2Learning ObjectivesIdentify the major homeowners policies for homeowners, condominium owners, and renters.Explain the major provisions in Section1 of the homeowners 3 policy.Given a specific property loss situationExplain the insured’s duties after a loss occurs.
3Main Contents Homeowners 2000 Program Analysis of homeowners 3 policy Section 1 coverageDiscuss the homeowner property insurance in Chinese market
4What’s Homeowners Insurance What’s homeowners insurance？ How many types of homeowners policies? The designed groups of people of each form and the coverages
5A homeowners policy on a private dwelling is designed for the owner-occupants of a family dwelling used exclusively for private residential purposes
7The insured subject The covered perils Exclusions the insurance amount Comparing various homeownersThe insured subject The covered perils Exclusions the insurance amount
8HO-2 (broad form)The insured subject: the dwelling, other structures, and personal property The covered perils: listed perils Exclusions: out of the listed The insurance amount: losses+ living expenses and/or fair rental value
9HO-3 (special form)The insured subject: the dwelling, other structures The covered perils: risk of direct physical loss Exclusions: losses specifically excluded The insurance amount: full replacement costs
10HO-4 (Contents broad form) The insured subject: the tenant’s personal property , and personal liability insurance The covered perils: the tenant’s property against loss, also personal liability insurance, additions or alterations to the building
11HO-5 (comprehensive form) The insured subject: the dwelling, other structures, and personal property, personal liability The covered perils: open perils coverage (all risk coverage” ) Exclusions: losses specifically excluded The insurance amount: direct physical losses, liability
12HO-6 (unit-owners form) The insured subject: condominium units and cooperative apartments. The covered perils: named perils listed in HO2. Exclusions: losses specifically excluded The insurance amount: direct physical losses of the building and other property, and minimum of $5000 of appliances, carpets, etc.
13HO-8 (modified coverage form) The insured subject: older homes The covered perils: named perils listed in HO2. The insurance amount: repair cost, and limited coverage of theft of personal property (a maximum of $1000 per occurrence)
14Comparison of Homeowners Coverages (see exhibit 1&2)coverageHo-2(Broad form)Ho-3(special formHo-4 (contents broad form)DwellingOther structuresPersonal propertyLoss of useMinimum varies by company10% of A50% of A30% of ANot applicableAmount varies30% of CCovered perilsFire or lightningWindstorm or hailExplosionRiot of civil commotionAircraftVehiclesSmokeTheftFalling objectivesSo on and so thatDwelling and other structures are covered against risk of direct physical loss to property.All losses are specifically excluded.Personal property is coveredSame perils as Ho-2 for personal property
15Comparison of Homeowners Coverages Ho-5(comprehensive form)Ho-6(unit owners formHo-8 (modified coverage form)DwellingOther structuresPersonal propertyLoss of useMinimum varies by company10% of A50% of A30% of ANot applicableAmount varies30% of CCovered perilsDwelling and other structures are covered against risk of direct physical loss to property.All losses are specifically excluded.Personal property is coveredSame perils as Ho-2 for personal propertyFire or lightningWindstorm or hailExplosionRiot of civil commotionAircraftVehiclesSmokeTheftFalling objectivesSo on and so that
16Analysis of Homeowners 3 Policy (Special Form) The insuredCoveragePerils insurance againstExclusions
17Analysis of Homeowners 3 Policy (Special Form) The insured:named insured and spousefamily membersother persons under age 21full-time student away from homeRelated persons in section 2Any person legally responsible for covered animals or watercraftWith respect to a motor vehicle to which the insurance applies, employees of the insured while working for the insured.
