1 TYPES OF PROPERTY POLICIES Flashcards
Dwelling policies
used for residental dwelling purposes
cannot have more than 4 dwelling units o
or more than 5 roomers or boarders
mobile homes are eligible if they are permanently affixed to a foundation, but only on the Basic Form of coverage (DP–1).
Incidental business occupancies, such as schools, studios, and offices, are permitted if the primary use of the dwelling is as a personal residence.
Dwellings located on farms are not eligible.
DP–1 (Basic Form)
The perils insured against are fire, lightning, and internal explosion. If an additional premium is paid for Extended Coverage (EC), the following perils are also included:
Wind storm or hail
Explosion
Riot or civil commotion
Aircraft, vehicles
Smoke
Volcanic eruption
The peril of vandalism or malicious mischief (VMM) may also be included with the payment of an additional premium. EC and VMM coverages, if purchased, must appear on the declarations. If VMM is purchased, it excludes loss for vandalism in vacant buildings.
Losses to the dwelling, other structures, and contents are paid on an actual cash value basis.
dp-2 dwelling form
DP-2 (Broad Form)
The perils insured against are the DP–1 perils, the EC perils, VMM and the following:
Damage by Burglars – This does not include theft coverage nor does it apply if the dwelling was vacant 60 or more consecutive days immediately before a loss.
Falling objects – Damage to the exterior of the building must take place for coverage to apply to contents inside the building.
Weight of ice, snow, or sleet – This doesn’t apply to awnings, patios, pavements, pools, etc.
Accidental discharge or overflow of water or steam – Must occur from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or household appliance. This doesn’t apply to constant or repeated seepage or leakage over a period of time or if the dwelling was vacant 60 or more consecutive days immediately before a loss.
Sudden and accidental tearing apart, cracking, burning, or bulging – Must occur to a steam or hot water heating system, air conditioning system, or automatic fire protective system, or household appliance.
Freezing – Must occur to a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or household appliance. Applies only if the insured used reasonable care to maintain heat in the building OR shut off the water supply and drained all systems of water.
Sudden and accidental damage from artificially generated electrical current – This peril is caused by man-made electricity or power surge and does NOT apply to damage to tubes, transistors, electronic components, or circuitry contained in appliances, fixtures, computers, etc.
The Damage by Burglars peril includes damage to the covered property caused by the burglar, but not theft of property. The Vehicle peril does not include loss to a fence, driveway, or walkway caused by a vehicle owned or operated by the insured. The Smoke peril does not include loss caused by smoke from agricultural smudging or industrial operations.
Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to personal property are paid on an actual cash value basis.
dp-3 dwelling form
Dwelling Coverage Forms (continued)
DP–3 (Special Form)
Coverage for the dwelling and other structures is provided on an open perils basis, meaning coverage is provided for all causes of loss except for those perils specifically excluded. In addition to the policy’s General Exclusions, the DP–3 specifically excludes the following losses under Coverages A and B:
Collapse, except for coverage provided by Other Coverages.
Freezing, thawing, or weight of water or ice on patios, fences, swimming pools, foundations, piers, docks, retaining walls, etc.
Theft of property not part of a covered building or structure.
Theft in or to a dwelling or structure under construction.
Wind, hail, ice, snow, or sleet to outdoor radio and TV antennas and aerials, trees, shrubs, plants, and lawns.
Vandalism and malicious mischief, theft or attempted theft, and any ensuing loss if the dwelling has been vacant for more than 60 consecutive days immediately before a loss.
Constant or repeated seepage or leakage of water or steam over a period of time from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or household appliance – these systems and appliances do NOT include sumps, sump pumps, mold, fungus, or wet rot unless resulting from accidental discharge or overflow of water or steam and is hidden from view.
