Question

 Assignment: Chapter 10 - Protecting Your Property

 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.

 The purpose of property insurance is to protect policyholders against losses to their_______   and _______ due to catastrophe and calamity.

 These contracts require policyholders to identify and describe the property that is covered and to specify the causes of loss, called _______ , for 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.

•  Earthquake

•  Windstorms

•  Fire

•  Vandalism

 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 value _______ cash of the damaged or destroyed property, which is calculated by subtracting the value of the item's _______  depreciation from its current _______  cost. This depreciation is usually the result of _______ 

 Hailey's Story: Actual Cash Value vs. Replacement Cost Coverage

 Hailey owns a house in Milwaukee 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 $13,000. The same items, which had an original cost of $7,800 when she'd bought them six years ago, had an estimated useful life of ten years.

 After calling her insurance agent, Hailey was reminded that she carries full insurance on, or 80% of the replacement cost value of, her house. However, to save $60 per year in her premium, she'd only covered her possessions for their actual cash value. Given this information, Hailey can expect to receive only _______  in compensation for her loss. In contrast, if she had carried replacement cost, instead of actual cash, coverage, thenshe would have received _______ .

 Property insurance companies retain several rights and can impose several requirements on its policyholders. Among

 them are:

 After it has paid a claim, the right of the _______  to request reimbursement from either the person who caused the loss or that 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.

 Gianna's two insurance policies

 Gianna owns a house in Centerville 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 _______ .

Answer 1

As per rules I am answering the first 4 subparts of the question

1: Property and its contents

(Property insurance protects the property as well as its contents)

2: Perils

The loss may be caused due to various factors such as fire, tornado etc. These are called perils.

3: Vandalism

Generally the property insurance covers loss due to natural disasters

4: Indemnity, cannot be

The principle of indemnity means that the insured cannot benefit from insurance and he must only be compensated for the loss.