insurance for consumer protection

Insurance for Consumer Protection

Insurance for Consumer Protection

What Every Agent Should Know

What Every Agent Should Know

Insurance Basicsfor Real Estate Licensees

Insurance Basicsfor Real Estate Licensees Risk Management

Impact on Real Estate Transactions

Insurance Contracts

Flood Insurance

Business Property Issues

Impact of Insurance Industry Changes

Insurance Fraud

Risk Management


Insurance Contracts

Flood Insurance

Business Property Issues

Impact of Insurance Industry Changes

Insurance Fraud

Chapter 1Chapter 1

Insurance Company BackgroundInsurance Company Background

Learning ObjectivesLearning Objectives

Name Situations That Cause Financial Problems for Property Owners

Identify Duties of State Insurance Departments

List Ways to Control Risk

Learn How to Transfer Risk by Buying Insurance

Explain Why to Purchase Insurance Before a Catastrophe

Name Situations That Cause Financial Problems for Property Owners

Identify Duties of State Insurance Departments

List Ways to Control Risk

Learn How to Transfer Risk by Buying Insurance

Explain Why to Purchase Insurance Before a Catastrophe

Risk ManagementRisk Management

Decision-Making Process Accept Exposure

Reduce Vulnerabilities

Mitigate Risk

Avoid Risk

Transfer Risk

Typical Questions

Decision-Making Process Accept Exposure

Reduce Vulnerabilities

Mitigate Risk

Avoid Risk

Transfer Risk

Typical Questions

Coverage NeededCoverage Needed

Damage to Real Property

Damage for Personal Property

Liability for Injury

Damage to Real Property

Damage for Personal Property

Liability for Injury

Risk ManagementRisk Management

Insurance Specialties Personal Lines

Commercial Lines

Excess and Surplus (E&S)

Real Estate Licensees Transaction Gatekeepers

Provide Guidance

Allow Consumers to Make Decisions

Insurance Specialties Personal Lines

Commercial Lines

Excess and Surplus (E&S)

Real Estate Licensees Transaction Gatekeepers

Provide Guidance

Allow Consumers to Make Decisions

Risk Control TechniquesRisk Control Techniques

Avoidance

Separate Exposures

Combine Exposure Units

• Personal Lines

• Commercial Lines

Sell the Property (Noninsurance

Transfer)

Avoidance

Separate Exposures

Combine Exposure Units

• Personal Lines

• Commercial Lines

Sell the Property (Noninsurance

Transfer)

Risk Control TechniquesRisk Control Techniques

Retain the Risk Self Insure

Higher Deductibles

Transfer the Risk Buy Insurance

Premiums Create Pool of Money

Retain the Risk Self Insure

Higher Deductibles

Transfer the Risk Buy Insurance

Premiums Create Pool of Money

Insurance CompaniesInsurance Companies State Insurance Regulators

Review Financial Records

Review Available Reserves

Determine Stability of Insurance Companies Admitted

Nonadmitted

State Insurance Regulators Review Financial Records

Review Available Reserves

Determine Stability of Insurance Companies Admitted

Nonadmitted

Insurance HistoryInsurance History

Early Fire Insurance

Influenced by Benjamin Franklin

Firemarks

Municipal Fire Companies

Early Fire Insurance

Influenced by Benjamin Franklin

Firemarks

Municipal Fire Companies

Regulating Insurance IndustryRegulating Insurance Industry

McCarran-Ferguson Act

Insurance Service Office (ISO)

State Insurance Commissions

Set Rates

Interpret Policy Language

Determine Reserves

Police Sales Activities of Company Representatives

McCarran-Ferguson Act

Insurance Service Office (ISO)

State Insurance Commissions

Set Rates

Interpret Policy Language

Determine Reserves

Police Sales Activities of Company Representatives

Regulators AssociationRegulators Association

National Association of Insurance Commissioners (NAIC)

Provides Forum for State Regulators Protect Public Interest

Promote Competitive Markets

Facilitate Fair and Equitable Treatment of Insurance Consumers

Promote Reliability, Solvency, and Financial Solidity of Insurance Institutions

National Association of Insurance Commissioners (NAIC)

