insuring personal residential homeowners 2000 program july 1, 2011 austin, tx

Insuring Personal ResidentialHomeowners 2000 Program

July 1, 2011Austin, TX

Learning Objectives

• They are found at the beginning of each section and will be reviewed as each section is introduced.

(c) The Society of CISR, Inc. 1-2

Course Focus

• Multiple Homeowners Forms will be briefly discussed

• Our primary focus is ISO’s Homeowners 3- Special Form (HO 3)

(c) The Society of CISR, Inc. 3

Personal Residential ConceptsLearning Objectives

Policy Overview and Eligibility 1. Determine the eligibility of specific risks for an Insurance

Services Office (ISO) Homeowners Policy. 2. Compare the various ISO Homeowners Policy Forms to

determine the specific type of risk that each would apply to and understand the important considerations to a specific form.

3. Identify the basic limits for each of the Homeowners

Section I – Property Coverage Parts.


Personal Residential ConceptsLearning Objectives

Policy Definitions 4. Determine who is a “you” as defined in the Homeowners

Policy. 5. Describe how “bodily injury” differs from personal injury. 6. Determine if an activity qualifies as a “business”. 7. Identify who is an “insured” under the Homeowners Policy. 8. List places that are considered an “insured location” under

the Homeowners Policy.


EligibilityLearning Objective 1: Determine the eligibility of specific risks for an Insurance Services Office (ISO) Homeowners Policy.

• Residential Purposes

• 1 to 4 family owner-occupied– Up to 2 roomers or boarders


Eligibility

• 1 to 4 family owner-occupied co-owned – Additional Insured – Residence Premises (HO 04 41)– HO 4 for co-owner

• Owners of a Condominium (HO 06)

• Tenants of a Dwelling or Apartment (HO 04)


Eligibility• Trust Arrangements

– Trust Endorsement (HO 06 15)– Additional Insured – Residence Premises (HO 04 41)

• Long Term Purchase– Policy in name(s) of occupant(s) – Additional Insured – Residence Premises (HO 04 41)

• Seasonal & Secondary Homes

• Dwelling Under Construction – Insured must occupy upon completion– Theft is excluded


Policy Overview


Policy Structure


Forms AvailableLearning Objective 2: Compare the various ISO Homeowners Policy forms to determine the specific type of risk that each would apply to and understand the important considerations to a specific form.

• HO-2 Broad– Restrictive coverage for owner-occupied dwellings– Only specifically named perils covered for both dwelling and

personal property

• HO-3 Special– Most widely used form for owner-occupied dwellings– Open perils for dwelling (Everything covered unless excluded)– Named perils for personal property


Forms Available

• HO-4 Contents Broad Form– Covers tenants of dwellings or apartments– No dwelling coverage because not owner-

occupied– Named perils for personal property

• HO-5 Comprehensive– For upscale accounts with owner-occupied

dwellings– Most complete coverage available with open

perils for dwelling and personal property


Forms Available

• HO-6 Unit Owner’s Form

– Individual condominium units– Unit-owner’s coverage needs vary by

community– Basic limit of $5,000 to cover dwelling and

structural responsibilities – Named perils for dwelling and personal property– $1,000 Loss Assessment Coverage included – More Loss Assessment Coverage available by

endorsement (advisable) Loss Assessment Coverage (HO 04 35)


Forms Available

• HO-8 Modified Coverage– Older or low value owner-

occupied dwellings – Very limited named perils

coverage

Important to note: The Liability Section is the same on all ISO Homeowners Policies


Declarations Page


Homeowner Coverage Parts• Coverage A – Dwelling

• Coverage B – Other Structures

• Coverage C – Personal Property

• Coverage D – Loss of Use

• Coverage E – Personal Liability

• Coverage F – Medical Payments to Others


Endorsements: General Purpose

• Broaden coverage

• Restrict coverage

• Clarify coverage

• Possibly state specific


Homeowners Coverage- Basic Limits on HO 3

(c) The Society of CISR, Inc.

Learning Objective 3: Identify the basic limits for each of the Homeowners Section I – Property Coverage Parts.

