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Insuring Personal Residential Homeowners 2000 Program July 1, 2011 Austin, TX.

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Presentation on theme: "Insuring Personal Residential Homeowners 2000 Program July 1, 2011 Austin, TX."— Presentation transcript:

1 Insuring Personal Residential Homeowners 2000 Program July 1, 2011 Austin, TX

2 Learning Objectives They are found at the beginning of each section and will be reviewed as each section is introduced. (c) The Society of CISR, Inc. 1-2

3 Course Focus Multiple Homeowners Forms will be briefly discussed Our primary focus is ISOs Homeowners 3- Special Form (HO 3) (c) The Society of CISR, Inc. 3

4 Personal Residential Concepts Learning Objectives Policy Overview and Eligibility 1. Determine the eligibility of specific risks for an Insurance Services Office (ISO) Homeowners Policy. 2. Compare the various ISO Homeowners Policy Forms to determine the specific type of risk that each would apply to and understand the important considerations to a specific form. 3. Identify the basic limits for each of the Homeowners Section I – Property Coverage Parts. (c) The Society of CISR, Inc. 4

5 Personal Residential Concepts Learning Objectives Policy Definitions 4. Determine who is a you as defined in the Homeowners Policy. 5. Describe how bodily injury differs from personal injury. 6. Determine if an activity qualifies as a business. 7. Identify who is an insured under the Homeowners Policy. 8. List places that are considered an insured location under the Homeowners Policy. (c) The Society of CISR, Inc. 4

6 Eligibility Learning Objective 1: Determine the eligibility of specific risks for an Insurance Services Office (ISO) Homeowners Policy. Residential Purposes 1 to 4 family owner-occupied – Up to 2 roomers or boarders (c) The Society of CISR, Inc. 5

7 Eligibility 1 to 4 family owner-occupied co-owned – Additional Insured – Residence Premises (HO 04 41) – HO 4 for co-owner Owners of a Condominium (HO 06) Tenants of a Dwelling or Apartment (HO 04) (c) The Society of CISR, Inc. 5

8 Eligibility Trust Arrangements – Trust Endorsement (HO 06 15) – Additional Insured – Residence Premises (HO 04 41) Long Term Purchase – Policy in name(s) of occupant(s) – Additional Insured – Residence Premises (HO 04 41) Seasonal & Secondary Homes Dwelling Under Construction – Insured must occupy upon completion – Theft is excluded (c) The Society of CISR, Inc. 6

9 Policy Overview (c) The Society of CISR, Inc. 7

10 Policy Structure (c) The Society of CISR, Inc. 8

11 Forms Available Learning Objective 2: Compare the various ISO Homeowners Policy forms to determine the specific type of risk that each would apply to and understand the important considerations to a specific form. HO-2 Broad – Restrictive coverage for owner-occupied dwellings – Only specifically named perils covered for both dwelling and personal property HO-3 Special – Most widely used form for owner-occupied dwellings – Open perils for dwelling (Everything covered unless excluded) – Named perils for personal property (c) The Society of CISR, Inc. 9

12 Forms Available HO-4 Contents Broad Form – Covers tenants of dwellings or apartments – No dwelling coverage because not owner- occupied – Named perils for personal property HO-5 Comprehensive – For upscale accounts with owner- occupied dwellings – Most complete coverage available with open perils for dwelling and personal property (c) The Society of CISR, Inc. 9

13 Forms Available HO-6 Unit Owners Form – Individual condominium units – Unit-owners coverage needs vary by community – Basic limit of $5,000 to cover dwelling and structural responsibilities – Named perils for dwelling and personal property – $1,000 Loss Assessment Coverage included – More Loss Assessment Coverage available by endorsement (advisable) Loss Assessment Coverage (HO 04 35) (c) The Society of CISR, Inc. 10

14 Forms Available HO-8 Modified Coverage – Older or low value owner- occupied dwellings – Very limited named perils coverage Important to note: The Liability Section is the same on all ISO Homeowners Policies (c) The Society of CISR, Inc. 10

15 Declarations Page (c) The Society of CISR, Inc. 11

16 Homeowner Coverage Parts Coverage A – Dwelling Coverage B – Other Structures Coverage C – Personal Property Coverage D – Loss of Use Coverage E – Personal Liability Coverage F – Medical Payments to Others (c) The Society of CISR, Inc. 12

17 Endorsements: General Purpose Broaden coverage Restrict coverage Clarify coverage Possibly state specific (c) The Society of CISR, Inc. 12

18 Homeowners Coverage- Basic Limits on HO 3 (c) The Society of CISR, Inc. Learning Objective 3: Identify the basic limits for each of the Homeowners Section I – Property Coverage Parts. 13

19 Conditional Contract Insured must: – Pay the premium – Comply with policy provisions Insurer must: – Provide the insurance (c) The Society of CISR, Inc. Insuring Agreement 14

