AIC 41 Flashcards
real property
includes land, buildings, attached structures, plants growing on the land, and anything embedded in the land, such as minerals
ISO Homeowners program offers six policy forms:
Homeowners 2—Broad Form (HO-2) Homeowners 3—Special Form (HO-3) Homeowners 4—Contents Broad Form (HO-4) Homeowners 5—Comprehensive Form (HO-5) Homeowners 6—Unit-Owners Form (HO-6) Homeowners 8—Modified Coverage Form (HO-8)
A mobile home is not eligible for
unendorsed coverage
Personal property includes
intangibles such as patents or copyrights
Real property includes
only tangible
Functional replacement cost
The cost of replacing damaged property with similar property that performs the same function but might not be identical to the damaged property.
The HO-2—Broad Form (HO 00 02), simply known as the HO-2,
provides named perils coverage for dwellings, other structures, and personal property. The HO-2 is designed to meet the risk management needs of owner-occupants of dwellings.
Forms HO-2, HO-3, HO-5, and HO-8 can be issued only to
the owner-occupant of a one-, two-, three-, or four-family dwelling.
The HO-3—Special Form (HO 00 03), called the HO-3,
provides special form coverage on dwellings and other structures (rather than the named perils coverage provided by the HO-2). Special form coverage, also known as open perils coverage, protects property against direct physical loss that is not otherwise excluded by the coverage form. Note that the HO-3 provides named perils coverage for personal property, as does the HO-2. The HO-3 is designed to meet the risk management needs of owner-occupants of dwellings who want broader coverage on their dwellings and other structures.
The HO-4—Contents Broad Form (HO 00 04), or HO-4,
provides coverage for a tenant’s personal property on a named perils basis. The HO-4 does not provide coverage for dwellings or other structures. This policy form is designed to meet the risk management needs of tenants and other occupants of apartments or dwellings. For example, a young woman who has recently graduated from college, started a new job, and moved into an apartment should obtain an HO-4 if she is no longer an official resident of her parents’ insured household and would like her own personal property and liability insurance protection. Form HO-4 can be issued to a tenant who maintains a residence in any kind of structure. Persons who maintain a residence in a building that they own but that is not a one- or two-family dwelling are also eligible.
A homeowners policy (other than HO-4) may also be issued in the name of a trust and trustee(s) when legal title to a one-, two-, three-, or four-family dwelling or condominium unit is held solely by the trust and when the trustee, beneficiary, or grantor regularly resides there.
If a portion of the premises is used for other-than-private-residential occupancy, eligibility rules permit (1) not more than two roomers or boarders per family unit and (2) an incidental business occupancy, such as an office, private school, or studio. Occasional rental of the premises to others is also allowed.
The HO-5—Comprehensive Form (HO 00 05), known as the HO-5,
provides open perils coverage on dwellings, other structures, and personal property. The HO-5 is designed to meet the risk management needs of owner-occupants of dwellings who would like the broadest coverage available among ISO’s forms for their property. A homeowner who desires the broadest available coverage for his home and contents, and is willing to pay the increased premium for it, should select the HO-5.
The HO-6—Unit-Owners Form (HO 00 06), or HO-6,
provides coverage for personal property on a named perils basis, with limited dwelling coverage (unit improvements and betterments). The HO-6 is designed to meet the risk management needs of the owners of condominium units and cooperative apartment shares. The HO-6 is similar to the HO-4, but it includes special provisions for loss exposures inherent in condominium and cooperative unit ownership. For example, a couple that purchases a vacation unit in a seaside condominium community should obtain additional homeowners coverage under an HO-6.
Only owners of condominium units and cooperative apartment shareowners are eligible for the HO-6, although the insured is not required to be an occupant of the unit. If a two-, three-, or four-family dwelling is co-owned by the families who reside there, one of the owner-occupant forms may be issued in the name of one of the owner-occupants, with the others named on an Additional Insured Endorsement (HO 04 41) to cover each party’s interest in the building. The other parties may be issued an HO-4 for their personal property. This combination of coverages gives all co-owners complete homeowners coverage.
The HO-8—Modified Coverage Form (HO 00 08), called the HO-8,
provides coverage for a dwelling, other structures, and personal property on a limited, named perils basis. A special valuation clause specifies that damage will be covered on a functional replacement cost basis. The HO-8 is designed to meet the risk management needs of owners-occupants of dwellings that may not meet insurer underwriting standards required for other policy forms (such as when the replacement cost of a dwelling significantly exceeds the dwelling’s market value). For example, a couple may own a historic home in a city where local property values, including the value of the historic home, are far below replacement cost. This couple may opt for homeowners coverage under an HO-8.
