Unit 7: Homeowners Insurance Flashcards
Homeowners Policy
- Package policy
- Multiline (1. property, 2. casualty)
- Includes both property and liability
Homeowners Eligibility
- Owner occupied
- No more than 4-family dwelling
- Primary purpose as a residence
- Dwellings under construction are eligible (for owner occupant)
- Mobile homes (require endorsement)
- Farm dwellings NOT eligible
Insureds
- Named insured including a resident spouse
- Resident relatives
- Anyone under 21 and in the care of the insured
- Full time student under age 24, relative, and prior resident
- Representative of the named insured in the event of death
Cancellation
- Insurance company can cancel during first 60 days for any reason (minimum 10 days notice)
- After 60 days (min 30 days notice) for material misrepresentation or substantial change in the risk
- Nonpayment of premium (10 days notice)
Nonrenewal by Insurer
- At the end of the policy period, nonrenewed by insurance company (30 days notice)
Standard Mortgagee Clause
- Can pay the premium
- File a claim up to insurable interest
- Receive advance notice of cancellation
- Dishonesty of insured doesn’t prevent mortgagee from collection
HO-2
Broad Form; owner occupant
HO-3
Special Form; owner occupant
HO-4
Tenants or Renters
HO-5
Comprehensive Form; owner occupant
HO-6
Condominium Owners
HO-8
Modified Form (older homes)
Homeowners: Section I Property
A - dwelling
B - other structures
C - personal property
D - loss of use
Homeowners: Section I Property - Coverage A Dwelling
- Including property attached
- Materials on the premises used in construction
- No coverage for a renter
Homeowners: Section I Property - Coverage B Other Structures
- Separated by a clear space
- Not used for business purposes
Homeowners: Section I Property - Coverage C Personal Property
- Not attached to the dwelling
- Anywhere in the world
- Guest’s property (if requested)
- Excluded: pets, motorized vehicles, property of renters or boarders
Special limits for theft
$1,500: jewelry, watches, and furs
$2,500: firearms and related items
$2,500: silverware, goldware, and pewterware
Special limits for ALL losses
$200: money and securities
$1,500: trailers
$2,500: business personal property on premises
$1,500: business personal property away from premises
$1,500: portable electronic apparatus away from the premises
Loss of Use
Indirect losses due to loss of home cause by a covered peril
- Additional living expenses
- Rental income
Additional Homeowners Coverages: Debris Removal
- Expenses paid if caused by a covered peril
- Removal of fallen trees covered if they damaged a covered structure or blocking a roadway
- Maximum of $1,000 for tree debris removal per occurrence and $500 per tree
Additional Homeowners Coverages: Reasonable repairs
Pays cost for repairs necessary to protect from additional loss
Additional Homeowners Coverages: Trees, shrubs, and other plants
Maximum of 5% of Coverage A, in addition to limit (10% of Coverage C for HO-4 and HO-6)
Maximum of $500 per tree
Additional Homeowners Coverages: Fire department service charge
Maximum of $500
No deductible
Additional Homeowners Coverages: Property removed
Protect from a sure and certain loss
ALL perils for 30 days
Additional Homeowners Coverages: Credit cards, forgery, and counterfeit money
Maximum of $500
No deductible
Additional Homeowners Coverages: Loss assessment
Loss assessment by a homeowners association
- Maximum of $1,000
- Damage to property caused by a covered peril
- Deductible applied once
Additional Homeowners Coverages in HO-2, 3, and 5
- Collapse (caused by covered peril, not earthquake)
- Landlord’s furnishings: $2,500
- Grave markers: $5,000
- Ordinance or law: increased cost up to 10% x dwelling limit
Perils (causes of loss): Basic
Fire, lightning, explosion, wind, hail, smoke, aircraft, vehicles, volcanic eruption, vandalism and malicious mischief, riot/civil commotion, and theft (all homeowners covers theft; not automatically covered in dwelling property policies)
Perils (causes of loss): Broad
All basic perils plus:
- falling objects
- accidental discharge of water (not flood)
- weight of ice, sleet, or snow
- freezing of plumbing (if care used)
- artificially generated current
- sudden tearing and breaking of heating and cooling system
Perils (causes of loss): Special
Open peril: all direct causes of loss (to the dwelling and other structures) unless specifically excluded
Excluded Perils in All Homeowners Policies
- enforcement of law or ordinance regulating construction, repair, or demolition
- earth movement, including earthquake and mine subsidence
- flooding and overflow from a sump pump
- power interruption that takes place off the residence premises
- war
- nuclear hazard
- the insured’s failure to save and preserve property after a loss, or to protect it from loss
- losses caused intentionally by the insured or by someone else at the insured’s direction
- destruction, confiscation, or seizure of property by the government or a public authority
Claims Payment: ACV
replacement - depreciation
- personal property
- awnings, carpeting, appliances, outdoor antennas, and outdoor equipment
- structures that are not buildings
Claims Payment: Replacement
- dwelling and other structures
- if insured for at least 80%
Personal property replacement cost endorsement
insures personal property on a replacement cost basis instead of ACV
Scheduled personal property endorsement
provides a separate schedule of insurance for items of personal property
- insured against open perils
- replacement coverage
- usually no deductible
Permitted incidental occupancies endorsement
removes $2,500 limit on business personal property
Earthquake endorsement
- land movement including volcanic eruption
- one deductible for 72 hours
Limited fungi, wet or dry rot, or bacteria
caused by a covered peril while the policy is in force
Home day care endorsement
premium based on the number of children
Section II: Coverage E Personal Liability
bodily injury and property damage
- insured at fault
- anywhere in the world
Section II: Coverage F Medical Payments
- to others (not the insured)
- no-fault
- on or off premises if due to insured’s activities
- covers domestic employees
- three years
Liability Exclusions pt 1
- liability for injury or damage that is expected or intended by the insured
- liability assumed through a contract
- BI or PD arising out of business pursuits or the rendering of or failure to render professional services
- BI or PD arising out of the rental of any part of the premises, except for the rental of part of an insured location as a residence
- Liability arising out of ownership, maintenance, use, loading, or unloading of aircraft, watercraft, and motor vehicles (except one used to service the premises or assist the handicapped)
Liability Exclusions pt 2
- liability arising out of the transmission of a communicable disease by an insured
- liability arising out of sexual molestation, corporal punishment, or physical or mental abuse; and liability arising out of the use, sale, manufacture, delivery, transfer, or possession of a controlled substance (does not apply to the legitimate use of prescription drugs)
Section II Watercraft covered
- watercraft not owned and not rented to an insured regardless of length or horsepower
- watercraft owned or not owned by an insured
- sailboats less than 26 feet
- boats with inboard motors of 50 horsepower or less
- boats with outboard motors of 25 horsepower or less
Additional Coverages (automatically included)
- defense costs - attorney fees, court costs, etc.
- court- ordered bonds
- post-judgment interest
- reasonable expenses, such as the insured’s travel expenses to testify in court (lost income while in court $250/day)
- first aid expenses - reimburses the insured for expenses that the insured incurs for first aid to others at the time of an accident
- damage to property of others - pays up to $1,000 per occurrence for property damaged or destroyed by the insured, without regard to legal liability
- loss assessment - pays up to $1,000 of the insured’s share of any loss assessment charged against the insured during the policy period by a corporation or association of property owners when the assessment is made as a result of an occurrence to which Section II applies
