Residential Property Insurance Coverages

Residential Property Insurance Coverages

Insight Insurance Consulting
Disclaimer Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. The instructional materials provided by The Insurance Community Center and its authors is intended as a general guideline and any interpretations provided by The Community do not modify or revise insurance policy language. Information which is copyrighted and proprietary to Insurance Services Office, Inc. (“ISO Material”) is included in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating Insurers. The authors of these materials, Insight Insurance Consulting and The Insurance Community Center assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided. Insight Insurance Consulting Copyright 2010 All Rights Reserved

What this class will cover
Steps in reviewing the residential property and identifying exposures Underwriting Considerations for the various policies

What this class will cover
Policies reviewed: Dwelling Fire Difference in Conditions and Wrap Arounds Homeowners Townhouses Tenants Package Cooperatives (Coop) Condominiums

Steps in reviewing residential properties and identifying exposures

Steps in reviewing the residential property and identifying exposures
Conduct a Residence Inspection Identify the types of residences to be insured Identify the types of occupancy for each residence Obtain information on the insured, ownership of the residence, and occupants

Complete the Residence Location Survey Sheet Identify Hazards Complete the Hazard Questionnaire Determine which program and type of policy the insured is qualified for

Complete the Homeowners Application Determine which insurance companies are best suited for the risk in terms of eligibility, coverages and pricing Submit the applications to the insurance companies

1. Conduct a Residence Inspection
Many insurance companies either require or expect that the insurance representative will physically see the property they are insuring and meet to prospective insured Inspections help in valuation and identifying potential hazards

2. Identify Type of Residential Property
Single Family Dwelling, Duplex; 3-4 Family Dwelling; Townhouse; Condominium; Cooperative; Apartment Unit; Mobile Home; RV (Motor Home, Fifth Wheel, Other)

2. Identify Type of Residential Property
An insured might have multiple residences that they own and/or rent. Some of the residences may be owner occupied as primary residences while others could be seasonal; part time; or rented to others.

3. Identify Type of Occupancy
Own the residence and Occupy as primary residence Own the residence and Occupy as a secondary or part time residence Own the residence and Occupy as a residence on a farm Own the residence on a farm and rent it out Own and Occupy in part and rent out part of the residence (Duplex, 3-4 Family Dwelling) Own and Rent to Others Rent

4. Identify Type of “Ownership”
Husband and Wife (Vesting) Husband or Wife (Vesting) Domestic Partners (Vesting) Individuals Co-Owners Estate Arrangement Family or “other” Trust Contract of Sale LLC

5. Complete the Residence Location Survey Sheet
The university has provided a residence location survey sheet in their checklists

6-7 Identify hazards The residence checklists provides guidelines for checking for hazards Hazards related to natural hazards and physical hazards of the residence to be insured

8-10 Qualification and Applications
Once the field underwriting process is complete then the correct market for the risk must be determined It is essential that the application is completed correctly and completely Supplemental information such as the university residential survey and pictures are helpful in the placement of coverage

Underwriting Considerations
Vary from Company to Company

Underwriting Considerations for Homes
Occupancy Owner Tenant Seasonal Secondary Condition of the home Age Upgrades Renovations Vacancy

Construction Details (such as) Roof Electrical Heating

Natural Hazards Location Flood, EQ, Wind Proximity to hazards like distance to tidal waters Brush Protection Class

Hazards Related to Occupancy Trampolines Dogs Swimming Pools Wood Burning Stoves Fuel Tank Storage

Hazards relating to the Insured Occupation Financial Stability Foreclosures/Bankruptcy Pride of Occupancy (Maintenance)

Usage of Home Residence Business, Agriculture, etc. Limits of Insurance Required Insurance to Value

Security SL Burglar Alarms Fire Protection Gated Community

Insurance Policies General Background

Insurance Policies There are several forms of insurance for residential properties The type of policy that should be written on a residence depends on the underwriting considerations discussed in this course

Insurance Policies In general the major considerations that determine the type of policy to be issued include: Type of Residence Ownership Occupancy Age, Condition and Protection Values Insurance Companies all have different eligibility requirements for different insurance forms

Owner Occupied 1-2 Family
Insurance Policies Owner Occupied Family Homeowners HO 3 Condominium HO 6 Dwelling Fire DP 1-3 Owner Occupied 3-4 Family CPL Non Owner Occupied Dwelling Fire DP 1-3 Dwelling Tenants Package HO 4 Contents

Dwelling Program DP Series of Forms

Reasons to Write the Dwelling Fire Program
Home does not qualify for a Homeowners Policy Residence is NOT owner-occupied Residence is in a designated brush hazard area Residence is under construction Home is vacant _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Residence value is less then the minimum or maximum allowable by the company Residence is a “seasonal” or secondary Residence is not up to the “physical” standards Residence may be owned in a name different from the “home owners” such as a partnership, joint venture or corporation _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

The insured may prefer having their home issued on a Dwelling Program because: The insured might not want or need the full range of homeowners coverages The Homeowners Program might be more expensive than the insured chooses to pay _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Dwelling Program The Dwelling Program can be written as a Property ONLY policy If written as a property only policy then the CPL could be written separately or added to an insured’s homeowners policy they have on another property Some insurance companies will include the Dwelling Fire with the CPL coverages _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Forms available in the Dwelling Fire Program
There are three Coverage Forms available in the DP series. The DP is the most comprehensive of the forms available. These forms offer property coverages on a dwelling and its contents similar to the coverages under Section I of the Homeowners Form. DP00 01 (DP 1) Basic Form DP00 02 (DP 2) Broad Form DP00 03 (DP 3) Special Form _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

DP Forms Available DP 1 Basic Form
Dwelling, Other Structures, Personal Property, Fair Rental Limited Named Perils DP 2 Broad Form Same as DP 1 with Additional Living Expense Broader Perils then DP1 DP 3 Special Form Special Form for Building & Other Structures Named Perils for Personal Property

DP 1 Dwelling Basic Form Fire or Lightning and Internal Explosion
Separate Premium for Windstorm Explosion Riot or Civil Commotion Aircraft Vehicles Smoke Volcanic Separate Premium for V or MM

DP 2 Broad Form Fire or Lightning Windstorm or Hail Explosion
Rio or Civil Commotion Aircraft Vehicles Smoke Vandalism or Malicious Mischief Damage by Burglars Falling Objects Weight of Ice, Snow or Sleet Accidental Discharge or overflow of water or steam Sudden and Accidental Tearing Apart… Freezing Sudden and Accidental Damage from Artificially Generated Electrical Current Volcanic Eruption

DP-3 Special Form Coverage A Dwelling and Coverage B Other Structures are Special Form subject to exclusions Personal Property-Named Perils For the same perils as DP 2 Broad Form

Endorsements Available
DP0104 DP 0312 DP0411 DP0414 DP0420 DP0431 Special Provisions Windstorm or Hail Percentage Deductible Automatic Increase in Coverage Additional Living Expense for DP1 Permitted Incidental Occupancy Improvements, Alterations and Additions

DP0404 DP0441 DP0463 DP0468 DP0469 DP047l Vandalism and Malicious Mischief Vacancy Additional Insured-Described Premises Loss Assessment Loss Assessment for Earthquake Earthquake Ordinance or Law

DP0472 DP0473 DP0495 DP0499 DP0530 DP1143 DP1766 Broad Form Theft Limited Theft Water Back Up and Sump Pump Overflow Sinkhole Collapse Functional Replacement Cost Dwelling Under Construction Unit Owners Coverage

Comprehensive Personal Liability CPL
Liability Coverages Comprehensive Personal Liability CPL

Personal Liability Coverage
Bodily Injury and Property Damage for which the insured is legally liable Medical Payments To Others Does not respond for the insured or members of the household Covers guests and visitors to the house

Liability Exclusions Expected or intended Business**
Rental other than of an insured location** Professional services** Premises owned, rented to an insured or rented to others not an insured location** Motor vehicles ** Endorsements Available

Liability Exclusions Watercraft Aircraft War
Transmission of communicable disease Sexual molestation Controlled substance

Liability Exclusions Assessments** Property damage to property owned
property damage to property rented Workers Compensation** Nuclear energy BI or PD to “you” **Endorsements Available

Medical Payments Exclusions
Residence employee off premises or in the course of work Workers compensation Nuclear Residents

Difference in Conditions (DIC) and Wrap Around Insurance

DIC and Wrap Arounds These are both methods for adding additional coverages to a Dwelling Fire Policy by means of a DIC or Wrap Normally they are written in conjunction with a DP 1 Basic Form The intent of the additional coverages is to modify the Homeowners Form to eliminate the coverages provided in the Dwelling Program and leave the “other” coverages on the Homeowners Policy in place.