Any of the following: wear and tear; deterioration; mechanical breakdown; smog, rust, or corrosion; smoke from agricultural smudging or industrial operations; pollution; settling, cracking, bulging, or expansion of foundation, walls, floors, pavement, or patios; and birds, vermin, rodents, insects, or domestic animals. Theft of property that is part of the dwelling or other structures is covered as long as the dwelling or other structures have not been vacant for more than 60 days. Theft of contents is still excluded unless coverage has been added by an endorsement.
HOMEOWNER
A. Homeowners
Eligibility
All homeowners forms, with the exception of the Contents Broad Form (HO–4) and Unit-owners Form (HO–6), require the named insured to be the owner/occupant of the insured dwelling. The dwelling must be the principal residence of the named insured, and incidental business occupancies such as offices, studios, and schools are permitted.
The Contents Broad Form (HO–4) and Unit-owners Form (HO–6) are written to insure the personal property and personal liability of the named insured who does not own the building in which he/she lives. The HO–4 is designed for tenants of residential units (i.e., dwellings and apartment units) and provides no coverage for buildings and other structures. The HO–6 is designed for the owners and tenants of condominium or cooperative units. Coverage is provided for the portion of the building the named insured owns (or is responsible for insuring), personal property, and personal liability.
Eligible residential dwellings are those containing one to four residential units and no more than 2 roomers or boarders per family. Dwellings under construction, and that will be the primary residence of the named insured upon completion of construction, are also eligible for coverage
HOMEOWNER FORMS
- HO-2
HO–2 (Broad Form)
This form provides named perils coverage for the dwelling (Coverage A), other structures (Coverage B), and personal property (Coverage C). The 16 named perils are:
Fire or lightning
Windstorm or hail
Explosion
Riot or civil commotion
Aircraft
Vehicles
Smoke
Volcanic eruption
Vandalism or malicious mischief
Theft (limited)
Falling objects
Weight of ice, snow, or sleet
Accidental discharge or overflow of water or steam
Sudden and accidental tearing apart, cracking, burning, or bulging of heating or air conditioning systems (HVAC)
Freezing
Sudden and accidental damage from artificially generated electrical current
Losses under Coverages A and B are valued on a replacement cost basis. Although coverage for personal property (Coverage C) is provided on the same named perils basis as the dwelling and other structures are, losses are valued on an actual cash value (ACV) basis.
This form does not cover loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured.
- HO-3
HO–3 (Special Form)
In the Special Form (HO–3), the dwelling and other structures (Coverages A and B) are insured on an open perils basis, meaning all perils are insured if they aren’t specifically excluded in the policy. Losses to the dwelling and other structures are valued on a replacement value basis just as they are in the HO–2. The Special Form (HO–3) specifically excludes the following causes of loss under Coverage A and B:
Collapse, except as provided by Additional Coverages
Freezing of household appliances or a plumbing, heating, air conditioning, or automatic fire protective system unless the insured has taken reasonable care to maintain heat in the building or shut off the water supply and drained the appliances and systems of water
Freezing, thawing, pressure or weight of water or ice on patios, fences, swimming pools, foundations, piers, docks, retaining wall
Theft in or to a dwelling under construction, including construction-related materials and supplies
Vandalism and malicious mischief, including ensuing loss, if the dwelling has been vacant for more than 60 consecutive days immediately before the loss
Mold, fungus, or wet rot unless resulting from accidental discharge or overflow of water or steam that is hidden from view
Wear and tear, marring, deterioration, mechanical breakdown, latent defect, inherent vice, smog, rust, corrosion, dry rot
Smoke from agricultural smudging or industrial operations
Pollution including discharge, dispersal, seepage, migration, or release of smoke, vapor, fumes, acids, or other chemicals unless such discharge is caused by a Coverage C Peril Insured Against
Settling, cracking, bulging, or expansion of foundation, walls, floors, pavements, patios
Birds, vermin, rodents or insects
Animals owned or kept by an insured
Personal property (Coverage C) is insured on a named perils basis that includes the same 16 named perils in the Broad Form (HO–2). Coverage C losses are valued on an actual cash value basis. It Includes losses to a fence, driveway or walk caused by a vehicle owned or operated by the insured.
