Homeowners Policy 12% Flashcards
ISO
“Insurance Services Offices”
“Insurance Services Offices” (ISO) forms:
● Forms for homeowners policies
● Each provides a different type of coverage
HO-2:
Broad form
HO-3
Special form
HO-4
Contents Broad form
HO-5
Comprehensive form
HO-6
Condominium form
HO-2 “Broad Form”
● Named peril policy
● Insures against all Broad Form perils
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● Covers the insured’s house and personal property
Named-Peril Forms: HO-4 “Contents Broad Form”
● Known as “renters insurance” (think “4-Rent”)
● Insures against all Broad Form perils
● Only covers personal property
● Does not insure house and other structures
Named-Peril Forms: HO-6 “Unit Owner’s Form”
● Known as the Condo Form
● Insures against all Broad Form perils
● Covers the owner’s belongings
● Covers all finished surfaces of the individual condominium unit
Open-Peril Forms: HO-3 “Special Form”
HO-3 “Special Form”
● Most common form
● Open-peril coverage for dwelling and other structures
● Named-peril coverage for personal property (covered against all Broad Form perils)
Open-Peril Forms: HO-5 “Comprehensive Form”
● Open-peril coverage for structures and personal property
● Most comprehensive coverage available
Basic(SFP)
Coverage
-Fire
-Lightning
Extended Coverage
Fire & Lightning +
-Windstorm
-Hail
-Explosion
-Riot or civil commotion
-Vehicles
-Aircraft
-Volcanic eruption
-Smoke
Broad Form Coverage
Extended Coverage Perils+
- Vandalism or malicious mischief
-Theft
-Falling objects
-Weight of ice, snow, or sleet
-Damage from a steam or hot water system
-Accidental discharge or over flow of water
or steam
-Freezing of plumbing, heating, air
conditioning systems, or domestic appliances
-Sudden and accidental damage from
artificially generated electrical current
-Sudden and accidental tearing apart,
cracking, burning or bulging
Declarations
The Declarations page lists what’s unique to an individual’s HO Policy:
● Policyholder name
● Policyholder address
● Premium
● Deductible
● Policy term (i.e. policy dates)
● Limits of coverage
● Any endorsements
Definitions
In a contract of adhesion, the insurer authors the agreement entirely and the insured may only take it or leave it.
The insurer’s advantage in this position, however, is mitigated by the fact that any ambiguity in the language will favor the insured.
Getting crystal clear on the terms is very important
Insured
- The person(s) named on the declarations page
- Residents of your household
a. relatives
b. persons under age 21 in your care
c. full-time students, under the age of 24, who are away at school
Residence Premises
- The dwelling listed on declarations page
- Other buildings, grounds where insured lives
- Building bought for use as a dwelling
- Any premises used in connection with the above
- Any premises the insured rents regularly but does not own
- Vacant land, except farm land
- Land the insured owns or rents in order to build a one- to four-unit residence
- Cemetery plots
- Premises the insured occasionally rents, unless for business purposes
Coverage A
Dwelling
Coverage A– Dwelling
● Dwelling
● Structures attached to dwelling
● Materials located in or near the “residence premises” used to construct, alter,
or repair dwelling and other structures on property
● Items that service the dwelling (AC compressor, fuel tanks)
● Under HO-6 (Condo Form): alterations, appliances, fixtures, and improvements
that are part of building contained within residence
● Not available under HO-4
Coverage B
Other Structures
Coverage B– Other Structures
Designed for detached structures, including:
● Garages
● Gazebos
● Fences
● Mailboxes
● Lampposts
● Sheds
Limit typically set at 10% of Coverage A limit
Coverage B is usually additional insurance:
● Pays in addition to the limit for Coverage A
● Typically set at a percentage of Coverage A limit
On apolicy with a $100,000 limit, Coverage B could pay up to $10,000 on top of the
$100,000 for Coverage A.
● Coverage A: $100,000
● Coverage B: 10% of Coverage A ($10,000)
● Insured could receive up to $110,000
Coverage B Exclusions
● Detached structures wholly rented out
● Structures held for rental
● Detached structures used for business
Coverage B it does cover:
● Structures rented to an insured or tenant of the primary dwelling
● Garages rented as private garages
Coverage C
Personal Property
Coverage C– Personal Property
Personal Property:
● All property that does not qualify as real property
● Covered anywhere in the world
Real Property:
● Buildings
● Elements attached to buildings
● Building materials/supplies that are located on or next to the residence
premises and intended for use on those premises
Coverage C Limits
normally set at 50% of Coverage A limit
Two categories of personal property:
- Property usually situated at the residence premises: full coverage
- Property usually situated somewhere other than the residence premises: 10%
of Coverage C limit or $1,000, whichever is greater
Coverage C Special Limits
● $200: coins and money
● $250: antennas, tapes, wires, records, disks and other media while in a vehicle
● $1,500:
○ securities, accounts, deeds, letters of credit, manuscripts, personal
records, passports, tickets, and stamps
○ theft of jewelry, watches, furs, and precious stones
○ boats and their trailers, furnishings, equipment, and engines
○ other types of trailers
○ personal property used for a business when away from the residence
○ portable electronics and accessories that are in a vehicle
● $2,500:
○ theft of firearms
○ theft of silver, gold, and platinum
○ personal property used for a business
Coverage C Exclusions
● Pets
● Motor vehicles
● Aircraft and hovercraft (but hobby aircraft are covered)
● Property of a renter or boarder
● Personal property the insured is renting out
● Credit cards
● Value of water or steam, such as from a heating system (but water in a
residential pool is covered under Coverage C)
● Mysterious disappearance (excluded in some policies)
Coverage D
Loss of Use
Coverage D– Loss of Use
For indirect losses that result from direct losses
Three coverages for Loss of Use:
● Additional Living Expenses (ALE)
● Fair Rental Value (FRV)
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● Prohibited Use (a.k.a. Civil Authority)
Additional Living Expenses (ALE)
● Most common type of Coverage D– Loss of Use
● Pays increase in expenses needed for the insured to maintain normal standard
of living after a covered loss
Additional Living Expenses (ALE) Requirements:
● Dwelling must be uninhabitable
● Damage must have been caused by a covered peril
Only covers costs that exceed the insured’s normal living expenses
ALE Example
Amanda’s regular expenses:
● Mortgage payment
● $20/week for laundry and dry cleaning
Amanda’s expenses after the loss:
● Mortgage payment
● Hotel bill
● $60/week for laundry and dry cleaning
Increase in Amanda’s expenses due to the loss:
● Hotel bill
● $40/week for laundry
Fair Rental Value
● Typeof Coverage D– Loss of Use
● Indemnifies insured for lost rent if a tenant has to move out due to covered damages
● Pays lost rental income until unit is habitable again
● Only pays net loss: subtracts any expenses that do not continue while the
tenant is gone
Fair Rental Value Example
Before the loss:
● Dana’s rental income: $1,200/month
● Dana’s water bill for rented unit: $40/month
After the loss:
● Dana’s lost rent: 3 weeks (3/4 month = $900)
● Water turned off: 3 weeks (3/4 month = $30)
● Dana’s net loss: $900- $30 = $870
Civil Authority coverage:
● Paysfor ALE and FRV when a civil authority prevents the insured from using
the home
● Civil authority: any government entity acting on behalf of, or to protect, people
or property
● Onlyapplies if the damage was caused by a peril covered in the insured’s
policy
Coverage D Limits
Measured in time.