Difference In Conditions / DIC
A DIC is a Homeowners Policy (HO 00 03/HO3) form. The DIC endorsement is attached to the Homeowners Policy which eliminates from the Homeowners Policy the perils of Fire ECE VMM _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Difference In Conditions / DIC
The DP-1 is written separately to cover the perils of Fire ECE VMM _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Advantages Of Combination DP-1 And DIC
All coverages afforded under a Homeowners Policy other than Fire, ECE and V & MM are made available. This includes such issues as: Theft Coverage Liability Coverage Homeowners Extensions of Coverage _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Disadvantages Of Combination DP-1 And DIC
For the perils of Fire, ECE and V & MM Coverage is only afforded as per the provisions of DP Coverage is ACV only There is No Additional Living Expense _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Wrap Around Policies A Wrap Around is a Homeowners Policy (HO 00 03/HO3) form The Wrap Around endorsement is attached to the Homeowners Policy which eliminates from the Homeowners Policy Fire, ECE & VMM _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Wrap Around Policies To the extent they are covered on the DP form. The Wrap pays excess over the DP coverages The DP 00 01/DP1 is written to cover the perils of Fire ECE VMM _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Wrap Around Policies The difference between the DIC and Wrap is that the Wrap eliminates the perils of the DP 1 only to the extent they are covered under that form _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Wrap Around Policies The Wrap is therefore EXCESS Fire, ECE, and V & MM Provides potential for higher limits DP 1 is ACV only so the Wrap picks up the difference between ACV and Replacement Cost Wrap Around provides first dollar Additional Living Expense in that it is not a coverage provided on a DP 1. The Additional Living Expense on the Wrap would apply even to the Fire, ECE & V& MM loss _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Homeowners Insurance

Homeowners Homeowners Policies are the premier policy for the owner of a home who occupies it as their residence. It is a package policy of Property and Liability and includes a lot of enhanced coverages and numerous endorsements. Every company has their own eligibility and their own form and endorsements ISO provides a guideline for homeowners coverages

What Types of Properties Are Insured On A Homeowner’s Policy
A Single Family Dwelling A Multiple Family Dwelling (1-2 units) A Townhouse Unit

Townhouse Similar to an individual home Two or more units
Sharing of a common wall with individual ownership up to the middle There is joint ownership of common property and a property owners association

Townhouse The owner owns the land beneath the home and the air above.
All improvements to their land i.e., the dwelling portion to the undivided shared wall and an undivided interest in common areas. Pool, recreation areas, landscaping, etc. Homeowners Policy HO3

Homeowners Forms Available
There are several “homeowners” forms available. However, not all of the forms listed are written in all states Specifically the HO 0001, HO 0002, HO 0005, and HO 0008 are written in limited states.

Homeowners Basic Form HO 0001 Not widely used Homeowners Broad Form HO 0002 Homeowners Special Form HO 0003 Coverage A, B, C, D

Contents Broad Form HO 0004 Coverage C,D Homeowners Comprehensive Form HO 0005 Coverage A, B, C, D Homeowners Unit Owners HO 0006 Coverage A, C, D

Homeowners Modified Form HO 0008 Coverage A, B, C,D

Components of the Policy
Agreement Definitions Deductible Section I Property Coverages Section I Perils Insured Against Section I Exclusions Section I Conditions

Components of the Policy
Section II Liability Coverages Section II Liability Exclusions Section II Additional Coverages Section II Conditions Section I & II Conditions

Agreement—The Contract
We will provide the insurance described in this policy in return for the premium and compliance with all applicable provisions of this policy.

Agreement An insurance contract is a contract of good faith
The insured relies on the good faith promise that an insurance company can and will pay claims as promised in the insurance contract. The insurance company, on the other hand, relies on the good faith and truthfulness of the insured in purchasing insurance protection

Definitions In the Homeowners Forms whenever a word is defined it is in parentheses in the policy language. Definitions are key to understanding the intent of the coverage and to determine whether coverage applies and if endorsements are required.

“You,” “We,” “Us,” “Our” In this policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse if a resident of the same household. "We," "us," and "our" refer to the Company providing this insurance. Lead-in language to the DEFINITIONS

“You,” “We,” “Us,” “Our” In this policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse if a resident of the same household. Note: Some carriers will write coverage for domestic partners. Note: There is a problem when a spouse is not named in the policy as a Named Insured if they are not residing with the spouse named on the policy.

“You”, “We”, “Us”, “Our” Solution: Name the spouse as a Named Insured.
Add the spouse as an Additional Insured using HO Trusts should be listed along with the individuals making up the trusts

Definitions (“Aircraft….)
1. Aircraft Liability, Hovercraft Liability, Motor Vehicle Liability and Watercraft Liability All definitions are put into the contract to define what is NOT covered on a Homeowners Policy

Definitions “Bodily Injury”
Bodily injury" means bodily harm, sickness or disease, including required care, loss of services and death that results. The definitions of aircraft, hovercraft, motor vehicle and watercraft liability has been added to the definitions section to facilitate the clarification in Section II that ANY liability arising out of these items is NOT covered unless specifically .This is a clarification and does not change coverage. Hovercrafts are added as excluded vehicles. Ask the students if they know what a hovercraft is. It is specifically defined in the policy as a self-propelled motorized ground vehicle and includes flarecraft and air cushion vehicles. We will discuss the actual exclusion when we get to Section II Exclusions. The definition of business has been revised in response to a judicial decisions that have made it clear that the intent of the policy was not clear. The new language is more specific. Activity involving full time, part-time or the occasional pursuit of a trade profession or occupation is considered business. Any other activity engaged in for monetary or other compensation is also included in the definition. They still “give back” any activity for which the insured receives less that $2000 in the previous year; volunteer activities for which no money is received, home day care for which no compensation is received, other than exchange of services; or home day care services for a relative of an insured. ISO does not consider this to be a change in coverage, although, depending on how individual claims were adjusted, some insureds may be affected. A definition for employee is added and includes leased workers but NOT temporary employees. It further states that a leased worker who is a residence employee is not considered an employee. The changes in the definition of insured are editorial. They have added the word “an” in front of “insured” and defined it as one or more insureds.

Definitions “Bodily Injury”
Problem: Coverage is limited to only the defined term of “Bodily Injury”.` An insured who, in addition to the residence premises on the HO has a rental property that liability coverage has been extended to include, in the event of invasion of privacy, wrongful eviction, etc., has coverage gap exists. An insured who is operating a business as a sole proprietor, employee, or partnership in the event of libel, slander, has a coverage gap.

Definition “Business”
Prior to the Homeowners 2000 form the definition of “business” was: "Business" includes trade, profession or occupation. The definition was vague and open to interpretation.