Provides Forum for State Regulators Protect Public Interest

Promote Competitive Markets

Facilitate Fair and Equitable Treatment of Insurance Consumers

Promote Reliability, Solvency, and Financial Solidity of Insurance Institutions

Insurance BasicsInsurance Basics Policy Considerations

Coverage Required

Advance Purchase Required

Cancellation

Deductibles

Full Replacement versus Actual Cash Value

Filing a Claim

Services to Expect

Policy Considerations Coverage Required

Advance Purchase Required

Cancellation

Deductibles

Full Replacement versus Actual Cash Value

Filing a Claim

Services to Expect

Chapter 2Chapter 2

Understanding Insurance ContractsUnderstanding Insurance Contracts


Compare Aleatory Contract to Contract of Adhesion

Explain Insurable Interest and Insured Value

Discuss Purpose of Coinsurance Clauses

Define Redlining

Name Components of an Insurance Policy

Compare Aleatory Contract to Contract of Adhesion

Explain Insurable Interest and Insured Value

Discuss Purpose of Coinsurance Clauses

Define Redlining

Name Components of an Insurance Policy

Understanding Insurance Contracts

Understanding Insurance Contracts

Contract Essentials Insured Is Property Owner

Insurer Is Insurance Company

Both Parties Must Comply

Generally May Not Be Assigned

Definite Beginning and Ending Dates

Contract Essentials Insured Is Property Owner

Insurer Is Insurance Company

Both Parties Must Comply

Generally May Not Be Assigned

Definite Beginning and Ending Dates

Unique IssuesUnique Issues Aleatory Contracts

Performance Depends on Future Event

Contingency May Not Occur

Contract of Adhesion Insurance Company Writes

Contract

No Negotiation

Aleatory Contracts Performance Depends on

Future Event

Contingency May Not Occur

Contract of Adhesion Insurance Company Writes

Contract

No Negotiation

Kick Me

Issues Unique to Insurance Contracts


Strict Construction Any Ambiguity

Construed Against Party Drawing Up Contract

Insurer Is Responsible

Strict Construction Any Ambiguity

Construed Against Party Drawing Up Contract

Insurer Is Responsible



Contract of Indemnity Compensated Only

for Loss Sustained

Provides Reimbursement, Not Financial Gain

Insurable Interest Insured Person Must

Have Legitimate Financial Interest

Must Be Present at Time of Loss

Contract of Indemnity Compensated Only

for Loss Sustained

Provides Reimbursement, Not Financial Gain

Insurable Interest Insured Person Must

Have Legitimate Financial Interest

Must Be Present at Time of Loss



Insured Value Land May Not Be Insured

Insured Value Is Total Value of Claim

Deductibles Initial Portion of Claim Paid by Insured

Discourages Frivolous Filings

Insured Value Land May Not Be Insured

Insured Value Is Total Value of Claim

Deductibles Initial Portion of Claim Paid by Insured

Discourages Frivolous Filings



Coinsurance Clause Prevents Underinsurance

Amount Paid Based on Percentage of Insurance to Value

Penalties for Underinsurance

Contract in the Public Interest Insurance Necessary Today

Prohibits Redlining

Coinsurance Clause Prevents Underinsurance

Amount Paid Based on Percentage of Insurance to Value

Penalties for Underinsurance

Contract in the Public Interest Insurance Necessary Today

Prohibits Redlining



Guaranteed Replacement Replace as It Had Been

Percentage Caps Today

Special Form Covers Everything Unless Excluded

A Few Exceptions

Named Peril Coverage for Perils Named in Policy

Flood Insurance Always Named Peril

Guaranteed Replacement Replace as It Had Been

Percentage Caps Today

Special Form Covers Everything Unless Excluded

A Few Exceptions

Named Peril Coverage for Perils Named in Policy

Flood Insurance Always Named Peril

Basic PoliciesBasic Policies

Endorsements

Available Coverages Vary

Cost

Form of Ownership

Occupancy

Real Estate Licensees

Know Differences

Provide Names

Endorsements

Available Coverages Vary

Cost

Form of Ownership

Occupancy

Real Estate Licensees

Know Differences

Provide Names

Overview of an Insurance PolicyOverview of an Insurance Policy Agreement to Insure