(limit) Additional Living Expenses are paid:
● Until the premises is repaired or replaced, or
● Until the insured’s household can settle elsewhere
Fair Rental Value (limit)
paid for the shortest amount of time needed to restore the rented area to rentable condition.
Civil Authority coverage pays ALE and FRV (limit)
● Until access to the home is restored
● Up to a maximum of two-weeks
Coverage D Limits, Cont’d
● Designed to cover the insured until the dwelling is habitable
● Allow Additional Living Expenses and Fair Rental Value to extend beyond the
policy expiration date if needed
● Remember: Fair Rental Value does not include time spent finding a new tenant
if a previous tenant cancels the lease
Percentage-Based Limits of Coverage D:
● Many policies also have a percentage based limit for Coverage D
● This limit usually falls between 10% and 30% of the Coverage A limit
● Be sure to study your insurer’s specific policy to determine whether a
percentage based limit applies
Loss of Use Deductibles
● Additional Living Expenses and Fair Rental Value: subject to the policy
deductible
● Civil Authority coverage: not subject to any deductible
Additional Coverages
● Not all losses are automatically covered under Coverages A-D
● Policyholders can purchase any of 12 Additional Coverages
Additional coverages (if purchased) 1. Debris Removal Coverage
● Pays to: remove and dispose of the debris of covered property if damaged by a covered peril
● Limit: the limit for the type of property involved
○ Debris from Dwelling: subject to Coverage A limit
○ Debris from Other Structures: subject to Coverage B limit
○ Debris from Personal Property: subject to Coverage C limit
- Additional Debris Removal Coverage
When needed Debris Removal can pay an additional 5% of the applicable limit:
● Coverage A property: 5% of Coverage A limit
● Coverage B property: 5% of Coverage B limit
● Coverage C property: 5% of Coverage C limit
Additional coverages (if purchased) 2. Reasonable Repairs
● Reimburses homeowner for expenses to protect property from further damage
● Does not increase the policy limit
● Subject to the policy deductible
Additional coverages (if purchased) 3. Tree and Shrub Replacement
● Pays up to 5% of the Coverage A limit, with $500 per tree, shrub, etc.
● Covers losses caused by several perils including lightning, but NOT the other
weather-related perils: windstorm, hail, and weight of ice, sleet, or snow
Additional coverages (if purchased) 4. Fire Department Service Charge
● Limit: $500
● Additional insurance
● No deductible
Additional coverages (if purchased) 5. Loss Assessment
● For condo owners under HO-6
● Pays when condo association charges an assessment after a loss
● Limit: typically $1,000 or $2,500 per claim
Additional coverages (if purchased) 6. Property Removal
● Provides coverage for items that the insured removes from danger if a covered
peril is imminent
● Property remains covered under the original peril for up to 30 days
● Nomatter what damages the property during this time, it will still be covered
under the peril that the insured was trying to protect it from
Additional coverages (if purchased) 7.Credit Card Fraud or Forgery
● Reimburses the policy holder for fraudulent credit card charges
● Includes forgery of checks
● Limit:$500
Additional coverages (if purchased) 8. Collapse
Applies if the collapse was caused by:
● Hidden decay or insect damage
● Weight of contents, including people
● Weight of precipitation on roof
● Use of defective materials if during construction
Collapse is not covered if caused by structural decay or earth movement, such as
settling, shrinking, expansion, cracking, or bulging
Additional coverages (if purchased) 8. Collapse Excluded Property:
● Awnings
● Fences
● Patios
● Swimming pools
● Underground pipes
● Septic Tanks
● Foundations
● Retaining walls
● Docks
Additional coverages (if purchased) 9. Glass or Safety Glazing Material Breakage
Covers:
● Breakage directly caused by earth movements
● Direct physical loss to covered property caused by breakage alone
Excludes losses to buildings that have been vacant for 60 consecutive days (unless it
was caused by earth movement)
Additional coverages (if purchased) 10. Ordinance or Law
● Pays difference between old construction and new code-required construction
during repair or damage due to a covered peril
● Pays up to 10%of the Coverage A limit as additional insurance
● Does not cover Ordinances or Laws as perils; this is specifically excluded
Additional coverages (if purchased) 11. Landlord’s Furnishings
● Designed to protect a landlord who rents out a furnished room
● Pays in addition to the Coverage A limit
● Limit: $2,500
● Excludes losses by theft
Additional coverages (if purchased) 12. Grave Marker
● Protects against damage to grave plots due to covered perils
● Limit: $5,000
Exclusions
Risks or causes of loss that the insurer decides not to cover
Named peril:
narrow coverage = few exclusions
Open peril:
wide coverage = many exclusions
Exclusions to HO Property Coverage:
● Ordinance or law
● Earth movement
● Water damage
● Off-premises power failure
● Neglect
● War
● Nuclear hazard
● Intentional acts
● Mechanical breakdown
Conditions section under section 1 of HO insurance
- Interest
- Our Option
- Deductible
- Loss Payment
- Duties After a Loss
- Abandonment
- Concealment Mortgage
- Loss Settlement
- No Benefit to Bailee
- Pair Or Set
- Nuclear Hazard
- appraisal
- recovered property
- other insurance
- volcano
- suit against us
- policy period
Section II Conditions
- Limit of Liability
- suit against us
- severability
- Bankruptcy
- Duties After “occurrence”
- other insurance
- duties of an injured person
- policy period
- claim payment
- concealment or fraud
Section II Conditions: Limit of Liability
The limit of liability is the same as it appears in the Declarations section of a
homeowners policy, regardless of the number of insureds, claims made, or persons injured.
Section II Conditions: Severability of Insurance
● Policy coverage applies separately to each insured
● However, this condition does not increase the total limit of liability for anyone occurrence
Section II Conditions: Duties After “Occurrence”
The insured must:
● Report the claim in a reasonable time frame
● Allow an adjuster to examine the loss
● Allow physical examinations
● Let the insurer know any pertinent information
Section II Conditions: Duties of an Injured Person
The injured third party must:
● Give the insurer proof of the occurrence
● Authorize the examination of medical records
● Submit to a physical examination
Section II Conditions: Payment of Claim
Paying a Medical Payments claim is not an admission of an insurer’s or insured’s
liability. This is because Med Pay is no-fault coverage, meaning the insurer can
choose to pay for someone’s injuries, even if the insured is not liable for them.
