The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

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Answer 1

Question

Chapter 10, Problem 1LO

Summary Introduction

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Expert Solution & Answer

Explanation of Solution

Some of the basic principles of property are as follows:

Principle of utmost good faith: This principle states that the insured and the insurer are required to exchange true and complete information to each other.

Principle of Contribution: This principle states that if different insurance companies are providing coverage to the same property, then the actual amount of loss is divided proportionately among all the companies providing insurance.

Principle of Subrogation: In this principle, the insurance company posses the legal rights of the property insured.

Importance of property insurance:

Property insurance is crucial because it provides protection against different perils and calamities like windstorm, fire, vandalism, theft to the persona and real properties. An individual must give equal importance to property insurance as one gives to health and life insurances.

Types of exposure:

Exposure to property loss: When an individual is exposed to the physical loss of the property, this is exposure to property loss. Most of the property insurance contracts identify the perils that are the reasons behind the loss and the property covered.
Exposure to liability: When an individual is exposed to the losses through liability, this is known as exposure to liability. Some of the examples of liability exposure can be driving a car, being careless about some professional duties and others.

Principle of Indemnity: According to the principle of indemnity, the insured will not get compensated more than the economic loss he/she incurred. The objective of this principle is to get protected from the dishonest policyholders who try to get extra advantage from the insurance.

Co-insurance: A provision that requires the holder of the policy to purchase the insurance of an amount that is equivalent to the specified percentage of the property’s replacement value. This is co-insurance. This is to help insured bear the loss through the co-insurance.

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4. On August 20, Mr. and Mrs. Cleaver decided to buy a property from Mr. and Mrs. Ward for $105,000. On August 30, Mr. and Mrs. Cleaver obtained a loan commitment from OKAY National Bank for an $84,000 conventional loan at 5 percent for 30 years. The lender informs Mr. and Mrs. Cleaver that a $2,100 loan origination fee will be required to obtain the loan. The loan closing is to take place September 22. In addition, escrow accounts will be required for all prorated property taxes and hazard insurance; however, no mortgage insurance is necessary. The buyer will also pay a full year's premium for hazard insurance to Rock of Gibraltar Insurance Company. A breakdown of expected settlement costs, provided by OKAY National Bank when Mr. and Mrs. Cleaver inspect the uniform settlement statement as required under RESPA on September 21, is as follows: I. Transactions between buyer-borrower and third parties: a. Recording fees--mortgage b. Real estate transfer tax c. Recording fees/document…

Answer 2

Question

Chapter 10, Problem 1LO

Summary Introduction

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Expert Solution & Answer

Explanation of Solution

Some of the basic principles of property are as follows:

Principle of utmost good faith: This principle states that the insured and the insurer are required to exchange true and complete information to each other.

Principle of Contribution: This principle states that if different insurance companies are providing coverage to the same property, then the actual amount of loss is divided proportionately among all the companies providing insurance.

Principle of Subrogation: In this principle, the insurance company posses the legal rights of the property insured.

Importance of property insurance:

Property insurance is crucial because it provides protection against different perils and calamities like windstorm, fire, vandalism, theft to the persona and real properties. An individual must give equal importance to property insurance as one gives to health and life insurances.

Types of exposure:

Exposure to property loss: When an individual is exposed to the physical loss of the property, this is exposure to property loss. Most of the property insurance contracts identify the perils that are the reasons behind the loss and the property covered.
Exposure to liability: When an individual is exposed to the losses through liability, this is known as exposure to liability. Some of the examples of liability exposure can be driving a car, being careless about some professional duties and others.

Principle of Indemnity: According to the principle of indemnity, the insured will not get compensated more than the economic loss he/she incurred. The objective of this principle is to get protected from the dishonest policyholders who try to get extra advantage from the insurance.

Co-insurance: A provision that requires the holder of the policy to purchase the insurance of an amount that is equivalent to the specified percentage of the property’s replacement value. This is co-insurance. This is to help insured bear the loss through the co-insurance.