Declarations Page

Definitions

Property Coverage Terms

Perils Insured Against Exclusions

Conditions

Endorsements

Agreement to Insure

Declarations Page

Definitions

Property Coverage Terms

Perils Insured Against Exclusions

Conditions

Endorsements

Overview of an Insurance PolicyOverview of an Insurance Policy

Liability Provisions Injury to Others

Insurer Will Defend for Covered Events

Legal Actions by Third Party Bodily Injury

Damage to Others’ Property

Defend or Pay

Insured Has No Say in Matter

Liability Provisions Injury to Others

Insurer Will Defend for Covered Events

Legal Actions by Third Party Bodily Injury

Damage to Others’ Property

Defend or Pay

Insured Has No Say in Matter

Chapter 3Chapter 3

Types of Insurance Policies and Coverage

Types of Insurance Policies and Coverage


Identify Insurance Problems With Vacant or Rented Homes

Name Perils Covered by Special Form Policy

Differentiate Among HO-1, HO-2, HO-3, HO-4, and HO-6

List Scheduled Personal Property Items

Explain Why Three Policies Are Necessary for Condo Rentals

Identify Insurance Problems With Vacant or Rented Homes

Name Perils Covered by Special Form Policy

Differentiate Among HO-1, HO-2, HO-3, HO-4, and HO-6

List Scheduled Personal Property Items

Explain Why Three Policies Are Necessary for Condo Rentals

Special Form PoliciesSpecial Form Policies Special Form Policies

Not “All Risks”

Physical Damage Not Excluded

Vary From Company to Company, State to state

Individual Property Issues How Property Used

Who Owns What

What Needs to Be Insured

Special Form Policies Not “All Risks”

Physical Damage Not Excluded

Vary From Company to Company, State to state

Individual Property Issues How Property Used

Who Owns What

What Needs to Be Insured

Special Real Estate SituationsSpecial Real Estate Situations

Vacant Homes Sellers Must Confirm Coverage with Agent

Coverage Reduced within Time Frame

Rental While Home Is On Market Nightmares!

Owner/Occupant Advantages Disappear

Dual Use Dwellings Days Occupied

Be Honest

Vacant Homes Sellers Must Confirm Coverage with Agent

Coverage Reduced within Time Frame

Rental While Home Is On Market Nightmares!

Owner/Occupant Advantages Disappear

Dual Use Dwellings Days Occupied

Be Honest

Owner Occupant PoliciesOwner Occupant Policies

HO-1 (Basic Fire Policy)

HO-2 (Nonrental Secondary Residence Policy)

HO-3 (Homeowners’ Policy)

HO-6 (Condominium Policy)

Flood Insurance ALWAYS a Separate Policy

HO-1 (Basic Fire Policy)

HO-2 (Nonrental Secondary Residence Policy)

HO-3 (Homeowners’ Policy)

HO-6 (Condominium Policy)

Flood Insurance ALWAYS a Separate Policy

Policy for Owner-OccupantsPolicy for Owner-Occupants

HO-1 (Basic Fire) Bare Bones

Named Peril (Fire and Lightning Damage)

Some Limited Endorsements Available

HO-1 (Basic Fire) Bare Bones

Named Peril (Fire and Lightning Damage)

Some Limited Endorsements Available


HO-2 (Nonrental Secondary Residence)

Hunting Lodge, Beach Home

Stepped-Up HO-1

Named Peril

Purchase Additional Endorsements

HO-2 (Nonrental Secondary Residence)

Hunting Lodge, Beach Home

Stepped-Up HO-1

Named Peril

Purchase Additional Endorsements


HO-3 Homeowners’ Policy

Special Form

ONLY for Owner-Occupants

Covers Personal Liability

Most For the Money

HO-3 Homeowners’ Policy

Special Form

ONLY for Owner-Occupants

Covers Personal Liability

Most For the Money


HO-6 (Condo Policy)

Tailored to Meet Association By-Laws

Owner Owns Interior

Shared Ownership for Common Areas

Different Insurance Needs

HO-6 (Condo Policy)