Section II Conditions: Suit Against Us
● The insured cannot take action against an insurer unless the insured has fully
complied with all the terms of a policy
● No one has the right to join an insurer intaking action against its insured
● No action can be taken against an insurer until the obligation of the insured is
determined by the insurer
Section II Conditions: Bankruptcy of an “Insured”
Even if the insured files for bankruptcy, the insurer must still pay any covered liability claims on behalf of the insured.
Section II Conditions: Other Insurance
This provision states that the coverage under Section II should kick in after any other
valid and collectible insurance, except insurance used specifically for covering
anything exceeding the limits of liability (i.e. excess Insurance).
Section II Conditions: Policy Period
Coverage only applies to bodily injury or property damage that occurs during the policy period.
Section II Conditions: Concealment or Fraud
Concealment, misrepresentations, and fraud can void policy coverage.
Section I & II Conditions
- Subrogation
- Waiver
- Cancellation
- Change
- Nonrenewal
- Assignment
- Liberalization
-Death
Personal Property is usually covered at ACV:
● ACV valuation subtracts depreciation from cost of new item
● Age and condition (wear and tear) of item are factors of its depreciation
If residence and other structures are covered for RC:
● Replacement is of like, kind, quality of original
structure
● Insured must show what has already been spent on repair, if any
Liability coverage:
pays damages to someone who suffers loss caused by the insured
Homeowners Liability Coverage can pay for:
● Medical bills
● Lost wages
● Pain & suffering
● Inconvenience
● Property damage
Bodily Injury
Physical harm, disease, sickness, or death
Property Damage
Physical damage or loss to tangible property
Occurrence
Accident or incident resulting in harm, damage, or loss
Coverage E
Personal Liability
Coverage E– Personal Liability
● Pays for bodily injury and property damage to third party if insured is found
negligent
● Applies even if the insured’s property causes a third party damages
● Never pays the insured
Coverage E Details
● Damage must be a result of the policyholder’s negligence
● $100,000 minimum coverage
● Pays insured’s legal defense fees
● Legal defense: insurer pays fees all the way to the end of a lawsuit, even if limit
is exceeded
● Insurer has the right to settle damages with the claimant however it wants
Coverage F
Medical Payments
Coverage F–Medical Payments
● No-fault coverage
● For medical expenses incurred by third party due to an accident on insured’s
premises
● Only necessary, reasonable medical charges
● $1,000 minimum limit
Eligible Medical Expenses:
● Medical services
● Surgery
● X-Rays
● Dental costs
● Ambulance services
● Hospital stays
● Professional Nursing
● Prosthetic Devices
● Funeral Services
Section II – Additional Coverages: Property of Others
● Pays damage to others’ property if insured causes it
● Subject to exclusions:
○ pays nothing covered by Section I
○ no coverage for intentional damage by persons 13 or over
○ no coverage for insured’s property
○ no coverage for property of tenants or residents
Section II– Additional Coverages: First Aid
● Covers all incurred costs necessary for the first aid of another
● Does not pay for first aid for the insured
Section II– Additional Coverages: Claims Expenses
Covers financial loss due to the demands of the claims process, including:
● The cost to investigate a claim
● Expenses incurred by the insured (including lost wages up to $250/day)
● Interest on judgments that accrue after the judgment
● Premiums for bonds required in a suit defended by the insurer
Section II– Additional Coverages: Loss Assessment
● Pays up to $1,000 for assessments of property association members
● Kicks in when:
○ injury or damage is not excluded under section two
○ the liability is for an act committed by an elected director or officer, not a
paid employee of the association
No coverage for assessments charged by a governmental body.
Coverage E Exclusions
● Bodily injury and property damage to the insured
● Bodily injury to persons covered by Workers Compensation insurance
● Damage to property rented by insured, occupied or used by insured, or held in
insured’s custody and care
● Liability for contracts
○ however, this is covered when relating to ownership, maintenance, or
use of insured location, or if insured had assumed others’ liability before
an occurrence
Coverage F Exclusions:
● The insured person
● Anyone who lives on residence premises regularly
● Anyone eligible for Workers Comp or Disability for the occurrence
● Harm to a resident employee who is not in the course of employment, or is not at premises at time of occurrence
- harm from nuclear reactions
Exclusions to both Coverages E and F:
● Intentional or malicious harm to third party by insured
● Harm from war
● Disease transmitted from insured to third party
● Sexual molestation or abuse by insured
● Drug use, sale, manufacture, possession
Exclusions relating to vehicle use:
● Harm or damage caused by insured’s automobile use
○ exceptions: vehicles for property maintenance, handicapped persons, or
those in storage
○ recreational vehicles are covered under certain conditions
● Aircraft
● Watercraft
○ if owned by insured, motor is 25hp or greater
○ if rented by insured, motor is 50hp or greater
○ rented or owned, sailboats 26-feet or greater
Excluded from HO Liability Coverage:
● Third party losses due to insured’s business
● Third party losses from insured’s failure to render business services
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage (endorsement)
- provides specified amount of coverage for loss caused by fungi
- Only applies if fungi or rot is caused by covered peril
- includes the cost of removing the fungi or rot, tearing out and replacing a portion of the building in order to gain access to the fungi or rot, and testing the air for the presence of fungi
Permitted Incidental Occupancies - residence (endorsement)
- specified amount of coverage for structures used for business on the residence premises
- “incidental”: business is not the primary use of the property
- Increases the amount of coverage for on - premises business property (supplies, equipment, furnishings, etc.)