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Answer 3

Question

Chapter 10, Problem 1LO

Summary Introduction

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Expert Solution & Answer

Explanation of Solution

Some of the basic principles of property are as follows:

Principle of utmost good faith: This principle states that the insured and the insurer are required to exchange true and complete information to each other.

Principle of Contribution: This principle states that if different insurance companies are providing coverage to the same property, then the actual amount of loss is divided proportionately among all the companies providing insurance.

Principle of Subrogation: In this principle, the insurance company posses the legal rights of the property insured.

Importance of property insurance:

Property insurance is crucial because it provides protection against different perils and calamities like windstorm, fire, vandalism, theft to the persona and real properties. An individual must give equal importance to property insurance as one gives to health and life insurances.

Types of exposure:

Exposure to property loss: When an individual is exposed to the physical loss of the property, this is exposure to property loss. Most of the property insurance contracts identify the perils that are the reasons behind the loss and the property covered.
Exposure to liability: When an individual is exposed to the losses through liability, this is known as exposure to liability. Some of the examples of liability exposure can be driving a car, being careless about some professional duties and others.

Principle of Indemnity: According to the principle of indemnity, the insured will not get compensated more than the economic loss he/she incurred. The objective of this principle is to get protected from the dishonest policyholders who try to get extra advantage from the insurance.

Co-insurance: A provision that requires the holder of the policy to purchase the insurance of an amount that is equivalent to the specified percentage of the property’s replacement value. This is co-insurance. This is to help insured bear the loss through the co-insurance.

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Answer 4

Question

Chapter 10, Problem 1LO

Summary Introduction

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Expert Solution & Answer

Explanation of Solution

Some of the basic principles of property are as follows:

Principle of utmost good faith: This principle states that the insured and the insurer are required to exchange true and complete information to each other.

Principle of Contribution: This principle states that if different insurance companies are providing coverage to the same property, then the actual amount of loss is divided proportionately among all the companies providing insurance.

Principle of Subrogation: In this principle, the insurance company posses the legal rights of the property insured.

Importance of property insurance:

Property insurance is crucial because it provides protection against different perils and calamities like windstorm, fire, vandalism, theft to the persona and real properties. An individual must give equal importance to property insurance as one gives to health and life insurances.

Types of exposure:

Exposure to property loss: When an individual is exposed to the physical loss of the property, this is exposure to property loss. Most of the property insurance contracts identify the perils that are the reasons behind the loss and the property covered.
Exposure to liability: When an individual is exposed to the losses through liability, this is known as exposure to liability. Some of the examples of liability exposure can be driving a car, being careless about some professional duties and others.

Principle of Indemnity: According to the principle of indemnity, the insured will not get compensated more than the economic loss he/she incurred. The objective of this principle is to get protected from the dishonest policyholders who try to get extra advantage from the insurance.

Co-insurance: A provision that requires the holder of the policy to purchase the insurance of an amount that is equivalent to the specified percentage of the property’s replacement value. This is co-insurance. This is to help insured bear the loss through the co-insurance.

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Answer 5

Chapter 10, Problem 1LO

Summary Introduction

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Expert Solution & Answer

Explanation of Solution

Some of the basic principles of property are as follows:

Principle of utmost good faith: This principle states that the insured and the insurer are required to exchange true and complete information to each other.

Principle of Contribution: This principle states that if different insurance companies are providing coverage to the same property, then the actual amount of loss is divided proportionately among all the companies providing insurance.

Principle of Subrogation: In this principle, the insurance company posses the legal rights of the property insured.

Importance of property insurance:

Property insurance is crucial because it provides protection against different perils and calamities like windstorm, fire, vandalism, theft to the persona and real properties. An individual must give equal importance to property insurance as one gives to health and life insurances.

