Ch. 4 - Homeowners Policy NOTECARDS Flashcards
A person who lives with someone else for an agreed upon price, usually for a considerable amount of time.
Boarder
Fraudulent imitation, forgery.
Counterfeit
Something occurring as a minor accompaniment to something else.
Incidental
The intentional act of concealing or altering an important fact that would have altered the basis of a decision by the other party.
Material misrepresentation
A risks or cause of loss specifically listed in a policy.
Named peril
A term used in property insurance that describes the breadth of coverage provided under an insurance policy form that insures against “any risk of loss” that is not specifically excluded.
Open peril
The right for an insurer to legally pursue a third party for recovery of the amount paid to the insured.
Subrogation
A person (or group) other than the two involved in an insurance contract (insured and insurer).
Third party
Responsibility under the law.
Liability
The person or organization that is protected by insurance; the party to be indemnified.
Insured
A comprehensive insurance form used to insure residential risks.
Similar to Dwelling Policy, but includes coverage for personal property of the insured and personal liability protection.
Homeowners Policy
What situations/properties may a Homeowners Policy be used for?
- 1 to 4 family owner-occupied residences.
- No more than 2 families or 2 roomers/boarders per unit.
- Various ownership types to include installments sale contracts, life estates, dwellings under construction, townhomes, and duplexes.
- Insuring a tenant of nonowned dwelling (renter’s form)
- A residential condominium or cooperate unit (under a condominium form)
- Seasonal dwellings and secondary residences
Are businesses eligible for a Homeowners Policy?
Business occupancies are ineligible unless:
Incidental occupancies such as offices, schools, or studios
Conducted by the insured on the dwelling premise
Includes bodily harm, sickness or disease, including required care, loss of services, and death that results from the bodily injury.
Bodily Injury
Who is considered an insured on a HO policy?
- The named insured
- Relatives of the named insured who reside with the named insured
- Nonrelative residents in the care of the name insured or resident relatives under age 21.
- Full-time students under the age of 24 who are relatives of the named insured and who were residents prior to attending school (if the full-time student is a nonrelative, the coverage is provided only until the age of 21)
- In addition for Section II- Liability: any person legally responsible for the insured’s animals, watercraft, or certain types of motorized vehicles.
What are Insured Location on an HO policy?
- The residence premises
- Part of other premises used by the named insured as a residence described in the Declarations/newly acquired during the policy period
- A premises not owned by the insured but where the insured is living temporarily such as motel room
- Vacant land owned/rented by the insured (excluding farmland)
- Land owned/rented by the insured where a residential dwelling (1-4 family) is being constructed
- Individual/family cemetery plots/burial vaults of the insured
- Any part of premises occasionally rented to any insured, except for business purposes (such as a hall for a wedding reception).
What are Residence Premises in HO policy?
- The one family dwelling where the insured resides
- The 2, 3, or 4 family dwelling where the insured resides in at least one of the family units
- Part of any building where the insured resides/is shown as the residence premises in the Declarations
- Other structures/grounds at the location
Physical injury, destruction, or loss of use of tangible property.
Property Damage
Employees of the insured whose duties are related to the maintenance or use of the home, including doing similar duties elsewhere.
Residence Employee
Coverage Form/Policy Format for HO Policy
Agreement Definitions Section 1 - Property Coverage Section 1 - Perils Insurance Against Section 1 - Exclusions Section 1 - Conditions Section 2 - Liability Coverages Section 2 - Exclusions Section 2 - Additional Coverages Section 2 - Conditions Section 1 & 2- Conditions
How many different coverage forms exist for HO?
6 different types
How are coverage forms chosen/determined?
Unlike DP, HO is determined by the type of residential exposure (via single family home or apartment), and then the appropriate form is chosen, similar to DP.
What type of property is typically used for HO forms?
Primarily used as private homes.
Which forms may only be used for private residences, not vacation homes?
HO-2, HO-3, AND HO-5 (Provide building coverage on a replacement cost basis if building is insured for 80%+ of replacement cost.)
Which coverage is used for an ACV basis?
H0-8
What is Broad Form?
HO-2
What is covered and not covered on HO-2 (Broad Form)?
Covered:
Provides protection for losses from named perils.
Not Covered:
Internal building damage by rain/snow/sleet/sand/dust unless damaged by wind/hail.
