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Asset Management is an important subject in Economics. In these Lecture Slides, following concepts are discussed : Home and Automobile Insurance, Protection, Financial Loss, Mind, Insurance Company, Risk-Sharing Firm, Insured Risk, Procedure, Purchase a Policy, Coverage
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financial^ loss
-^ Provides^ peace^ of^ mind • Insurance^ company^ (insurer) –^ Risk‐sharing^ firm^ that^ assumes
financial^ responsibility for^ losses^ from^ an^ insured
risk
-^ Procedure^ –^ Purchase^ a^ policy^ known
as^ coverage
-^ Insurance^ firm^ assumes
a^ risk^ for^ a^ fee
-^ Insured^ policyholder^ pays
a^ periodic^ premium
and^ Develop^ a
-^ For^ example,^ driving^ drunk,
Buy InsuranceSelf Insurance
Planning^ an^ Insurance
Program
1.^ Set^ insurance^ goals^ to
reduce^ possible^ loss^ of: • Income due to premature^ death,^ illness,^ accident^ or unemployment • Property caused by perils • Income, savings and property^ due^ to^ personal^ negligence
2.^ Develop^ a^ plan^ to^ reach
your^ goals • What do you need to insure? • How much should you insure^ it^ for? • What kind of insurance should^ you^ buy? • Who should you buy insurance^ from?
3.^ Put^ your^ plan^ into^ action 4.^ Check^ your^ results^ •^ Insurance^ needs^ and^
goals^ change^
Objective^2 Assess the Insurance^ Coverage^ and
Policy Types^ Available^ to^ Homeowners
and^ Renters
-^ Damage^ or^ destruction
of^ the^ building^ in which^ you^ live,^ and^ other
structures^ on^ the property^ •^ Garage,^ tool^ shed,^ trees,
and^ shrubs
-^ Additional^ Living^ Expenses^ •^ May^ be^ limited^ to^20
‐30%^ of^ property^ value • May be limited to 6 ‐ 9 months
Homeowner’s^ Insurance
Coverages
-^ Personal^ Property^ •^ Furniture,^ appliances
and^ clothing • Household inventory advisable • Usually 55%, 70%, or 75%^ of^ property^ value • Limits on certain items^ such^ as^ jewelry
-^ Personal^ Liability^ and^ Related
Coverage
-^ Covers^ injuries^ to^ others
on^ property^ (e.g.,^ fall^ on^ ice)
-^ Specialized^ Coverage^ •^ Earthquake^ endorsement^ •^ Flood^ coverage
Renter’s^ Insurance • Broad Form – Covers personal^ property^ loss^ or
-^ Renter’s^ insurance
-^ Many^ renters^ do^ not
Home^ Insurance
Policy^ Forms
-^ Basic^ Form^ (HO‐1)^ –^ Protects^ against^ perils^ such
as^ fire,^ lightning,^ windstorms,^ hail,
smoke,^ theft, vandalism^ and^ riots^ (specific^ named
perils)
-^ Broad^ Form^ (HO‐2)^ –^ Wider^ coverage^ including^ falling
objects^ and^ damage^ from^ ice,^ snow
or^ sleet (more^ specific^ named^ perils) • Special^ Form^ (HO‐3) – Basic^ +^ Broad^ form^ +^ all^ other^ risks
unless^ specifically^ excluded^ (commonly earthquake,^ flood,^ nuclear^ accidents,
business^ usage)
-^ Tenant’s^ Form^ (HO‐4)^ –^ Covers^ personal^ property
against^ listed^ risks
-^ Comprehensive^ Form^ (HO‐5)^ –^ Expands^ HO‐^3 coverage
to^ replacement^ cost;^ increasingly
rare!
-^ Condominium^ Owner^ (HO‐6)^ –^ Covers^ personal^ property
and^ building^ additions
Policy^ Provisions • Look for a policy^ with^ full^ coverage
(100%^ value)
-^ Coinsurance^ clause^ requires
you^ to^ pay^ a^ part^ of^ a
-^ Replacement^ Cost^ •^ Full^ cost^ to^ repair^ or
item • 10 ‐20%^ >^ actual^ cash^ value
coverage^ 8-13 Docsity.com
Factors^ That^ Affect
Home^ Insurance Costs
-^ Location^ of^ Home^
-^ Type^ of^ Structure^ (e.g.,
-^ Coverage^ Amount
-^ Home^ Insurance^ Discounts^ –^ Alarm^ system^ –^ Smoke^ detectors^ –^ If^ you^ insure^ car^ with
the^ same^ company
-^ Company^ Differences^ –^ Compare^ costs^ and
coverages
medical expenses,^ lost^ wages,^ etc.
associated^ with^ injuries^ caused by^ an^ accident^ for^ which^ you
were^ responsible
-^ Expressed^ as^3 numbers:
100/300/50 • Maximum coverage in^ $1,000’s • $100,000 maximum paid^ for^ injuries^ to^ any^ one person • $300,000 maximum paid^ in^ total^ (2+^ people) • $50,000 maximum paid^ for^ property^ damage
injured^ in^ your automobile,^ including^ yourself – Also^ covers^ you^ or^ family^ members
injured^ while^ riding^ in or^ hit^ by^ another^ vehicle • Uninsured^ Motorist’s^ Protection – Protection^ against^ the^ risk^ of^ getting
into^ an^ accident^ with someone^ with^ no^ insurance • Underinsured^ Motorist’s^ Coverage – Pays^ costs^ if^ your^ car^ is^ hit^ by^ a^
person^ who^ doesn’t^ have^ enough insurance^ to^ cover^ the^ damage
they^ did^ to^ you^ and^ your^ car
Collision^ Coverage Pays for damage^ to^ your^ automobile, regardless of^ who^ is^ at^ fault. – If you are^ not^ at^ fault,^ your^ insurer
will^ try^ to collect^ from^ the^ other^
driver’s^ property^ damage liability^ first. – Coverage^ limited^ to^ the
retail^ value^ of^ your vehicle
Comprehensive
Physical^ Damage Covers^ damage^ to^ your
vehicle^ not caused^ by^ a^ collision,
such^ as:
-^ Fire,^ theft^ or^ vandalism –^ Glass^ breakage –^ Hail,^ sand,^ or^ wind^ storm –^ Falling^ objects^ or^ hitting
an^ animal
