Homeowners Liability Insurance Chapter 10 Introduction of the topic and yourself (name, where you work, job title)

What is Liability? Owners of property have duty to protect people who are on the premises for legitimate purposes from harm Failure to do so can make them legally responsible You can also become liable to others for injuries and damage that occur away from home Speak to the students about cases that involved a homeowner, renter or business owner. What was the source of liability in each case? What injuries or damages were cause? Discuss dogs, pools and other risks insurers do not like 2

Homeowners Insurance Provides protection for legal liability to others from bodily injury and property damage that arises out of the premises where the insured resides or his or her activities that take place away from the insured location Coverage E in the Homeowners policy Speak to the students about cases that involved a homeowner, renter or business owner. What was the source of liability in each case? What injuries or damages were cause? Discuss dogs, pools and other risks insurers do not like 3

Homeowners Policy Package policy for individuals that own a home or rent a residence (apartment or home) Includes both property and liability insurance Liability section is same for all different types of homeowner policies (e.g., HO-3, HO-4, HO-6) Liability divided into: Coverage E: Personal Liability Coverage F: Medical Payments to Others

Coverage E- Personal Liability Two important elements: Pay for damages for which the insured is legally responsible Subject to policy limit. Basic limit is $100,000 per claim. It can be increased Provide a defense to the insured for any suits covered by the policy Coverage is unlimited. Additional coverage provided by the policy In order to have coverage under a liability policy: Insured must be legally responsible for the injury or damage Occurrence must take place during the policy period Event must be covered by the policy Go over the basics of liability insurance in the homeowners policy.

Who is Insured? Homeowners policies liability coverage protect Spouse living in household Relatives living in household Under 21 in your care: Exchange student, foster care Relatives under age 24 enrolled in school full-time Instructor- 2 minutes- more intro to Homeowners

Vicarious liability: Liability that is transferred from one person to another (e.g., parent responsible for child's actions) Bodily injury: Bodily harm, sickness or disease including required care, loss of services and death that results from injury Property Damage: Physical injury to, destruction of, or loss of use of tangible property Occurrence: Accident including continuous or repeated exposure to harmful conditions Go over these definitions so students understand what you are talking about later on in the presentation. You can add examples to each word to illustrate them better to the students if need me.

Insured Location Residence premises (property where home is located) Non-owned premises where insured temporarily resides (e.g., hotel) Secondary residence (e.g., beach house) Vacant land Location rented by insured (e.g., ballroom for wedding) Instructor- 3 minutes

Coverage F-Medical Payments Covers Individuals on premises Applies to injuries that take place on the insured location and at other locations due to activities of insured Does not cover you or anyone included in the definition of insured – this coverage is for your guests Explain how medical payments works in the homeowners policy. Explain that First Aid coverage got its name because insurance companies want to payout quickly so the other party does not sue. Take care of the damages/injuries before they become worse. 9

Things Not Covered Under Liability and Medical Payments Motor vehicles – covered under Personal Auto Policy Motorized watercraft – small boats are covered but large ski boats, yachts, jet skis are covered under boat policy Aircraft and Hovercraft Intentionally hurting someone Running a business out of your home Professional liability War, illegal substances, communicable diseases and abuse

More Medical Payment Exclusions Injuries to residence employees (e.g., maid or nanny) Injury to anyone who resides in house Go over what is not covered and why it is not covered.

Discussion Question An insured owns a jet ski It has a 25 horsepower inboard motor If the insured injures someone while operating the jet ski – would the homeowner policy apply? Instructor- 5 minutes- allow them to work in teams…use coverage form to answer Answer: No- Exclusion for watercraft

Higher limits can be purchased Coverage Limits Basic Coverage: Personal Liability $100,000 Medical Payments $1,000 Damage to Property of Others $1,000 Higher limits can be purchased

Homeowner Endorsements Endorsements are optional coverages Earthquake Endorsement Personal Property Replacement cost Scheduled Personal Property Jewelry Furs Collectibles Personal Injury – libel, slander Identity Theft Go over the different types of endorsements people can have with their homeowners dealing with liability in the policy. 14

Determining Premium Age and type of construction of dwelling Type of roof Location – fire protection Value of home – Coverage A Deductible chosen Type of homeowner policy Different perils covered HO-2, HO-3,HO-5 Optional coverages chosen Premium receives a credit for: Smoke alarms Deadbolts Central burglar system Automatic sprinkler system Instructor-4 minutes- discuss homeowner premiums… Townhouses pay more due to multiple living units connected Fire Protection Grade (Class) Different communities receive different fire protection grades (by special bureaus). A fire protection grade is composed of an evaluation of the following factors: the available water supply competency of fire fighting personnel type and quality of fire fighting equipment distance from fire department and response time distance from fire hydrants, etc. The lower the grade, the better the overall fire protection and, therefore, the lower the rate. The grades go from one to ten, though the lowest rate that is awarded for the best overall fire protection is two. All of the communities (or residence locations) that fall within a given grade make up a fire protection class. Homes and other structures with a grade 9 or 10 are, for all intents and purposes, unprotected and receive the highest rates. Give examples for types of construction