Section I – Property CoveragesCoverage A Dwelling Value of house

Insured selectsCoverage B Other Structures 10% of Coverage A

Coverage C Personal Property 50% of Coverage A

Coverage D Loss of Use 30% of Coverage A

Section II – Liability CoveragesCoverage E Personal Liability $100,000 per Occurrence - Minimum

Insured SelectsCoverage F Medical Payments to

Others$1,000 per Person - Minimum

Insured Selects

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• Conditional Contract

• Insured must:– Pay the premium– Comply with policy provisions

• Insurer must:– Provide the insurance


Insuring Agreement

14

Policy Definitions

Defined words appear in quotation marks.

Learning Objective 4: Determine who is a “you” as defined in the Homeowners Policy.

• “You” and “Yours”– Named Insured in Declarations– Resident spouse

• “We”, “Us” and “Our”– Insurance company


Definitions


• “Aircraft Liability”

• “Hovercraft Liability”

• “Motor Vehicle Liability”

• “Watercraft Liability”

Defined for liability exclusion

Very broad definition!

Sub-definitions for aircraft, hovercraft, watercraft and

“motor vehicle”

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And Includes . . .

• Ownership

• Maintenance, occupancy, operation, use, loading or unloading

• Entrustment

• Failure to supervise or negligent supervision

• Vicarious liability


“Bodily Injury”Learning Objective 5: Describe how “bodily injury” differs from personal injury.

• Bodily harm, sickness or disease

– Including care and loss of services

• Does not include personal injury

– Libel, slander, wrongful eviction, and other perils

– Personal Injury Coverage(HO 24 82)

– Personal Injury Coverage (Aggregate Limit of Insurance) (HO 24 10)

• Should add Personal Injury to every policy!(c) The Society of CISR, Inc. 16

“Business”

Learning Objective 6: Determine if an activity qualifies as a “business”.

• Defined as

– Trade, profession or occupation engaged in on a full-time, part-time or occasional basis

OR

– All other activities engaged in for money or other compensation except . . .


“Business”

• Activities generating under $2,000 in the 12 months BEFORE the beginning of the policy period

• Volunteer activities if no money was received other than expenses

• Home day care if there is no compensation (mutual exchange of services is okay)

• Home daycare to a relative (compensation okay)


“Employee”

• Any employee or leased employee other than a “residence employee”


“Insured”

Learning Objective 7: Identify who is an “insured” under the Homeowners Policy.

• “You”

• Resident relatives

• Anyone under 21 in “your” care or resident relative’s care

• Full-time student if:– Relative under the age of 24 or– Person in your care under the age of 21; and – Resident of your household before attending school


“Insured”

• Non-resident student relative over 24

– Additional Insured – Student Living Away From The Residence Premises (HO 05 27)

• Resident of the household who is not an “insured” by definition

– Other Members of Your Household (HO 04 58)


“Insured”

• Limited Section II Liability Coverage:

– Person responsible for animals or watercraft covered by the policy

– Employees using a covered vehicle

– Others using a covered vehicle on an “insured location”


Learning Objective 8: List the places that are considered an “insured location” under the Homeowners Policy.

• Identifies locations where premises liability is extended

• Does not limit personal activities exposures


“Insured Location”

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• “Residence premises”

• Any other location shown in the declarations or acquired during the policy period for “your” residence

• Any premises used by “you” in connection with the “residence premises”

• Non-owned temporary residence (hotel room)



• Vacant land

• Land owned on which a 1 to 4 family dwelling is being built for an “insured”

• Individual or family burial vaults or plots

• Any premises occasionally rented to an “insured” for non- “business” use


“Motor Vehicle”

• Self propelled land or amphibious vehicles

– Riding lawn mowers– Children’s motorized riding toys– Motorized scooters– Etc.

• Trailer while carried, towed by or hitched for towing


Other Definitions

• “Occurrence”

• “Property Damage”

• “Residence Employee”

• “Residence Premises”

(c) The Society of CISR, Inc.2122

Property Coverages Learning ObjectivesSection I – Property Coverages

9. Describe how Coverage A – Dwelling and Coverage B – Other Structures apply to specific situations.

10. Determine how Coverage C – Personal Property provides or limits coverage for property located on and off premises.

11. List the special limits that apply to specific types of personal property under Coverage C – Personal Property.


Property Coverages Learning Objectives

12. Recommend methods of covering specific types of personal property for which coverage is limited or excluded in the unendorsed Homeowners Policy.