Tailored to Meet Association By-Laws

Owner Owns Interior

Shared Ownership for Common Areas

Different Insurance Needs

Basic HO-3 CoveragesBasic HO-3 Coverages Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property Actual Cash Value (ACV) or

Depreciated Amount

Replacement Cost Coverage

Scheduled Personal Property (SPP)

Coverage A: Dwelling

Coverage B: Other Structures

Coverage C: Personal Property Actual Cash Value (ACV) or

Depreciated Amount

Replacement Cost Coverage

Scheduled Personal Property (SPP)

Basic HO-3 CoveragesBasic HO-3 Coverages

Coverage D, Loss of Use Partial Loss

Total Loss

Coverage E, Personal Liability Personal Umbrella Policy

Exclusions for Business Use

Special Situations (e.g., Golf Cart Use)

Coverage D, Loss of Use Partial Loss

Total Loss

Coverage E, Personal Liability Personal Umbrella Policy

Exclusions for Business Use

Special Situations (e.g., Golf Cart Use)

Basic HO-3 CoveragesBasic HO-3 Coverages

Coverage F, Medical Payments No-Fault Medial Coverage

Invited or Noninvited Guests

Exclusions

• Housekeepers

• Tree Trimmers

• Lawn Care Personnel

Coverage F, Medical Payments No-Fault Medial Coverage

Invited or Noninvited Guests

Exclusions

• Housekeepers

• Tree Trimmers

• Lawn Care Personnel

Types of Property InsuredTypes of Property Insured

Town House Own Land Above,

Below, and Behind

HO-3

Cooperative Leaseholder Is

Stockholder

Coop Association Owns Building

Ownership of Fixtures Vary

Town House Own Land Above,

Below, and Behind

HO-3

Cooperative Leaseholder Is

Stockholder

Coop Association Owns Building

Ownership of Fixtures Vary

Types of Property InsuredTypes of Property Insured

True Condominium Single Entity

Bare Walls In

Condominium Master Policy

Unit Assessment Insurance

True Condominium Single Entity

Bare Walls In

Condominium Master Policy

Unit Assessment Insurance

HO-6 (Condominium Policy)HO-6 (Condominium Policy)