Internal building damage by falling object unless FO damages the roof or outside wall first.
Damage to fences/driveways/walks by vehicle owned/operated by a resident
Water damage if vacant for 60+ days
What is Special Form?
HO-3
What is covered and not covered on HO-3 (Special Form)?
Covered:
Provides protection for dwelling/other structures on an open peril basis, and personal property only for broad perils
Vehicle damage is covered even if caused by an insured/resident
Not Covered:
Property/losses/perils not covered because of limitations of the insuring agreement/general exclusions
Damage caused by freezing during vacancy/unoccupied/during construction unless reasonable care to maintain heat/water is shut off
Theft in/to a dwelling/structure under construction
VMM of dwelling vacant for 60+ days
Preventable/gradual losses such as wear and tear, bulging/expansion of foundation, walls, or floors
Faulty/inadequate/defective planning, zoning, surveying, or design.
Weather condition losses that contribute to causes found in the general exclusions (flood, power failure)
Acts, decisions, or the failure to act.
What is Contents Broad Form?
HO-4
What is covered and not covered on HO-4 (Contents Broad Form)?
Insures personal property for broad perils
May not be issued to an owner-occupant
May be issued for tenant in a rented dwelling, apartment, or mobile home that does not provide coverage on the dwelling itself
What is another name of HO-4 (Contents Broad Form)?
Tenant Broad Form
What is Comprehensive Form?
HO-5
What is covered and not covered on HO-5 (Comprehensive Form)?
Covers both the dwelling/other structures on an open peril basis
Also covers personal property on an open peril basis
Not Covered:
Landlord furnishes in an apartment that is rented
Coverage is limited to $2500 and provided on a named peril basis
Includes mysterious disappearance as an expanded coverage
Theft, including misplacing or losing of insured property.
Mysterious Disappearance
What is Condominium Unit Owners form?
HO-6
What is covered and not covered in general for HO-6 (Condominium Unit Owners)?
Expands coverage to include parts of the building, such as alterations and appliances that the insured is required to insure because of the condominium association agreement
Designed for the owner-occupant of a condominium
What is covered and not covered for Coverage A (Dwelling) of HO-6?
Coverage A (Dwelling) - COVERED:
Alterations, appliances, fixtures, and improvements of the building in the residence
Items of real property that pertain to the residence
Property that is insured’s insurance responsibility under a corporation/association of property owners agreements
Structures owned solely by the insured, other than the residence, at the location of the residence.
Coverage A (Dwelling) - NOT COVERED:
Land
Structures rented to any person that is not a tenant unless used solely as private garage
Structures from which any business is conducted
Structures used to store business property
What is covered and not covered for Coverage C (Personal Property) of HO-6?
Coverage C (Personal Property) - COVERED:
Personal property owned/used by an insured while it is anywhere in the world.
After a loss, per the insured’s request, personal property owned by:
Others while the property is on the part of the residence premises occupied by an insured
A guest or a residence employee while the property is in any residence occupied by any insured.
What is covered and not covered for HO-8 (Modified Coverage Form)?
Unique HO form
Intended for use when the replacement cost coverage is not practical
Used when the market value of the structure is considerably lower than the replacement cost, typically in older homes.
What is Modified Coverage Form?
HO-8
What are the biggest differences on the HO-8 form?
Theft coverage: $1000 basic limit for losses; no coverage for off premise theft
Worldwide Coverage: Limited to either 10% of the personal property limit or $1000, whichever is larger.
Debris Removal: Not an additional amount of insurance; included in the total policy limit.
Trees, Plants, Shrubs: $250 max each
Property of Guests or Residence of Employees: Only covered while on insured premises.
Coverages A and B: Provides on a functional replacement cost basis.
Glass or Safety Glazing Material: $100 loss limit.
What is the theft coverage limit for HO-8?
$1000 basic limit for losses; no coverage for off premise theft
What is the worldwide coverage for HO-8?
$1000 basic limit for losses; no coverage for off premise theft
What is the Debris Removal policy for HO-8?
Not an additional amount of insurance; included in the total policy limit.
What is the Tree, Plants, and Shrubs policy for HO-8?
$250 max each
What is the Property of Guests or Residence of Employees policy for HO-8?
Only covered while on insured premises.
What is Coverage A and B for HO-8 policy?