Most courts who have examined the issue of defining “business” and “business pursuits” agree that two criteria must be satisfied for a business to exist: (a) Expectation of gain (b) At least some degree of continuity

"Business" means: A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; or Any other activity engaged in for money or other compensation, except the following: One or more activities, not described in (2) through (4) below, for which no "insured" receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period; The definitions of aircraft, hovercraft, motor vehicle and watercraft liability has been added to the definitions section to facilitate the clarification in Section II that ANY liability arising out of these items is NOT covered unless specifically .This is a clarification and does not change coverage. Hovercrafts are added as excluded vehicles. Ask the students if they know what a hovercraft is. It is specifically defined in the policy as a self-propelled motorized ground vehicle and includes flarecraft and air cushion vehicles. We will discuss the actual exclusion when we get to Section II Exclusions. The definition of business has been revised in response to a judicial decisions that have made it clear that the intent of the policy was not clear. The new language is more specific. Activity involving full time, part-time or the occasional pursuit of a trade profession or occupation is considered business. Any other activity engaged in for monetary or other compensation is also included in the definition. They still “give back” any activity for which the insured receives less that $2000 in the previous year; volunteer activities for which no money is received, home day care for which no compensation is received, other than exchange of services; or home day care services for a relative of an insured. ISO does not consider this to be a change in coverage, although, depending on how individual claims were adjusted, some insureds may be affected. A definition for employee is added and includes leased workers but NOT temporary employees. It further states that a leased worker who is a residence employee is not considered an employee. The changes in the definition of insured are editorial. They have added the word “an” in front of “insured” and defined it as one or more insureds.

(2) Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity; (3) Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or (4) The rendering of home day care services to a relative of an "insured". The definitions of aircraft, hovercraft, motor vehicle and watercraft liability has been added to the definitions section to facilitate the clarification in Section II that ANY liability arising out of these items is NOT covered unless specifically .This is a clarification and does not change coverage. Hovercrafts are added as excluded vehicles. Ask the students if they know what a hovercraft is. It is specifically defined in the policy as a self-propelled motorized ground vehicle and includes flarecraft and air cushion vehicles. We will discuss the actual exclusion when we get to Section II Exclusions. The definition of business has been revised in response to a judicial decisions that have made it clear that the intent of the policy was not clear. The new language is more specific. Activity involving full time, part-time or the occasional pursuit of a trade profession or occupation is considered business. Any other activity engaged in for monetary or other compensation is also included in the definition. They still “give back” any activity for which the insured receives less that $2000 in the previous year; volunteer activities for which no money is received, home day care for which no compensation is received, other than exchange of services; or home day care services for a relative of an insured. ISO does not consider this to be a change in coverage, although, depending on how individual claims were adjusted, some insureds may be affected. A definition for employee is added and includes leased workers but NOT temporary employees. It further states that a leased worker who is a residence employee is not considered an employee. The changes in the definition of insured are editorial. They have added the word “an” in front of “insured” and defined it as one or more insureds.

Definitions “Employee”
"Employee" means an employee of an "insured", or an employee leased to an "insured" by a labor leasing firm under an agreement between an "insured" and the labor leasing firm, whose duties are other than those performed by a "residence employee."

Definition “Insured” "Insured" means:
You and residents of your household who are: (a) Your relatives; or (b) Other persons under the age of 21 and in the care of any person named above;

Definition “Insured” b. A student enrolled in school full time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of: (1) 24 and your relative; or (2) 21 and in your care or the care of a person described in a.(1) above; or

Additional Insured – Student Living Away From The Residence Premises - HO 05 27 10 00
Allows the definition of “insured” to be expanded to include an older student. Must have originally been a resident of the household. Must be a relative (any age) or a non-relative under the age of 21 and under the care of another insured. Must be enrolled in school and reside at the scheduled address.

Other Members Of Your Household - HO 04 58 10 00
Expands the definition of “insured” to include any scheduled person. Allows the off-premises personal property coverage to apply for this person’s benefit. The coverage for this person’s personal property is part of Coverage C. Provides that the named insured will fairly represent this person to the insurance company and will act on that person’s behalf.

Assisted Living Care Coverage - HO 04 59 10 00
This endorsement schedules a person living in an assisted living facility, such as long term nursing, assisted living, nursing home, rest home, etc. This person must be related to the insured by blood, marriage or adoption. This endorsement provides “insured” status for this scheduled person.

Residence Held In Trust – HO 05 43 10 00
Expands the definition of insured to include a “trustee”, who is not named in the Declarations page. Includes specific members of their family.

Other “Insured” considerations
It is very common for a home owner to have a loan on their home or other types of property. The Lenders Loss Payable Endorsement 438 BFU NS (05 42) is attached to the policy to provide “non-derivative” protection for the lender. Additionally the lender is named on the declaration page.

Additional Interests Residence Premises
In addition to the Mortgagee this endorsement allows for other persons or organizations who have an interest in the “residence premises” to be listed on the policy. The form does provide cancellation and non renewal notification to the parties so indicated.

Definition-“Insured location”
“Insured location” means: a. The residence premises; b. The part of other premises, other structures and grounds used by you as a residence; and (1)Which is shown in the Declarations; or (2)Which is acquired by you during the policy period for your use as a residence; c. Any premises used by you in connection with a premises described in 4.a. and 4.b. above; The definition of residence employee now includes leased employees and specifically does NOT include temporary workers furnished to the insured to substitute for a permanent “residence employee” or to do seasonal or short-term work. Again, this is a clarification and is not a change in coverages. The definition of residence premises has been broadened to include three or four family dwellings. The insured still must reside in one of the units and other structures and grounds at the location are also covered. In 1994 an endorsement for these dwellings was introduced, and since it has been approved in most jurisdictions, they have been added to the form and the endorsement (H ) has been withdrawn.

Definition-“Insured location”
d. Any part of a premises: (1) Not owned by an insured; and (2) Where an insured is temporarily residing; e. Vacant land, other than farm land, owned by or rented to an insured; The definition of residence employee now includes leased employees and specifically does NOT include temporary workers furnished to the insured to substitute for a permanent “residence employee” or to do seasonal or short-term work. Again, this is a clarification and is not a change in coverages. The definition of residence premises has been broadened to include three or four family dwellings. The insured still must reside in one of the units and other structures and grounds at the location are also covered. In 1994 an endorsement for these dwellings was introduced, and since it has been approved in most jurisdictions, they have been added to the form and the endorsement (H ) has been withdrawn.

Definition-“Insured location””
f. Land owned by or rented to an insured on which a one, two, three or four family dwelling is being built as a residence for an insured; g. Individual or family cemetery plots or burial vaults of an insured; or h. Any part of a premises occasionally rented to an insured for other than business use. The definition of residence employee now includes leased employees and specifically does NOT include temporary workers furnished to the insured to substitute for a permanent “residence employee” or to do seasonal or short-term work. Again, this is a clarification and is not a change in coverages. The definition of residence premises has been broadened to include three or four family dwellings. The insured still must reside in one of the units and other structures and grounds at the location are also covered. In 1994 an endorsement for these dwellings was introduced, and since it has been approved in most jurisdictions, they have been added to the form and the endorsement (H ) has been withdrawn.

Definition- “Motor Vehicle”
"Motor vehicle" means: a. A self-propelled land or amphibious vehicle; or b. Any trailer or semitrailer which is being carried on, towed by or hitched for towing by a vehicle described in a. above. NOTE: Definition is included to indicate what is NOT covered on a Homeowners Form

Definition — “Occurrence”
"Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in: a. Bodily injury; or b. Property damage.

Definition— “Property Damage”
"Property damage" means physical injury to, destruction of, or loss of use of tangible property.

Definition “Residence Employee”
An employee of an “insured” or an employee leased to an "insured” by a labor leasing firm, under an agreement between an “insured” and the labor leasing firm; whose duties are related to the maintenance or use of the “residence premises” including household or domestic services; or

Definition “Residence Employee”
One who performs similar duties elsewhere not related to the “business” of an “insured”. A “residence employee” does not include a temporary employee who is furnished to an “insured” to substitute for a permanent “residence employee” on leave or to meet seasonal or short tem workload conditions.