Building Alterations and Additions Original Coverage

Additional Endorsement

Valuable Additions to Standard Coverage Water and Sewer Backup

Earthquake Insurance

Personal Articles Floater or Scheduled Personal Property

Building Alterations and Additions Original Coverage

Additional Endorsement

Valuable Additions to Standard Coverage Water and Sewer Backup

Earthquake Insurance

Personal Articles Floater or Scheduled Personal Property


Separate Policies Umbrella Liability

Flood Insurance

Loss Assessment Coverage

Assessments Not Covered Improvements

Damages Above the Limits

Debris Cleanup

Separate Policies Umbrella Liability

Flood Insurance

Loss Assessment Coverage

Assessments Not Covered Improvements

Damages Above the Limits

Debris Cleanup


Separate Policies Needed for Association

Coverage for Investors and Their Tenants Master Policy

Renters’ Policy

HO-6 Policy Purchased by Owner

Separate Policies Needed for Association

Coverage for Investors and Their Tenants Master Policy

Renters’ Policy

HO-6 Policy Purchased by Owner

Policies Available for Rental PropertiesPolicies Available for Rental Properties

HO-4 (Renters’ Policy) Excludes Dwelling

Limits Coverage to Renters’ Personal Property and Liability Exposures

Rental Home or Landlord’s Policy Little Personal Property Coverage

Written in Personal Lines

Business Properties

Other Structures

HO-4 (Renters’ Policy) Excludes Dwelling

Limits Coverage to Renters’ Personal Property and Liability Exposures

Rental Home or Landlord’s Policy Little Personal Property Coverage

Written in Personal Lines

Business Properties

Other Structures

Personal Property Used for Business

Personal Property Used for Business

Two Exclusions Excludes Anything Used At All for Business

Limits Coverage to $250

Correct These Limits Adaptable Electronic Apparatus Coverage

Increased Limits on Business Property

Personal Liability for the Home Office No Coverage for

Business from Home

Commercial Insurance Required

Two Exclusions Excludes Anything Used At All for Business

Limits Coverage to $250

Correct These Limits Adaptable Electronic Apparatus Coverage

Increased Limits on Business Property

Personal Liability for the Home Office No Coverage for

Business from Home

Commercial Insurance Required

Chapter 4Chapter 4

Floods and Other HO ExclusionsFloods and Other HO Exclusions


Define Flooding

Name Causes of Flooding

Explain Circumstances When Lender Must Require Flood Insurance

Discuss Assistance Provided by Some States

Identify Areas Prone to Earthquakes and Volcanic Action

Define Flooding

Name Causes of Flooding

Explain Circumstances When Lender Must Require Flood Insurance

Discuss Assistance Provided by Some States

Identify Areas Prone to Earthquakes and Volcanic Action

Property DamageProperty Damage

Fires

Floods

Earthquakes

Others Requiring Special Insurance

Tornadoes

Volcanoes

Terrorism

Fires

Floods

Earthquakes

Others Requiring Special Insurance

Tornadoes

Volcanoes

Terrorism

FloodsFloods

Flooding Definitions Overflow of Inland or Tidal Waters

Accumulation or Runoff of Surface Waters

Mudflows Caused by Flooding

Everyone Lives in a Flood Zone Every State

Some Floods Are Multistate

Flooding Definitions Overflow of Inland or Tidal Waters

Accumulation or Runoff of Surface Waters

Mudflows Caused by Flooding

Everyone Lives in a Flood Zone Every State

Some Floods Are Multistate

Special Flood Hazard Areas(SFHAs)

Special Flood Hazard Areas(SFHAs)

Determined by Flood History and Location

Used to Determine Flood Insurance Premiums

Zones A Inland Areas

Zones V Coastal Areas

Determined by Flood History and Location

Used to Determine Flood Insurance Premiums

Zones A Inland Areas

Zones V Coastal Areas



For Federally-Related Loans

Before Quote Elevation Certificate

Community Member

Flood Zone

Base Flood Elevation (BFE)

Lowest Floor Elevation; Qualified Openings?

Year that Dwelling Was Built

Can “Assign” Flood Insurance Policy to Buyer

For Federally-Related Loans

Before Quote Elevation Certificate

Community Member

Flood Zone

Base Flood Elevation (BFE)

Lowest Floor Elevation; Qualified Openings?

Year that Dwelling Was Built

Can “Assign” Flood Insurance Policy to Buyer

Major Causes of FloodsMajor Causes of Floods

Hurricanes

Storm Damages Increasing

Tidal Surges Cause Most Damage

Homeowners’ Insurance Excludes Floods

Hurricane Warnings and Watches Affect Real Estate Closings

Hurricanes Impact the Insurance Industry

Hurricanes

Storm Damages Increasing

Tidal Surges Cause Most Damage

Homeowners’ Insurance Excludes Floods

Hurricane Warnings and Watches Affect Real Estate Closings

Hurricanes Impact the Insurance Industry

Other Causes of FloodingOther Causes of Flooding

Water Main Breaks

Considered Surface Water

Not Covered by Homeowners

or Flood Insurance

Storm Water Runoff

Dam Bursts

Water Main Breaks

Considered Surface Water

Not Covered by Homeowners

or Flood Insurance

Storm Water Runoff

Dam Bursts

Teton Dam Burst – Utah usbr.govTeton Dam Burst – Utah usbr.gov

Flood InsuranceFlood Insurance

Required for Federally-Related Transaction

If Located in Special Flood Hazard Area (SFHA)

Burden Placed on Lenders

Required for Federally-Related Transaction

If Located in Special Flood Hazard Area (SFHA)

Burden Placed on Lenders

HUD Statement RequirementsHUD Statement Requirements

Flood Certificate Required Special Flood Hazard Area (SFHA)

OR

Nonspecial Flood Hazard Area

If SFHA Flood Insurance Required

Elevation Certificate Required for Quote

Every Property Can Flood

Flood Certificate Required Special Flood Hazard Area (SFHA)