20 Policy Definitions Defined words appear in quotation marks. Learning Objective 4: Determine who is a you as defined in the Homeowners Policy. You and Yours – Named Insured in Declarations – Resident spouse We, Us and Our – Insurance company (c) The Society of CISR, Inc. 14

21 Definitions (c) The Society of CISR, Inc. Aircraft Liability Hovercraft Liability Motor Vehicle Liability Watercraft Liability Defined for liability exclusion Very broad definition! Sub-definitions for aircraft, hovercraft, watercraft and motor vehicle 15

22 And Includes... Ownership Maintenance, occupancy, operation, use, loading or unloading Entrustment Failure to supervise or negligent supervision Vicarious liability (c) The Society of CISR, Inc. 15

23 Bodily Injury Learning Objective 5: Describe how bodily injury differs from personal injury. Bodily harm, sickness or disease – Including care and loss of services Does not include personal injury – Libel, slander, wrongful eviction, and other perils – Personal Injury Coverage(HO 24 82) – Personal Injury Coverage (Aggregate Limit of Insurance) (HO 24 10) Should add Personal Injury to every policy! (c) The Society of CISR, Inc. 16

24 Business Learning Objective 6: Determine if an activity qualifies as a business. Defined as – Trade, profession or occupation engaged in on a full-time, part-time or occasional basis OR – All other activities engaged in for money or other compensation except... (c) The Society of CISR, Inc. 17

25 Business Activities generating under $2,000 in the 12 months BEFORE the beginning of the policy period Volunteer activities if no money was received other than expenses Home day care if there is no compensation (mutual exchange of services is okay) Home daycare to a relative (compensation okay) (c) The Society of CISR, Inc. 17

26 Employee Any employee or leased employee other than a residence employee (c) The Society of CISR, Inc. 17

27 Insured Learning Objective 7: Identify who is an insured under the Homeowners Policy. You Resident relatives Anyone under 21 in your care or resident relatives care Full-time student if: – Relative under the age of 24 or – Person in your care under the age of 21; and – Resident of your household before attending school (c) The Society of CISR, Inc. 18

28 Insured Non-resident student relative over 24 – Additional Insured – Student Living Away From The Residence Premises (HO 05 27) Resident of the household who is not an insured by definition – Other Members of Your Household (HO 04 58) (c) The Society of CISR, Inc. 18

29 Insured Limited Section II Liability Coverage: – Person responsible for animals or watercraft covered by the policy – Employees using a covered vehicle – Others using a covered vehicle on an insured location (c) The Society of CISR, Inc. 19

30 Learning Objective 8: List the places that are considered an insured location under the Homeowners Policy. Identifies locations where premises liability is extended Does not limit personal activities exposures (c) The Society of CISR, Inc. Insured Location 19

31 Insured Location Residence premises Any other location shown in the declarations or acquired during the policy period for your residence Any premises used by you in connection with the residence premises Non-owned temporary residence (hotel room) (c) The Society of CISR, Inc. 19

32 Insured Location Vacant land Land owned on which a 1 to 4 family dwelling is being built for an insured Individual or family burial vaults or plots Any premises occasionally rented to an insured for non- business use (c) The Society of CISR, Inc. 20

33 Motor Vehicle Self propelled land or amphibious vehicles – Riding lawn mowers – Childrens motorized riding toys – Motorized scooters – Etc. Trailer while carried, towed by or hitched for towing (c) The Society of CISR, Inc. 20

34 Other Definitions Occurrence Property Damage Residence Employee Residence Premises (c) The Society of CISR, Inc

35 Property Coverages Learning Objectives Section I – Property Coverages 9. Describe how Coverage A – Dwelling and Coverage B – Other Structures apply to specific situations. 10. Determine how Coverage C – Personal Property provides or limits coverage for property located on and off premises. 11. List the special limits that apply to specific types of personal property under Coverage C – Personal Property. (c) The Society of CISR, Inc. 23

36 Property Coverages Learning Objectives 12. Recommend methods of covering specific types of personal property for which coverage is limited or excluded in the unendorsed Homeowners Policy. 13. Explain the limited property coverage found in Coverage C – Personal Property for business property. 14. Apply the coverage provisions of Coverage D – Loss of Use. 15. Determine if a given property loss is covered by the Section I – Additional Coverages. (c) The Society of CISR, Inc. 23

37 Property Coverages Learning Objectives 16. Determine if a given property loss is covered by the Perils Insured Against for Coverages A, B and/or C of the HO 3 – Special Form. 17. Apply property exclusions to specific loss situations. 18. Calculate loss payments under the Loss Settlement Provision of the Homeowners Policy. (c) The Society of CISR, Inc. 23

38 Coverage A - Dwelling Learning Objective 9: Describe how Coverage A – Dwelling and Coverage B – Other Structures apply to specific situations. Dwelling on the residence premises shown in the Declarations Attached structures Materials & supplies used to construct, alter or repair the dwelling or other structures located on or next to the residence premises Excludes land (c) The Society of CISR, Inc. 24