Earthquake (endorsement)
- adds coverage for earthquakes for additional premium
- all earth movement occurring within a 72 hour period = 1 earthquake
- deductible: 2% to 20% of the building’s value
- Excludes losses from flood or tidal waves
Scheduled personal property (endorsement)
- specific amount of coverage for specifically described articles of property
- limited coverage for new items before the insured reports to the insurer 25%
- for full coverage of new items: insured must report to the insurer within 30 days (or 90 days for fine art)
Personal property replacement cost (endorsement)
- additional premium for RC coverage for personal property
- does not apply to items already insured under agreed value coverage
- for items with a replacement value of more than $500, the policy: pays actual cash value first, pays the rest of the repair or RC if the insured notifies the insurer within 180 days of the initial claim
Business pursuits (endorsement)
- personal liability and medical payments coverage for business pursuits
- coverage does not apply:
- if the insured is the owner of, or partner in, the business
- to any liability arising out of professional services
- to any liability arising out of training
Watercraft liability (endorsement)
- adds coverage for watercraft powered by motors with more than 25 horsepower and sailing vessels 26 feet or longer
Excludes: watercraft used in racing except sailing
- rentals
- craft used to carry people for a fee
“Special provisions - Michigan” (endorsement)
It makes minor changes to various sections of the base policy to ensure that it complies with state laws
Select dwelling policy endorsements
Broad theft coverage
dwelling under construction
Broad Theft coverage
- coverage for on premises and off premises theft of personal property
- covered perils: theft, attempted theft, vandalism, or malicious mischief
- excludes vacant dwellings
“Special provisions - Michigan” (endorsement)
Coverage must include
- at least actual cash value for the property
- direct loss by fire and lightning
- 5 days of pro rata coverage for any insured property moved somewhere else to escape a covered peril
the insurer or the claimant can demand an appraisal if they can’t agree on the acv of a loss.
“Special provisions - Michigan” (endorsement)
policy termination
- policy will be voided if the insured commits any misrepresentation, concealment, or fraud
- insurer must send written cancellation notice at least 10 days in advance
- cancellation notice must state that the insurer will refund unearned premiums upon request
“Special provisions - Michigan” (endorsement)
Loss settlement
- insurer can repair, replace, rebuild, or take the property
- claimant cannot abandon any property to the insurer
- losses must be paid within 30 days
“Special provisions - Michigan” (endorsement)
Mortgagee clause
- insurer can cancel a mortgagee’s interest in the policy with 10 days written notice (only if mortgagee is not an insured)
- if the insured does not give proof of loss, the mortgagee will get a chance to prove the loss within 60 days
“Special provisions - Michigan” (endorsement)
suits against us
- policy holder cannot sue the insurer unless he has complied with all policy terms
- the action must be started within 1 year after the loss, or whatever time period listed in the policy, whichever is longer
Conditions section under section 1 of HO insurance
Insurable Interest and Limit of Liability
The insurer does not have to pay more than:
● The insured’s interest in the covered property at the time of the loss, or
● The applicable limit of liability
This applies even if more than one person has insurable interest in the property
Conditions section under section 1 of HO insurance
Deductible
● The insurer will only pay the part of a loss that exceeds the deductible amount stated in the declarations.
● If there are two or more deductibles under a policy, the highest deductible amount applies
Conditions section under section 1 of HO insurance
Duties After Loss
The insured must:
● Notify the police if the loss may have involved a crime
● Notify the insurer about what property was involved, and the circumstances surrounding the loss
● Submit a description of how, where, and when the loss occurred
● Try to prevent further damages, and keep track of expenses incurred doing this
● Give the insurer a list of damaged property
Conditions section under section 1 of HO insurance
Concealment or Fraud
Concealment, misrepresentations, and fraud can void policy coverage.
Conditions section under section 1 of HO insurance
Loss Settlement
This provision details how different types of property losses are settled
Conditions section under section 1 of HO insurance
Loss to a Pair or Set
If part of a set or an instrumental part of a whole is lost or destroyed, the policy will:
● Pay to replace, restore, or repair the set, or
● Pay the difference in the set’s actual cash value that was caused by the loss
Conditions section under section 1 of HO insurance
Appraisal
● If the insurer and the insured disagree on the amount of loss, either party can
demand an appraisal of the loss
● It involves two appraisers and one umpire
● Agreement by both appraisers or by one appraiser and the umpire is binding
Conditions section under section 1 of HO insurance
Other Insurance and Service Agreement
This provision specifies how an insurer will pay for losses that are covered by another insurance policy or a service agreement.
Conditions section under section 1 of HO insurance
Suit Against Us
The insured cannot take action against an insurer unless the insured has fully complied with all the terms of the policy and starts the action within two years of the date of loss.
Conditions section under section 1 of HO insurance
Our Option
The insurer can repair or replace any part of a damaged property with material or property of like kind and quality, as long as they give written notice within 30 days of
receiving proof of loss.
Conditions section under section 1 of HO insurance
Loss Payment
This provision clarifies how, when, and to whom a claim will be paid.
Conditions section under section 1 of HO insurance
Abandonment of Property
The policy holder may not abandon damaged property to the insurer
Conditions section under section 1 of HO insurance
Mortgage clause:
the lender (mortgagee) will be indemnified if a covered loss occurs, and has the right to receive notice if the policy holder either fails to adhere to the contract, or does not pay policy premiums
Conditions section under section 1 of HO insurance
Loss Payable clause:
ensures that a lender will be listed as a payee under the policy if a loss or damage occurs
Conditions section under section 1 of HO insurance
No Benefit to Bailee
Policy will not pay a third party who has custody or control of the insured’s property, even if it is with the insured’s granted permission.
Conditions section under section 1 of HO insurance
Nuclear Hazard Clause
A loss caused by any nuclear reaction, radiation, or radioactive contamination is not
covered, unless the loss was directly caused by a fire resulting from the nuclear
hazard.
Conditions section under section 1 of HO insurance
Recovered Property
After the claimant has been indemnified, if either party recovers any property involved
in the claim, they must tell the other party about it
Conditions section under section 1 of HO insurance
Volcanic Eruption Period
One or more volcanic eruptions that occur with in a72-hour period are considered one
volcanic eruption.
Conditions section under section 1 of HO insurance
Policy Period
Coverage only applies to a loss that occurs during the policy period
Section I & II Conditions
- Subrogation
- Waiver
- Cancellation
- Change
-Nonrenewal - Assignment
- Liberalization
- Death
Section I & II Conditions
Subrogation
Before a loss, the insured can transfer to the insurer his right to collect the amount of the indemnity from the guilty party. If his rights are not transferred, his insurer might
require an assignment of rights when they pay a claim.
Section I & II Conditions
Cancellation
● Lists how and why the insurer may cancel the policy
● Specifies how much advance notice the insurer must give before it can end
coverage
● States that the policyholder may cancel at anytime, for any reason
Section I & II Conditions
Nonrenewal
IF an insurer chooses not to renew a policy, it must send written notice to the insured at least 30 days before the policy’s expiration date
Section I & II Conditions
Liberalization
this provision refers to when the insurer expands coverage and current insureds benefit automatically without paying higher premiums.
Section I & II Conditions
Waiver or change of policy provisions
- are only valid if they are in writing
- an insurer’s request for an appraisal or examination does not waive its rights
Section I & II Conditions
Assignment
this provision prohibits the insured from transferring a policy to someone else without the insurer’s written consent
Section I & II Conditions
Death
IF insured dies, his policy will cover his legal representatives, including
- household members who were covered at the time of his death, but only if they still live at the covered property
- those who have proper temporary custody of the property until a legal representative is appointed.