OR

Nonspecial Flood Hazard Area

If SFHA Flood Insurance Required

Elevation Certificate Required for Quote

Every Property Can Flood

Lenders Require Flood Insurance

Lenders Require Flood Insurance

Any Federally Related Loans

Secured by Property in A, V, AV

Enforced by FDIC

Lenders May Lose FDIC Insurance

Any Federally Related Loans

Secured by Property in A, V, AV

Enforced by FDIC

Lenders May Lose FDIC Insurance

Katrina - Biloxi, Miss fema.govKatrina - Biloxi, Miss fema.gov

National Flood Insurance ProgramNational Flood Insurance Program Federally-Backed Flood Insurance

Required for Federally Related Loans

Enforced by FDIC

Premium Discounts Available

Community Must Implement Floodplain Regulations

Only Covers Flooding

Federally-Backed Flood Insurance Required for Federally

Related Loans

Enforced by FDIC

Premium Discounts Available

Community Must Implement Floodplain Regulations

Only Covers FloodingUSGS.GOV

National Flood Insurance Program

National Flood Insurance Program

Community Rating System (CRS) Offers Premium Reductions

Public Information

Floodplain Mapping and Regulations

Flood Damage Reduction Measures

Flood Preparedness Criteria

Community Rating System (CRS) Offers Premium Reductions

Public Information

Floodplain Mapping and Regulations

Flood Damage Reduction Measures

Flood Preparedness Criteria

Flood Coverage Requirements Flood Coverage Requirements

Excess Water Result from Unusual and Rapid Accumulation

Affecting More Than One Property

Temporary

Inundation of Normally Dry Land

Source Must Be Defined in Policy and Sudden for Insured

Excess Water Result from Unusual and Rapid Accumulation

Affecting More Than One Property

Temporary

Inundation of Normally Dry Land

Source Must Be Defined in Policy and Sudden for Insured

Flood Insurance CoverageFlood Insurance Coverage

Rising Water or Swell Building Property

Construction Materials

Personal Property as Contents

Debris Demolition and Removal Coverage

Does NOT Cover All Water-Related Problems

Rising Water or Swell Building Property




Does NOT Cover All Water-Related Problems

Flood Insurance ClaimsFlood Insurance Claims Losses Covered by Flood Insurance

Building Property




Losses NOT Covered by Flood Insurance

Losses Covered by Flood Insurance Building Property




Losses NOT Covered by Flood Insurance

Rapid River Flood, 1972Rapid River Flood, 1972

Flood Insurance CrisisFlood Insurance Crisis

Paying Out More than Taking In Canceling Policies

Increasing Premiums

More Carry Flood Insurance

Any License Insurance Agent Can Write Policy Write Excess Limits with Private Insurance

Policy Not Canceled When NFIP Pays Claim

Paying Out More than Taking In Canceling Policies

Increasing Premiums

More Carry Flood Insurance

Any License Insurance Agent Can Write Policy Write Excess Limits with Private Insurance

Policy Not Canceled When NFIP Pays Claim

State Assistance ProgramsState Assistance Programs

Joint Underwriting Associations (JUAs)

Programs Vary

Joint Underwriting Associations (JUAs)