Provides on a functional replacement cost basis.
What is Glass or Safety Glazing Material coverage for HO-8?
$100 loss limit
Covered perils for HO-2 (Broad):
Broad form perils on Coverages A, B, and C
Covered perils for HO-3 (Special):
Coverages A & B - open peril; Coverage C - same perils as Form HO-2
Covered perils for HO-4 (Contents Broad):
Coverage C same perils as Form HO-2 (broad)
Covered perils for HO-5 (Comprehensive):
Building, other structures, and contents - open peril or special
Covered perils forHO-6 (Condominium):
Coverage A, B*, and C for the same perils as Form HO-2 (broad)
*In this firm, Coverage B is merged with Coverage A
Covered perils for HO-8 (Modified Homeowners):
Fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; smoke; vandalism; theft; volcanic eruption
What is a big difference between DP and HO?
Unlike DP, HO includes liability.
2 types of liability coverage:
Coverage E - Personal Liability
Coverage F - Medical Payments To Others
Responds if a claim is made/a suit is brought against an insured for damages due to bodily injury (BI) or property damage (PD) caused by an occurrence to which the coverage applies.
Personal Liability (Coverage E)
What does Coverage E do?
- Pays up to the policy’s limit of liability for damages for which insured is legally liable.
- Provide a defense at eh insurer’s expense by counsel of the insurer’s choice, even if suit is groundless, false, or fraudulent
- $100,000 basic limit of liability is included.
Pays for necessary medical expenses incurred within 3 years (36 months) of an accident causing bodily injury.
Medical Payments To Others (Coverage F)
What is considered necessary medical expenses?
medical, surgical, x-ray, dental, ambulance, and funeral services.
Who is covered under Coverage F?
A person is injured on the residence premise with the insured’s permission to be there (guest of the insured)
A person is injured by an insured off the residence premise, and injury:
Arises from the residence premise/ways of adjoining the premise.
Is caused by the activities of an insured.
Is caused by a residence employee of an insured during the course of employment.
Caused by an animal owned by or in the care of the insured.
Who is not covered under Coverage F?
The insured
Regular residents of the insured’s household (except residence employees)
4 Additional Limit of Liability Coverages:
- Claims Expense
- First Aid To Others
- Damage To The Property of Others
- Loss Assessment Coverage
The policy will pay expenses incurred/costs taxed against the insured in any suit the insurer defends, premiums on bonds, required in suit, reasonable expenses incurred by the insured including up to $250 a day for loss of income, and interest on the entire judgment that accrues after judgment has been entered/before the insurer pays.
Claims Expense
The policy will pay expenses the insured incurs to render first aid for bodily injury to third parties. (Not for 1st aid to an insured)
First Aid To Others
The policy will pay up to $1000 per occurrence on a replacement cost basis for damage the insured causes to the property of others.
Damage To The Property of Others
Who does Damage To The Property of Others coverage not apply to?
Not applicable to the extent a loss is covered in Section 1, for international damage, unless done by an insured under the age of 13 to property owned by an insured/resident of the household, to property owned by/rented to a tenant, or arising out of a business of the insured.
The policy will pay up to $1000 per occurrence for the insured’s share of loss assessment charged against them as owner/tenant of the residence premises, during the policy period, by a corporation or associations of property owners.
Loss Assessment Coverage
Exclusions to both Coverage E and Coverage F:
- Motor Vehicle Liability
- Watercraft Liability
- Expected or Intended Injury
- Business Liability
- Aircraft liability
- Hovercraft liability
- Professional Services
- Insured premise which is not an insured location
- War
- Communicable disease
- Sexual molestation, corporal punishment, or mental abuse
- Controlled substances
What is covered and not covered under Motor Vehicle Liabiity?
NOT COVERED vehicles registered for public roads, unregistered vehicles that should be registered, vehicles used in racing/competition, rented vehicles, cargo vehicles, business vehicles (unless it’s a motorized golf cart).
COVERED:
In dead storage
Used to service premise only
Used to assist the handicapped parked at insured location
Off public road vehicles damaged on public roads
Motorized golf cart used for leisure activities
What is covered and not covered under Watercraft Liability?