Definition “Residence Premises”
8. "Residence premises" means: a. The one family dwelling, other structures, and grounds; or; b. That part of any other building; where you reside and which is shown as the “residence premises” in the Declarations.

Definition “Residence Premises”
“Residence premises” also means a two family dwelling where you reside in at least one of the family units and which is shown as the residence premises” in the declarations.

Deductible The deductible is applicable only to Section1—Property Coverages The deductible will be indicated on the Declarations Page

Coverages Provided Homeowners HO 0003

Coverage Provided There are four “coverages” provided in the Homeowners. Dwelling Insured to 100% Replacement Cost B. Other Structures 10% of Coverage A Dwelling C. Personal Property 50% of Coverage A Dwelling D. Loss of Use 20% of Coverage A Dwelling

Additional Limits Of Liability For Coverages A, B, C, And D - HO 04 11 10 00
Used to increase the dwelling limit of coverage to apply when the loss exceeds the limit shown on the Declarations page. Specifies that the same policy percentages for Coverages B, C and D apply.

Section 1 Property Coverage
Coverage A Dwelling Coverage

Dwelling The dwelling must be used for dwelling purposes to qualify for a Homeowners Policy It must be occupied for qualification Typically the forms will state will limit recovery if the building has been vacant for 60 consecutive days for Vandalism and Malicious Mischief and exclude theft to a home under construction Some forms exclude all coverage if the building has been vacant 60 days.

Section I - Property Property Coverages
Explains the categories of property covered, special limits, excluded property, and additional coverages Perils Insured Against Describes the perils covered for direct loss to covered property

Section I - Property Exclusions
Lists the perils that are uniformly excluded for all covered property Conditions Establishes the insurer’s and policyholder’s responsibilities, and defines how losses will be settled

Coverage A - Dwelling The dwelling must be insured for 100% of the replacement cost. The dwelling amount is used to determine the coverages under B, C, and D as they are percentages of Coverage A

Extended Replacement Cost (ERC)
Many homeowners carriers are including Extended Replacement Cost for Coverage “A” on the policies. The ERC can be expressed as a percentage such as 125% or 150% of the coverage “A” limit. Or the ERC can be expressed in an additional amount of insurance on the Declarations Page

Inflation Guard H0 243 (04-84)-Inflation Guard Endorsement
Allows coverages A, B, C, D to be increased annually by a stated percentage.

Coverage A - Dwelling Dwelling provides coverage on the dwelling structure located on the residence premises including structures attached to the dwelling for the amount indicated on the declarations page

Coverage A - Dwelling Under Coverage “Dwelling:” materials and supplies located on or next to the residence premises used to construct, alter, or repair the dwelling or other structure on the residence premises. Land is not covered.

Coverage A - Dwelling Problem: Definition of construction.
There is no coverage for “theft in or to a dwelling under construction, or of materials and supplies for use in the construction until the dwelling is finished and occupied.

Coverage A - Dwelling Coverage “A “is generally provided on a replacement cost basis. The limit for coverage a must be at least 80% of the current replacement cost of the dwelling in order for losses to be settled at replacement cost. Replacement cost means the cost of replacing property without a reduction for depreciation. You must replace property or valuation reverts to actually cash value.

Coverage A--Dwelling There is an exclusion for Ordinance or Law which means the enforcement of any ordinance or law regulating the construction, repair, or demolition of a building or other structure, unless specifically provided under this policy. There is an endorsement available to remove the exclusion

Ordinance Or Law - Increased Amount Of Coverage - HO 04 77 10 00
The homeowner’s policy allows for 10% of the limit of coverage for Coverage A – Dwelling to apply to building ordinance compliance. This endorsement allows that percentage to be increased. Does not apply coverage to Coverage B, C or D.

Replacement Cost Loss Settlement For Certain Non-Building Structures On The Residence Premises - HO Allows for replacement cost coverage to apply to certain specified types of structures at the residence premises. Reinforced-masonry walls; Metal or fiberglass fences; Fences made of plastic/resin materials such as polyvinylchloride; Patios, walks (not made of wood or wood products); and Driveways. Does not include any response, other than the original policy coverage, for ordinance or law compliance.

Functional Replacement Cost Loss Settlement - HO 05 30 10 00
Allows for functionally equivalent building to replace the original structure. Buildings under Coverages A or B are eligible. Must be insured at least 80% to functional value. Must contract to rebuild within 180 days of loss.

Coverage A - Dwelling Some companies have special reproduction provisions for older homes especially those on the registry

Coverage B Other Structures
Provided for Automatically for 10% of the Coverage A Dwelling Amount

Coverage B – Other Structures
Coverage on a garage or other private structures not attached to or part of the dwelling. Includes such things as swimming pools, fences, tool sheds, tennis courts, and greenhouses.

We cover other structures on the residence premises set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line, or similar connection.

We do not cover: Land… Other structures rented or held for rental to any person not a tenant of the dwelling unless used solely as a private garage Other structures from which any “business” is conducted; or

Other structures used to store “business” property. However, we do cover a structure that contains “business” property solely owned by an “insured” or a tenant of the dwelling provided that “business property” does not include gaseous or liquid fuel other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure.

The 10% of coverage “A” that is automatically provided as a coverage “B” limit is increased by some carriers or specific coverage on scheduled structures can be obtained by endorsement.

The limit of liability for this coverage will not be more than 10% of the limit of liability that applies to Coverage A. Use of this coverage does not reduce the Coverage A limit of liability.

Problem: If the insured operates an incidental business in the home, coverage for the dwelling is provided. If the insured operates an incidental business or stores business personal property in the “other structure” the “other structure” is not covered.”

Solution: H Permitted Incidental Occupancies - Residence Premises Covers an other structure being used for a “business” conducted by an “insured” at a specified limit.. Identify on the endorsement the type of business and if it is operated in the Dwelling or Other Structure. The business MUST be operated as the named insured appears.

Other Structure Endorsements
H Special structures away from the residence premises Provides coverage at a specified limit for described structures at a location other than the “residence premises.”

H Coverage B - Off premises Allows coverage for non - specified structures away from the “residence premises.”

H Structures Rented to Others Residence Premises Covers described rental structures for a specified limit.

H Other Structures - Increased Limits Increases coverage on detached structures for an amount excess of the policy amount. The structure(s) that necessitates the increase must be described.

Coverage C Personal Property

Coverage C—Personal Property
The ISO Homeowners Form provides for the percentage of Coverage A to be 50% There are insurance companies who will issue the coverage with a higher percentage automatically Some carriers will allow the percentage to be higher by endorsement

We cover personal property owned or used by an insured while it is anywhere in the world. Covers the insured’s personal property worldwide, with no territorial restrictions

After a loss and at your request, we will cover personal property owned by: Others while the property is on the part of the residence premises occupied by an insured; A guest or residence employee, while the property is in any residence occupied by an insured.

Coverage C – Limit for Property at Other Residences
Our limit of liability for personal property usually located at an insured’s residence other than the residence premises is 10% of the limit of liability for Coverage C, or $1000, whichever is greater. However, this limitation does not apply to personal property:

Coverage C – Limit for Property at Other Residences
Moved from the “residence premises” because it is being repaired, renovated or rebuilt and is not fit to live in or store property in; or In a newly acquired principal residence for 30 days from the time you begin to move the property there.

Coverage C – Personal Property
Clarification: There is 100% off premises coverage available under Coverage C for covered personal property not subject to special limitation anywhere in the world. There is a 10% limitation in a secondary Residence Premises.

Personal Property Endorsement
H — Personal Property At Other Residences—Increased Limit Increases the 10% of Coverage C at an other “residence” by a specified amount.