13. Explain the limited property coverage found in Coverage C – Personal Property for “business” property.

14. Apply the coverage provisions of Coverage D – Loss of Use.

15. Determine if a given property loss is covered by the Section I – Additional Coverages.



16. Determine if a given property loss is covered by the Perils Insured Against for Coverages A, B and/or C of the HO 3 – Special Form.

17. Apply property exclusions to specific loss situations.

18. Calculate loss payments under the Loss Settlement Provision of the Homeowners Policy.


Coverage A - DwellingLearning Objective 9: Describe how Coverage A – Dwelling and Coverage B – Other Structures apply to specific situations.

• Dwelling on the “residence premises” shown in the Declarations

• Attached structures

• Materials & supplies used to construct, alter or repair the dwelling or other structures located on or next to the “residence premises”

• Excludes land


Coverage B – Other Structures

• Detached structures

• Webster’s Dictionary defines a structure as anything built


Examples of Other Structures


Swimming Pool Playscape

Shed Fence

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• Excludes land

• Excludes other structures rented to someone other than a tenant of the dwelling for use other than a private garage• Structures Rented To Others – Residence

Premises (HO 04 40)



• Excludes other structures where “business” is conducted

• Excludes other structures used to store “business” property unless:

• Property is solely owned by an “insured” or tenant of the dwelling

AND• Property is not gaseous or liquid fuels

• Permitted Incidental Occupancies –Residence Premises (HO 04 42)



• Coverage B – Other Structures is limited to 10% of Coverage A – Dwelling

• Other Structures on the Residence Premises - Increased Limits (HO 04 48)

• Specific additional amount of insurance on described other structure(s)


Coverage C – Personal Property

Learning Objective 10: Determine how Coverage C – Personal Property provides or limits coverage for property located on and off premises.

• Property owned or used by an “insured”

• Worldwide coverage

• At “your” request:

– Property of others on the “residence premises”

– Property of a guest or “residence employee” while in any residence occupied by an “insured”



• Limits at other residences

– Property usually located at another residence of an “insured”

– Limited to 10% of Coverage C or $1,000 whichever is greater

• Limitation does not apply to property at a newly acquired residence for the first 30 days



• Policy later excludes theft for property usually located at another residence except:

– When an “insured” is temporarily living there

– College student must have been there any time during the 60 days prior to the loss



• Limits at Self-Storage Facilities– Property owned or used by an “insured” and located at

a self-storage facility– Limited to 10% of Coverage C or $1,000 whichever is

greater

• Limitation does not apply:– If property moved because residence is under

renovation; or– To personal property usually located at other

residences

• Increase Amount Of Insurance For Personal Property Located In A Self-Storage Facility (HO 06 14)


Special Limits of Liability – Coverage C – Personal Property


Learning Objective 11: List the special limits that apply to specific types of personal property under Coverage C – Personal Property.

Limit Item All Perils

$200 Money Yes

$1,500 Securities, accounts, deeds, etc. Yes$1,500 Watercraft including their trailers,

furnishings, equipment and motors Yes

$1,500 Trailers not used with watercraft Yes

$1,500 Jewelry, watches, & furs Theft Only Limitation

$2,500 Firearms and related equipment Theft Only Limitation

$2,500 Silverware, silver plated, goldware, pewterware, etc.

Theft Only Limitation

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Special Limits of Liability – Coverage C – Personal Property


Limit Item All Perils

$2,500 Property on the “residence premises” used primarily for “business” purposes Yes

$1,500 Property away from the “residence premises” used primarily for “business” purposes Yes

$1,500 Electrical apparatus while in or upon a motor vehicle, equipped to be powered by electrical

system of vehicle and other sourcesYes

$250Antennas, disks, wires and other media used

with specific electronic equipment while in the “motor vehicle”

Yes

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Special Treatment of Personal Property Exposures

Learning Objective 12: Recommend methods of covering specific types of personal property for which coverage is limited or excluded in the unendorsed Homeowners Policy.