39 Coverage B – Other Structures Detached structures Websters Dictionary defines a structure as anything built (c) The Society of CISR, Inc. 25

40 Examples of Other Structures (c) The Society of CISR, Inc. 25

41 Coverage B – Other Structures Excludes land Excludes other structures rented to someone other than a tenant of the dwelling for use other than a private garage Structures Rented To Others – Residence Premises (HO 04 40) (c) The Society of CISR, Inc. 25

42 Coverage B – Other Structures Excludes other structures where business is conducted Excludes other structures used to store business property unless: Property is solely owned by an insured or tenant of the dwelling AND Property is not gaseous or liquid fuels Permitted Incidental Occupancies – Residence Premises (HO 04 42) (c) The Society of CISR, Inc. 26

43 Coverage B – Other Structures Coverage B – Other Structures is limited to 10% of Coverage A – Dwelling Other Structures on the Residence Premises - Increased Limits (HO 04 48) Specific additional amount of insurance on described other structure(s) (c) The Society of CISR, Inc. 26

44 Coverage C – Personal Property Learning Objective 10: Determine how Coverage C – Personal Property provides or limits coverage for property located on and off premises. Property owned or used by an insured Worldwide coverage At your request: – Property of others on the residence premises – Property of a guest or residence employee while in any residence occupied by an insured (c) The Society of CISR, Inc. 27

45 Coverage C – Personal Property Limits at other residences – Property usually located at another residence of an insured – Limited to 10% of Coverage C or $1,000 whichever is greater Limitation does not apply to property at a newly acquired residence for the first 30 days (c) The Society of CISR, Inc. 28

46 Coverage C – Personal Property Policy later excludes theft for property usually located at another residence except: – When an insured is temporarily living there – College student must have been there any time during the 60 days prior to the loss (c) The Society of CISR, Inc. 28

47 Coverage C – Personal Property Limits at Self-Storage Facilities – Property owned or used by an insured and located at a self-storage facility – Limited to 10% of Coverage C or $1,000 whichever is greater Limitation does not apply: – If property moved because residence is under renovation; or – To personal property usually located at other residences Increase Amount Of Insurance For Personal Property Located In A Self-Storage Facility (HO 06 14) (c) The Society of CISR, Inc. 29

48 Special Limits of Liability – Coverage C – Personal Property (c) The Society of CISR, Inc. Learning Objective 11: List the special limits that apply to specific types of personal property under Coverage C – Personal Property. 30

49 Special Limits of Liability – Coverage C – Personal Property (c) The Society of CISR, Inc. 30

50 Special Treatment of Personal Property Exposures Learning Objective 12: Recommend methods of covering specific types of personal property for which coverage is limited or excluded in the unendorsed Homeowners Policy. Coverage C Increased Special Limits of Liability (HO 04 65) – Does NOT broaden perils – Use to increase special limits of coverage on some types of property – Watch the jewelry per item limit (c) The Society of CISR, Inc. 32

51 Special Treatment of Personal Property Exposures Scheduled Personal Property Endorsement (HO 04 61) – Specific amount of insurance on scheduled items – Not a valued policy (agreed value) except for fine arts – Pays least of: ACV, cost of repair, cost to replace, or amount of insurance – Risks of direct physical loss with exclusions – Deductible does not apply (c) The Society of CISR, Inc. 32

52 Special Treatment of Personal Property Exposures Scheduled Personal Property Endorsement (With Agreed Value Loss Settlement) (HO 04 60) – Same as HO EXCEPT it provides agreed value for all classes of covered property (c) The Society of CISR, Inc. 33

53 Special Treatment of Personal Property Exposures Learning Objective 13: Explain the limited property coverage found in Coverage C – Personal Property for business property. Permitted Incidental Occupancies (HO 04 42) – Increases business personal property used in the described business to full Coverage C limit – Does not broaden causes of loss (c) The Society of CISR, Inc. 33

54 Increased Limits on Business Property Increased Limits on Business Property (HO 04 12) – Increases certain business property of business conducted off premises to specified limit while property is on the residence premises – Increases business property limit while off premises to 60% of specified limit – Does not broaden causes of loss (c) The Society of CISR, Inc. 33

55 Coverage C – Personal Property Not Covered Articles specifically insured (Example- Scheduled personal property) Animals, birds, or fish (c) The Society of CISR, Inc. 34

56 Motor vehicles – Includes accessories, equipment, parts, tapes, discs, etc. While in or upon the motor vehicle. (note exceptions) – Gives back coverage if motor vehicle is not required to be registered for use on public roads or property which is: Used SOLELY to service a residence; or Designed to assist the handicapped (c) The Society of CISR, Inc. Coverage C – Personal Property Not Covered 34

57 Aircraft and parts – Except model or hobby aircraft Hovercraft and parts – Defined as a self-propelled motorized ground effect vehicle and includes, but is not limited to flarecraft and air cushion vehicles (c) The Society of CISR, Inc. Coverage C – Personal Property Not Covered 34