“Insurance Services Offices”
ISO
● Forms for homeowners policies
● Each provides a different type of coverage
“Insurance Services Offices” (ISO) forms:
Broad form
HO-2:
Special form
HO-3
Contents Broad form
HO-4
Comprehensive form
HO-5
Condominium form
HO-6
● Named peril policy
● Insures against all Broad Form perils
● Covers the insured’s house and personal property
HO-2 “Broad Form”
● Known as “renters insurance” (think “4-Rent”)
● Insures against all Broad Form perils
● Only covers personal property
● Does not insure house and other structures
Named-Peril Forms: HO-4 “Contents Broad Form”
● Known as the Condo Form
● Insures against all Broad Form perils
● Covers the owner’s belongings
● Covers all finished surfaces of the individual condominium unit
Named-Peril Forms: HO-6 “Unit Owner’s Form”
● Most common form
● Open-peril coverage for dwelling and other structures
● Named-peril coverage for personal property (covered against all Broad Form perils)
Open-Peril Forms: HO-3 “Special Form”
● Open-peril coverage for structures and personal property
● Most comprehensive coverage available
Open-Peril Forms: HO-5 “Comprehensive Form”
-Fire
-Lightning
Basic(SFP)
Coverage
Fire & Lightning +
-Windstorm
-Hail
-Explosion
-Riot or civil commotion
-Vehicles
-Aircraft
-Volcanic eruption
-Smoke
Extended Coverage
Extended Coverage Perils+
- Vandalism or malicious mischief
-Theft
-Falling objects
-Weight of ice, snow, or sleet
-Damage from a steam or hot water system
-Accidental discharge or over flow of water
or steam
-Freezing of plumbing, heating, air
conditioning systems, or domestic appliances
-Sudden and accidental damage from
artificially generated electrical current
-Sudden and accidental tearing apart,
cracking, burning or bulging
Broad Form Coverage
What page lists what’s unique to an individual’s HO Policy:
● Policyholder name
● Policyholder address
● Premium
● Deductible
● Policy term (i.e. policy dates)
● Limits of coverage
● Any endorsements
Declarations
In a contract of adhesion, the insurer authors the agreement entirely and the insured may only take it or leave it.
The insurer’s advantage in this position, however, is mitigated by the fact that any ambiguity in the language will favor the insured.
Getting crystal clear on the terms is very important
Definitions
- The person(s) named on the declarations page
- Residents of your household
a. relatives
b. persons under age 21 in your care
c. full-time students, under the age of 24, who are away at school
Insured
- The dwelling listed on declarations page
- Other buildings, grounds where insured lives
- Building bought for use as a dwelling
- Any premises used in connection with the above
- Any premises the insured rents regularly but does not own
- Vacant land, except farm land
- Land the insured owns or rents in order to build a one- to four-unit residence
- Cemetery plots
- Premises the insured occasionally rents, unless for business purposes
Residence Premises
Dwelling
Coverage A
● Dwelling
● Structures attached to dwelling
● Materials located in or near the “residence premises” used to construct, alter,
or repair dwelling and other structures on property
● Items that service the dwelling (AC compressor, fuel tanks)
● Under HO-6 (Condo Form): alterations, appliances, fixtures, and improvements
that are part of building contained within residence
● Not available under HO-4
Coverage A– Dwelling
Other Structures
Coverage B
Designed for detached structures, including:
● Garages
● Gazebos
● Fences
● Mailboxes
● Lampposts
● Sheds
Limit typically set at 10% of Coverage A limit
Coverage B– Other Structures
● Pays in addition to the limit for Coverage A
● Typically set at a percentage of Coverage A limit
On apolicy with a $100,000 limit, Coverage B could pay up to $10,000 on top of the
$100,000 for Coverage A.
● Coverage A: $100,000
● Coverage B: 10% of Coverage A ($10,000)
● Insured could receive up to $110,000
Coverage B is usually additional insurance:
● Detached structures wholly rented out
● Structures held for rental
● Detached structures used for business
Coverage B Exclusions
● Structures rented to an insured or tenant of the primary dwelling
● Garages rented as private garages
Coverage B it does cover:
Personal Property
Coverage C
● All property that does not qualify as real property
● Covered anywhere in the world
Coverage C– Personal Property
● Buildings
● Elements attached to buildings
● Building materials/supplies that are located on or next to the residence
premises and intended for use on those premises
Real Property:
normally set at 50% of Coverage A limit
Coverage C Limits
- Property usually situated at the residence premises: full coverage
- Property usually situated somewhere other than the residence premises: 10%
of Coverage C limit or $1,000, whichever is greater
Two categories of personal property:
● $200: coins and money
● $250: antennas, tapes, wires, records, disks and other media while in a vehicle
● $1,500:
○ securities, accounts, deeds, letters of credit, manuscripts, personal
records, passports, tickets, and stamps
○ theft of jewelry, watches, furs, and precious stones
○ boats and their trailers, furnishings, equipment, and engines
○ other types of trailers
○ personal property used for a business when away from the residence
○ portable electronics and accessories that are in a vehicle
● $2,500:
○ theft of firearms
○ theft of silver, gold, and platinum
○ personal property used for a business
Coverage C Special Limits
● Pets
● Motor vehicles
● Aircraft and hovercraft (but hobby aircraft are covered)
● Property of a renter or boarder
● Personal property the insured is renting out
● Credit cards
● Value of water or steam, such as from a heating system (but water in a
residential pool is covered under Coverage C)
● Mysterious disappearance (excluded in some policies)
Coverage C Exclusions
Loss of Use
Coverage D
For indirect losses that result from direct losses
Three coverages for Loss of Use:
● Additional Living Expenses (ALE)
● Fair Rental Value (FRV)
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● Prohibited Use (a.k.a. Civil Authority)
Coverage D– Loss of Use
● Most common type of Coverage D– Loss of Use
● Pays increase in expenses needed for the insured to maintain normal standard
of living after a covered loss
Additional Living Expenses (ALE)
● Dwelling must be uninhabitable
● Damage must have been caused by a covered peril
Only covers costs that exceed the insured’s normal living expenses
Additional Living Expenses (ALE) Requirements:
Amanda’s regular expenses:
● Mortgage payment
● $20/week for laundry and dry cleaning
Amanda’s expenses after the loss:
● Mortgage payment
● Hotel bill
● $60/week for laundry and dry cleaning
Increase in Amanda’s expenses due to the loss:
● Hotel bill
● $40/week for laundry
ALE Example
● Typeof Coverage D– Loss of Use
● Indemnifies insured for lost rent if a tenant has to move out due to covered damages
● Pays lost rental income until unit is habitable again
● Only pays net loss: subtracts any expenses that do not continue while the
tenant is gone
Fair Rental Value
Before the loss:
● Dana’s rental income: $1,200/month
● Dana’s water bill for rented unit: $40/month
After the loss:
● Dana’s lost rent: 3 weeks (3/4 month = $900)
● Water turned off: 3 weeks (3/4 month = $30)
● Dana’s net loss: $900- $30 = $870
Fair Rental Value Example
● Paysfor ALE and FRV when a civil authority prevents the insured from using
the home
● Civil authority: any government entity acting on behalf of, or to protect, people
or property
● Onlyapplies if the damage was caused by a peril covered in the insured’s
policy
Civil Authority coverage:
Measured in time.