Liability arising from the use of watercraft NOT COVERED when:
The watercraft is being raced (sail boats are okay if in a predicted log race)
Rented to others
Used to carry people/cargo for a fee
Used for any business purposes
COVERED:
Is stored
A sailing vessel that is under 26 feet in length (26 or more if not owned/rented by insured)
Powered by an inboard-outboard engine with 50 hp or less, but only when borrowed or rented by the insured.
If watercraft is over 50 hp, coverage applies only when borrowed.
If outboard engines/motors are 25 hp or less.
If more than 25 hp, coverage applies if borrowed/rented
BI or PD which is expected or intended by the insured even if it is of a different kind/degree than initially expected, or is sustained by a different person, entity, or property than initially expected/intended.
Expected or Intended Injury
What is the premise of Business Liability?
Business exposures of an insured are not covered.
Coverage is granted for rental of an insured location on an occasional basis if used as a residence.
Provides coverage for partial rental of residence if the portion is rented to house no more than 2 roomers/boarders or certain business exposures such as office, school, studio, or private garage
Self-employed insureds under the age of 21 are covered for a full time or part time basis with no employees
Other Exclusions That Apply To Both Coverages:
Aircraft liability Hovercraft liability Professional Services Insured premise which is not an insured location War Communicable disease Sexual molestation, corporal punishment, or mental abuse Controlled substances
Damage to property owned by the insured.
Damage to property of others in the care/custody/control of the insured, unless caused by fire, smoke, or explosion.
Bodily injury to named insured/any relative/minor residing in household.
Bodily injury to any person eligible for worker’s compensation.
Liability for any assessment charged against the insured as a member of an association, corporation, or community of property owners.
Contractual liability, excluding contracts related to ownership/maintenance/use of the insured premises.
BI or PD in which an insured is also an insured under a nuclear energy policy.
Exclusions for Coverage E - Personal Liability
Exclusions for Coverage F - Medical Payments:
BI resulting from nuclear hazard
BI to a residence employee if it occurs off an insured location/does not arise in the course of employment.
BI to anyone, other than a resident employee, who regularly resides in any part of an insured location.
BI to any person eligible for workers compensation.
Common Policy Conditions for Section II -Liability:
- Bankruptcy of an Insured
- Limit of Liability
- Severability of Insurance
- Duties After An Occurrence
- Duties of an Injured Person
- Payment of Claim
- Suit Against The Insurer
- Other Insurance
- Policy Period
Condition for Bankruptcy of an Insured:
Will not relieve the insurer of its obligations under the policy.
Condition for Limit of Liability:
Total limit shown in declaration is insurer’s total liability for any occurrence, despite the number of suits filed/claimants involved.
Insurer’s duty to settle/defend ends when the limit of liability has been exhausted by payment of a judgment/settlement.
Condition for Severability of Insurance:
Applies separately to each insured and does not increase the insurer’s liability for any one occurrence.
Condition for Duties After An Occurrence
The insured must perform these duties in the event of an occurrence:
Give written notice to the insurer/agent ASAP that identifies:
The identity of the policy
The named insured
Available info on the time, place, and circumstance of the offense
Name and addresses of any claimants/witnesses
Cooperate with the insurer in the investigation, settlement, or defense of any claim/suit.
Forward the insurer every notice, demand, summons, or process relating to the offense ASAP.
Per the request of the insurer, assist in:
Making settlement.
Enforcing any right of contribution/indemnity against any person who may be liable to an insured.
Conducting suits/attending hearings/trials.
Securing/giving evidence/obtaining the attendance of witnesses.
Insureds may not voluntarily make payment, assume obligation, or incur expense other than that for first aid to others at the time of injury.
Assist the insurer in subrogation rights.
If loss involves PD to others, submit to the insurer a signed/sworn proof of loss within 60 days of their request.
If the insured fails to comply with these requirements, the insurer has no obligation to provide coverage.
Conditions for Duties of an Injured Person:
Coverage F (Medical Payments To Others): Injured parties/someone representing injured parties must provide the insurer/agent written proof of claim/authorization to obtain any medical records; must also submit to physical exam by a doctor of the insurer’s choice per request.
Conditions for Payment of Claim:
Coverage F (Medical Payments To Others): Payment of claim under the medical payment section is not considered an admission of liability by the insured/insurer.
Conditions for Suit Against The Insurer:
No action may be brought against the insurer until all policy provisions have been complied with nor may anyone join the insurer in action against the insured.