18Analysis of Homeowners 3 Policy (Special Form) Coveragecoverage A: Dwellingcoverage B: Other structurescoverage C: Personal propertycoverage D: Loss of useAdditional coverages
19Analysis of Homeowners 3 Policy (Special Form) Coverage A: Dwellingcover the dwelling on the residence premises as well as any structure attached to the dwellingspecifically excludes land
20Analysis of Homeowners 3 Policy (Special Form) Coverage B: other structuresinsures other structures on the residence premises that are separated from the dwelling by clear space, including a detached garage, tool shed, or horse stableExclusions: a rented private garage, a business structure, structures used to store business property (examples)
21Analysis of Homeowners 3 Policy (Special Form) Coverage C: personal propertyInsures: personal property, also includes borrowed property, and the personal property of a guest or resident employee while the property is in an residence occupied by an insured.There are some special limits of the liability (see Exhibit 3)Exclusions: Certain types of property are excluded under Coverage C. (examples)
22Special limits of liability (see exhibit 3) Type of propertyAmount1.money, bank notes, bullion, gold, silver, platinum, coins, medals, stored valued cards, and smart cards2. securities, valuable papers, manuscripts, personal records, passports, tickets, and stamps3.Watercraft of all types4. Trailers not used with watercraft of all types5. Theft of jewelry, watches, furs, and precious stones6. Property on the residence premises used primarily for business purposes7. Electronic apparatus, while or upon a motor vehicle, but only if the apparatus is equipped to be operated by power from the motor vehicle’s electrical system.$200$1500$2500
23Analysis of Homeowners 3 Policy (Special Form) Coverage D: loss of useInsures: provides protection when the residence premises cannot be used because of a covered loss. Three benefits are provided: additional living expense, fair rental value, and prohibited use. (examples)
24Analysis of Homeowners 3 Policy (Special Form) Additional Coverage :In addition to basic Coverages A, B, C, and D, the HO-3 policy provides several additional coverages Including: additional living expenses, living expenses, fair rental value, and prohibited use)Debris RemovalReasonable RepairsTree, Shrubs, and Other PlantsFire Department Service ChargeProperty Removal
25Analysis of Homeowners 3 Policy (Special Form) Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit MoneyLoss AssessmentCollapseGlass or Safety Glazing MaterialLandlord’s FurnishingsOrdinance or LawGrave MarkersDeductible (examples)
26Analysis of Homeowners 3 Policy (Special Form) Perils insurance againstDwelling and Other StructuresPersonal Property
27Analysis of Homeowners 3 Policy (Special Form) Dwelling and Other Structures:The dwelling and other structures are insured against “risk of direct physical loss to property.”Excluded Losses :Collapse.Freezing.Fences, pavement, patio, and similar structures.Dwelling under construction.Vandalism and malicious mischiefMold, fungus, or dry rot.Other exclusions. (examples)
28Analysis of Homeowners 3 Policy (Special Form) Personal Property:Personal property is covered on a named-perils basis. The policy pays for a direct physical loss to personal property from the perils discussed in the following :Fire or LightningWindstorm or HailExplosionRiot or Civil Commotion Aircraft , etc. (examples)
29Analysis of Homeowners 3 Policy (Special Form) Exclusions:In addition to the specific exclusions previously discussed, several general exclusions appear in the policy. Including:Ordinance or LawEarth MovementWater DamagePower FailureNeglectWarNuclear HazardIntentional LossGovernmental ActionWeather ConditionsActs or DecisionsFaulty, Inadequate, or Defective Planning and Design
30Analysis of Homeowners 3 Policy (Special Form) Section 1: Conditions:Section I in the homeowners policy contains numerous conditions. The most important are discussed here.Insurable Interest and Limit of LiabilityLoss SettlementLoss to a Pair or SetAppraisal ClauseOther Insurance and Service Agreement
31Analysis of Homeowners 3 Policy (Special Form) Insurable Interest and Limit of Liability:If more than one person has an insurable interest in the property, the insurer’s liability for any one loss is limited to each insured’s insurable interest at the time of loss but not to exceed the maximum amount of insurance.--Duties After a Loss:Give prompt noticeProtect the propertyPrepare an inventory of damaged personal propertyexhibit the damaged propertyFile a proof of loss within 60 days
33Analysis of Homeowners 3 Policy (Special Form) Loss Settlement:This section of the homeowners policy deals with the payment of losses. You should know how losses are paid under a homeowners policy.