Coverage C – Personal Property
Special Limits of Liability. There are special limits for different categories of coverage Insurance companies vary as to the amount of coverage they provide automatically Insurance companies will allow increases in these coverages or specific insurance by category added by endorsement

Types of Special Limits on Personal Property
Money, Gold, Coins, Etc. Securities, Etc. Watercraft, Trailers & Equipments Theft of Jewelry, watches, furs… Theft of firearms Theft of silverware… Property on the “residence premises” used primarily for business

Endorsements To Increase Internal Limits
HO Increase Limits on Business Property allows the limit to be increased to a maximum of $10,000 on premises and 10% of the increased limit away from premises. The HO DOES NOT provide stored property or stock. It may not be used for a business being conducted BY THE INSURED on the residence premises. The insured can purchase broader coverage on an Inland Marine basis.

Types of Special Limits on Personal Property
Property away from the “residence premises” used primarily for “business purposes. Electronic apparatus and accessories while in our upon a “motor vehicle”, but only if the apparatus is equipped to be operated by power from the “motor” vehicles’ electrical system while still capable of being operated by other power source.

Assisted Living Care Coverage - HO 04 59 10 00
This endorsement provides limited coverage for certain types of specified property, subject to the policy deductible. $250 for each hearing aid or other similar audio enhancement device. $100 for each pair of eyeglasses. $100 for all contact lenses. $500 for all false teeth or dentures. $500 for each medi-alert device. $250 for all walking aids and devices such as walkers or canes. $500 for each wheelchair

Loss Settlement--Endorsements
H0 290 (04-84) Property Replacement Cost Replaces ACV with RCV for Personal Property and awnings, carpeting, household appliances, outdoor antennas and outdoor equipment. H0 243 (04-84)-Inflation Guard Endorsement Allows coverages A, B, C, D to be increased annually by a stated percentage.

Property Not Covered Articles separately described and specifically insured in this or other insurance Animals, birds or fish (Mortality) Motor vehicles and parts (PAP) Aircraft and parts (Personal Aircraft) Hovercraft Property of roomers, boarders, and other tenants (Personal HO4)

Property Not Covered Property in an apartment regularly rented or held for rental to others by an “insured” “Business” data including such data stored in ….Credit Cards ,Electronic Fund Transfers… Water or Steam

Increased Special Limits Of Liability H / H (with H and H only) Money, securities, jewelry, firearms, silverware, electronic apparatus while in or while out of a vehicle are the classes of property that may be increased with this endorsement.

H —Scheduled Personal Property Endorsement Allows certain classes of property to have specific coverage with broader perils and no deductible.

Scheduled Personal Property Endorsement
The Scheduled Personal Property Endorsement Provides Coverage for a Schedule (List) of Specific Items.

Scheduled Personal Property Endorsement
A Loss to a Scheduled Item (Other Than Fine Art) Is Settled at the Lesser Of: Actual Cash Value The Cost to Repair the Item The Amount for Which the Item Could Be Replaced With on Substantially Identical to the Lost or Damaged Item.

Scheduled Personal Property Endorsement (With Agreed Value Loss Settlement) - HO 04 60 10 00
Allows for scheduled items to be paid at the scheduled amount shown. HO still provides coverage at ACV, except for fine arts, which are covered as scheduled. Expands the coverage to worldwide for all types of scheduled property. This endorsement also contains broad form pair and set coverage. This endorsement allows for a buy back of surrendered property.

Identity Fraud Expense Coverage HO 04 55 03 03
The endorsement provides up to $15,000 for “expenses” incurred by an “insured” as the direct result of any one “identity fraud” first discovered or learned of during the policy period.

Loss of Use Additional Living Expense

Coverage D—Loss of Use There are four insuring agreements
Additional Living Expense Fair Rental Value Civil Authority Prohibits Use Loss or Expense Not Covered

Coverage D – Loss of Use 2000 Edition Date Changes
3.Civil Authority Prohibits Use If a civil authority prohibits you from use of the "residence premises" as a result of direct damage to neighboring premises by a Peril Insured Against, we cover the loss as provided in 1. Additional Living Expense and 2. Fair Rental Value above for no more than two weeks. 4.Loss Or Expense Not Covered We do not cover loss or expense due to cancellation of a lease or agreement.

Coverage D – Loss of Use Loss of Use is provided for 20% of the dwelling amount If a covered loss makes the insured dwelling uninhabitable, the policy allows two methods of compensation for such loss:

Coverage D – Loss of Use Some insurance companies do limit Loss of Use with a percentage. Some companies will provide for unlimited Loss of Use but will specify the length of time they will pay for example 18 months.

Coverage D – Loss of Use Additional Living Expenses- the necessary increase in living expenses incurred by the insured to maintain the insured’s normal standard of living. Fair Rental Value- the amount of rent that could reasonably be charged for the premises, less any expenses that do not continue while the premises are uninhabitable.

Coverage D – Loss of Use We will pay for the necessary increase in your normal living expense if: Your residence is made untenantable by an off-premises power stoppage; and This power stoppage is caused by a peril insured against under Coverage A, B, or C

Coverage D – Loss of Use This coverage extension will not start until the residence premises has been untenantable for 48 hours and will continue for no longer than 7 days.

Subject to Certain Limitations for Specific Perils and Types of Losses
Additional Coverages Subject to Certain Limitations for Specific Perils and Types of Losses

Additional Coverages Debris Removal Reasonable Repairs
Trees, Shrubs, and Other Plants Fire Department Service Charge Property Removed Credit Card, Fund Transfer Card, Forgery, and Counterfeit Money

Additional Coverages Loss Assessment Collapse
Glass or Safety Glazing Material Landlord’s Furnishings Ordinance or Law** Grave Markers **New in 2000

Debris Removal Included in the limit of insurance that applies to the damaged property. If the amount to be paid for the damage plus the debris removal expense is more than the limit of liability an additional 5% of the limit is available. There is a limit of $1,000 for fallen trees subject to a limit of $500 for any one tree. Prior limit was $500 for both.

Trees, Shrubs and Other Plants
This is additional coverage 5% of the dwelling limit Subject to no more than $500 per item Only for fire, explosion, riot, aircraft, vehicles, vandalism or malicious mischief or theft. No windstorm coverage

Credit Card, Electronic Fund Transfer, Card or Access Device, Forgery and Counterfeit Money
$ limit provided H Credit Card Fund Transfer Card, Forgery And Counterfeit Money Increases the $500 limit for this coverage up to $10,000.

Loss Assessment We will pay up to $1,000 for your share of loss assessment charged during the policy period against you, as owner or tenant of the "residence premises", by a corporation or association of property owners.

Loss Assessment The assessment must be made as a result of direct loss to property, owned by all members collectively, of the type that would be covered by this policy if owned by you, caused by a Peril Insured Against under Coverage A, other than: (1) Earthquake; or (2) Land shock waves or tremors before, during or after a volcanic eruption.

Loss Assessment Endorsements
H Loss Assessment Coverage Increases the limit for loss assessments (up to $50,000 maximum). Limits deductible Loss Assessments to $1,000. Optional limits available for other specified locations.

Loss Assessment Endorsements
H Loss Assessment Coverage For Earthquake Adds coverage for earthquake damage at specifically described locations for a purchased limit at each location using a percentage deductible.

Collapse Collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its current intended purpose.

Collapse A building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse.

Collapse A part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building. A building or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion. The last three are new language as of the 2000 form.

Ordinance or Law You may use up to 10% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates This is new to the 2000 series. This can be increased with the HO Ordinance or Law Increased Amount of Coverage.

