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Owners Insurance - Lecture Notes | MTH 130, Study notes of Mathematics

Material Type: Notes; Professor: Martineau; Class: Modern Business Mathematics; Subject: Mathematics (MTH); University: Monroe Community College; Term: Unknown 1989;

Typology: Study notes

Pre 2010

Uploaded on 08/09/2009

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MTH 130 Modern Business Mathematics
Brigitte Martineau Section 12.1
Page 1 of 5
Owner’s Insurance
Why do we need owner’s insurance?
What item can we insure?
Who can buy owner’s insurance?
There are 2 types of owner’s insurance:
1. Full coverage owner’s policy:
Protect against losses from damage caused by…
2. Comprehensive owner’s policy:
Same coverage as in type 1
Liability insurance for protection against losses resulting…..
i.
ii.
pf3
pf4
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Brigitte Martineau Section 12.

Owner’s Insurance

Why do we need owner’s insurance?

What item can we insure?

Who can buy owner’s insurance?

There are 2 types of owner’s insurance:

  1. Full coverage owner’s policy:
    • Protect against losses from damage caused by…
  2. Comprehensive owner’s policy:
    • Same coverage as in type 1
    • Liability insurance for protection against losses resulting…..

i.

ii.

Brigitte Martineau Section 12.

What is a deductible?

Cost of insurance (also called ___________________) depends on:

Table 12-1.1  Rate are given in $ per $100 of insurance

Rate Class A B C D E F

Structure Stone Frame

Contents Stone Frame

Liability $0.04 $0.07 $0.10 $0.13 $0.16 $0.

Examples:

  1. The Langs own a frame house in class D. They want a comprehensive owner’s policy which will provide $100,000 coverage for the house, $50,000 coverage for the contents, and $200,000 liability insurance. Find their annual premium.
  2. Kamden Industries owns a stone building in class F. The company wants a comprehensive owner’s policy, which will provide $80,000 coverage for the building, $300,000 coverage for the contents, and $100,000 liability insurance. What will be the annual premium?

Brigitte Martineau Section 12.

How to cancel a policy?

You can cancel a policy before expiration date in two different ways:

  1. Policy cancelled by the Insurance Company:
  2. Policy cancelled by the owner:

Example :

  1. If the Langs in problem 1 and purchased an annual policy, determine the charge and refund if the policy is cancelled after then months by a) the insurance company and B) the Langs.

Settlement

When property is damaged, a claim is filed and a settlement is given.

The settlement is always the ______________ amount between the amount of loss or the amount of insurance.

Examples:

  1. A fire caused $28,000 damage to a house insured under a full coverage owner’s policy for $150,000. What settlement will the insurance company make?
  2. What if the damages were worth $195,000?

Brigitte Martineau Section 12.

  1. Banion Distributors has its warehouse insured under full coverage owner’s policies for $90,000 with Company A and $45,000 with Company B. If a storm caused $9000 damage to the warehouse, how much of the damage will each company pay?

Co-Insurance Clause

A co-insurance clause (or average clause) is a clause preventing property owners form being


The insurance company asks for a minimum amount of insurance in order to get a full settlement. If you do not have the required minimum, your settlement is calculated according to the following:

Settlement =

Example

  1. The Partons own a house valued at 150,000. Their owner’s policy provides $120, coverage on the house and also contains a 90% co-insurance clause. What settlement will the insurance company make for a damage claim of $27,