58 Property of roomers and tenants unless related to an insured Personal property in a rental apartment – Additional Coverage #10 provides $2,500 coverage but no theft coverage Personal property rented to others off the residence premises Business data – Will cover the cost of blank media and prerecorded software (c) The Society of CISR, Inc. Coverage C – Personal Property Not Covered 35

59 Credit cards, fund transfer cards, etc. – Additional Coverage #6 gives back $500 Water or steam (c) The Society of CISR, Inc. Coverage C – Personal Property Not Covered 36

60 Coverage D – Loss of Use Learning Objective 14: Apply the coverage provisions of Coverage D – Loss of Use. Additional Living Expenses – Part of residence premises where you reside that is not fit to live in due to a covered property loss – Covers the necessary increase in living expenses to maintain the normal standard of living (c) The Society of CISR, Inc. 36

61 Coverage D – Loss of Use Fair Rental Value – Part of residence premises rented to others or held for rental that is not fit to live in due to a covered property loss – Covers the fair rental value less non- continuing expenses (c) The Society of CISR, Inc. 37

62 Coverage D – Loss of Use Civil Authority – Two weeks coverage when civil authority prohibits use of residence premises when there is direct damage to a neighboring premises by a Peril Insured Against No coverage for loss due to cancellation of a lease Loss of use coverage is not limited by expiration of policy (c) The Society of CISR, Inc. 37

63 Section I - Additional Coverages Learning Objective 15: Determine if a given property loss is covered by the Section I – Additional Coverages. Debris Removal – Covered property damaged by a covered peril – Removal of volcanic ash if causes direct damage to covered property – Additional 5% of applicable limit available if limit exhausted (c) The Society of CISR, Inc. 38

64 Section I - Additional Coverages Debris removal for tree removal – Removal from the residence premises – Up to $500 per tree/$1,000 per loss – Caused by: Your tree felled from windstorm, hail or weight of ice, snow or sleet A neighbors tree felled by a Coverage C Peril Insured Against – Tree must damage a covered structure or block a driveway or access to the residence (c) The Society of CISR, Inc. 39

65 Section I - Additional Coverages Reasonable repairs – Reasonable cost necessary to protect damaged property from further damage – Not additional insurance Trees, shrubs and other plants – Limited named perils – 5% of Coverage A with a maximum of $500 for any one tree, plant or shrub – Additional insurance (c) The Society of CISR, Inc

66 Section I - Additional Coverages Fire department service charge – $500, no deductible – Additional insurance Property removed – Covered property endangered by a covered peril – True all risk coverage for 30 days – Not additional insurance (c) The Society of CISR, Inc. 41

67 Section I - Additional Coverages Credit card, fund transfer card or access device, forgery and counterfeit money – $500 coverage – Excludes resident of the household; person who was entrusted with the card; or a person if not complying with card requirements – No deductible – Additional insurance (c) The Society of CISR, Inc. 42

68 Section I - Additional Coverages Loss Assessment – $1,000 limit as additional insurance – Exposure exists for homes in areas governed by homeowners associations – Covers assessments due to common property damaged by a covered peril – Deductible applies – Can increase limit to $50,000 using Supplemental Loss Assessment Coverage (HO 04 35) (c) The Society of CISR, Inc. 43

69 Section I - Additional Coverages Collapse – Excluded except as provided in this Additional Coverage – Specified causes of loss only (Coverage C perils, hidden decay or insect damage, or weight of contents, people or rain) (c) The Society of CISR, Inc. 44

70 Section I - Additional Coverages Glass or safety glazing material – Glass that is part of a covered building – Damage to covered property damaged by broken glass – Excluded if dwelling is vacant for more than 60 days – Not additional insurance (c) The Society of CISR, Inc. 45

71 Section I - Additional Coverages Landlord furnishings – Coverage C Perils – Theft excluded – $2,500 in each apartment on the residence premises – Not additional insurance (c) The Society of CISR, Inc. 46

72 Section I - Additional Coverages Ordinance Or Law – Increased costs due to: Ordinance or law regulating construction, etc. Demolition and reconstruction of the undamaged portion of a covered building Remodeling, removal or replacement of the undamaged part of a covered building – 10% of Coverage A – Additional insurance – Includes debris removal (c) The Society of CISR, Inc. 46

73 Section I - Additional Coverages Ordinance or Law (Continued) – Excludes loss of value due to ordinance – Excludes pollution testing or cleanup – Can increase coverage by using Ordinance or Law – Increased Amount of Coverage (HO 04 77) Options of 25%, 50%, 75% or more (c) The Society of CISR, Inc. 47

74 Section I - Additional Coverages Grave Markers – Coverage C Perils – $5,000 limit – Not additional insurance (c) The Society of CISR, Inc. 47