Authorization Of Building Codes
Municipal / County Building Codes Community Needs State Regulates Specific Industries Federal Building Codes Building Quality And Usage Of Federal Buildings ADA State compliance Not a building code

What Are Building Codes?
Insulation Landscaping Signs Materials Used - Occupancy Impact Parking ADA Regulate Everything About Construction Plumbing Electrical Structural Support Grading Sloping Roofing Flooring

What Are Zoning Laws Regulate Everything About What Is Built
Building Height Parking Allowance Occupancy Environmental Impact Studies Building Dimensions Vs. Land Size

What’s Not Covered Without Building Ordinance Coverage?
Tearing Down Undamaged Building Removing Debris Building Back That Part

Grave Markers We will pay up to $5,000 for grave markers, including mausoleums, on or away from the "residence premises" for loss caused by a Peril Insured Against under Coverage C. This coverage does not increase the limits of liability that apply to the damaged covered property

Perils of Insurance

Perils for Coverages A and B
“We insure against risk of direct loss to property described in coverage A and B only if that loss is a physical loss to property”

Perils for Coverages A and B
Perils excluded for Coverages A and B Coverage is limited by the perils excluded. If a peril is not listed within these exclusions, it is covered.

Perils for Coverage C We insure for direct physical loss to property described in Coverage C caused by a peril listed below unless the loss is excluded in Section 1—Exclusions

Perils for Coverage C Fire or Lightning Windstorm or Hail Explosion
Riot or Civil Commotion Aircraft

Perils for Coverage C Vehicles Smoke Vandalism or Malicious Mischief
Theft Falling Objects Weight of Ice, Snow, or Sleet

Perils for Coverage C Accidental Discharge or Overflow of Water or Steam Sudden and Accidental Tearing Apart, Cracking, Burning, or Bulging or a Steam, Hot Water, Air Conditioning or Automatic Sprinkler System, or Appliance for Heating Water

Perils for Coverage C Freezing
Sudden and Accidental Damage from Artificially Generated Electrical Current Damage by glass or safety glazing material Volcanic Eruption

Water Back-Up and Sump Discharge or Overflow HO 04 95 01 09
Provides for up to $5,000 for direct physical loss not caused by the negligence of an “insured” to property covered under Section 1 caused by water, or waterborne material which backs up through sewers or drains or overflows from a sump pump

Theft Peril Limitations and Exclusions
Theft committed by an insured. Theft in or to a building under construction, including construction materials and supplies, that occurs before the building is completed and occupied.

Theft Peril Limitations and Exclusions
Theft from any part of the residence premises rented to someone other than an insured. Theft of covered property from a secondary residence that the insured owns, rents, or occupies except while an insured is temporarily living there.

Section I--Exclusions
Ordinance or law Earth movement Water damage Power failure Neglect War Nuclear hazard Intentional loss Governmental Action

Section I--Exclusions
Weather Conditions Acts or decisions including the failure to act Faulty, inadequate or defective: Planning, zoning, development, surveying, siting Design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction Materials used in repair, construction, renovation or remodeling; or Maintenance

Power Failure H0 04 98-Refrigerated Property
Provides coverage for spoilage due to power failure or mechanical breakdown of the refrigerator or freezer for a specified dollar amount.

Conditions Insurable Interest and Limit of Liability
Duties After the Loss Loss Settlement Loss to a Pair or Set Appraisals Other Insurance and Service Agreement Suit Against Us Our Option

Conditions Loss Payment Abandonment of Property Mortgagee Clause
No Benefit to Bailee Nuclear Hazard Clause Recovered Property Volcanic Eruption Period

Conditions Policy Period Concealment or Fraud Loss Payable Clause

Section II—Liability Coverages

Section II Liability Coverage E—Personal Liability
If a claim is made or a suit is brought against an “insured” for damages because of “bodily injury” of “property damage” caused by an “occurrence” to which this coverage applies ,we will

Section II Liability Pay up to our limit of liability for the damages for which an “insured” is legally liable. Damages include prejudgment interest awarded against an “insured” and Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the “occurrence” has been exhausted by payment of a judgment or settlement.

Who Is an Insured for Section II - Liability Coverage?
The named insured’s spouse, if a resident of the same household. Note that it is always correct to show both spouses as named insureds, even if only one of them is on the deed. Show the “owner” on the first line with the correct trust deed ownership information and then the second spouse.

Who Is an Insured for Section II - Liability Coverage?
Relatives of the named insured, if residents of the same household. Anyone under the age of 21, if in the care of the named insured or resident relative and if residents of the same household.

Coverage E – Personal Liability
It also may be extended beyond bodily injury and property damage to include liability for personal injury with the personal injury endorsement (HO 24 82).

Liability Coverages Coverage F—Medical Payments To Others To others
Incurred within three years Reasonable charges On the “insured location”: Persons on the insured location with the insured’s permission.

Coverage F – Medical Payments to Others
Off the “insured location”: Arises out of a condition on the insured location or adjoining ways. Is caused by the activities of an insured. Is caused by a residence employee in the course of employment by an insured. Is caused by an animal owned by or in the care of an insured.

Section II Exclusions Motor Vehicles - Coverage is Excluded
Registered for use on public roads Used for Auto racing, or other competition Rented to others Carrying persons or cargo for a fee Business purposes So we see that the new exclusions clauses have become very specific as well. Starting with the broad statement that this coverage does not apply to any motor vehicle. Then, instead of just listing the instances in which coverage does not apply, each instance is defined specifically. They follow this same formula for watercraft. (these are the two coverages where courts have actually found coverage). They leave the aircraft and hovercraft exclusions very broad and depend upon the definition of these two items to be understood and preclude coverage. As you go down the list of exclusions, have a student read each one from the policy - to see just how specific they have gotten.

Section II Exclusions Motor Vehicles -Coverage Applies In dead storage
Solely for residence servicing Designed to assist the handicapped Being used as such Parked on an insured location Recreational use off public roads Not owned by an insured Owned by insured and on premises Since there are some instances where a motor vehicle is involved in injury that would be covered, (when the vehicle is not being used as a “vehicle” - because the auto policy would not apply), this coverage is found in the exclusions section as “givebacks”. Once again, run down the list from the slide and have a student read the actual policy language. It is much more specific, although the intent of the policy remains the same. In dead storage - up on blocks or without wheels, etc. Used for residence servicing - a riding lawn mower etc. To assist the handicapped - the golf cart used to get the mail Whether being used or just parked Rented or borrowed recreational vehicles are covered anywhere - snowmobiles, three-wheelers, dirt bikes, etc. If the insured owns the recreational vehicle, there is only coverage on premises. They should buy coverage for the owned vehicle because the usage is much greater than if they occasionally rent or borrow them.

Section II Exclusions Motorized golf carts – coverage applies
Parked at a golf course In use at a golf course Travel to and from the course Crossing roads in the course of play Private residential community In response to the growing use of motorized golf carts on golf courses and in residential communities, the exclusion has been revised and the coverage has been broadened. The intent of the policy is to cover the insured for their liability while golfing or on their own property. They have increased the verbiage in the policy to be specific about that. Since our society is aging, these golf carts have become a mode of transportation in some areas. They are not eligible for “auto” coverage, so the H0 steps in to cover them in certain circumstances. This is a BROADENING of the coverage to answer a need. This broadening only applies to owned carts. They are covered On a golfing facility when used for a permitted recreational or leisure activity - (sight seeing?, bird watching? Driving along with the golfers, but the driver is not golfing.) On a golfing facility when travelling to a from the parking area or cart storage area. Within a private residential community If it is legal to drive them on public roads Subject to the authority of the owners association instead of the municipal authorities.

Section II Exclusions Watercraft - Coverage is Excluded
Organized race or other competition Give back sailboats Predicted log cruises Rented to others Used to carry persons or cargo for a fee Used for business purposes The watercraft exclusion has always been very confusing. Since this is where liability coverage is found in some instances, it is difficult to dig out the coverages. The new language makes it somewhat easier. The actual coverage has not changed. Like a motor vehicle, there is no coverage for racing or competitions. There are two exceptions to that rule for watercraft: Sailboats Predicted log cruises Renting your boat, carrying persons or cargo for a fee and business use of watercraft is absolutely excluded with no exceptions.

