Chapter 5 - Homeowners Policy Flashcards
16 NAMED PERILS
- 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.
ADD’L COVS
SECTION 1
s include debris removal; reasonable repairs; trees, shrubs, and plants; fire department service charge; property removed; credit card, electronic fund transfer card or access device, forgery, and counterfeit money; loss assessment; collapse, and glass or safety glazing material.
5.4
BUSINESS MEANS:
a. A trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis.
b. Any other activity engaged in for money or other compensation, EXCEPT: 1) Volunteer activities for which no compensation is received other than expense reimbursement. 2) Home day care services for which no compensation is received other than the mutual exchange of day care services. 3) Rendering home day care services to a relative of an insured. 4) Any other activity not described above for which no insured receives more than $2,000 in compensation during the 12 months before the current policy term.
CREDIT CARDS, ELECTRONIC FUND TRANSFER CARD, FORGERY, AND COUNTERFEIT MONEY
up to $500.
5.4
GLASS OR SAFETY GLAZING MATERIAL
covers direct damage to property, as well as damage caused solely by broken pieces of such glass or glazing material.
5.4
HO-2
BROAD FORM
Must be owner-occupant of the insured dwelling
Each form includes a Section 1 - Property Coverages (Cov A (named),B(named),C(named),D)
and
Section 2 - Liability Coverages (Cov E,F)
- Owner occupied dwelling with no more than 4 residential units; the named insured must live in one of the units
insures the dwelling and other structures for the 16 named perils and losses. Valuation is on a replacement cost basis.
Coverage D limit of insurance is 30% of Coverage A
Example: J is teaching a family member, T, how to drive J’s car. T accidentally drives into J’s garage and fence, causing damages. The damages to the garage are covered on a replacement cost basis, but the damage to the fence would not be covered under this form
5.1
HO-3
SPECIAL FORM
Must be owner-occupant of the insured dwelling
Each form includes a Section 1 - Property Coverages (Cov A(open),B(open),C(named),D)
and
Section 2 - Liability Coverages (Cov E,F)
- Owner occupied dwelling with no more than 4 residential units; the named insured must live in one of the units
Insures the dwelling and other structures on an open perils basis and losses are valued on a replacement cost basis.
- Coverage D limit of insurance is 30% of Coverage A
Example: The insured property was vandalized, and the windows and fence were damaged. The insurer pays the claim on a replacement cost basis.
5.1
HO-4 CONTENTS BROAD FORM
Do not need to be owner-occupant of the insured dwelling
Each form includes a Section 1 - Property Coverages (Cov C(named),D)
and
Section 2 - Liability Coverages (Cov E,F)
designed for tenants of a residential unit and provides no coverage for buildings and other structures.
- residence or apartment is rented, not owned
- Coverage D limit of insurance is 30% of Coverage C
EXAMPLE: R is a tenant of a house, and their couch is damaged by accidental discharge of water. The insurer pays the claim on an actual cash value basis.
5.1
HO-5
COMPREHENSIVE FORM
Must be owner-occupant of the insured dwelling
Each form includes a Section 1 - Property Coverages (Cov A,B,C,D)
and
Section 2 - Liability Coverages (Cov E,F)
- Owner occupied dwelling with no more than 4 residential units; the named insured must live in one of the units
insures the dwelling, other structures, and personal property on an open perils basis. Loss valuation for the dwelling and other structures is on a replacement cost basis and loss valuation for personal property is on an actual cash value basis.
- Coverage D limit of insurance is 30% of Coverage A
EXAMPLE: The insured property and some contents inside are damaged after a deer broke into the home. The insurer pays for damages to the building on a replacement cost basis and damages to personal property on an actual cash value basis.
5.1
HO-6 UNIT-OWNERS FORM
Does not need to be owner-occupant of the insured dwelling
Each form includes a Section 1 - Property Coverages (Cov C(named),D)
and
Section 2 - Liability Coverages (Cov E,F)
designed for the owners of condominium and cooperative units. Coverage is provided for the building and personal property; other structures coverage is included in Coverage A – Dwelling.
- covers the personal property of the condominium unit owner as well as building coverage
- condo or cooperative unit may be rented or owned
- insured personal property of the insured while anywhere in the world
- provides named perils coverage for Cov A(named) & C
- includes real property for which the insured is responsible under the association’s bylaws or declarations
Coverage D limit of insurance is 50% of Coverage C
EXAMPLE: The insured condo is damaged by burglars. The insurer pays for the damage to the property, but it does not cover the contents that do not belong to the insured.
5.1
HO-8
MODIFIED COVERAGE FORM
Must be owner-occupant of the insured dwelling
Each form includes a Section 1 - Property Coverages (Cov A,B,C,D)
and
Section 2 - Liability Coverages (Cov E,F)
- Owner occupied dwelling with no more than 4 residential units; the named insured must live in one of the units
is used when insuring older homes where replacement value and market value are disproportionate or when a moral hazard would be created if insurance were written in an amount equal to 100% of a dwelling’s replacement value.
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
Coverage D limit of insurance is 10% of Coverage A
EXAMPLE: The insured property is damaged in a hailstorm. Because of the age of the home, the insurer pays for materials that will perform the same function as the original materials.
5.1
INSURED LOCATION MEANS:
a. The residence premises.
b. The part of any other premises, structures, or grounds used by the insured as a residence if it is shown in the Declarations or acquired by the named insured during the policy period for use as a residence.
c. Any premises used by the named insured described in a. or b. above, such as a boat slip.
d. Any premises not owned by an insured and where the insured is temporarily residing, such as hotel rooms and summer vacation rentals.
e. Vacant land, other than farm land, owned by or rented to an insured.
f. Land owned by or rented by an insured on which a 1, 2, 3, or 4-family dwelling is being built as a residence for an insured.
g. Individual and family cemetery plots or burial vaults of an insured.
h. Any part of a premises occasionally rented to an insured for other than business purposes, such as a banquet hall where a wedding reception is hosted.
5. 2
INSURED MEANS:
a. The named insured and his or her resident spouse if the resident spouse is a member of the named insured’s household.
b. Other residents of the named insured’s household who are: 1) Relatives of the named insured, meaning they are related by blood, marriage, or adoption. 2) Under the age of 21 and in the care of any insured.
c. Full-time students living away at college if they: 1) Are under age 24 and related to the named insured. 2) Were a resident of the named insured’s household before moving away to college; OR 3) Are under age 21 and in the care of the named insured or a resident relative.
d. Under Section II Liability Coverages, any person or organization legally responsible for covered animals or watercraft owned by an insured, unless custody of such animals or watercraft is in the course of “business” – as defined by the policy.
e. With respect to a “motor vehicle,” to which liability coverage applies, persons using a covered vehicle on an insured location with insured’s consent and persons while engaged in the employment of the named insured or a resident relative.
5. 2
LANDLORD’S FURNISHINGS
provides up to $2,500 of coverage, on a named perils basis, for appliances, carpeting, and household furnishings owned by the insured and located in each apartment rented to others on the residence premises. Coverage for the peril of theft is NOT provided.
5.4
LOSS ASSESSMENT
coverage provides up to $1,000 for loss assessment charged against an insured as the owner or tenant of the residence premises by an association or corporation of property owners for direct damage to property collectively owned by all members.
5.4