75 Section I- Additional Coverages (c) The Society of CISR, Inc. COVERAGELIMIT ADDITIONAL INSURANCE DEDUCTIBLE APPLIES Debris Removal Reasonable Repairs Trees, Shrubs, Plants & Lawns Perils: Fire/Lightning, Explosion, Riot, Civil Commotion, Aircraft, Vehicles, V&MM and Theft Fire Department Service Charge Property Removed (30 days) 48

76 Section I- Additional Coverages (c) The Society of CISR, Inc. COVERAGELIMIT ADDITIONAL INSURANCE DEDUCTIBLE APPLIES Credit Card, Fund Transfer Card $500YesNo Loss Assessment $1,000Yes Collapse Included in the limit that applies to property damaged NoYes Glass or Safety Glazing Material Included in the limit that applies to property damaged NoYes Landlords Furnishings $2,500NoYes Ordinance Or Law 10% of Coverage AYes Grave Markers $5,000NoYes 48

77 Section I – Perils Insured Against Learning Objective 16: Determine if a given property loss is covered by the Perils Insured Against for Coverages A, B and/or C of the HO 3 - Special Form. Dwelling & Other Structures – Direct loss with exclusions – Open perils concept – Burden of proof is on the insurance company to prove loss is excluded (c) The Society of CISR, Inc. 49

78 Section I – Perils Insured Against Dwelling & Other Structures Exclusions – Collapse except for Additional Coverages # 8 No coverage for collapse including: – Abrupt falling down or caving in – Loss of structural integrity – Cracking, bulging, settling etc. if related to above (c) The Society of CISR, Inc. 49

79 Section I – Perils Insured Against Dwelling & Other Structures Exclusions – Freezing of plumbing unless one of two precautions taken – Freezing, thawing, pressure or weight of water or ice to fences, swimming pools, pavement, foundations, retaining walls, piers, or docks – Theft to a dwelling under construction No coverage for theft of materials and supplies until the dwelling is both finished and occupied No theft coverage for property in a dwelling under construction (c) The Society of CISR, Inc. 50

80 Section I – Perils Insured Against Dwelling & Other Structures Exclusions – Vandalism and malicious mischief No coverage for vandalism and any ensuing loss if the dwelling has been vacant for more than 60 days immediately prior to loss (c) The Society of CISR, Inc. 51

81 Section I – Perils Insured Against Dwelling & Other Structures Exclusions – Mold, fungus, or wet rot Covered if hidden in walls or ceilings, beneath floors, above ceilings and caused by accidental discharge or overflow of water or steam within identified systems (c) The Society of CISR, Inc. 51

82 Section I – Perils Insured Against Dwelling & Other Structures Exclusions – Wear and tear – Mechanical breakdown – Smog, rust, dry rot – Smoke from agricultural smudging or industrial operations – Pollution unless caused by Coverage C Peril (c) The Society of CISR, Inc. 52

83 Section I – Perils Insured Against Dwelling & Other Structures Exclusions – Settling, shrinking, bulging, etc. of walls, floors or foundations – Birds, rodents or insects – Nesting or infestation or release of waste or secretions by any animal – Animals owned or kept by an insured In most cases, ensuing loss is covered unless otherwise excluded (c) The Society of CISR, Inc

84 Additional Exclusions that apply to all of Section I – Property appear later. For losses to dwelling or other structures... if the policy doesnt exclude the cause of loss, it is covered! (c) The Society of CISR, Inc.

85 Section I – Perils Insured Against Personal Property – Named perils – Broad Form perils – Burden of proof is on the insured to establish the cause of loss to prove the loss is covered (c) The Society of CISR, Inc. 54

86 Section I – Perils Insured Against Personal Property – Fire or lightning – Wind or hail (note exclusions) – Explosion – Riot or civil commotion – Aircraft – Vehicles – Smoke (note exclusions) – Vandalism or malicious mischief (c) The Society of CISR, Inc. 54

87 Section I – Perils Insured Against Personal Property – Theft Includes attempted theft and loss of property from a known place when likely to have been stolen (c) The Society of CISR, Inc. 54

88 Section I – Perils Insured Against Theft Exclusions – Committed by an insured – Dwelling under construction – From part rented to other than an insured – Theft of watercraft, trailers and campers away from the residence premises – Theft of property at another residence owned, rented or occupied by an insured unless insured is staying there (see exceptions) (c) The Society of CISR, Inc. 55

89 Section I – Perils Insured Against Personal Property – Falling objects (see requirement) – Weight of ice, snow or sleet – Damage caused by accidental discharge or overflow of water or steam from an appliance, etc. (Damage to appliance or system not covered) – Sudden and accidental tearing apart, cracking, etc. Steam or hot water heating system, etc. (not from freezing) (c) The Society of CISR, Inc. 56

90 Section I – Perils Insured Against Personal Property – Freezing (Precautions must be taken) Must maintain heat; or Shut off water and drain – Sudden and accidental damage from artificially generated electrical current – Volcanic eruption (c) The Society of CISR, Inc. 57

91 (c) The Society of CISR, Inc. For losses to personal property… if the policy didnt list the peril, it is not covered!

