Homeowners Policy (CH 5) Flashcards
Main differences between Homeowners and Dwelling Insurance:
Theft is now a named covered peril.
Liability coverage is included in the package.
Homeowner policies may only be issued to cover premises which are principally used for private residential purposes including the following:
- Owner-Occupied of 1 to 4 family dwellings
- Tenants in a non-owned building used as a residence.
- Owner-Occupants of Condominiums.
- Dwellings under construction.
- Dwellings purchased on Land Contracts or occupied under a Life Estate agreement.
- Seasonal Dwellings if the insured is covered under a homeowner policy for their primary dwelling.
- Mobile Homes with the attachment of the Mobile Home endorsement.
Children and family are included in coverage in a homeowners policy until:
At age 24, students are expected to buy their own insurance.
Business
a trade, profession, or occupation, full-time or part-time, if at least $2,000 annually is earned.
Business pursuits liability is excluded from HO policy but there is an endorsement available to add liability to the policy for a business activity.
Vacant Land
any land where there are no man-made improvements.
ex. acres of land used for vacation purposes with nothing there except nature. Addition of fencing, shed, etc. means land is no longer vacant or covered. Endorsement available.
Coverage A- Dwelling
- The residence premises shown on the Declarations page.
- Structures attached to the dwelling
- Any materials and supplies located on, or next to, the residence premises and used to construct, alter, or repair the dwelling
Coverage B- Structures
Covers permanent yard fixtures separate and detached from the dwelling. Automatic 10% of the coverage A dwelling limit is given as blanket protection.
Coverage C- Contents
Personal Property. automatic limit of 50% of coverage A is given. Contents are covered anywhere in the world.
10% limitation for property normally kept at another residence owned by the insured or located in a storage facility.
Motor vehicle exclusion
if the vehicle is NOT subject to vehicle registration an dis used to service the insured premises of designed to assist people with disabilities, it is covered.
ex. Riding lawnmower, motorized wheelchair
Coverage D- Loss of Use
New Expenses and Normal Living Expenses
Indirect loss. 30% of coverage A.
Also only covers new expenses.
ex. fire in house, rent at hotel/elsewhere is covered to a normal standard of living.
Special Limits of Liability
HO policies contain special limits of liability for certain types of property. If a client has special property that exceeds the special limits, special coverage is recommended such as Personal Articles Floater.
General Exclusions
- Ordinance and Law
- Earth movement (although collapse is covered, but not if caused by earthquake)
- Water damage (not for flood, sewer backup or seepage), including water-borne materials
- Power Failure
- Neglect
- War
- Nuclear Hazards
- Intentional Losses
Which four of the eight general exclusions can be added by endorsement?
- Ordinance and Law
- Earth Movement
- Water Damage
- Power Failure
Typical exclusions contained in most all-risk forms:
Wear and tear
Inherent vice or latent defect (build in flaw, usually natural)
Smog or wet rot, except wet rot within walls, ceilings, or floors caused by plumbing leakage from a covered loss
discharge of pollutants
settling or expansion of pavements, walls, or roofs
damage caused by birds. vermin, rodents, or insects
black mold or fungus, except when caused by leakage from a covered plumbing loss
Coverage E- Personal Liability
If a claim is made or a suit against an insured for damages of bodily injuries caused by an occurrence to which this coverage applies, insurer will
- Pay up to our limit of liability for damages the insured is legally liable and
- Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false, or fraudulent.
Duty to settle or defend