HO-3 policy provides four basic property coverages
Coverage A—Dwelling
Coverage B—Other Structures
Coverage C—Personal Property
Coverage D—Loss of Use
The Broadened Residence Premises Endorsement provides
for a starting date and an end date to the residency requirement.
(ISO) Residence Premises Definition Endorsement
changes the language of the definition to require residency at the inception date of the policy.
Coverage B—Other Structures
applies to structures on the residence premises that are not attached to the dwelling and are separated from it by “clear space.”
An additional amount equal to 10 percent of the Coverage A limit is available for
other structures.
Coverage B has three important exclusions:
A structure rented to anyone who is not a resident of the dwelling. However, a structure that is rented to others for use as a private garage is covered.
A structure from which any business is conducted.
A structure used to store business property. However, a structure containing business property is covered if the business property is solely owned by an insured or a tenant of the dwelling, provided that the 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 standard limit for Coverage C is
50 percent of the Coverage A limit, and it applies in addition to that limit.
Only 10 percent of the Coverage C limit or $1,000 (whichever is greater) is available for property usually located
at a residence other than the one listed on the Declarations page. This same limitation applies to property kept by an insured in a self-storage warehouse.
The special limits for three personal property categories (jewelry and furs; firearms and related items; and silverware, goldware, platinumware, and pewterware) apply only when
loss is caused by theft.
The Coverage D limit is
30 percent of the Coverage A limit, and it applies in addition to the Coverage A limit.
Coverage A—Dwelling and Coverage B—Other Structures are provided on a
special form coverage basis, commonly referred to as open perils coverage.
Coverage C—Personal Property
is provided on a named perils coverage basis.
No covered perils are listed in Section I—Property Coverages for Coverage D—Loss of Use or for the policy’s Additional Coverages, because
Coverage D and three of the Additional Coverages apply only when other covered losses occur. The remaining Additional Coverages individually describe when coverage applies.
EXCLUSIONS of HO-3 Coverages A and B
Examples of excluded perils are flood, earthquake, and war.
Collapse (without cause ?)
Freezing of a plumbing, heating, air conditioning, or sprinkler system or a household appliance
Freezing, thawing, pressure, or weight of water or ice
Theft (while under construction or home sharing)
Vandalism and malicious mischief (if home sharing or vacant for more than 60 days)
Mold, fungus, or wet rot (unless hidden or results from accident)
Natural deterioration
Smoke from agricultural smudging or industrial operations
Pollutants
Settling of the dwelling
Animals
Ensuing losses not specifically excluded by the HO-3 are covered.
For example, settling of foundations is excluded, but if a settling foundation causes a water pipe to break, the ensuing water damage would be covered.
These are named perils that APPLY to HO-3 Coverage C:
Fire or lightning Windstorm or hail Explosion Riot or civil commotion Aircraft Vehicles Smoke Vandalism or malicious mischief Theft 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 Freezing Sudden and accidental damage from artificially generated electrical current Volcanic eruption
Limitations Applicable to Theft Peril
Theft committed by an insured is excluded.
Theft from a building under construction and theft of construction materials are excluded.
Theft from a part of the insured premises rented to someone other than an insured is excluded.
Theft of personal property from another residence the insured owns, rents, or occupies is excluded unless the insured is temporarily living there.
Theft of property of an insured who is a student residing away from home (such as in a dormitory) is excluded unless the student has been there during the ninety days before the loss.
Theft is excluded for watercraft, including furnishings and equipment, away from the residence premises.
Theft of trailers, semi-trailers, and campers is excluded.
Theft arising from home-sharing host activities is excluded.
The HO-3 Section I exclusions apply to Coverages A, B, and C:
Ordinance or law--This exclusion eliminates coverage for losses resulting from any ordinance or law that reduces the value of the property; requires testing for or cleaning up of pollutants; or requires demolition, construction, or debris removal. Earth movement Water Power failure Neglect War Nuclear hazard Intentional loss Governmental action
Section I—Exclusions contains three additional exclusions that apply only to Coverage A—Dwelling and Coverage B—Other Structures:
Weather is an excluded peril only if it contributes to any of the previously excluded perils. For example, torrential rain that causes a mudslide would not be a covered peril, because earth movement (mudslide) is excluded. However, if the weight of rainwater that has collected on a roof causes the roof to collapse, coverage is provided under the Collapse form of Additional Coverage.
Acts or decisions—including the failure to act or decide
Damage that results from faulty planning, zoning, surveying, design specifications, workmanship, construction, renovation, materials, and maintenance is excluded.
Losses to personal property listed under Coverage C—Personal Property
are settled at the lesser of two amounts:
Actual cash value (ACV) at the time of the loss
The amount required to repair or replace the items
These are the methods for determining the loss settlement for a building:
If the limit of insurance is 80 percent or more of the replacement cost, the insurer will pay for the replacement cost of the damage up to the limit of coverage.