34Analysis of Homeowners 3 Policy (Special Form) Loss Settlement:personal propertydwelling and other structuresExtended and guaranteed replacement cost
35Analysis of Homeowners 3 Policy (Special Form) Personal property:Covered losses to personal property are paid on the basis of actual cash value at the time of loss but not to exceed the amount necessary to repair or replace the property.Personal property can be insured for replacement cost by adding a replacement cost endorsement to the policy.
36Analysis of Homeowners 3 Policy (Special Form) Dwelling and other structures:the losses are paid on the basis of replacement cost with no deduction for depreciation.If the amount of insurance carried is equal to at least 80% of the replacement cost of the damaged building at the time of loss, full replacement cost is paid with no deduction up to the limit of the policy.
37Analysis of Homeowners 3 Policy (Special Form) If the insurance carried is less than 80% of the replacement cost, the insured receives the larger of the following two amounts:Actual cash value of that part of the building damaged or :(2) Amount of insurance carried ×Loss80%×Replacement cost
38Analysis of Homeowners 3 Policy (Special Form) Extended and guaranteed replacement cost:Some insurers make available an extended replacement cost endorsement, which pays an extra 20% or more above the policy limits, depending on the insurer.
39Analysis of Homeowners 3 Policy (Special Form) Loss to a Pair or Set:In the event of loss to a pair or set, the insurer can elect either to repair or replace any part of the pair or set or to pay the difference between the actual cash value of the property before and after the loss.
40Analysis of Homeowners 3 Policy (Special Form) Appraisal Clause:The appraisal clause is used when the insured and insurer agree that the loss is covered, but the amount of the loss is in dispute.
41Analysis of Homeowners 3 Policy (Special Form) Other Insurance and Service Agreement:If other insurance covers a Section I loss, the insurer will pay only the proportion of the loss that its limit of liability bears to the total amount of insurance covering the loss. (examples )
42Section 1 and 2 Conditions Section I and Ⅱ ConditionsThe homeowners policy contains several common conditions that apply to both Sections I and Ⅱ. They are summarized as follows:Liberalization ClauseWaiver or Change of Policy ProvisionsCancellationNonrenewal of the PolicyAssignment of the PolicySubrogationDeath of Named Insured or Spouse
44SummaryThe homeowners policy can be used to cover the dwelling, other structures, personal property, additional living expenses, and personal liability claims.Section 1 provides coverage on the dwelling, other structures, personal property, loss-of-use benefits, and additional coverage. Section 2 provides personal liability insurance to the insured and also covers the medical expenses of others.HO-2 policy is broad form covering the dwelling and other structures, and personal property.HO-3 is special form covers the dwelling and other structures against risk of direct physical loss to the described property.HO-4 is contests broad form designed for renters.HO-5 is comprehensive form insuring the dwelling, other structures, and personal property against the risk of direct physical loss to property.HO-6 is unit-owners form designed for condominium owners.
45Review Questions1. Identify the basic types of homeowner policies and indicate the groups for which each form is designed. 2. Explain the special limits of liability that apply to certain types of property. Why are these limits used? 3. List the various exclusions that are found in Section I of the Homeowners 3 policy. 4. What duties are imposed on the insured after a property loss occurs? 5. Describe the replacement cost provisions of the homeowners policy and five an example. 6. Explain how the homeowners policy responds to a covered loss if the loss is also covered by a home warranty or service agreement. 7. Explain the extended replacement cost endorsement. What is a guaranteed replacement cost policy? 8. Explain briefly how the mortgage clause protects the insurable interest of the mortgagee.
46Search for Information 资料查询：目前我国保险市场上居民财产保险单的承保风险责任、除外责任及保险金额。现实问题思考：结合美国房屋所有者保险，为我国居民住宅保险发展给出建议