92 Review of Covered Perils (c) The Society of CISR, Inc. PERIL INSURED AGAINST COVERAGE A - DWELLING COVERAGE B - OTHER STRUCTURES COVERAGE C – PERSONAL PROPERTY Fire or LightningYes Windstorm or HailYes ExplosionYes Riot or Civil CommotionYes AircraftYes VehiclesYes SmokeYes VandalismYes TheftYes Volcanic EruptionYes 58

93 Review of Covered Perils (c) The Society of CISR, Inc. PERIL INSURED AGAINST COVERAGE A - DWELLING COVERAGE B - OTHER STRUCTURES COVERAGE C – PERSONAL PROPERTY Weight of Ice, Sleet or SnowYes Accidental Discharge or Overflow of Water or Steam Yes Yes Cracking, Burning, Bulging of Heating System or AC Hot Water Heater Yes Yes Sudden and Accidental Damage From Artificially-Generated Electrical Current Yes Yes FreezingYes Risks of Direct Loss, except: Those perils that are specifically excluded Yes No 58

94 Section I – Property Exclusions Learning Objective 17: Apply property exclusions to specific loss situations. Ordinance or Law – Except for 10% of Coverage A provided by Additional Coverage # 11 – Ordinance or Law – Increased Amount of Coverage (HO 04 77) (c) The Society of CISR, Inc. 59

95 Section I – Property Exclusions Earth Movement – By act of nature or any other cause – Give back of coverage for fire, explosion, and theft – Earthquake Endorsement (HO 04 54) (c) The Society of CISR, Inc. 60

96 Section I – Property Exclusions Water Damage – No coverage for: Flood, surface waters, tidal water Back up of sewers or drains or overflows from sump Regardless of cause – Giveback for fire, explosion and theft – Flood Policy – Limited Water Back Up and Sump Discharge or Overflow Coverage (HO 04 95) (c) The Society of CISR, Inc. 61

97 Section I – Property Exclusions Power Failure Off Residence Premises – Refrigerated Property Coverage (HO 04 98) Neglect – During or after the loss War Nuclear Hazard Intentional Loss (c) The Society of CISR, Inc

98 Section I – Property Exclusions Government Action Weather Conditions Acts or Decisions Faulty or Inadequate Planning, Design, Materials or Maintenance (c) The Society of CISR, Inc. 64

99 Section I – Conditions Insurable Interest The insurance company will not pay more than: – That insureds interest at the time of the loss – The applicable limit of liability (c) The Society of CISR, Inc. 65

100 Section I – Conditions Deductible Shown in Declarations If more than one deductible could apply to loss, only largest applies Applies to Section I – Property (c) The Society of CISR, Inc. 65

101 Section I – Conditions Duties After a Loss Protect property from further damage Inventory the damaged property Notify the carrier or agent and credit card company and/or police (if applicable) Exhibit the property to an adjuster Submit a sworn statement (c) The Society of CISR, Inc. 66

102 Section I – Conditions Loss Settlement Learning Objective 18: Calculate loss payments under the Loss Settlement Provision of the Homeowners Policy. Actual Cash Value vs. Replacement Cost Actual Cash Value for (Unendorsed HO-3): – Personal property – Awnings, carpeting, appliances and outdoor equipment Change the above by Personal Property Replacement Loss Settlement Endorsement (HO 04 90) Actual Cash Value Loss Settlement Windstorm or Hail Losses To Roof Surfacing Endorsement (HO 04 93) (c) The Society of CISR, Inc. 67

103 Section I – Conditions Loss Settlement Actual Cash Value for: – Structures that are not buildings Replacement Cost Loss Settlement for Certain Non-Building Structures On The Residence Premises Endorsement (HO 04 43) – Grave markers including mausoleums (c) The Society of CISR, Inc. 68

104 Section I – Conditions Loss Settlement (c) The Society of CISR, Inc. 69

105 Section I – Conditions Loss Settlement Buildings covered by Coverage A or B – Settled on RC or ACV depending on compliance with the 80% requirement – Insured can always choose an ACV settlement if financially beneficial – Certain items not included in determining the compliance (foundations) (c) The Society of CISR, Inc. 69

106 Section I – Conditions Loss Settlement Buildings rebuilt at new premises will not increase amount paid RC will not be paid until repairs or replacement made unless: – The loss is less than 5% of the amount of insurance on the building; or – The loss is less than $2,500 (c) The Society of CISR, Inc. 69

107 Loss Settlement Endorsements Specified Additional Amounts of Insurance for Coverage A (HO 04 20) – Additional 25% or 50% of Coverage A available – Does NOT increase Coverages B, C & D Additional Limits of Liability for Coverages A, B, C, & D (HO 04 11) – No cap – Increases Coverages B, C & D in proportion to increase in Coverage A (c) The Society of CISR, Inc