If the limit of insurance is less than 80 percent of the replacement cost, the insurer will pay the greater of two amounts. The first amount is the ACV of the damage. The second is the proportion of the cost to repair or replace the damage that the limit of insurance bears to 80 percent of the replacement cost. This second method is sometimes easier to understand as a formula.
proportion of the cost to repair or replace the damage that the limit of insurance bears to 80 percent of the replacement cost
Loss payment =
Limit of insurance/80% x replacement cost of entire dwelling
x
Replacement cost of the loss
The Additional Limits of Liability for Coverages A, B, C, and D endorsement increases the Coverage A—Dwelling limit to
equal the current replacement cost of the dwelling if that amount exceeds the limit appearing on the Declarations page. The limits of liability for Coverage B—Other Structures, Coverage C—Personal Property, and Coverage D—Loss of Use will be increased by the same percentage applied to Coverage A.
Loss to a Pair or Set the insurer has two options:
Example: 2 lanterns that cost $2000 for the set with just 1 lantern ACV at $300 but 1 lantern costs $1,500
Replace the missing lantern for $1,500 and restore the pair to its original value
Pay Cindy the difference between the ACV of the lanterns as a pair and the ACV of the remaining single lantern ($1,700)
If there is a home warranty
Insurance applies as excess
Our Option
condition reserves the right for the insurer to repair or replace damaged property with similar property, should it choose to do so.
A loss is payable
sixty days after the insurer receives a proof of loss and either an agreement has been reached by the insurer and the insured or a court judgment or an appraisal award has been entered.
Mortgage Clause
A mortgagee has rights that are independent of the insured’s rights. If the insurer denies the insured’s loss (if, for example, arson by the insured is discovered), the mortgagee retains the right to collect from the insurer its insurable interest in the property.
No Benefit to Bailee
cannot avoid responsibility for the damage because the insured has coverage under the homeowners policy
HO-3 Section I—Conditions
Insurable Interest and Limit of Liability Deductible Your Duties After Loss Loss Settlement Loss to a Pair or Set Appraisal Other Insurance and Service Agreement Our Option Loss Payment Abandonment of Property Mortgage Clause No Benefit to Bailee Loss Payable Clause OTHERS: Suit Against Us Recovered Property Volcanic Eruption Period Policy Period Concealment or Fraud Nuclear Hazard Clause
the four steps of the DICE method
declarations, insuring agreement, conditions, and exclusions
The list of named perils in the HO-2 encompasses most common insurable perils faced by homeowners. It closely resembles the list of named perils applicable to Coverage C in the HO-3 with a few minor differences. These are two examples:
The vehicles peril is found in both policies, but the HO-2 policy has an exclusion for loss to a fence, driveway, or walk caused by a vehicle owned or operated by a resident of the premises.
For accidental discharge or overflow of water or steam, the HO-2 excludes coverage if the building is vacant for more than sixty consecutive days. The HO-3 does not mention vacancy under this peril.
HO-4 Contents Broad Form Compared With HO-3
HO-4 Coverage C is written at a limit the insured selects as adequate to cover personal property. In the HO-3, HO-2, and HO-5, the Coverage C limit is typically 50 percent of the Coverage A limit.
Coverage D in the HO-4 is provided automatically at 30 percent of the Coverage C limit, rather than as 30 percent of the Coverage A limit, as in the HO-2 and HO-3.
The HO-4 provides an additional coverage for building additions and alterations, with a limit equal to 10 percent of the Coverage C limit.
The HO-4 does not include an additional coverage for furnishings provided by a landlord, because the occupant-insured of the apartment does not have an insurable interest in such property.
Both the HO-3 and the HO-4 provide an additional coverage for increased costs imposed by a building ordinance or law. The HO-3 limit is 10 percent of the Coverage A limit, while the HO-4 limit is 10 percent of the building additions and alterations limit.
Trees, shrubs, and other plants are covered for 10 percent of the Coverage C limit in the HO-4 policy, while the HO-3 provides coverage for up to 5 percent of the Coverage A limit.
The HO-5 broadens personal property coverage
The HO-5 covers water damage, including flood damage, for personal property away from a location owned, rented, occupied, or controlled by an insured.
The HO-5 covers personal property damaged by rain through an open window, door, or roof opening, even if the building itself is not damaged.
The HO-5 special limits of $1,500 for jewelry and furs, $2,500 for firearms, and $2,500 for silverware apply not only to items that are stolen, but also to items that are misplaced or lost. The HO-3 does not cover, for any amount, items that are misplaced or lost.