Programs Vary

Other Catastrophic EventsOther Catastrophic Events

Earthquakes Special Rider or Endorsement Needed

Earthquake Insurance Considerations

Earthquake Insurance Costs

Volcanoes Few Definitions

Little Interest by Insurance Companies

Earthquakes Special Rider or Endorsement Needed

Earthquake Insurance Considerations

Earthquake Insurance Costs

Volcanoes Few Definitions

Little Interest by Insurance Companies

Acts of TerrorismActs of Terrorism Terrorism Risk

Insurance Act (TRIA) Applies to Terrorist

Event Causing $5M or More

Included in Most Commercial Policies

Homeowners Include Under Special Endorsement

Terrorism Risk Insurance Act (TRIA) Applies to Terrorist

Event Causing $5M or More

Included in Most Commercial Policies

Homeowners Include Under Special Endorsement

Chapter 5Chapter 5

Preparing for Disasters and Filing Claims

Preparing for Disasters and Filing Claims


Describe Importance of Off-Site Storage of Important Documents

Plan a Disaster Checklist

List Supplies to Stockpile

Summarize Information to Tenants

Explain Importance of Securing Property

Describe Importance of Off-Site Storage of Important Documents

Plan a Disaster Checklist

List Supplies to Stockpile

Summarize Information to Tenants

Explain Importance of Securing Property

Basic Insurance ResponsibilitiesBasic Insurance Responsibilities

Maintain the Right Policy

Avoid Nonrenewal or Cancellation

Avoid Filing Claims

Maintain Adequate Coverage

Know the Deductible

Maintain Inventory Lists

Maintain the Right Policy

Avoid Nonrenewal or Cancellation

Avoid Filing Claims

Maintain Adequate Coverage

Know the Deductible

Maintain Inventory Lists

Preparing for a DisasterPreparing for a Disaster

Recordkeeping Systems Record Backups and Protection

Insurance Policies

Contact Information

Recordkeeping Systems Record Backups and Protection

Insurance Policies

Contact Information

Preparing for a DisasterPreparing for a Disaster

Disaster Checklist

Office and Administrative Tasks

Supplies and Equipment

Building and Grounds

Codes and Policy Requirements Warnings to Tenants

Renter’s Insurance Issues

Disaster Checklist

Office and Administrative Tasks

Supplies and Equipment

Building and Grounds

Codes and Policy Requirements Warnings to Tenants

Renter’s Insurance Issues

Steps to Perform After a Disaster


Secure the Property

From Intruders

From Further Damage

Possibly from Tenants

Temporary Repairs

Photograph the Damage

Document Receipts

Assessing the Damage

Secure the Property

From Intruders

From Further Damage

Possibly from Tenants

Temporary Repairs

Photograph the Damage

Document Receipts

Assessing the Damage



Contact All Relevant Parties Emergency Personnel

Insurance Carrier

Owners

Tenants

Contractors

Employees

Utility Companies

Others?

Establish a Command Center

Secure Records

Contact All Relevant Parties Emergency Personnel

Insurance Carrier

Owners

Tenants

Contractors

Employees

Utility Companies

Others?

Establish a Command Center

Secure Records

Insurance ClaimsInsurance Claims

Deciding to File a Claim Document Damage

Make Temporary Repairs

Get Estimates

Assess personal Property Losses

Keep Records

Be Patient

Deciding to File a Claim Document Damage

Make Temporary Repairs

Get Estimates

Assess personal Property Losses

Keep Records

Be Patient

Chapter 6Chapter 6

Working with Insurance AgentsWorking with Insurance Agents

Learning ObjectivesLearning Objectives Compare Independent Agents to Captive

Agents (Direct Writers)

Identify Licensing Requirements for Insurance Agents

List Prohibited Activities for Insurance Agents

Discuss Topics Insurance Agents Should Explain to Residential Buyers

Explain Importance of Insurance Availability Contingency in Purchase Agreement

Compare Independent Agents to Captive Agents (Direct Writers)

Identify Licensing Requirements for Insurance Agents

List Prohibited Activities for Insurance Agents

Discuss Topics Insurance Agents Should Explain to Residential Buyers

Explain Importance of Insurance Availability Contingency in Purchase Agreement

Types of Insurance AgentsTypes of Insurance Agents

Independent Agents

Captive Agents and Direct Writers

Independent Agents

Captive Agents and Direct Writers

Agent Licensing RequirementsAgent Licensing Requirements

Successfully Pass State Insurance Exam

Generally Complete Continuing Education Requirements

Successfully Pass State Insurance Exam

Generally Complete Continuing Education Requirements

Professional DesignationsProfessional Designations

Voluntary

Offered by Trade Associations

Not Required by State Licensing Requirements

Require Additional Study

Voluntary

Offered by Trade Associations

Not Required by State Licensing Requirements

Require Additional Study

Insurance in Real Estate Transactions

Insurance in Real Estate Transactions

Real Estate Licensees Direct Buyers to Insurance Agents

Encourage Honesty

Be Aware of Contingency Implications

Insurance Agents Thoroughly Explain Insurance Basics

Proactive in Contacting Tenants

Real Estate Licensees Direct Buyers to Insurance Agents

Encourage Honesty

Be Aware of Contingency Implications

Insurance Agents Thoroughly Explain Insurance Basics

Proactive in Contacting Tenants

Policy ListPolicy List

Important Issues Policy Limits for Theft

Other Limits (Business Property)