Coverage D Limits
● Until the premises is repaired or replaced, or
● Until the insured’s household can settle elsewhere
(limit) Additional Living Expenses are paid:
paid for the shortest amount of time needed to restore the rented area to rentable condition.
Fair Rental Value (limit)
● Until access to the home is restored
● Up to a maximum of two-weeks
Civil Authority coverage pays ALE and FRV (limit)
● Designed to cover the insured until the dwelling is habitable
● Allow Additional Living Expenses and Fair Rental Value to extend beyond the
policy expiration date if needed
● Remember: Fair Rental Value does not include time spent finding a new tenant
if a previous tenant cancels the lease
Coverage D Limits, Cont’d
● Many policies also have a percentage based limit for Coverage D
● This limit usually falls between 10% and 30% of the Coverage A limit
● Be sure to study your insurer’s specific policy to determine whether a
percentage based limit applies
Percentage-Based Limits of Coverage D:
● Additional Living Expenses and Fair Rental Value: subject to the policy
deductible
● Civil Authority coverage: not subject to any deductible
Loss of Use Deductibles
● Not all losses are automatically covered under Coverages A-D
● Policyholders can purchase any of 12 Additional Coverages
Additional Coverages
● Pays to: remove and dispose of the debris of covered property if damaged by a covered peril
● Limit: the limit for the type of property involved
○ Debris from Dwelling: subject to Coverage A limit
○ Debris from Other Structures: subject to Coverage B limit
○ Debris from Personal Property: subject to Coverage C limit
Additional coverages (if purchased) 1. Debris Removal Coverage
When needed Debris Removal can pay an additional 5% of the applicable limit:
● Coverage A property: 5% of Coverage A limit
● Coverage B property: 5% of Coverage B limit
● Coverage C property: 5% of Coverage C limit
- Additional Debris Removal Coverage
● Reimburses homeowner for expenses to protect property from further damage
● Does not increase the policy limit
● Subject to the policy deductible
Additional coverages (if purchased) 2. Reasonable Repairs
● Pays up to 5% of the Coverage A limit, with $500 per tree, shrub, etc.
● Covers losses caused by several perils including lightning, but NOT the other
weather-related perils: windstorm, hail, and weight of ice, sleet, or snow
Additional coverages (if purchased) 3. Tree and Shrub Replacement
● Limit: $500
● Additional insurance
● No deductible
Additional coverages (if purchased) 4. Fire Department Service Charge
● For condo owners under HO-6
● Pays when condo association charges an assessment after a loss
● Limit: typically $1,000 or $2,500 per claim
Additional coverages (if purchased) 5. Loss Assessment
● Provides coverage for items that the insured removes from danger if a covered
peril is imminent
● Property remains covered under the original peril for up to 30 days
● Nomatter what damages the property during this time, it will still be covered
under the peril that the insured was trying to protect it from
Additional coverages (if purchased) 6. Property Removal
● Reimburses the policy holder for fraudulent credit card charges
● Includes forgery of checks
● Limit:$500
Additional coverages (if purchased) 7.Credit Card Fraud or Forgery
Applies if the collapse was caused by:
● Hidden decay or insect damage
● Weight of contents, including people
● Weight of precipitation on roof
● Use of defective materials if during construction
Collapse is not covered if caused by structural decay or earth movement, such as
settling, shrinking, expansion, cracking, or bulging
Additional coverages (if purchased) 8. Collapse
● Awnings
● Fences
● Patios
● Swimming pools
● Underground pipes
● Septic Tanks
● Foundations
● Retaining walls
● Docks
Additional coverages (if purchased) 8. Collapse Excluded Property:
Covers:
● Breakage directly caused by earth movements
● Direct physical loss to covered property caused by breakage alone
Excludes losses to buildings that have been vacant for 60 consecutive days (unless it
was caused by earth movement)
Additional coverages (if purchased) 9. Glass or Safety Glazing Material Breakage
● Pays difference between old construction and new code-required construction
during repair or damage due to a covered peril
● Pays up to 10%of the Coverage A limit as additional insurance
● Does not cover Ordinances or Laws as perils; this is specifically excluded
Additional coverages (if purchased) 10. Ordinance or Law
● Designed to protect a landlord who rents out a furnished room
● Pays in addition to the Coverage A limit
● Limit: $2,500
● Excludes losses by theft
Additional coverages (if purchased) 11. Landlord’s Furnishings
● Protects against damage to grave plots due to covered perils
● Limit: $5,000
Additional coverages (if purchased) 12. Grave Marker
Risks or causes of loss that the insurer decides not to cover
Exclusions
narrow coverage = few exclusions
Named peril:
wide coverage = many exclusions
Open peril:
● Ordinance or law
● Earth movement
● Water damage
● Off-premises power failure
● Neglect
● War
● Nuclear hazard
● Intentional acts
● Mechanical breakdown
Exclusions to HO Property Coverage:
- Interest
- Our Option
- Deductible
- Loss Payment
- Duties After a Loss
- Abandonment
- Concealment Mortgage
- Loss Settlement
- No Benefit to Bailee
- Pair Or Set
- Nuclear Hazard
- appraisal
- recovered property
- other insurance
- volcano
- suit against us
- policy period
Conditions section under section 1 of HO insurance
- Limit of Liability
- suit against us
- severability
- Bankruptcy
- Duties After “occurrence”
- other insurance
- duties of an injured person
- policy period
- claim payment
- concealment or fraud
Section II Conditions
The limit of liability is the same as it appears in the Declarations section of a
homeowners policy, regardless of the number of insureds, claims made, or persons injured.
Section II Conditions: Limit of Liability
● Policy coverage applies separately to each insured
● However, this condition does not increase the total limit of liability for anyone occurrence
Section II Conditions: Severability of Insurance
The insured must:
● Report the claim in a reasonable time frame
● Allow an adjuster to examine the loss
● Allow physical examinations
● Let the insurer know any pertinent information
Section II Conditions: Duties After “Occurrence”
The injured third party must:
● Give the insurer proof of the occurrence
● Authorize the examination of medical records
● Submit to a physical examination
Section II Conditions: Duties of an Injured Person
Paying a Medical Payments claim is not an admission of an insurer’s or insured’s
liability. This is because Med Pay is no-fault coverage, meaning the insurer can
choose to pay for someone’s injuries, even if the insured is not liable for them.