Section II Exclusions Watercraft - Coverage Applies Stored Sailboat
Less than 26 feet More than 26 feet not owned or rented Motorboat Inboard/Outdrive not owned Even if the boat is not being used for racing or competition, rented to others, used to carry cargo, or for business, there is still no coverage for it. However, the next section is the “giveback” section. There will be coverage if: Any type of boat if it is stored If it is a sailboat less than 26 feet long If the sailboat is more than 26 feet long it is still covered if the insured does own it If it is a motor boat Inboard or inboard/outdrive not owned or rented by the insured - the insured is driving their neighbors boat There is no coverage for owned inboard/outboard boats - the policy specifically states 50 Hp or more and 50 Hp or less - but both are only covered if they are not owned or rented.

Section II Exclusions Watercraft - Coverage Applies 25 Hp or less
More than 25 Hp If not owned or rented Acquired during the policy period Reported or not Coverage applies for the policy period Acquired before the policy period Declared at policy inception Reported within 45 days of inception There is coverage for Motorboats that are Outboard motors with less than 25 Hp. Outboard motors with more than 25Hp Not owned or rented Acquired during the policy period Declared on the policy Reported to the insurance co. after it is acquired Obviously, the intent is to cover outboard motorboats, but if they are over 25 Hp, the company wants to know if you own it.(An underwriting consideration?) This is very clearly written in the new policy language, whereas, the old policy language made it seem a lot more complicated. For the outboard motor boats, if it is added during the policy period, the coverage applies until the end of the policy at which time, it has to be added to the declarations.

Endorsements H0 24 64 --Snowmobile
Provides Liability and Medical Payments coverage for owned snowmobiles specifically described on the endorsement. HO Snowmobile

Endorsement H0 24 75--Watercraft
Provides Liability and Medical Payments coverage for described watercraft.

Section II Exclusions Aircraft
This policy does not cover “aircraft liability.” Hovercraft Aircraft and hovercraft liability is completely excluded. There is no giveback. Expected or intentional acts are excluded. Any act that is intended or should be expected to cause injury or damage is excluded regardless of who is injured, what is damaged or the severity of the resulting injury or damage. The new policy language gives back coverage for the use of reasonable force to protect persons or property. This is broadening the coverage from the old policy. The Business and Rental Property exclusions have been combined in the new policy. Further, language is clarified so that there is no doubt that there is NO coverage if BI or PD arising out of or in connection with a business. It makes no difference if an insured owns or operates the business, is employed by the business, or rents part of a dwelling, an other structure or the grounds to another person who owns or operates a business. There is NO coverage for business pursuits. Of course there are some “givebacks” (they are the same as in the policy before) Occasionally renting out the insured location as a residence Having roomers or boarders in a single family residence Home offices, schools or studios Renting the garage as a garage The new policy language adds insureds under the age of 21 involved in part-time or occasional self-employed business with no employees.

Section II Exclusions Coverage E&F
Expected Or Intended Injury Business** Professional** Services “insured’s” Premises Not An “Insured Location” War Communicable Disease Sexual Molestation, Corporal Punishment Or Physical Or Mental Abuse Controlled Substances Liability for rendering or failure to render professional services is excluded. A professional liability policy would be needed for this coverage. Premises liability is excluded for those property that the insured owns or rents if that property is not on the policy. War is excluded whether it is undeclared, insurrection, warlike actions of the military, or seizure for use by the military. Discharge of a nuclear weapon is warlike even if it is accidental. The transmission of a communicable disease is excluded. Sexual molestation, corporal punishment or physical or mental abuse are all excluded. The use, manufacture, delivery, transfer or possession of a controlled substance is excluded. This exclusion goes on the define controlled substances. The legitimate use of prescription drugs under the supervision of a doctor is the “giveback”. Finally, there is coverage for bodily injury to a residence employee while they are working for injury caused by: Motor vehicles, watercraft, aircraft, hovercraft, on owned or rented property that is not on the policy. Since residence employees are exempt from WC, there has to be coverage for injury to them that the insured could be construed to be responsible for. If you take your personal maid with you on your Yacht you have coverage. That finishes up all the exclusions that apply to both liability and medical payments. Next we will look at exclusions that only apply to personal liability.

Expected or Intended Prior to 2000
Coverage E - Personal Liability and Coverage F - Medical Payments to Others do not apply to “bodily injury” or “property damage”: a. Which is expected or intended by the “insured”

Expected or Intended Exclusion - 2000 Language
"Bodily injury" or "property damage" which is expected or intended by an "insured" even if the resulting "bodily injury" or "property damage": a. Is of a different kind, quality or degree than initially expected or intended; or b. Is sustained by a different person, entity, real or personal property, than initially expected or intended

Business Exclusion Business Pursuits of the Insured, or the Rental or Holding for Rental of Any Premises by the Insured, Except If: Rented on an Occasional Basis Rented to No More Than Two Roomers or Boarders for a Single Family Unit Rented Only As an Office, School Studio, or Private Garage

Business Endorsements
HO No Section II—Liability Coverages For Home Day Care Business Limited Section I—Property Coverages For Home Day Care Business HO Home Business Insurance Coverage

Business Endorsements
HO Home Day Care Coverage HO Business Pursuits

Professional Exclusion
"Bodily injury" or "property damage" arising out of the rendering of or failure to render professional services;

Insured Location Exclusion
Injury or damage arising from any premises that are not insured locations and that are: Owned by an insured Rented to an insured Rented to others by an insured

Communicable Disease Exclusion
"Bodily injury" or "property damage" which arises out of the transmission of a communicable disease by an "insured;"

Sexual Molestation Exclusion
Sexual Molestation, Corporal Punishment Or Physical Or Mental Abuse "Bodily injury" or "property damage" arising out of sexual molestation, corporal punishment or physical or mental abuse; or

Controlled Substances Exclusion
"Bodily injury" or "property damage" arising out of the use, sale, manufacture, delivery, transfer or possession by any person of a Controlled Substance as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812. Controlled Substances include but are not limited to cocaine, LSD, marijuana and all narcotic drugs. However, this exclusion does not apply to the legitimate use of prescription drugs by a person following the orders of a licensed physician.

Exclusions for Coverage E Only
Personal Liability Does Not Apply To: Liability for the insured’s share in any loss assessment as a member of an association, corporation, or community of property owners. Liability assumed under any contract or agreement. Property damage to property owned by the insured.

Property Damage to Property Rented To, Occupied, Used by or in the Insured Care but Covers Damage Caused by Fire, Smoke, or Explosion. Bodily injury to any person eligible to receive benefits under any Workers compensation law; Non-occupational disability law; or Occupational disease law.

All Bodily Injury or Property Damage Covered Under a Nuclear Energy Liability Policy. Workers Compensation Intra-family Suits

Exclusions for Coverage F Only
Coverage does not apply to “bodily injury” To a “residence employee” To any person eligible to receive benefits voluntarily From any nuclear reaction, nuclear radiation, or radioactive contamination

Section II - Additional Coverages
Claims expenses First Aid expenses Damage to property of others Loss assessment Limit of Liability Severability Duties after an Occurrence Claims expenses: Costs incurred in defending any suit are paid by the company Bond premiums but not the bond itself Reasonable expenses of the insured at the company request including loss of earnings up to $250 a day. This is an increase from the previous $50. Postjudgment interest First Aid Expenses of others.

