Unit 8 - Personal Lines: Dwelling & Homeowners Policies Flashcards
What are the ELIGIBILITY requirements for a dwelling insurance policy?
1) Dwelling must be occupied by tenant or owner
2) One to four units (single family structure)
3) Mobile homes must be TIED DOWN or on a permanent foundation
4) Farms, ranches, or business are not eligible.
Define Coverages A-E in a dwelling policy
COVERAGE A… Dwelling (except mobile homes)
COVERAGE B… Other detached structures separated by a clear space from the dwelling and used in connection to the dwelling. COVERAGE LIMIT = 10% of Coverage A.
COVERAGE C… Personal property (contents), but does not cover property of renters. COVERAGE LIMIT = 50% of Coverage A. Is optional coverage.
COVERAGE D… Fair rental value (indirect loss of use). COVERAGE LIMIT = 10% of Coverage A.
COVERAGE E… loss of use (only when owner lives in dwelling). Used to cover additional living expenses required to allow the household to maintain normal standard of living. COVERAGE LIMIT = 20% of Coverage A, with no deductible.
Is dwelling insurance a monoline policy?
Yes because liability coverage isn’t automatically built in. It can, however, be added by endorsement ONLY if the dwelling is owner occupied.
Basic Dwelling Policy Form (DP-1)
Defined as limited named perils/causes of loss.
FLI - Fire, Lightening, Internal Explosion + Removal
Extended Coverage (EC), WC SHAVVER - Wind, Civic Commotion, Smoke, Hail, Aircraft, Vehicle NOT owned by insured, Volcanic Eruption, Explosion, Riot
Vandalism and Malicious Mischief (SFP policies lose this coverage after 30 days of vacancy, other policies lose it after 60 days of vacancy)
Broad Dwelling Policy Form (DP-2)
Defined as more named perils (causes of loss) other than the basic form. DP-2 automatically includes coverage outlined in the DP-1 form.
BIG AFFECT
Burglary Damage to Building
Ice/Sleet/Snow
Glass Coverage
Accidental discharge/overflow Freezing pipes Falling objects Electric Current Collapse coverage Tear apart
Special/Open Dwelling Policy Form (DP-3)
Defined as open perils (causes of loss).
GWOWPENNI
Government Action War Ordinance/Law Water/Flood Power outage (off premises) Earth Movements Negligence Nuclear Events Intentional Damage
** NOTE: Broad perils are only covered for Coverage C.
Dwelling Insurance
A monoline insurance policy used mainly for residential rental property, not usually for owner-occupied homeowners property.
Homeowners Insurance
A package policy providing both property and liability coverages in the same contract; all homeowner policies are required to have theft coverage.
Define Coverages A-D in Section 1 of a homeowner’s policy
COVERAGE A… Dwelling (except mobile homes)
COVERAGE B… Other detached structures separated by a clear space from the dwelling and used in connection to the dwelling. COVERAGE LIMIT = 10% of Coverage A.
COVERAGE C… Personal property (contents), but does not cover property of renters. COVERAGE LIMIT = 50% of Coverage A. SPECIAL LIMITS are attached to Coverage C (see separate slide)
COVERAGE D… Loss of use coverage provides payment for the additional costs over and above normal living expenses because of the inability to use property as a result of covered loss. There is no deductible on loss of use. COVERAGE LIMIT = Varies by insurance company
Define Coverages E-F in Section 2 of a homeowner’s policy
COVERAGE E… Personal liability coverage (BI + PD)
COVERAGE F… Medical payments to others
What are the ELIGIBILITY requirements for a homeowners insurance policy?
1) Residential structures with one to four units, one of which MUST be owner occupied.
2) Farms, mobile homes, and businesses aren’t eligible.
3) Homes under construction can be covered, as long as owner intends to occupy it after construction is completed.
