covers liability to third parties for injuries suffered on the property o Typical risks covered by home insurance fire lighting falling objects riots windstorm explosion theft water smoke etcTwo ways to estimate the amount of coverage required 1 Estimate the value of contents as some percent usually 20 2 Estimate the insurance coverage for the contents by listing and value every itemTwo forms of home insurance you can buy 1 Depreciated value value of replacement or repair for the item to the condition it was in when lost or damagedSubtracting the price of a new item an allowance for depreciation based on the age of the item 2 Replacement value damaged or lost item is the cost of buying a new item of the same quality higher premiumThe lost or destroyed item must be replaced with ones of comparable qualityCost approach of valuation method used to evaluate the cost to replace the homes structure everything except the land and foundation if the home were destroyed o Gives a professional estimate of both the depreciated value and the replacement value of the homes structure o 80 rule insurance companies will not pay the full loss on partial damage unless the insured has bought
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