HO-6 Unit-Owners Form Compared With HO-3
The HO-6 with a mandatory Residence Premises Definition Endorsement defines residence premises as the unit where the insured resides on the inception date of the policy. The HO-3 mandatory endorsement definition includes a one- to four-family dwelling where the insured resides on the inception date of the policy.
The HO-6 description of Coverage A—Dwelling under Section I—Property Coverages includes: (1) alterations, appliances, fixtures, and improvements that are part of the building contained within the insured unit; (2) items of real property that pertain exclusively to the insured unit; (3) property that is the unit owner’s responsibility under a condominium or cooperative association’s property owners’ agreement; and (4) structures owned solely by the insured at the residence location (such as a storage shed or garage).
Coverage A—Dwelling in the HO-6 provides a basic limit of $5,000, which can be increased if needed.
Coverage B—Other Structures coverage is eliminated from the HO-6 because Coverage A of the HO-6 includes other structures owned solely by the insured.
Coverage C—Personal Property is subject to a limit the insured selects.
Coverage D—Loss of Use is provided automatically at a limit that is 50 percent of the Coverage C limit, rather than 30 percent of the Coverage A limit.
Section I—Perils Insured Against in the HO-6 provides named perils coverage for Coverages A and C, similar to the coverage provided in the HO-2.
Loss Assessments coverage is identical in the HO-3 and the HO-6, although it is more applicable to a condominium or cooperative corporation than a private dwelling. Condominiums and cooperatives have many elements, such as driveways, outdoor lighting, and swimming pools, that belong to all unit owners collectively. Damage to any of these commonly owned elements could result in an assessment against each individual unit owner.
Trees, shrubs, and other plants are covered for up to 10 percent of the Coverage C limit, in contrast to the HO-3 limit of 5 percent of the Coverage A limit. In the HO-6, this coverage applies to plants solely owned by the named insured on grounds at the insured unit (such as those in the yard of a townhouse-style condominium).
The additional coverage for landlord’s furnishings is not included in the HO-6 policy.
In the HO-6 policy, coverage for debris removal does not cover the cost to remove trees that damage a covered structure or block a driveway or ramp. This cost would be the condominium corporation’s responsibility.
Cooperative corporation
A form of real property ownership in which the real property is owned by a corporation whose shareholders are the tenants of the property.
These common endorsements amend Insurance Services Office, Inc. (ISO) homeowners policies:
Personal Property Replacement Cost Loss Settlement
Scheduled Personal Property
Inflation Guard
Earthquake
Assisted Living Care Coverage
Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage—Increased Limit
Home Business Insurance Coverage
Ordinance or Law—Increased Amount of Coverage
Limited Water Back-Up and Sump Discharge or Overflow Coverage
Supplemental Loss Assessment Coverage
Broadened Residence Premises Definition Endorsement
Home-Sharing Host Activities Amendatory Endorsement
Broadened Home-Sharing Host Activities Coverage Endorsement
Additional Residence Rented to Others—1, 2, 3, or 4 Families
Personal Injury Coverage
Aircraft Liability Definition Revised to Remove Exception for Model and Hobby Aircraft
Personal Injury for Aircraft Liability Excluded
Personal Property Replacement Cost Loss Settlement Endorsement
For losses with a replacement value of more than $500, the insured must repair or replace the lost or damaged items before the insurer will pay the replacement cost.
Scheduled Personal Property Endorsement
aka
personal inland marine coverage
provides scheduled coverage for specific items, such as jewelry, furs, musical instruments, silverware, fine arts, and rare coins.
endorsement is not subject to any deductible
-open perils-
The Scheduled Personal Property Endorsement covers more causes of loss than the HO-3 and other homeowners forms. The special limits and Coverage C deductible do not apply to the endorsement.
does not contain the regular homeowners exclusions of earth movement, water damage (flood), and government action
The endorsement typically has certain primary exclusions:
Wear and tear, gradual deterioration, and inherent vice
Insects or vermin
War in its various forms, as well as accidental discharge of nuclear weapons
Nuclear hazards
Inflation Guard Endorsement
help prevent underinsurance caused by economic inflation and rising replacement costs.
automatically increases limits for Coverages A, B, C, and D
Earthquake Endorsement
mandatory deductible is usually 5 percent of the limit that applies to either Coverage A or Coverage C, whichever is greater, but not less than $500.
Assisted Living Care Coverage
Endorsement
provides Section I—Coverage C—Personal Property and Section II—Coverage E—Personal Liability Coverage to a relative of the insured who is a resident of a facility that provides assisted living services
This scheduled person must not be a resident of the insured’s household.
Section II coverage excludes liability assumed by the facility before an occurrence and bodily injury to a staff member of the facility.
Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage—Increased Limit Endorsement
provides a higher limit of coverage to as much as $10,000 (Normally, Section I provides $500)
Home Business Insurance Coverage (HOMEBIZ) Endorsement
requirements for a home business to be covered under this endorsement, such as ownership by an insured, operation from the residence premises, and a maximum of three employees.
Section I—Property Coverage provides full Coverage C—Personal Property limits for business property, accounts receivable, loss of business income, extra expense, and increased Coverage C limits for other property.
Section II—Liability Coverages provides products-completed operations coverage up to an annual aggregate limit equal to the Coverage E—Personal Liability limit; provides all other business liability coverage (including personal and advertising injury).
Ordinance or Law—Increased Amount of Coverage Endorsement
increases the coverage that is provided by an HO-3 policy of 10 percent of Coverage A by increments of 25 percent
Limited Water Back-Up and Sump Discharge or Overflow Coverage Endorsement
Unendorsed homeowners policies exclude property coverage for water or waterborne materials that originate from within the insured’s dwelling and back up through sewers or drains, or that overflow from a sump, sump pump, or related equipment.
Supplemental Loss Assessment Coverage
Endorsement
An association might assess homeowners for major expenses, such as the installation of a new roof on a club house or damages paid to a person injured on the association’s property.
The unendorsed homeowners policy provides some limited coverage under the Additional Coverages of Section I—Property Coverages and Section II—Liability Coverages.
Broadened Residence Premises Definition Endorsement
This endorsement can be used when an insured may not be planning to reside in the premises on the inception date of the policy
Home-Sharing Host Activities Amendatory Endorsement
clarify that the HO-3 policy does not provide any property or liability coverage for home-sharing exposures
Broadened Home-Sharing Host Activities Coverage Endorsement
provide property and liability coverage for home-sharing host activities
Additional Residence Rented to Others—1, 2, 3, or 4 Families Endorsement
designed for insureds who own rental property not at the insured location
It extends Coverage E—Personal Liability and Coverage F—Medical Payments to Others to one- to four-family residences that are owned by the insured and rented to others.
Personal Injury Coverage
Endorsement
expands the liability coverage of a homeowners policy by adding the definition of personal injury and then adding coverage for personal injury
Personal injuries are defined in this endorsement as injuries arising out of one or more of these offenses:
False arrest, detention, or imprisonment
Malicious prosecution
Invasion of privacy, wrongful eviction, or wrongful entry
Publication, in any manner, of material that slanders or libels another party or disparages the other party’s goods, products, or services
Publication, in any manner, of material that violates a person’s right to privacy
Aircraft Liability Definition Revised to Remove Exception for Model and Hobby Aircraft endorsement
excludes liability for bodily injury or property damage arising from the operation of unmanned aircraft.
Personal Injury for Aircraft Liability Excluded endorsement
excludes “aircraft liability” from personal injury coverage provided by endorsement to homeowners policies
Some residences are insured under dwelling policies because they are ineligible for homeowners policies for any of these reasons:
The residence is not owner-occupied.
The value of the dwelling is below the minimum limit for a homeowners policy.
The residence does not otherwise meet an insurer’s underwriting guidelines.
DP-3 dwelling form includes five coverages:
Coverage A—Dwelling Coverage B—Other Structures Coverage C—Personal Property Coverage D—Fair Rental Value Coverage E—Additional Living Expense
Unlike homeowners forms, the dwelling forms do not include
liability coverage
The dwelling form also specifically states that building equipment and outdoor equipment used for the service of
the premises and located on the described location are covered if they are not covered elsewhere in the policy.
For example, if the insured owns a lawn mower kept in the garage of the insured dwelling and uses it to cut the grass at the insured location, the lawn mower would be included under Coverage A (if the insured did not purchase Coverage C—Personal Property).
DP-3 Coverage C—Personal Property
Unlike the homeowners form, the dwelling form has no special limits that apply to any specific type of personal property
excludes coverage for money
excludes boats other than rowboats and canoes
can choose to purchase only Coverage A under the DP-3. The HO-3 has no such option.
DP-3 Other Coverages
Loss assessment coverage not automatically included (like in homeowners)
additional coverages in the homeowners policy for landlord’s furnishings and for credit cards, transfer cards, forgery, and counterfeit money are not available in the dwelling policy.
The DP-3 form provides up to 10 percent of the Coverage A limit for Coverage B—Other Structures as outlined in the Other Coverages provision. This coverage is additional insurance and does not reduce the Coverage A limit for the same loss.
debris removal coverage of the DP-3 form is included in the limit that applies to the damaged property
There is no debris removal coverage for trees, shrubs, and plants in the DP-3 form.
The DP-3 form provides 10 percent of the Coverage C limit as additional insurance to cover a tenant’s improvements, alterations, and additions for loss by a covered peril. The HO-3 form has no comparable coverage.