Section II Conditions: Payment of Claim
● The insured cannot take action against an insurer unless the insured has fully
complied with all the terms of a policy
● No one has the right to join an insurer intaking action against its insured
● No action can be taken against an insurer until the obligation of the insured is
determined by the insurer
Section II Conditions: Suit Against Us
Even if the insured files for bankruptcy, the insurer must still pay any covered liability claims on behalf of the insured.
Section II Conditions: Bankruptcy of an “Insured”
This provision states that the coverage under Section II should kick in after any other
valid and collectible insurance, except insurance used specifically for covering
anything exceeding the limits of liability (i.e. excess Insurance).
Section II Conditions: Other Insurance
Coverage only applies to bodily injury or property damage that occurs during the policy period.
Section II Conditions: Policy Period
Concealment, misrepresentations, and fraud can void policy coverage.
Section II Conditions: Concealment or Fraud
- Subrogation
- Waiver
- Cancellation
- Change
- Nonrenewal
- Assignment
- Liberalization
-Death
Section I & II Conditions
● ACV valuation subtracts depreciation from cost of new item
● Age and condition (wear and tear) of item are factors of its depreciation
Personal Property is usually covered at ACV:
● Replacement is of like, kind, quality of original
structure
● Insured must show what has already been spent on repair, if any
If residence and other structures are covered for RC:
pays damages to someone who suffers loss caused by the insured
Liability coverage:
● Medical bills
● Lost wages
● Pain & suffering
● Inconvenience
● Property damage
Homeowners Liability Coverage can pay for:
Physical harm, disease, sickness, or death
Bodily Injury
Physical damage or loss to tangible property
Property Damage
Accident or incident resulting in harm, damage, or loss
Occurrence
Personal Liability
Coverage E
● Pays for bodily injury and property damage to third party if insured is found
negligent
● Applies even if the insured’s property causes a third party damages
● Never pays the insured
Coverage E– Personal Liability
● Damage must be a result of the policyholder’s negligence
● $100,000 minimum coverage
● Pays insured’s legal defense fees
● Legal defense: insurer pays fees all the way to the end of a lawsuit, even if limit
is exceeded
● Insurer has the right to settle damages with the claimant however it wants
Coverage E Details
Medical Payments
Coverage F
● No-fault coverage
● For medical expenses incurred by third party due to an accident on insured’s
premises
● Only necessary, reasonable medical charges
● $1,000 minimum limit
Coverage F–Medical Payments
● Medical services
● Surgery
● X-Rays
● Dental costs
● Ambulance services
● Hospital stays
● Professional Nursing
● Prosthetic Devices
● Funeral Services
Eligible Medical Expenses:
● Pays damage to others’ property if insured causes it
● Subject to exclusions:
○ pays nothing covered by Section I
○ no coverage for intentional damage by persons 13 or over
○ no coverage for insured’s property
○ no coverage for property of tenants or residents
Section II – Additional Coverages: Property of Others
● Covers all incurred costs necessary for the first aid of another
● Does not pay for first aid for the insured
Section II– Additional Coverages: First Aid
Covers financial loss due to the demands of the claims process, including:
● The cost to investigate a claim
● Expenses incurred by the insured (including lost wages up to $250/day)
● Interest on judgments that accrue after the judgment
● Premiums for bonds required in a suit defended by the insurer
Section II– Additional Coverages: Claims Expenses
● Pays up to $1,000 for assessments of property association members
● Kicks in when:
○ injury or damage is not excluded under section two
○ the liability is for an act committed by an elected director or officer, not a
paid employee of the association
No coverage for assessments charged by a governmental body.
Section II– Additional Coverages: Loss Assessment
● Bodily injury and property damage to the insured
● Bodily injury to persons covered by Workers Compensation insurance
● Damage to property rented by insured, occupied or used by insured, or held in
insured’s custody and care
● Liability for contracts
○ however, this is covered when relating to ownership, maintenance, or
use of insured location, or if insured had assumed others’ liability before
an occurrence
Coverage E Exclusions
● The insured person
● Anyone who lives on residence premises regularly
● Anyone eligible for Workers Comp or Disability for the occurrence
● Harm to a resident employee who is not in the course of employment, or is not at premises at time of occurrence
- harm from nuclear reactions
Coverage F Exclusions:
● Intentional or malicious harm to third party by insured
● Harm from war
● Disease transmitted from insured to third party
● Sexual molestation or abuse by insured
● Drug use, sale, manufacture, possession
Exclusions to both Coverages E and F:
● Harm or damage caused by insured’s automobile use
○ exceptions: vehicles for property maintenance, handicapped persons, or
those in storage
○ recreational vehicles are covered under certain conditions
● Aircraft
● Watercraft
○ if owned by insured, motor is 25hp or greater
○ if rented by insured, motor is 50hp or greater
○ rented or owned, sailboats 26-feet or greater
Exclusions relating to vehicle use:
● Third party losses due to insured’s business
● Third party losses from insured’s failure to render business services
Excluded from HO Liability Coverage:
- provides specified amount of coverage for loss caused by fungi
- Only applies if fungi or rot is caused by covered peril
- includes the cost of removing the fungi or rot, tearing out and replacing a portion of the building in order to gain access to the fungi or rot, and testing the air for the presence of fungi
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage (endorsement)
- specified amount of coverage for structures used for business on the residence premises
- “incidental”: business is not the primary use of the property
- Increases the amount of coverage for on - premises business property (supplies, equipment, furnishings, etc.)
Permitted Incidental Occupancies - residence (endorsement)
- adds coverage for earthquakes for additional premium
- all earth movement occurring within a 72 hour period = 1 earthquake
- deductible: 2% to 20% of the building’s value
- Excludes losses from flood or tidal waves
Earthquake (endorsement)
- specific amount of coverage for specifically described articles of property
- limited coverage for new items before the insured reports to the insurer 25%
- for full coverage of new items: insured must report to the insurer within 30 days (or 90 days for fine art)
Scheduled personal property (endorsement)
- additional premium for RC coverage for personal property
- does not apply to items already insured under agreed value coverage
- for items with a replacement value of more than $500, the policy: pays actual cash value first, pays the rest of the repair or RC if the insured notifies the insurer within 180 days of the initial claim
Personal property replacement cost (endorsement)
- personal liability and medical payments coverage for business pursuits
- coverage does not apply:
- if the insured is the owner of, or partner in, the business
- to any liability arising out of professional services
- to any liability arising out of training
Business pursuits (endorsement)
- adds coverage for watercraft powered by motors with more than 25 horsepower and sailing vessels 26 feet or longer
Excludes: watercraft used in racing except sailing
- rentals
- craft used to carry people for a fee
Watercraft liability (endorsement)
It makes minor changes to various sections of the base policy to ensure that it complies with state laws
“Special provisions - Michigan” (endorsement)
Broad theft coverage
dwelling under construction
Select dwelling policy endorsements
- coverage for on premises and off premises theft of personal property
- covered perils: theft, attempted theft, vandalism, or malicious mischief
- excludes vacant dwellings
Broad Theft coverage
- at least actual cash value for the property
- direct loss by fire and lightning
- 5 days of pro rata coverage for any insured property moved somewhere else to escape a covered peril
the insurer or the claimant can demand an appraisal if they can’t agree on the acv of a loss.
