Study 8 - Other Property Coverages Flashcards
Secondary Home
A traditional home, unlike a summer cottage, that the insured lives in often throughout the year
High Value Homes
A distinctive home with a high-value replacement value - typically greater than $1 million
High-Value Home Insurance
Requires specialized insurance coverage that costs more than standard insurance. Includes:
- Kidnap expense coverage
- Equipment breakdown - provides a specified amount for accidental breakdown of the equipment or system including lack of maintenance
- Home invasion coverage - high value homes are more attractive to thieves and burglars
- Home appraisal expenses
- Disappearing deductible - waive the deductible on losses above a specified amount
- Cash-out option - insured able to receive cash payment up to the policy limit without deduction for depreciation
- Increased special limits -
Mobile Home
Manufactured housing, commonly called house trailers. Usually placed in one location and left there permanently, but retain the ability to be moved as required in many areas.
Modular Home
A type of manufactured housing that is built in a factory and moved to a building site in large individual sections. They are not movable and may be considered a permanent structure.
Mobile Homeowners Form
There is a single IBC mobile homeowners form. It insures against named perils, which makes it most directly comparable to the IBC homeowners basic form.
Coverage A includes the optional extension of emergency removal expense which permits the insured to use up to 5% of the amount of insurance under coverage A for any reasonable expense incurred to remove the building to protect it from an insured peril. An example is a fire in the in the surrounding area.
2 Exclusions under the mobile homeowners form
- Loss or Damage occurring while the building is being moved, except in an emergency to protect it when endangered by an insured peril
- Loss due to conversion, embezzlement, or secretion by any person in possession of the building
Rented Dwellings
A house purchased by the insured not for use as their principal residence but purely for investment purposes. They can generate a higher than acceptable loss frequency if not underwritten properly. Hazards include:
- Maintenance - may not be convenient for the owner to go to the dwelling on a regular basis
- Marijuana Grow Ops and Meth Labs - Fires are more likely to occur, as are burglaries, and vandalism
- Vacant dwelling - if a landlord does not have a prospective tenant ready to move in
- Occupancy - Too many renters - can change the occupancy to a boarding house which is a material change in risk
- Vandalism
The residential basic form is the most suitable for a rented dwelling
Accommodation Sharing (Airbnb)
An arrangement set up by means of a website or mobile app in which a property primarily occupied by its owner is rented for a short time period to a third party
Accommodation Sharing Issues
The homeowners forms may have a number of exclusions that limit coverage for exposures arising from accommodation sharing. Including:
- Damage to Dwelling and Contents of Hosts - excludes damage to the dwelling and contents if the building is used for business purposes. Airbnb includes coverage to protect hosts from damage caused by guests under its “host guarantee”
- Damage to Property of Guests - not covered under the host’s insurance policy due to the exclusion for property of roomers or boarders
Seasonal Dwellings
A second dwelling typically located in rural settings or on a lakefront that is owned by the insured. Seasonal dwellings are usually covered for limited named perils and may be allowed to remain unoccupied for longer periods of time without penalties.
Seasonal Residence Form
Named perils policy similar to the residential basic form.
The standard named perils omit vandalism or malicious acts but allows the insured to add coverage for an additional premium for that peril - burglary or robbery, vandalism or malicious acts, glass breakage
Hobby Farms
To cover small, personal farming operations, many insurers offer a special policy form or rider to cover limited farming activities. This form may be a hobby farm policy, sometimes called a country estate policy, or a hobby farm rider attached to a homeowners form
Determining whether a risk qualifies as a hobby farm
- Primary dwelling owner-occupied
- Less than 25 acres
- Max of 5 farm animals
- Max of 10 poultry
- Max income from farming operations of $10,000
- No employees involved in farm operations
- No custom farming, horse boarding, training, or riding facilities
- Max $25,000 of farm equipment
- Max $25,000 of farm-related outbuildings
What is covered under a hobby farm policy
- Outbuildings used for farming purposes
- Livestock, which may include coverage for livestock mortality, feed, and other materials such as saddle and tack
- Poultry and eggs
- Farm produce
- Farm equipment