108 Section I – Conditions Loss to a Pair or Set – May pay to repair or replace or pay difference between ACV before and after loss Other Insurance – Pro rata share Mortgage Clause – Mortgagee has rights under Policy No Benefit to Bailee Recovered Property – Your option (c) The Society of CISR, Inc

109 Property Coverages Learning Objectives Section II - Liability Coverages 19.In specific loss situations, apply the coverage and exclusions found in Coverage E – Personal Liability of the Homeowners Policy. 20.Apply Coverage F – Medical Payments To Others in a given loss situation. 21.Determine if a type of motor vehicle is excluded, and those types that may be covered under Coverage E – Personal Liability and Coverage F – Medical Payments To Others. (c) The Society of CISR, Inc. 75

110 Section II – Liability Coverages Coverage E – Personal Liability Coverage F – Medical Payments to Others (c) The Society of CISR, Inc.

111 Coverage E – Personal Liability Learning Objective 19: In specific loss situations, apply the coverage and exclusions found in Coverage E – Personal Liability of the Homeowners Policy. Legal liability required Bodily injury – Remember Personal Injury Endorsement Property damage Prejudgment interest included in limit of liability Defense is in addition to the limit of liability (c) The Society of CISR, Inc. 76

112 Coverage F – Medical Payments to Others Learning Objective 20: Apply Coverage F – Medical Payments To Others in a given loss situation. Necessary & reasonable expenses Legal liability is not required Expenses must be incurred or ascertained within 3 years (c) The Society of CISR, Inc. 77

113 Coverage F – Medical Payments to Others Does not apply to you or regular resident of your household except residence employees Applies to persons on an insured location with permission Applies to persons off an insured location for certain losses (c) The Society of CISR, Inc. 77

114 Section II – Exclusions Learning Objective 21: Determine if a type of motor vehicle is excluded, and those types that may be covered under Coverage E – Personal Liability and Coverage F – Medical Payments To Others. Motor Vehicle Liability – Ownership, maintenance, or occupancy – Operation or use – Loading or unloading – Entrustment – Failure to supervise or negligent supervision – Vicarious liability (c) The Society of CISR, Inc. 78

115 Section II – Exclusions Part I of the Motor Vehicle Liability Exclusion – Registered for use on public roads or property – Should have been registered – Operated in a race – Rented to others – Used to carry people or cargo for a fee – Used for any business purposes unless a motorized golf cart on a golf facility (c) The Society of CISR, Inc

116 Section II – Exclusions Part 2 of the Motor Vehicle Liability Exclusion gives back coverage for the following motor vehicles as long as Part I does not apply: – Dead storage – Used solely to service a residence – Designed to assist the handicapped and is being used to assist the handicapped or is parked on an insured location (c) The Society of CISR, Inc. 79

117 Section II – Exclusions Also Covered if: Non-owned recreational vehicle An owned recreational vehicle – While on an insured location; or – Off an insured location if a toy designed for a child seven years old or younger (Power and speed restrictions apply) (c) The Society of CISR, Inc. 80

118 Section II – Exclusions Also Covered if: Owned motorized golf cart – Carries up to 4 people and maximum speed 25 MPH on level ground – On a golfing facility – In a private residential community where insured has a residence, if allowed by property owners association (c) The Society of CISR, Inc

119 Recreational Vehicle Endorsements Owned Snowmobile (HO 24 64) – Personal Liability and Medical Payments To Others Recreational Vehicle Policy Miscellaneous Vehicle Endorsement to a Personal Auto Policy (c) The Society of CISR, Inc. 81

120 Section II – Exclusions Watercraft Liability – Ownership, maintenance, or occupancy – Operation or use – Loading or unloading – Entrustment – Failure to supervise or negligent supervision – Vicarious liability (c) The Society of CISR, Inc. 82

121 Section II – Exclusions Watercraft Liability – Excludes watercraft Preparing or operating in a race except sailboats and predicted log races Rented to others Used to carry people or cargo for a fee Used for any business purposes – Covers watercraft that is stored – Covers specified types of watercraft (c) The Society of CISR, Inc. 82

122 Watercraft Liability Coverage (c) The Society of CISR, Inc. 82

123 Watercraft Endorsement Watercraft (HO 24 75) – Watercraft must be listed – Personal Liability and Medical Payments To Others Coverage – No physical damage – Exclusions listed (c) The Society of CISR, Inc. 83

124 Section II – Exclusions Aircraft Liability Hovercraft Liability (c) The Society of CISR, Inc. 84

125 Expected or intended injury Business – Remember, previously defined – Excludes all activities except renting an insured location for specified uses – Covers part-time business pursuits of a minor (c) The Society of CISR, Inc. Section II – Exclusions 84 85

126 Business Endorsements Permitted Incidental Occupancies (HO 04 42) – On premises Personal Liability and Medical Payments to Others Coverage – For necessary and incidental use of the premises – Business must be operated by the insured – Excludes workers compensation (c) The Society of CISR, Inc. 86

