Unit 6 - Dwelling Insurance Flashcards
What is a dwelling insurance policy?
- Different from homeowner policy
- Not required to be owner occupied
- Covers risks like rental properties, older homes, hunting cabins, lake houses
What is another name for a dwelling insurance policy?
monoline policy (because they insure only property)
What types of properties do dwelling insurance policies cover?
- vacation homes
- rental property
- 1-4 unit dwellings / boarders
- properties under constuction
- mobile homes that are permanently attached
- NOTE - farm dwellings are NOT eligible for this policy
List the four coverages in a dwelling policy.
- Coverage A - dwelling, materials and supplies
- Coverage B - other structures -separate but contained within a fence, etc. Cannot include be used for commercial, manufacturing or farming
- Coverage C - personal property contained in the dwelling for the policyholder. does not provide coverage for tenant property. 10% of Coverage C amount covers personal property owned by policyholder anywhere in the world.
- Coverage D - fair rental value - loss of rents. limited to 20% of insurance policy value or 2 weeks if a civil authority prohibits use due to nearby accident
- Coverage E - additional living expenses including motel, dining, laundry and transportation expenses(covered in DP-2 and DP-3) Can be added to DP-1 by endorsement
What personal property is not covered by Coverage C in a dwelling policy?
- animals, birds, fish
- aircraft
- motor vehicles, other than motorized equipment to maintain property
- boats, other than rowboats and canoes
- accounts, bills, currency, money and securities
List the other coverages that are automatically included in DP-1 form of a dwelling policy.
- Other structures - up to 10% of Coverage A limit
- Debris removal
- Property removed - for up to 5 days
- Reasonable repairs - to protect from further damage
- Tenant Improvements, alterations and additions
- Fire department service charges - up to $500. no deductible applies.
- Worldwide coverage - up to 10% of Coverage C limit
- Rental value - up to 20% of Coverage A limit for loss of fair rental value; payouts reduce limit of liability coverage
What coverages are included in DP-2 and DP-3, in addition to DP-1 for no additional premium?
- Trees, shrubs and other plants - max $500 each up to 5% of Coverage A
- Collapse - must be caused by the event covered
- Glass or safety glazing materia
- Ordinance of law - 10% of coverage A
- Property removed - covered for 30 days (instead of 5 days on DP-1)
How does DP-1 pay claims? (on what basis?)
Actual Cash Value = Replacement Cost - Depreciation
Insureds must cover their buildings with insurance equal to 80% or more of the full replacement cost, at the time of loss.
How does DP-2 and DP-3 pay claims? (on what basis?)
Replacement Cost
What basic form perils are covered in DP-1?
- Fire
- Lightening
- Internal explosion
Are extended coverage perils included in a dwelling policy?
Yes, for an additional premium.
What are basic extended coverage perils?
- Wind
- Civil Comotion
- Riot
- Explosion (internal + external)
- Volcanic Eruption
- Vehicles (not if caused by insured, not to any fence, etc.)
- Aircraft
- Smoke (excludes from fireplace)
- Hail
Can you add VM&M to basic dwelling policy with extended coverage?
Yes, for an additional premium, in addition to the extended coverage premium.
VM&M does not cover damage to glass, losses by theft, larceny, burglary, or vandalism if vacant > 60 days.
What is broad form of coverage (DP-2)?
Broad form coverage = DP-1 coverage + extended coverage + vandalism and malicious mischief + the following additional coverages: BIG AFFECT
* Burglary damage
* Ice, sleet and snow - weight of
* Glass breakage
* Accidential discharge of water
* Freezing objects
* Falling objects
* Electrical current
* Collapse
* Tearing assunder
What are common exclusions to DP-2 (Broad form coverage)
- weight of ice/snow or falling objects on awnings, fences, patios, swimming pools, docks and retaining walls
- accidental discharge of water from continous leaking
- flood
- burlary if property vacant > 60 days
What are the covered perils in a special form DP-3 policy?
- risks of direct physical loss are covered except for the exclusions listed
- provides open peril coverage on the dwelling and other structures
- personal prpoerty is covered on a named broad peril basis
What are some common exlusions to a special form DP-3 policy?
Under coverages A and B - exclusions are:
* intentional damage
* theft
* freezing of plumbing (if unoccupied and care not taken)
* wear and tear
* foundations
List the general exclusions on a dwelling policy.
- Ordinance or law
- Earthquake
- Flood
- War
- Nuclear
- Intentional losses
- Government seizure
List common conditions of a dwelling policy.
** Loss settlement **- ACV for personal property, ACV for dwelling for DP1, but replacement cost for DP2 and DP3 (as long as insurance coverage >= 80% of replacement cost)
** our option **- lets insurer the right to repair or replace with like kind materials within 30 days of claim notification
*** deductible clause **- only the amount of loss over the deductibe will be paid, up to limit of liability
* pair or set condition - can repair or replace part of the set or pay the difference between ACV before and after loss
* Loss payment condition - loss will be paid within 60 days after reaching an agreement with insured
* other insurance condition - if loss is covered by other insurance, insurer only pays for it’s proportion of loss
* recovered property condition - if insured or insurer recovers property on which the insurer has made loss payment, the other party must be notified
On what schedule is a personal liability coverage added to a dwelling policy?
Coverage L covers personal liability for bodily injury or property damage including:
1. at fault
1. bodiliy injury to others
1. property damage to others
1. both on or off premises
1. Min limit is $100k,
What is Coverage M in a dwelling policy?
Medical payments to others:
* Insurer will pay medical expenses up to 3 years after the incident
* min limit of $1,000 / person
* no fault
* covers both on and off premises
What are additional supplemental coverages for Coverage M that do not cost extra?
Think of BAILED:
* Bonds
* Aid (first)
* Interest - pre and post judgment
* Loss of earnings
* Expenss
* Defense costs
What are some exclusions for Coverage M?
- War
- Losses expected or intended by insured
- Transfer of disease by insured
- Sexual molestation, bodily punishment or physical or mental abuse
- Drugs - selling, use or possession
- Rental of a premise not eligible
- Locations not listed as insured location
- Ownership/maintenace/use/loading of watercraft, aircraft or vehicles
What are some exclusions for Coverage L?
- damage for property owned by insured
- damage to property rented to / occupied by insured
- losses covered by workers comp
- losses charged against insured as member of association, corporation or community of property owners
- injury to minor of insured or relative that live in same household
What is the residential theft coverage endorsement of a dwelling policy?
- Not automatically included
- covers both on and off premises
- can be BROAD - owner occupied
- or can be LIMITED - not owner occupied
- covers theft, attempted theft, vandalism and malicious mischief
What are some exclusions to the residential theft coverage endorsement of a dwelling policy?
- animals
- credit cards
- property in mail
- aircraft
- other insurance property
- tenant’s property
- business property
- property in custody of others
- motor vehicles
What are some special limits to the residential theft coverage endorsement of a dwelling policy?
- $200 for monetary theft (coins/precious metals)
- $1500 for securities, manuscripts, valuable paper property
- $1500 for watercraft, trailers and equipment
- $1500 for trailers not used with watercraft
- $1500 for jewelry, watches, furs, precious and semi-precious stones
- $2500 for firearms
- $2500 for silverware, goldware and pewterware
Limit is total of each category.
Insured must notify the policy when a theft occurs.
List 3 other endorsements in a dwelling policy.
- Automatic increase in insurance - annual increase in Coverage A, B amount of 4%, 6% or 8%
- Dwelling under construction - attached to provide coverage to intended occupant of a dwelling under construction is the named insured
- Mobile home - allows home and personal property to be insured (mobile home must be on a permanent foundation)