The DP-3 form provides up to 10 percent of the Coverage C limit for loss to the property covered under Coverage C, except rowboats and canoes, while that property is anywhere in the world.
The DP-3 form provides up to 20 percent of the Coverage A limit for losses under both Coverage D—Fair Rental Value and Coverage E—Additional Living Expense. This coverage is additional insurance and does not reduce the Coverage A limit for the same loss.
The DP-3 form, like the HO-3 form, provides coverage for the cost of reasonable repairs made after the occurrence of a covered loss solely to protect covered property from further damage. This coverage does not increase the limit of liability that applies to the covered property.
maximum limit that can be applied (as an additional amount of insurance) to trees, shrubs, other plants, or lawns is 5 percent of the Coverage A limit
Collapse:
Coverage C—Personal Property perils
Hidden decay of a building or any part of a building
Hidden insect or vermin damage to a building or any part of a building unless the insured is aware of the damage prior to the collapse
Weight of contents, equipment, animals, or people
Weight of rain collecting on a roof
Use of defective materials or methods of construction, remodeling, or renovation if the collapse occurs during the course of such work
Ordinance or Law:
Coverage A provides ordinance or law coverage up to 10 percent of the Coverage A limit. If there is no Coverage A limit, up to 10 percent of the Coverage B limit is provided for ordinance or law coverage. This coverage is additional insurance.
The DP-3, like the HO-3, uses the special form approach and insures against “direct physical loss to property” (as opposed to named perils coverage) under Coverage A—Dwelling and Coverage B—Other Structures
The DP-3 does not cover theft of personal property, but coverage is provided for damage to covered property caused by burglars unless the dwelling has been vacant for more than sixty days.
Two ISO endorsements are available for adding theft coverage to a dwelling policy
Broad Theft Coverage (DP 04 72) and Limited Theft Coverage (DP 04 73)
Off-premises theft coverage is available under the ISO Dwelling Policy program
Only if on-premises coverage is purchased.
ISO has designed an endorsement specifically for mobile homes to be used with an
HO-3 policy
(can also be used with an HO-2 policy)
Mobilehome tenants may use the HO-4 policy without adding the mobilehome endorsement.
The mobilehome policy modifies the HO-3 policy in several ways:
The definition of “residence premises” is changed in the mobilehome endorsement to mean the mobile home and other structures located on land owned or leased by the insured where the insured resides on the inception date of the policy period.
Mobilehome
Section I—Property Coverages, Coverage B—Other Structures
The liability coverage limit for other structures on the premises is a maximum of 10 percent of the limit that applies to Coverage A, with a minimum limit of $2,000.
Mobilehome
Section I—Property Coverages, Additional Coverages
This “property removed” coverage applies if the mobile home is endangered by an insured peril, requiring removal to avoid damage, and provides up to $500 (with no deductible) for reasonable expenses incurred by the policyholder for removal and return of the entire mobile home. The mobilehome endorsement removes the ordinance or law additional coverage that is provided by the HO-3; however, it may be restored by another endorsement.
Mobilehome
Section I—Conditions, Loss Settlement
carpeting and appliances are not included as property to be valued on the basis of actual cash value (ACV). Therefore, such property is included in Coverage A, and—if the required amount of insurance is met—replacement cost coverage applies.
Mobilehome
Section I—Conditions, Loss to a Pair or Set
Additional coverage is added to repair or replace damaged parts of a series of panels to match the remainder of the panels as closely as possible or to provide an acceptable decorative effect. However, the coverage does not guarantee that replacements will be available, and the insurer is not required to pay for repair or replacement of the entire series of pieces or panels.
Section I—Conditions, Mortgage Clause
This provision modifies the word “mortgagee” in the policy to include a lienholder (a lending institution that holds title to the mobile home).
the liability coverage under a mobilehome
policy is the same as the liability coverage under a homeowners policy
Actual Cash Value Mobilehome endorsement (MH 04 02)
This endorsement changes the loss settlement terms on the mobile home and other structures to apply an ACV basis rather than a replacement cost basis. (maybe the owner decides this because the mobilehome is old = lower premium)
Transportation/Permission to Move endorsement (MH 04 03)
This endorsement provides coverage for perils of transportation (collision, upset, stranding, or sinking) and coverage for the mobile home and other structures at the new location anywhere in the United States or Canada for a period of thirty days from the effective date of the endorsement. Losses are subject to a transportation peril deductible specified in the endorsement or elsewhere in the policy.
Mobilehome Lienholder’s Single Interest endorsement (MH 04 04)
It provides coverage only to the lienholder for collision and upset transportation exposures, subject to numerous recovery conditions. It also provides coverage to the lienholder for any loss resulting from the owner’s conversion, embezzlement, or secretion (concealment) of the mobile home.
