Lesson 13 - Property Insurance & Natural Catastrophes

Major Coverages - Dwelling Building

Property insurance that covers the main house itself, coverage is based on property value

Major Coverages - Detached Private Structures

Property insurance that covers structures not attatched to dwelling like a shed (10% of dwelling coverage)

Major Coverages - Personal Property

Property insurance that covers the contents of your home, like furniture and appliances

Major Coverages - Additional Living Expenses

Property insurance that covers costs of hotel if home is being repaired (20% of dwelling coverage)

Major Coverages - Personal Liability

Property insurance that covers legal costs in case someone sues for damages/injury that occurred on your property

Major Coverages - Voluntary Medical Payments

Property insurance that covers minor medical costs if someone gets hurt on your property

Major Coverages - Voluntary Property Damage Payments

Property insurance that covers minor damage you cause to someone else's property

Minor Coverages - Fair Rental Value

Reimburses lost rental income if a previously insured rental unit becomes uninhabitable

Minor Coverages - Debris Removal

Property insurance that covers the cost of removing debris after a covered loss, like cleaning up after a flood

Minor Coverages - Fire Department Charges

Property insurance that covers the fees some fire departments charge for responding to calls

Minor Coverages - Inflation Protection

Property insurance that adjusts policy limits to keep up with inflation, ensuring adequate coverage over time

What is Comprehensive Coverage?

Insures the building and all its contents against all perils except those excluded

What is Broad Coverage?

Provides comprehensive protection for buildings while covering contents against specific perils

What is Named Perils Coverage?

Property insurance that insures the building and all of its contents for only the specific risks listed in the insurance contract

What is No Frills Coverage?

Basic insurance policy that does not meet normal standards, typically only offers fire protection

What is Replacement Cost Coverage?

The insurer will pay to repair or replace the dwelling and contents with materials of similar kind and quality.

What is a Personal Articles Floater?

Additional coverage that provides larger coverage limits for a single expensive item.

What are some common exclusions in Property Insurance?

Water damage, terrorism, nuclear hazards, wear and tear, freezing/thawing, tenant properties, and animal damage

What is Tenant’s Insurance?

Tailored for renters, protects personal belongings, provides liability coverage, covers living expenses during temporary relocation, and may include unit improvements.

What is Condominium Coverage?

Condo insurance for owners, covers personal belongings, liability, unit improvements, and often includes common area and loss assessment coverage.

In terms of natural catastrophes, what are Primary Perils?

Risks with severe loss potential that are well-monitored in developed insurance markets. Includes tropical cyclones, earthquakes, and blizzards.

In terms of natural catastrophes, what are Independent Secondary Perils?

Risks that are not well-monitored and are not included in current risk models. Includes river floods, torrential rainfall, and wildfires.

In terms of natural catastrophes, what are Dependent Secondary Perils?

Secondary effects of a primary peril, not always well-captured in primary peril modelling and not proportional to their severity potential. Includes hurricane-induced precipitation and fires after earthquakes.

In terms of natural catastrophes, what is the Coverage Gap?

The difference between economic losses and insured losses. Most of the time insured losses are less than the economic losses actually incurred.

What are Catastrophe Bonds?

Bonds that defer payments if catastrophic losses occur and exceed a set trigger, providing insurers funds to cover catastrophic losses and prevent insolvency. They may convert to stock and have high issuance costs.