127 Business Endorsements Business Pursuits (HO 24 71) – Personal Liability and Medical Payments To Others Coverage on and off premises (clerical, sales and teachers) – Insured may not own or financially control the business – Excludes professional other than teaching – Teachers can purchase corporal punishment (c) The Society of CISR, Inc. 86

128 Business Endorsements Structures Rented to Others (HO 04 40) – Property, Personal Liability and Medical Payments To Others Coverage for structures rented to others for use as a private residence (c) The Society of CISR, Inc. 86

129 Section II – Exclusions Professional liability Uninsured locations (owned but no insurance purchased) War Transmission of a communicable disease Sexual molestation, corporal punishment, mental abuse Controlled substance (c) The Society of CISR, Inc

130 Coverage E – Personal Liability Exclusions Loss Assessment – $1,000 available in Section II – Additional Coverages Owned property (cant be liable to self) Property in the care, custody or control of an insured except for damage by fire, smoke or explosion (c) The Society of CISR, Inc. 89

131 Coverage E – Personal Liability Exclusions Workers compensation (If provided or required to be provided by an insured) Nuclear energy liability Bodily injury to an insured (c) The Society of CISR, Inc. 90

132 Coverage F – Medical Payments to Others Exclusions Residence employee off premises unless during course of employment Workers compensation (voluntarily or required) Nuclear Regular residents except a residence employee (c) The Society of CISR, Inc. 91

133 Section II – Additional Coverages Claims expenses – In addition to limits of liability First aid expenses (c) The Society of CISR, Inc. 92

134 Section II – Additional Coverages Damage To Property Of Others – Caused by an insured – Up to $1,000 – Excludes intentional damage if insured is 13 or older – Gives back coverage for recreational vehicles not required to be licensed and not owned by an insured (c) The Society of CISR, Inc. 93

135 Section II – Additional Coverages Loss Assessment – No defense – $1,000 coverage – Supplemental Loss Assessment Coverage (HO 04 35) to increase limits to $50,000 (c) The Society of CISR, Inc. 94

136 Section II – Conditions Duties after a loss – Conditional contract – Any insured paying, assuming or incurring costs other than first aid does so at own risk (c) The Society of CISR, Inc. 95

137 Section II – Conditions Duties of an injured person – Must submit to medical exam by doctor of the insurance companys choice Other insurance – Excess coverage except for excess/umbrella coverage Policy period – Loss must occur during policy period (c) The Society of CISR, Inc. 96

138 Section II – Conditions Cancellation and nonrenewal – Modified by state specific endorsements (c) The Society of CISR, Inc. 97

139 Section II – Conditions Assignment – Must have written consent of insurance company Subrogation – May waive before a loss – Must be in writing – Subrogation does not apply to Medical Payments and Damage to Property of Others (c) The Society of CISR, Inc. 98

140 Learning Objectives Dwelling Policy 1.List the eligibility requirements for Dwelling Policies. 2.Point out the differences between Homeowners Policies and Dwelling Policies. 3.Discuss endorsements applicable to Dwelling Policies. (c) The Society of CISR, Inc. 1

141 Dwelling Policy Learning Objective 1: List the eligibility requirements for Dwelling Policies. Eligibility – Family dwelling up to 4 units – Not more than 4 apartments per dwelling or unit – Under construction – Townhouse or row house – Mobile or trailer home (Basic Form only & on permanent foundation) (c) The Society of CISR, Inc. 2

142 Dwelling Fire Occupancy – Owner, seasonal or tenant occupied – Wider range of incidental occupancies – No more than 5 roomers or boarders per unit (c) The Society of CISR, Inc. 2

143 Dwelling Fire Coverage Parts – Coverage A - Dwelling – Coverage B - Other Structures – Coverage C - Personal Property – Coverage D - Fair Rental Value – Coverage E - Additional Living Expenses (Not in Basic Form) Liability Parts by Endorsement – Coverage L - Personal Liability – Coverage M - Medical Payments to Others (c) The Society of CISR, Inc. 3

144 Dwelling Fire Forms – DP-1 Basic – DP-2 Broad – DP-3 Special (c) The Society of CISR, Inc. 3

145 Dwelling Fire – Eligibility Comparison (c) The Society of CISR, Inc. 5

146 Dwelling Fire - Limitations No Theft No Liability and Medical Payments Coverage No Loss Assessment (c) The Society of CISR, Inc. 7

147 Dwelling Fire – Perils Insured Against (c) The Society of CISR, Inc. 147

148 Dwelling Fire - Endorsements Broad Theft Coverage (DP 04 72) Limited Theft Coverage (DP 04 73) Loss Assessment Property Coverage (DP 04 63) Personal Liability (DL 24 01) Business Pursuits (DL 24 05) Watercraft (DL 24 06) Loss Assessment Liability Coverage (DL 24 14) Snowmobiles (DL 24 07) (c) The Society of CISR, Inc. 7-9

149 Thank you! Please Complete Your Evaluation Form (c) The Society of CISR, Inc.


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