Basic Perils (HO-8 & DP-1)
FLI - Fire, Lightening, Internal Explosion + Removal
WCSHAVVER (ECs) - Wind, Civil Commotion, Smoke, Hail, Aircraft, Vehicle NOT owned by insured, Volcanic Eruption, Explosion, Riot
Vandalism + Malicious Mischief
THEFT
Broad Perils (HO-2 & DP-2)
Basic Perils (+)
BIG AFFECT
Building damage caused by theft
Ice/Sleet/Snow
Glass Coverage
Accidental discharge/overflow Freezing Pipes Falling Objects Electric Current Collapse Coverage Tear Apart
Special/Open Form Perils (HO-3 & DP-3)
GWOWPENNI
Government Actions War Ordinance/Law Water/Flood Power outage (off premises) Earth Movement Negligence Nuclear Event Intentional Damage
Open-perils coverage on dwelling and other structures (i.e. Coverage A & B)
Broad form coverage on personal property (i.e. Coverage C)
Tenants/Renters (HO-4)
Broad form coverage on personal property (i.e. Coverage C)
Comprehensive Form (HO-5)
Open-perils coverage on buildings (Coverages A & B) and personal property (Coverage C)
Includes mysterious disappearance.
Condominium Owners (HO-6)
Covers the structure and permanent fixtures NOT covered by the condominium association.
Coverage A limit = $1,000
Coverage D limit = 50% of Coverage C
Broad form coverage on personal property (i.e. Coverage C)
Modified Form for Special Risks (HO-8/DP-1)
All losses settled on actual cash value (ACV) basis (i.e. applies to A, B, & C coverages)
Used primarily on older homes (where replacement costs are too high given skilled labor/craftmanship)
Basic perils covered + THEFT on Coverages A, B, & C.
SPECIAL LIMITS under COVERAGE C (personal property) in Homeowners Policy
$200… Money, gold, and silver
$1,500… Securities, tickets, stamps, and deeds
$1,500… Watercraft, trailers, motors, and equipment
$1,500… Other trailers
$1,500… THEFT of jewelry, furs, or both
$2,500… THEFT of guns
$2,500… THEFT of silverware or goldware
$2,500… Business property OFF premises
$1,500… Business property OFF premises
$250… Media
What are two important ADDITIONAL COVERAGES that property insurance contracts provide, at no additional cost?
1) Property removal… Saving property for a sure and certain loss (30 days)
2) Trees, shrubs, plants… replacement covered for $500 each up to a max of 5% of Coverage A (10% for HO-4 & HO-6)
What are the 3 methods adjusters use to settle homeowners insurance claims?
1) Actual cash value (ACV) = Today’s replacement cost - depreciation
2) Replacement Cost = Today’s cost of materials & labor to rebuild structure (endorsement required to cover personal property under Coverage C)
3) Pair or set clause = Difference between the ACV before and after the loss
Describe Liability Coverages E-F as outlined in Section II of the homeowners policy.
COVERAGE E… Personal liability coverage (BI & PD for which the insured is legally liable to a 3rd party)
COVERAGE F… Medical Payments to others (no fault/legal liability is required to pay out)
Coverages E - F in a homeowners policy apply to injuries and damages caused by…
- The insured’s personal activities
- Activities of the insured’s children
- Conditions of the premises
- A resident employee
- Animal owned by or in the care of the insured.
What are two important ADDITIONAL COVERAGES that liability coverage provides, at no additional cost?
Supplementary payments (BAILED)
Bonds Aid Interest Loss of income Defense
** NOTE: All of these are paid to the insured (not a 3rd party claimant)
Under the homeowners policy, what are 2 important ENDORSEMENTS?
1) PERSONAL INJURY (liability endorsement)… Expands the definition of BI to include libel, slander, social media, invasion of privacy, wrongful entry, malicious prosecution, eviction, and false arrest. EXCLUDED–Discrimination of any kind is excluded, as well as criminal actions.
2) Personal property replacement cost…Allows losses under Coverage C to be settled for replacement cost rather than ACV.
Valued Policy Law
Pays full face amount of insured structure ONLY for total loss during fire.
Special personal property
“Optional” endorsement for high value items.
Personal Articles Floaters Policy (monoline)
Coverage provided thru inland-marine.
INCLUDES… open perils, breakage, mysterious disappearance.
EXCLUDES… Wear abd tear, insects, inherent vice
** NOTE: Kept confidential from pubic record
