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Unit 1 The World of Insurance
Section 2.1
Homeowner’s and Renter’s Insurance
Objectives
After completing this section, you will be able to:
• Define the purposes of homeowner’s and renter’s insurance.
• Identify policy types.
• Describe flood and earthquake insurance.
• Identify what liability protection is provided by homeowner’s insurance.
• Determine how much homeowner’s insurance is enough.
Protecting Your Home and Yourself
Suppose the fire engines you heard roaring down the street were
responding to a house fire. The firefighters were able to prevent the
home’s destruction, but the fire caused a lot of damage. Property and
casualty insurance helps the family restore its home and possessions.
Property and casualty insurance protects policyholders against
financial loss associated with property damage or injury to others.
For most people, their home is their most valuable possession.
This is why carrying the right amount of homeowner’s insurance is so
important. Homeowner’s insurance is a form of property and casualty
insurance. It protects the home, its structures (like a detached garage),
and its contents against certain losses. This is “property” coverage. It
also provides liability protection for the policyholder and his or her
family. This is “casualty” coverage.
Terms
property and casualty
insurance
mortgage
replacement cost
cash value
depreciation
endorsement
umbrella policy
scheduling
For most people, a
house is the largest
investment they will
make. It is important to
protect the house, but
also to protect personal
property and to provide
liability protection.
Source: Shutterstock (Donald Joski)