Section I and II - Conditions
Liberalization clause Waiver or Change Cancellation Non-renewal Assignment Subrogation Death Each Section of the policy has its own conditions that apply only to that Section, but some conditions apply to both. This policy only applies to damage which occurs during the policy period. The liberalization clause is being changed in the new policy. While this policy provision benefits the insured, it is not intended to apply to general program revisions containing both broadening and restrictions of coverage. So the language has been changed to state that if a change is made which broadens coverage without additional premium charge, that change will automatically apply but the clause does not apply to a general program revision containing both broadening and restrictions in coverage implemented through a subsequent edition of the policy or an amendatory endorsement. A waiver or change in a provision of the policy must be in writing. The insured may cancel this policy at any time by returning the policy or contacting the company in writing. The company may cancel only for the listed reasons. They must notify the insured in writing at the address contained in the policy. Proof of mailing is proof of notice. The company may cancel with 10 days notice At any time the premium has not been paid For any reason if the policy has been in effect for less than 60 days The company may cancel with 30 days notice If the policy has been in effect for more than 60 days or at any time if this is a renewal policy If there has been a material misrepresentation If the risk has changed substantially For any reason at renewal

Additional Coverages Amounts Payable Are in Addition to the Limits of Liability for Coverages E and F. Claim Expenses – Provides for Insurer Payment of Litigation Expenses for Claims Against an Insured, Including Reimbursement of Wage Loss up to $50 Per Day When the Insured Is Assisting in the Investigation or Defense of a Claim. First Aid Expenses – Reimburses the Insured for Expenses Incurred in Securing First Aid for Others.

Additional Coverages Damage to Property of Others – Pays Replacement Cost up to $500 Per Occurrence for Damage to the Property of Others Caused by an Insured.

Additional Coverages Loss Assessment – Pays up to $1,000 for a Share of Any Loss Assessment That Is Charged by a Corporation or Association of Property Owners to Which the Insured Belongs, for Loss at the Residence Premises That Is a Result of a Covered Occurrence, or Acts of Volunteer Officers and Directors of the Association.

Severability of Insurance Conditions of Section II
States that the insurance applies separately to each insured. Therefore, each insured is treated as though he or she has separate coverage under the policy. However, the limit of liability per occurrence remains the same regardless of the number of insureds.

Owned Motorized Golf Cart Physical Loss Coverage - HO 05 28 10 00
Scheduled limit applies. Parts and accessories are covered, but only up to 10% of the limit for the cart. Golf Cart" means a motorized conveyance that is: Designed to carry up to four people on a golf course for the purpose of playing golf. Speed maximum of 25 miles per hour on level ground.

Home Business Insurance Coverage - HO 07 01 10 00
Additional Definitions of “advertisement” has been added. "Advertisement" means a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. Definition of Personal and Advertising Injury has been added. This change conforms with the 1998 Commercial General Liability and further limits the response of the liability portion of this endorsement.

Personal Injury - HO This endorsement separates “personal injury” from the original policy definition of “bodily injury”. The endorsement now contains a separate definition of “personal injury”. Provides up to $1,000 of coverage for loss assessments. Specifies that offenses relating to defamation apply to oral and written publications.

Personal Injury - HO Clarifies that the offenses of “wrongful eviction,” “wrongful entry” and “invasion of the right of private occupancy” apply to improper actions regarding a room, dwelling or premises. New exclusion applies if the insured has knowledge that an action would violate the other person’s rights. Excludes any loss arising out of pollution. A more detailed exclusion of knowledge of falsity and loss arising out of a “criminal act” committed by or at the direction of the insured now applies.

Insuring the Apartment Unit Risk

Apartment An apartment can pertain to many types of dwelling units. What they have in common is that they are “tenant” occupied. The owner of apartment units could occupy a unit for their own residence premises but they would then be the apartment owner.

Apartment An apartment building is a multi tenant housing building which has rental units that can be rented on a month to month basis or for a longer period of time. Tenants may also enter into lease agreements which obligate them for a longer period of time

Apartment Tenant’s Responsibility Premises Liability Insurance
Responsible for their own personal property May be responsible for any alterations or additions they add to rental units Insurance is written on an HO 04

Apartment Apartment Owner is responsible for:
All building property All outdoor property All owned indoor property All furniture in furnished apartments All landscaping All common areas Own Liability Insurance is written on an Apartment Package

Insuring the Cooperative Risk

Cooperatives Cooperatives may look like an apartment house or a condominium What distinguishes all of them is the “ownership” of the buildings and units. In an apartment situation there is no sharing of the ownership of the building and common areas. The apartment owner owns the property solely and has sole responsibility to insure for the property.

Cooperatives (Co-op) The concept of cooperatives began in 1926 in New York. It is one of the oldest multi family type of housing. The ownership of the co-op is a non-profit corporation made up of all of the unit owners. Each unit owner has a fractional interest in the ownership of the buildings and the common areas.

Cooperatives (Co-op) Different from a condo, no one legally owns their own units but owns them all in common. There is a commercial package placed on the cooperative similar to that placed on the apartment property. Each individual co op owner insures their own personal property and liability on an HO 04 form

Insuring the Condominium Homeowner Risk

Condominium The word “condominium comes from the Latin word meaning joint ownership or control. Condominiums were originally developed by the Romans to solve congested living conditions and to promote conservation. In modern terms it denotes individual ownership of units with the sole right to sell the unit.

Condominiums In the United States Condos were built as early as 1947 but not legally recognized until 1961. By 1968 all states in the United States had passed legislation authorizing condominium developments

Condominium Condominium typically means the unit owners property interest in a multi-unit building. The unit owner must have A fee-simple title to the unit owned and an undivided interest in common with all other owners of the project in the land, buildings, etc. Which are not deemed to be units by the condominium declarations.

Condominium Condominiums are defined in law in the civil code
Additional, the specifics of ownership and responsibility are detailed in the CC & Rs of the association. There are four general classifications of residential homeowners associations: Simple Condominiums ( Section 783) A, B, C, D, E, Condominiums Regular Planned Unit Developments Loose Planned Unit Developments

Condominium Condominium “unit”
Oftentimes referred to as the “air space” within the unfinished walls, floors and ceilings. Building The CC &R’s will define “building” for purposes of sole ownership and common ownership. The Association will provide coverage on their association policy for common building elements. Common Elements Usually defined as the entire projects other than the units. These would be land, basic building structures, lobbies, corridors, roofs, and similar areas. Also, parking as storage areas.

Condominium Time share condominium
Is a type of condominium, however rather than buying a unit the individuals by “time” they can spend using the unit. There are multiple owners on each unit. The association in the CC & R’s will indicate how the insurance is to be provided. Typically the association purchases the insurance on the structures including the units and the individual unit owners pay for the premium as their financial interest vests on the condominium unit

Condominium In the single entity unit there will be two insurance policies purchased. One is purchased by the association for what they are legally obligated to insure and the other is purchased by the unit owner for their individual responsibility.

Condominium There are three general concepts to the co-ownership of the unit. The CC & R’s will provide details on the specific ownership Bare Walls—The unit owner owns everything from the stucco “in” which means all wall coverings; appliances; dividing walls; and any items attached to the walls.

Condominium All In Concept-- The association has an interest in the original additions and alterations inside the unit at the time of construction. Any improvements made to the unit after the original construction is the responsibility of the unit owner.

Condominium All In Inclusive—The association is responsible to insure everything in the units other then the individuals contents. It all depends on which type of condominium definition is being used to determine what coverages and limits of insurance must be purchased by the association and the individual unit owner.

Condominium

Condominium The unit owner will purchase an HO form which includes both property and liability Coverage A is for Additions and Alterations Coverage C is provided for the personal property Coverage D is for the Loss of Use

Condominium The individual Unit Owner is responsible for:
Their own personal property That portion of the unit in which they have a sole interest Additions or alterations within their unit (for they have sole interest) Use of the unit Use of the limited common area Special condominium assessments

Condominium The association is responsible to insure:
Buildings, (excluding those portions in which the unit owner has sole interest) can include additions or alterations dependent on the association declarations/CC & R’s Association personal property and owners property in the care, custody or control of the association

Condominium Pools, fences, signs, light poles and other structures on the common area Retaining walls, underground utilities, sprinkler systems, driveways, walks etc. Lawns, trees, plants and shrubs Under some declarations the buildings include the units

Residential Property Insurance Coverages

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Residential Property Insurance Coverages

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