Question

1.  For answering the question below, you can use your own home, your parents’ or a friend’s home, or just imagine your dream first home and location.

Your homeowners policy is about to be renewed.  It is written to cover your dwelling for its original construction cost.  The policy is a Homeowners form HO-3 and is standard in all respects.  The coverages are all standard percentages, and there are no endorsements or modifications to the policy.  What changes to this basic contract should you consider?

2.  You might be able to answer this one using your own dwelling, apartment, dorm room, etc.  If not, refer to #1 above.  Go to the www.rateyourrisk.org (Links to an external site.)Links to an external site. web site and take the "Risk of Burglary Test."   What changes can you make to decrease the likelihood of this type of crime?

3.  As the CEO of a property-casualty insurance company, how would another downturn in the economy, such as what happened from 2007-2010, especially in the housing market, affect your homeowners insurance business? What about insurers in areas at risk for natural disasters such as the Houston area or Florida?

4. How might changes in technology such as Smart Homes and the Internet of Things, Solar Panels, etc. affect the structure of homeowners insurance with respect to coverages and risk exposures?

Answer 1

1.  For answering the question below, you can use your own home, your parents’ or a friend’s home, or just imagine your dream first home and location.

Your homeowners policy is about to be renewed.  It is written to cover your dwelling for its original construction cost.  The policy is a Homeowners form HO-3 and is standard in all respects.  The coverages are all standard percentages, and there are no endorsements or modifications to the policy.  What changes to this basic contract should you consider?

Answer – In my view we should definitely relook the following changes in basic contract and request the insuring company to add following changes in the policy:

• I will request to include the coverage that help me to protect from natural disasters and any other natural calamity that can impact my house
• I will also request to provide coverage from theft, fire that can impact my house
• I will request them to cover any damages or loss that can be caused to my home due to mold, fungi, and other microbes
• I will request them to cover the damages and provide for any damages which will be caused by any animal

2.  You might be able to answer this one using your own dwelling, apartment, dorm room, etc.  If not, refer to #1 above.  Go to the www.rateyourrisk.org (Links to an external site.)Links to an external site. web site and take the "Risk of Burglary Test."   What changes can you make to decrease the likelihood of this type of crime?

Answer – We can do following this to reduce the chances of theft or Burglary in house:

• Use of Camera record or video surveillance outside my house, this will help to monitor any authorized presence of unknown human
• Will put barricading on the front of house and will use electric wire to protect
• Further will put thump impression at all gates, to which only authorized person can access.
• Finally, if there is break in any of the above protocols, I will use the technology which can automatically call and inform to nearest police station for help.

3.  As the CEO of a property-casualty insurance company, how would another downturn in the economy, such as what happened from 2007-2010, especially in the housing market, affect your homeowners insurance business? What about insurers in areas at risk for natural disasters such as the Houston area or Florida?

Answer – Any downturn in the economy due to slowdown has huge impact to my business, majorly following things happens in such cases:

• Drastic reduction in sale of insurance as people will lose their purchasing power and buying new insurance policy is last priority of the customer
• Difficulty in getting existing premium from the customers as they will find hard to pay their debts due to loss of job or reduction in salary
• There will be less house/property sales

Insurers find very difficult to operate in the areas which are prone to natural disasters as premium cost rise in those areas very drastically. Currently buying policies to protect home in such areas is very costly and attract huge premium, which results in attracting less customers and consequently less sales.

4. How might changes in technology such as Smart Homes and the Internet of Things, Solar Panels, etc. affect the structure of homeowners insurance with respect to coverages and risk exposures?

Answer

Changes in technology such Smart homes and internet of things are common things to be used in house these days and customer understand the cost and risk associated with using such technology, and therefore planning for buying homeowners are looking for the insurance which provides them full coverage in protecting associated risk with these items as well. Technology always comes with high risk in terms of implementation and re-use of such technology for future course. So companies should look for creating such policies which offer protection and security for such items as well.