The burden of proof for losses to the dwelling and other structures falls to the insurer because coverage is provided on an open perils basis. On the other hand, the burden of proof for losses to personal property falls to the insured to show which of the 16 named perils caused the loss.
HO–4 (Contents Broad Form)
The Contents Broad Form is also known as the renter’s or tenant homeowners policy. It doesn’t provide any coverage for the dwelling or other structures because it’s designed to insure those who are tenants. The HO–4 insures personal property under Coverage C against loss from the 16 named broad form perils found in the HO–2 and HO–3 forms. Personal property losses are valued on an actual cash value basis, as they are on the HO–2 and HO–3 forms.
HO–5 (Comprehensive Form)
The Comprehensive Form provides the broadest coverage of any of the homeowners forms. Coverage A - Dwelling, Coverage B - Other Structures, and Coverage C - Personal Property provide insurance on an open perils basis.
Losses to the dwelling and other structures are valued on a replacement cost basis, losses to personal property are valued on an actual cash value basis.
Homeowner Coverage Forms (continued)
HO–6 (Unit-Owners Form)
The Unit-owners Form provides named perils coverage to the owner of a condominium or cooperative unit under Coverage A - Dwelling and Coverage C - Personal Property. Coverage B does not appear in this form; however, if the owners of condominiums or cooperative units wish to insure other structures, the value of other structures may be included in the Coverage A limit of insurance.
The form insures real property (building and building items) for which the insured is responsible under the bylaws of the condominium association or cooperative corporation. It also insures personal property of the insured while anywhere in the world.
Homeowner Coverage Forms (continued)
HO–8 (Modified Form)
The loss valuation method for the Modified Coverage Form is typically Actual Cash Value (ACV). However, if exact materials are not available, they may be replaced with materials that will perform the same function and have the same efficiency, even if they aren’t of like kind and quality.
The Modified Coverage Form is often used to insure older homes when the replacement and market values of the dwelling are disproportionate or if a moral hazard would be created if insurance were written at 100% of replacement cost. An example of a dwelling that would be insured under this coverage form is an old Victorian home. If the property were destroyed in a loss, the insured would not want to restore or replace it exactly as it was before the loss, or they may not be able to find the necessary materials to recreate the dwelling exactly as it was. Instead of insuring the dwelling for its replacement value of $1,200,000, the insured could insure it for a much lower amount of insurance using this form.
The HO-8 does not cover the following perils:
Falling objects
Weight of ice, sleet, or snow
Accidental discharge of water or steam
Accidental tearing apart, cracking, burning, or bulging of heating or air conditioning systems
Freezing
Sudden and accidental damage from artificially generated electrical current
Homeowners Coverages
Section I
Section II
Coverage A - Dwelling
Coverage E - Personal Liability
Coverage B - Other Structures
Coverage F - Medical Payments to Others
Coverage C - Personal Property
Coverage D - Loss of Use
- Commercial Package Policy (CPP)
The Common Policy Declarations Page shows the Who, What, When, Where, and how much that applies to the insurance provided by the policy. It defines each of the coverage parts included on the policy. Each coverage part also contains its own unique declarations page:
Who: The Named Insured, which is the individual or business entity for whom insurance is provided.
What: A description of the business being insured.
When: The policy period, which includes the effective and expiration dates. Commercial package policies are written for terms of one year.
Where: The mailing address of the named insured.
How Much: On the common declarations, this includes the total premium charged for each coverage part as well as the total policy premium. If a premium does not appear next to a coverage part on the common declarations, no coverage is provided.
COMMERCIAL PROPERTY
a. Commercial building and business personal property form
The Building and Personal Property Coverage Form describes how property coverage applies to the following classes of property: buildings, business personal property of the insured, and personal property of others. There is no liability coverage provided by this form.
