Principles of Risk Management and Insurance Essay

Principles of Risk Management and Insurance - Essay Example For the shed in the backyard, it is covered up to $15,000 (10% of Coverage A which is $150,000). Personal property can only be covered up to $75,000(50% of Coverage A which is $150,000). Additional living expense for living in a rented apartment until their home is rebuilt is covered up to $45,000 which is 30% of coverage A. The home office computer can only be covered up to $1,500 which is stated in the special limits of liability clause. Should the Grangers will lose the case against their neighbors (being sued for not controlling their son), their personal liability coverage is only up to $100,000. Before coverage, the Grangers are also required to pay for the deductible of $250 as stated in their policy. 2. Why is it important for an insurer to consider each factor? a) The credit score or credit worthiness of the insured is important for an insurer or underwriter in considering the homeowner’s premium for insurance companies Approximates the probability of an insurer makin g its claim against their possibility based on their credit score or history of borrowing and repayment. Credit score also is a good determinant for insurance companies to determine the individual’s capacity to pay their insurance premiums.