6.4
Jan 20, 2018
6.4
Property Owners Insurance PremiumsTerms to know:
Homeowner InsuranceDwellingOther StructuresPersonal PropertyAdditional Living ExpensePersonal LiabilityMedical Payments to OthersReplacement Cost PoliciesInsurance Premium
Insurance Premium (Example)You insure your house for $89,000 at an annual
rate of $0.51 per $100.
1.Find the number of $100 units in the insured amount
$89,000/$100 = 890 (# of $100 units)
2.# of $100 units x rate = premium (round to nearest $)
890 x $0.51 = $453.90 = $454
Insurance Premium (A)You insure your house for $61,000 at an annual
rate of $0.46 per $100.
1.Find the number of $100 units in the insured amount
$61,000/$100 = 610 (# of $100 units)
2.# of $100 units x rate = premium (round to nearest $)
610 x $0.46 = $280.60 = $281
Insurance Premium (B)You insure your house for $43,000 at an annual
rate of $0.74 per $100.
1.Find the number of $100 units in the insured amount
$43,000/$100 = 430 (# of $100 units)
2.# of $100 units x rate = premium (round to nearest $)
430 x $0.74 = $318.20= $318
Renters Insurance PremiumsRenters PolicyExample….(page 244)Check your understanding ( page 244-245)
Collecting on Insurance ClaimsTerms/Formulas to know:
DeductibleFiling a claimAdjusterFace valueCoinsurance Policy
Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss
Collecting on Insurance Claims (Example)The Face value of your policy is $30,000 with
a $1,000 deductible. If your loss was $7,800 how much would you receive from the insurance company?
Loss – Deductible = Amount insurance company pays
$7,800 - $1,000 = $6,800
Collecting on Insurance Claims (E)The Face value of your policy is $18,000 with
a $250 deductible. If your loss was $10,200 how much would you receive from the insurance company?
Loss – Deductible = Amount insurance company pays
$10,200 - $250 = $9,950
Collecting on Insurance Claims (F)The Face value of your policy is $70,000 with
a $500 deductible. If your loss was $82,000 how much would you receive from the insurance company?
Loss – Deductible = Amount insurance company pays
$70,000 - $500 = $69,500
Collecting on Insurance Claims (Example 2)Building value of $50,000 is insured for $24,000 under
an 80% coinsurance policy. The building had damages of $7,200. What amount did the insurance company pay?
Value x coinsurance % = required amount of coinsurance
$50,000 x 80% = $40,000
Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss
($24,000/$40,000) x $7,200 = $4,320
Collecting on Insurance Claims (G)Building value of $65,000 is insured for $41,600 under
an 80% coinsurance policy. The building had damages of $4,000. What amount did the insurance company pay?
Value x coinsurance % = required amount of coinsurance
$65,000 x 80% = $52,000
Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss
($41,600/$52,000) x $4,000 = $3,200
Collecting on Insurance Claims (H)Building value of $90,000 is insured for $46,800 under
an 80% coinsurance policy. The building had damages of $42,000. What amount did the insurance company pay?
Value x coinsurance % = required amount of coinsurance
$90,000 x 80% = $72,000
Amount paid by insurance company = (Face value/Required Amount of Coinsurance) x Loss
($46,800/$72,000) x $42,000 = $27,300