“Special provisions - Michigan” (endorsement)
Coverage must include
- policy will be voided if the insured commits any misrepresentation, concealment, or fraud
- insurer must send written cancellation notice at least 10 days in advance
- cancellation notice must state that the insurer will refund unearned premiums upon request
“Special provisions - Michigan” (endorsement)
policy termination
- insurer can repair, replace, rebuild, or take the property
- claimant cannot abandon any property to the insurer
- losses must be paid within 30 days
“Special provisions - Michigan” (endorsement)
Loss settlement
- insurer can cancel a mortgagee’s interest in the policy with 10 days written notice (only if mortgagee is not an insured)
- if the insured does not give proof of loss, the mortgagee will get a chance to prove the loss within 60 days
“Special provisions - Michigan” (endorsement)
Mortgagee clause
- policy holder cannot sue the insurer unless he has complied with all policy terms
- the action must be started within 1 year after the loss, or whatever time period listed in the policy, whichever is longer
“Special provisions - Michigan” (endorsement)
suits against us
The insurer does not have to pay more than:
● The insured’s interest in the covered property at the time of the loss, or
● The applicable limit of liability
This applies even if more than one person has insurable interest in the property
Conditions section under section 1 of HO insurance
Insurable Interest and Limit of Liability
● The insurer will only pay the part of a loss that exceeds the deductible amount stated in the declarations.
● If there are two or more deductibles under a policy, the highest deductible amount applies
Conditions section under section 1 of HO insurance
Deductible
The insured must:
● Notify the police if the loss may have involved a crime
● Notify the insurer about what property was involved, and the circumstances surrounding the loss
● Submit a description of how, where, and when the loss occurred
● Try to prevent further damages, and keep track of expenses incurred doing this
● Give the insurer a list of damaged property
Conditions section under section 1 of HO insurance
Duties After Loss
Concealment, misrepresentations, and fraud can void policy coverage.
Conditions section under section 1 of HO insurance
Concealment or Fraud
This provision details how different types of property losses are settled
Conditions section under section 1 of HO insurance
Loss Settlement
If part of a set or an instrumental part of a whole is lost or destroyed, the policy will:
● Pay to replace, restore, or repair the set, or
● Pay the difference in the set’s actual cash value that was caused by the loss
Conditions section under section 1 of HO insurance
Loss to a Pair or Set
● If the insurer and the insured disagree on the amount of loss, either party can
demand an appraisal of the loss
● It involves two appraisers and one umpire
● Agreement by both appraisers or by one appraiser and the umpire is binding
Conditions section under section 1 of HO insurance
Appraisal
This provision specifies how an insurer will pay for losses that are covered by another insurance policy or a service agreement.
Conditions section under section 1 of HO insurance
Other Insurance and Service Agreement
The insured cannot take action against an insurer unless the insured has fully complied with all the terms of the policy and starts the action within two years of the date of loss.
Conditions section under section 1 of HO insurance
Suit Against Us
The insurer can repair or replace any part of a damaged property with material or property of like kind and quality, as long as they give writtennoticewithin30daysof
receiving proof of loss.
Conditions section under section 1 of HO insurance
Our Option
This provision clarifies how, when, and to whom a claim will be paid.
Conditions section under section 1 of HO insurance
Loss Payment
The policy holder may not abandon damaged property to the insurer
Conditions section under section 1 of HO insurance
Abandonment of Property
the lender (mortgagee) will be indemnified if a covered loss occurs, and has the right to receive notice if the policy holder either fails to adhere to the contract, or does not pay policy premiums
Conditions section under section 1 of HO insurance
Mortgage clause:
ensures that a lender will be listed as a payee under the policy if a loss or damage occurs
Conditions section under section 1 of HO insurance
Loss Payable clause:
Policy will not pay a third party who has custody or control of the insured’s property, even if it is with the insured’s granted permission.
Conditions section under section 1 of HO insurance
No Benefit to Bailee
A loss caused by any nuclear reaction, radiation, or radioactive contamination is not
covered, unless the loss was directly caused by a fire resulting from the nuclear
hazard.
Conditions section under section 1 of HO insurance
Nuclear Hazard Clause
After the claimant has been indemnified, if either party recovers any property involved
in the claim, they must tell the other party about it
Conditions section under section 1 of HO insurance
Recovered Property
One or more volcanic eruptions that occur with in a72-hour period are considered one
volcanic eruption.
Conditions section under section 1 of HO insurance
Volcanic Eruption Period
Coverage only applies to a loss that occurs during the policy period
Conditions section under section 1 of HO insurance
Policy Period
- Subrogation
- Waiver
- Cancellation
- Change
-Nonrenewal - Assignment
- Liberalization
- Death
Section I & II Conditions
Before a loss, the insured can transfer to the insurer his right to collect the amount of the indemnity from the guilty party. If his rights are not transferred, his insurer might
require an assignment of rights when they pay a claim.
Section I & II Conditions
Subrogation
● Lists how and why the insurer may cancel the policy
● Specifies how much advance notice the insurer must give before it can end
coverage
● States that the policyholder may cancel at anytime, for any reason
Section I & II Conditions
Cancellation
IF an insurer chooses not to renew a policy, it must send written notice to the insured at least 30 days before the policy’s expiration date
Section I & II Conditions
Nonrenewal
this provision refers to when the insurer expands coverage and current insureds benefit automatically without paying higher premiums.
Section I & II Conditions
Liberalization
- are only valid if they are in writing
- an insurer’s request for an appraisal or examination does not waive its rights
Section I & II Conditions
Waiver or change of policy provisions
this provision prohibits the insured from transferring a policy to someone else without the insurer’s written consent
Section I & II Conditions
Assignment
IF insured dies, his policy will cover his legal representatives, including
- household members who were covered at the time of his death, but only if they still live at the covered property
- those who have proper temporary custody of the property until a legal representative is appointed.
Section I & II Conditions
Death