Types of exposure:

Exposure to property loss: When an individual is exposed to the physical loss of the property, this is exposure to property loss. Most of the property insurance contracts identify the perils that are the reasons behind the loss and the property covered.
Exposure to liability: When an individual is exposed to the losses through liability, this is known as exposure to liability. Some of the examples of liability exposure can be driving a car, being careless about some professional duties and others.

Principle of Indemnity: According to the principle of indemnity, the insured will not get compensated more than the economic loss he/she incurred. The objective of this principle is to get protected from the dishonest policyholders who try to get extra advantage from the insurance.

Co-insurance: A provision that requires the holder of the policy to purchase the insurance of an amount that is equivalent to the specified percentage of the property’s replacement value. This is co-insurance. This is to help insured bear the loss through the co-insurance.

Answer 6

Chapter 10, Problem 1LO

Summary Introduction

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Expert Solution & Answer

Explanation of Solution

Some of the basic principles of property are as follows:

Principle of utmost good faith: This principle states that the insured and the insurer are required to exchange true and complete information to each other.

Principle of Contribution: This principle states that if different insurance companies are providing coverage to the same property, then the actual amount of loss is divided proportionately among all the companies providing insurance.

Principle of Subrogation: In this principle, the insurance company posses the legal rights of the property insured.

Importance of property insurance:

Property insurance is crucial because it provides protection against different perils and calamities like windstorm, fire, vandalism, theft to the persona and real properties. An individual must give equal importance to property insurance as one gives to health and life insurances.

Types of exposure:

Exposure to property loss: When an individual is exposed to the physical loss of the property, this is exposure to property loss. Most of the property insurance contracts identify the perils that are the reasons behind the loss and the property covered.
Exposure to liability: When an individual is exposed to the losses through liability, this is known as exposure to liability. Some of the examples of liability exposure can be driving a car, being careless about some professional duties and others.

Principle of Indemnity: According to the principle of indemnity, the insured will not get compensated more than the economic loss he/she incurred. The objective of this principle is to get protected from the dishonest policyholders who try to get extra advantage from the insurance.

Co-insurance: A provision that requires the holder of the policy to purchase the insurance of an amount that is equivalent to the specified percentage of the property’s replacement value. This is co-insurance. This is to help insured bear the loss through the co-insurance.

Answer 7

Chapter 10, Problem 1LO

Summary Introduction

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Answer 8

Expert Solution & Answer

Explanation of Solution

Some of the basic principles of property are as follows:

Principle of utmost good faith: This principle states that the insured and the insurer are required to exchange true and complete information to each other.

Principle of Contribution: This principle states that if different insurance companies are providing coverage to the same property, then the actual amount of loss is divided proportionately among all the companies providing insurance.

Principle of Subrogation: In this principle, the insurance company posses the legal rights of the property insured.

Importance of property insurance:

Property insurance is crucial because it provides protection against different perils and calamities like windstorm, fire, vandalism, theft to the persona and real properties. An individual must give equal importance to property insurance as one gives to health and life insurances.

Types of exposure:

Exposure to property loss: When an individual is exposed to the physical loss of the property, this is exposure to property loss. Most of the property insurance contracts identify the perils that are the reasons behind the loss and the property covered.
Exposure to liability: When an individual is exposed to the losses through liability, this is known as exposure to liability. Some of the examples of liability exposure can be driving a car, being careless about some professional duties and others.

Principle of Indemnity: According to the principle of indemnity, the insured will not get compensated more than the economic loss he/she incurred. The objective of this principle is to get protected from the dishonest policyholders who try to get extra advantage from the insurance.

Co-insurance: A provision that requires the holder of the policy to purchase the insurance of an amount that is equivalent to the specified percentage of the property’s replacement value. This is co-insurance. This is to help insured bear the loss through the co-insurance.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

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The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

To discuss: The basic principles and importance of property insurance, including types of exposure, indemnity and co-insurance

Explanation of Solution

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