COMMERCIAL PROPERTY
b. Causes of loss forms
c. Business income
d. Extra expense
e. Equipment breakdown
b. Causes of loss forms
c. Business income
d. Extra expense
e. Equipment breakdown
COMMERCIAL PROPERTY
b. Causes of loss forms
c. Business income
d. Extra expense
e. Equipment breakdown
b. Causes of loss forms
c. Business income
d. Extra expense
e. Equipment breakdown
- Business Owners Policy (BOP)
- Builders Risk
D. Inland marine
1. Personal Articles floaters
2. Commercial Property floaters
E. National Flood Insurance Program
F. Others
1. Earthquake
2. Mobile Homes
3. Watercraft
4. Farm Owners
5. Windstorm
Additional Coverages
Debris Removal – The policy will pay up to an additional $10,000 for debris removal expense, for each location, in any one occurrence of physical loss or damage to covered property if the total of the actual debris removal expense plus the amount paid for the direct physical loss or damage exceeds the limit of insurance on the covered property.
Preservation of Property – The policy will cover on an open perils basis, for up to 30 days, property while being moved or temporarily stored at another location to save and protect it from damage by a covered peril.
Fire Department Service Charge – The policy will pay up to $2,500 for the insured’s liability for fire department service charges assumed by contract or agreement prior to loss, or required by local ordinance.
Collapse – Collapse is defined as 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 intended purpose.
Water Damage, Other Liquids, Powder, or Molten Material Damage – The policy will pay the cost to tear out and replace any part of the building or structure to repair damage to the system or appliance from which the water or other substance escaped.
Business Income – The policy will pay for the actual loss sustained for a period of 12 consecutive months after the date of direct physical loss or damage. However, ordinary payroll expenses are paid only for 60 days following the direct physical loss or damage, unless a greater number of days is shown in the Declarations. This additional coverage is not subject to the limits of insurance in Section I.
Extra Expense – The policy will pay for the necessary extra expenses the insured incurs for up to 12 consecutive months after the date of direct physical loss or damage. This additional coverage is not subject to the limits of insurance in Section I.
Pollution Cleanup and Removal – The policy will pay up to $10,000 per location for pollution cleanup and removal due to a covered loss occurring during each separate 12 month period.
Civil Authority – The coverage applies when civil authorities prohibit access to the described premises due to a covered loss that occurs within 1 mile of the insured’s property. The coverage begins 72 hours after the action occurs and ends 4 consecutive weeks after the coverage begins.
Additional Coverages (continued)
Money Orders and Counterfeit Paper Currency – The policy will pay up to $1,000 for any one loss resulting from the insured having accepted, in good faith, money orders issued by the post office, bank, or counterfeit paper currency during the regular course of business.
Forgery or Alteration – The policy will pay up to $2,500 for any one loss resulting directly from forgery or alteration of any check or similar instrument that the insured, or someone impersonating the insured, has issued.
Increased Cost of Construction – The policy will pay up to $10,000, for each building, for the increased costs incurred to comply with enforcement of an ordinance or law that regulates the repair, rebuilding, or replacement of damaged parts of a covered building following a covered loss.
Business Income from Dependent Properties – The policy will pay the actual loss of business income (up to $5,000) sustained by the insured due to physical loss or damage at the premises of a dependent property caused by or resulting from a covered cause of loss.
Glass Expenses – The policy will pay for the expenses incurred to install temporary plates, board up openings, and to remove or replace obstructions when repairing or replacing glass that is part of a building.
Electronic Data – Up to $10,000.
Interruption of Computer Operations – For interruptions caused by the specified causes of loss and certain computer viruses – Up to $10,000.
Limited Fungi, Wet Rot, and Dry Rot – Up to $15,000.
Click here for a printable PDF of the Additional Coverages.