Property Removed Increased Limit endorsement (MH 04 06)
This endorsement allows the policyholder to increase the $500 limit, provided as an additional coverage under the ISO Mobilehome Endorsement (MH 04 01), for removing a mobile home that is endangered by an insured peril.
Ordinance or Law Coverage endorsement (MH 04 08)
This endorsement enables the mobilehome policyholder to add ordinance or law coverage for an amount equal to a specified percentage of the Coverage A limit
Actual Cash Value Loss Settlement for Windstorm or Hail Losses to Mobilehome Roof Surfacing endorsement (MH 04 25)
When roof surfacing is damaged by windstorm or hail, the property loss settlement for the roof surfacing is made on an ACV basis. However, other buildings, such as those insured under Coverage A or B, may be settled at replacement cost
*Virtually identical to homeowner’s
Broadened Residence Premises Definition endorsement (MH 04 27)
This endorsement indicates a starting date and an ending date within the policy period during which the residency requirement will be temporarily removed. It is used when the insured will not be residing on the premises on the inception date of the policy period.
Under an ISO Mobilehome Endorsement, Section I, Coverage B—Other Structures is no less than
$2,000
Under an ISO Mobilehome Endorsement, accidental damage to permanently installed furniture is
Covered under Section I, Coverage A—Dwelling
FAIR plans
make standard lines of property insurance available for exposures located in areas underserved by the voluntary market.
private insurers and state insurance authorities coordinate efforts to provide such coverage.
To be eligible for FAIR plan coverage, a property must be ineligible for coverage in the voluntary market, and the policyholder must have the property inspected by the FAIR plan administrator.
the state can deny insurance, provided the exposures are not related to the neighborhood location or to hazardous environmental conditions that are beyond the owner’s control
Some state FAIR plans provide limited homeowners coverage; however, most plans provide coverage only for fire and a limited number of perils, which often include vandalism, riot, and windstorm
Syndicate
A group of insurers or reinsurers involved in joint underwriting to insure major risks that are beyond the capacity of a single insurer or reinsurer; each syndicate member accepts predetermined shares of premiums, losses, expenses, and profits.
Difference in conditions (DIC) policy, or DIC insurance
Policy that covers on an “all-risks” basis to fill gaps in the insured’s commercial property coverage, especially gaps in flood and earthquake coverage.
Under most FAIR plans, five types of exposures are considered uninsurable:
Property that is vacant or open to trespass
Property that is poorly maintained or that has unrepaired fire damage
Property that is subject to unacceptable physical hazards, such as poor housekeeping or storage of flammable materials
Property that violates a law or public policy, such as a condemned building (one that is considered unfit for human habitation)
In some states, property that was not built in accordance with building and safety codes
Beachfront and windstorm plans
Most beachfront and windstorm plans provide insurance coverage for windstorm and hail losses that cannot be obtained in the voluntary market. Under these plans, losses from tidal water are generally excluded and should be covered under a flood insurance policy.
must be ineligible for coverage in the voluntary market and must be located in designated coastal areas
Eligibility for coverage under each plan requires that buildings constructed or rebuilt after a specified date conform to an applicable building code.
boatowners policy
often insured against total loss on an agreed value basis in the event of total loss
ACV for other items
When property is insured on an ACV basis, the policy typically states the insured will collect the least of three amounts in the event of a loss:
The ACV of the property immediately before loss
The actual cost to repair or replace the damaged property
The limit of insurance scheduled in the policy for the damaged property
These exclusions commonly apply to boatowners liability coverage:
Liability assumed under a contract
Damage to property owned by an insured
Bodily injury to an insured or the insured’s employees, including crew members paid by the insured
Bodily injury or property damage intentionally caused by the insured
Discharge or escape of pollutants of any kind
Accidents occurring while the insured boat is rented to others, used to carry persons or property for a fee, hired or chartered, placed in an exhibition, or operated in an organized race
Bodily injury to persons being towed by the covered boat in waterskiing, parasailing, hang gliding, or similar activities
For an additional premium, coverage can often be provided by endorsement for the activities described in the last two items.
Pleasure use warranty
An express warranty stating that the insured boat may be used only for private pleasure purposes.
Lay-up warranty
A provision in a boatowners policy stating that the insured boat will be placed in a safe berth or ashore for storage between certain dates specified in the policy.
commercial property coverage part, which consists of five components:
Commercial property declarations One or more commercial property coverage forms One or more causes of loss forms Commercial Property Conditions Any applicable endorsements
The commercial property coverage part is a component of the commercial package policy (CPP) program of Insurance Services Office, Inc. (ISO).
It can also be the single coverage part included in a monoline policy under ISO procedures.