Replacement Costs

Deductibles

Trees

Home Must Be Owner-Occupied

Additional Coverages

Important Issues Policy Limits for Theft

Other Limits (Business Property)

Replacement Costs

Deductibles

Trees

Home Must Be Owner-Occupied

Additional Coverages

Insurance Agent GuidelinesInsurance Agent Guidelines

Prohibited Activities

Blank Applications

Rebates

Gifts

Prohibited Activities

Blank Applications

Rebates

Gifts

Insurance Agent GuidelinesInsurance Agent Guidelines

Permitted Activities No Minimum Amount of Production

to Enter

All Agents May Share Equally

Permitted Activities No Minimum Amount of Production

to Enter

All Agents May Share Equally

Obtaining a Price QuoteObtaining a Price Quote

States Regulate Insurance Companies Companies May File for Deviations and

Discounts

Availability and Cost Affected by Claim History of Applicant and Property

Importance of Insurance Contingency in Purchase Agreement

States Regulate Insurance Companies Companies May File for Deviations and

Discounts

Availability and Cost Affected by Claim History of Applicant and Property

Importance of Insurance Contingency in Purchase Agreement

Chapter 7Chapter 7

Recent Changes and Industry TrendsRecent Changes and Industry Trends


Name Stringent Underwriting Guidelines

Compare Guaranteed Replacement Cost vs. Replacement Caps

Discuss Use of Credit Scores and Use of Insurance Financial Scores (IFS)

Explain Why IFS and Previous Claims History Affect Buyers

Describe Impact of Comprehensive Loss Underwriting Exchange (CLUE) on Listings

Name Stringent Underwriting Guidelines

Compare Guaranteed Replacement Cost vs. Replacement Caps

Discuss Use of Credit Scores and Use of Insurance Financial Scores (IFS)

Explain Why IFS and Previous Claims History Affect Buyers

Describe Impact of Comprehensive Loss Underwriting Exchange (CLUE) on Listings

Catastrophic LossesCatastrophic Losses

Most Costly Catastrophes

Acts of God

Insurance Industry Ability to Pay Claims

Most Costly Catastrophes

Acts of God

Insurance Industry Ability to Pay Claims

Changes as a Result of Catastrophic Losses

Changes as a Result of Catastrophic Losses

Replacement Caps

Premiums Closely Aligned with Potential Total Loss

Replacement Caps

Premiums Closely Aligned with Potential Total Loss

Stronger Underwriting Guidelines

Stronger Underwriting Guidelines

Credit Scoring and IFS

Fair Credit Reporting Act (FCRA)

How Mortgage Companies Use

Credit Scores

How Insurance

Companies Use IFS

Credit Scoring and IFS

Fair Credit Reporting Act (FCRA)

How Mortgage Companies Use

Credit Scores

How Insurance

Companies Use IFS

Changes in IndustryChanges in Industry Impact of Claims History

Comprehensive Loss Underwriting Exchange (CLUE)

Impact of Claims History Comprehensive Loss Underwriting

Exchange (CLUE)

Higher Deductibles

Property Inspection Prior to Issuing Policy

Prior Water-Related Claims

Higher Deductibles

Property Inspection Prior to Issuing Policy

Prior Water-Related Claims

I Have noCLUE



Sellers Obtain CLUE Early to Correct Any Errors

Insurance Companies Interpret Data Differently

Buyers Obtain Credit Scores and Insurance

Scores Early

Insurance Agent Can File for CLUE Report of Property

Sellers Obtain CLUE Early to Correct Any Errors

Insurance Companies Interpret Data Differently

Buyers Obtain Credit Scores and Insurance

Scores Early

Insurance Agent Can File for CLUE Report of Property



Contingency Clauses

Monthly Insurance Premiums Impact Buyers’ Debt-to-Income Ratios

Buyer May Not Be Able to Buy

Report Any Errors

Contingency Clauses

Monthly Insurance Premiums Impact Buyers’ Debt-to-Income Ratios

Buyer May Not Be Able to Buy

Report Any Errors

insurance for consumer protection

Documents

insurance companyboth

financial problems

property ownerinsurer

real propertydamage

responsibleissues unique

time of lossissues unique

personal propertyliability

actual cash valuefiling