Conditions for Other Insurance:
Coverage E (Personal Liability): Insurance will be considered excess over any valid/collectible insurance, unless the other insurance is intended to be excess coverage (umbrella liability policies).
Conditions for Policy Period:
Coverage only applies to losses that occur during the policy period.
Conditions for Both Property and Liability Coverage:
- Liberalization Clause
- Waiver or Change of Policy Provisions
- Cancellation and Nonrenewal
- Assignment
- Subrogation
- Death
What must be included in a written notice according to Duties After An Occurrence?
Give written notice to the insurer/agent ASAP that identifies:
The identity of the policy
The named insured
Available info on the time, place, and circumstance of the offense
Name and addresses of any claimants/witnesses
Per the request of the insurer, assist in what according to Duties After An Occurrence?
Making settlement.
Enforcing any right of contribution/indemnity against any person who may be liable to an insured.
Conducting suits/attending hearings/trials.
Securing/giving evidence/obtaining the attendance of witnesses.
According to Duties After An Occurrence: how many days does an insurer have to receive a proof of loss?
60 days
If the insurer adopts any changes that broaden coverage in policy, those changes will automatically apply to the policy at no additional premium, if this implementation date falls within 60 days prior to the policy period.
Liberalization Clause
Any waiver/change of policy provisions must be in writing by the insurer.
Waiver or Change of Policy Provisions
Cancellation and Nonrenewal:
The insured may cancel the policy at any time by returning the policy to the insurer or providing written notice.
If insurer cancels coverage, it must provide the insured with a 10-day advance written notice for cancellation due to nonpayment or premium or if the policy has been in force for no more than 60 days.
Other cancellations or nonrenewal must be provided by the insurer to the insured 30 days in advance via written notice.
Insurer can only cancel a policy after it has been in force for 60 days due to:
- Material misrepresentation
2. Substantial change in the risk since policy was issued.
The insured may not assign the policy to any other person without written consent of the insurer.
Assignment
The insured may waive all rights of recovery against any other person if done in writing and prior to a loss.
If rights are not waived, the insurer may require any assignment of rights of recovery for loss.
If assignment is sought, an insured must sign and deliver all papers/cooperate with the insurer.
Does not apply to additional coverage damage to property of others and Coverage F- Medical Payments.
Subrogation
If named insured/spouse dies, deceased’s legal rep will be considered an insured in regards to the property of the deceased covered at time of death.
Death
Selected Endorsements:
- Special Provisions - Ohio
- Limited Fungi, Wet or Dry Rot, or Bacteria Coverage
- Permitted Incidental Occupancies
- Home Day Care
- Business Pursuits
- Watercraft
- Personal Injury
- Personal Property Replacement Cost
Mandatory endorsement modifies the ISO policy to conform with Ohio Law.
Special Provisions - Ohio Endorsement
Endorsement that may be added to add special limits for losses caused by fungi, dry/wet rot, and bacteria for both property and liability losses.
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement
Must be attached separately to cover other structures used for business activity, remove the special limit of liability for business and personal liability and medical payment.
Permitted Incidental Occupancies Endorsement
Endorsement may be attached to the policy to cover for liability associated with the business. NOT COVERED: Sexual molestation Corporal punishment Physical or mental abuse Draft/saddle animals Vehicles used for animals Motor vehicles Aircraft Watercraft
Home Day Care Endorsement
How is premium set for Home Day Care?
Premium based of number of children in daycare
Endorsement that allows an insured to extend the Section II liability coverage to certain business pursuits that occur away from the premises.
Covers activities but not businesses.
Business Pursuits Endorsement
Endorsement provides liability protection for BI or PD caused by the ownership/use of watercraft (except when used to carry person for fee/rented to others.)
Watercraft Endorsement
Endorsement that covers PI that result from false arrest, libel slander, defamation of character, and invasion of privacy.
Personal Injury Endorsement
Changes the ACV on personal property, household appliances, carpeting, awnings, and outdoor equipment to a replacement basis. No requirement for 80% of the insured at time of loss.
Personal Property Replacement Cost Endorsement
Coverage Forms:
HO-2 (Broad) HO-3 ( Special) HO-4 (Renters/Tenants) HO-5 (Comprehensive) HO-6 (Condominium) HO-8 (Modified)