Commercial property coverage part
Commercial package policy (CPP) coverage component that provides a broad range of coverages to “middle-market” or larger firms to insure buildings and business personal property.
Commercial package policy (CPP)
Policy that covers two or more lines of business by combining ISO’s commercial lines coverage parts.
Monoline policy
Policy that covers only one line of business.
Package modification factors
Factors that are applied to the regular policy premiums for certain coverage parts of a CPP that includes both property and liability coverages, resulting in premium discounts for those coverage parts.
Commercial property declarations page
A required commercial property coverage part component that provides basic information about the policyholder and the insurance provided.
Commercial property coverage form
A commercial property coverage part component that can be any of several commercial property forms containing an insuring agreement and related provisions.
Causes of loss form
A required component of the commercial property coverage part that specifies perils covered.
Commercial Property Conditions
A required component of the commercial property coverage part that contains conditions applicable to all commercial property coverage forms.
A commercial property declarations page contains information that pertains specifically to property insurance:
A description of the property insured
The kinds and amounts of coverage provided and the covered causes of loss (basic, broad, or special)
A list of mortgagees, if any
The deductible amount
A list of the property coverage forms and endorsements attached to the policy
The applicable coinsurance percentage(s)
Any optional coverages
A commercial property coverage form typically contains these elements:
Insuring agreement
Delineation of the property covered and not covered
Additional coverages and coverage extensions
Provisions and definitions that apply only to that coverage form
The Commercial Property Conditions
Apply to all commercial property coverage forms unless the form contains a condition to the contrary
Package modification factors for the Commercial Package Policy (CPP) often
Specify the endorsements that modify coverage parts in the policy.
The commercial property declarations page lists
the covered causes of loss (basic, broad, or special); the deductible amount; and any optional coverages.
The BPP’s Property Not Covered section lists
Some kinds of property, such as smuggled goods being held for sale, are illegal to insure.
Some property may be much less susceptible to loss by most of the perils insured against. Examples include building foundations below the lowest basement floor or the surface of the ground, retaining walls that are not part of a building, and underground pipes.
Some kinds of property are excluded because they can be insured more advantageously under other forms. For example, insurers generally prefer to cover money, securities, automobiles, and aircraft under other policies.
Building and Personal Property Coverage Form (BPP) can cover any combination of three broad categories of property:
Building
Your Business Personal Property
Personal Property of Others
Your Business Personal Property
owned by the insured and used in the insured’s business.
coverage applies only when the property is located in or on the described Building or in the open (or in a vehicle) within 100 feet of the building or structure or within 100 feet of the described premises, whichever distance is greater.
Coverage for improvements and betterments is provided under which type of property on the Building and Personal Property Coverage Form?
Your Business Personal Property
BPP Additional Coverages and Coverage Extensions: Special Limits
All of the BPP’s additional coverages and coverage extensions, except Preservation of Property, are subject to special dollar limits.
the limit for the Pollutant Cleanup and Removal additional coverage is $10,000 per policy year.
the Electronic Data additional coverage limit is $2,500 per policy year
These are the six additional coverages in the BPP:
Debris Removal Preservation of Property Fire Department Service Charge Pollutant Cleanup and Removal Increased Cost of Construction Electronic Data
BPP
Debris Removal
Following a loss, large amounts of debris may remain on the premises, and the cost of removing the debris may be substantial. The Debris Removal additional coverage covers the cost of removing debris of covered property resulting from a covered cause of loss during the policy period. It would not, for example, pay to remove the debris resulting from a flood if flood is not a covered cause of loss or to remove the debris of the insured’s licensed automobiles, because they are not covered property.
In some cases, the cost to remove debris of property that is not covered property is also covered. For example, the cost to remove debris of a neighboring building that a windstorm blew onto the insured’s premises would be covered.
The Debris Removal additional coverage includes the cost to clean up pollution at the insured’s premises caused by an insured peril. For example, if a building is shown as covered property, the cost to clean up debris from a fire that causes the release of toxic chemicals onto the floor of the insured’s building would be covered. However, the Debris Removal provision does not apply to costs for cleanup or removal of pollutants from land or water. Limited coverage for these costs is available under the provisions of another additional coverage. No coverage is provided for cleanup of off-premises pollution even when it results from a covered loss.
BPP
Preservation of Property
It is sometimes necessary to move covered property to another location to protect it. The Preservation of Property additional coverage extends the policy to protect covered property while it is being moved and for up to thirty days at the new location. This coverage is broader than the normal coverage under the policy. It protects against “any direct physical loss or damage” and is not limited to either the covered causes of loss or locations stipulated in the coverage form. The protection provided under this additional coverage is subject to the limits of insurance stated in the declarations. Consequently, the additional coverage provides no protection if the applicable limit of insurance is exhausted by payment for the physical loss.
