Insurance

Lecture 2

PROPERTY INSURANCE

1. IDENTIFYING HOME AND PROPERTY PROTECTION

2. UNDERSTANDING PROPERTY INSURANCE POLICIES

3. PURCHASING PROPERTY INSURANCE

1. IDENTIFYING HOME AND PROPERTY PROTECTION

A large portion of people's earnings is spent acquiring various kinds of property. People buy clothes, dishes, toys, and other inexpensive items. These items are sometimes stolen, broken, or misplaced, usually with relatively minor economic consequences. However, people also spend money to buy expensive jewelry, furniture, sound equipment, cameras, and houses. If something happens to one of these things the economic loss could be very large.

Property insurance is designed to protect you from the personal and financial hardships you would experience if some of your property were lost due to fire, theft, vandalism, floods, windstorms, or other hazards. Property owners also are at risk of being sued by people who are injured on their property. Because the risks of loss in such situations are high, property owners should carry property insurance.

Home and property insurance protects you against three kinds of economic loss: (1) damage to your home or property, (2) the additional expenses you must pay to live someplace else if your home is badly damaged, and (3) liability losses related to your property.

Damage to Home or Property

Fires cause almost $9 billion worth of damage every year. Much of this damage is to homes. The dollar amount of damage goes up almost every year. Homes and other expensive property should be insured for fire damage as well as damage caused by vandalism, unavoidable accidents, and natural disasters such as lightning, earthquake, wind, and flood. If your home or property experiences damage and you are insured, the insurance company will pay all or a portion of the cost of repair or replacement.

Additional Living Expenses

If a fire or other disaster strikes your home, one of the first shocks you will experience is that you do not...