• Coverage C Increased Special Limits of Liability (HO 04 65)

– Does NOT broaden perils

– Use to increase special limits of coverage on some types of property

– Watch the jewelry per item limit (c) The Society of CISR, Inc. 32


• Scheduled Personal Property Endorsement (HO 04 61)

– Specific amount of insurance on scheduled items

– Not a valued policy (agreed value) except for fine arts

– Pays least of: ACV, cost of repair, cost to replace, or amount of insurance

– Risks of direct physical loss with exclusions

– Deductible does not apply



• Scheduled Personal Property Endorsement (With Agreed Value Loss Settlement) (HO 04 60)

– Same as HO 04 61 EXCEPT it provides agreed value for all classes of covered property



Learning Objective 13: Explain the limited property coverage found in Coverage C – Personal Property for “business” property.

• Permitted Incidental Occupancies (HO 04 42)

– Increases “business” personal property used in the described “business” to full Coverage C limit

– Does not broaden causes of loss


Increased Limits on Business Property

• Increased Limits on Business Property (HO 04 12)

– Increases certain “business” property of “business” conducted off premises to specified limit while property is on the “residence premises”

– Increases business property limit while off premises to 60% of specified limit

– Does not broaden causes of loss


Coverage C – Personal Property Not Covered

• Articles specifically insured (Example- Scheduled personal property)

• Animals, birds, or fish


• “Motor vehicles”

– Includes accessories, equipment, parts, tapes, discs, etc. While in or upon the “motor vehicle”. (note exceptions)

– Gives back coverage if “motor vehicle” is not required to be registered for use on public roads or property which is:

• Used SOLELY to service a residence; or• Designed to assist the handicapped



34

• Aircraft and parts– Except model or hobby aircraft

• Hovercraft and parts– Defined as a self-propelled motorized

ground effect vehicle and includes, but is not limited to flarecraft and air cushion vehicles



34

• Property of roomers and tenants unless related to an “insured”

• Personal property in a rental apartment– Additional Coverage #10 provides $2,500 coverage

but no theft coverage

• Personal property rented to others off the “residence premises”

• “Business” data – Will cover the cost of blank media and

prerecorded software



35

• Credit cards, fund transfer cards, etc.– Additional Coverage #6 gives back $500

• Water or steam



36

Coverage D – Loss of Use

Learning Objective 14: Apply the coverage provisions of Coverage D – Loss of Use.

• Additional Living Expenses

– Part of “residence premises” where “you” reside that is not fit to live in due to a covered property loss

– Covers the necessary increase in living expenses to maintain the normal standard of living



• Fair Rental Value

– Part of “residence premises” rented to others or held for rental that is not fit to live in due to a covered property loss

– Covers the fair rental value less non-continuing expenses



• Civil Authority– Two weeks coverage when civil authority

prohibits use of “residence premises” when there is direct damage to a neighboring premises by a Peril Insured Against

• No coverage for loss due to cancellation of a lease

• Loss of use coverage is not limited by expiration of policy


Section I - Additional Coverages

Learning Objective 15: Determine if a given property loss is covered by the Section I – Additional Coverages.

• Debris Removal

– Covered property damaged by a covered peril

– Removal of volcanic ash if causes direct damage to covered property

– Additional 5% of applicable limit available if limit exhausted



• Debris removal for tree removal– Removal from the “residence premises” – Up to $500 per tree/$1,000 per loss

– Caused by:• “Your” tree felled from windstorm, hail

or weight of ice, snow or sleet• A neighbor’s tree felled by a Coverage C

Peril Insured Against

– Tree must damage a covered structure or block a driveway or access to the residence



• Reasonable repairs– Reasonable cost necessary to protect

damaged property from further damage– Not additional insurance

• Trees, shrubs and other plants– Limited named perils– 5% of Coverage A with a maximum of $500

for any one tree, plant or shrub– Additional insurance



• Fire department service charge– $500, no deductible

– Additional insurance

• Property removed– Covered property endangered by a covered

peril

– True all risk coverage for 30 days

– Not additional insurance



• Credit card, fund transfer card or access device, forgery and counterfeit money– $500 coverage

– Excludes resident of the household; person who was entrusted with the card; or a person if not complying with card requirements

– No deductible

– Additional insurance(c) The Society of CISR, Inc. 42


• Loss Assessment– $1,000 limit as additional insurance– Exposure exists for homes in areas governed

by homeowners associations– Covers assessments due to common property

damaged by a covered peril– Deductible applies– Can increase limit to $50,000 using

Supplemental Loss Assessment Coverage (HO 04 35)



• Collapse

– Excluded except as provided in this Additional Coverage

– Specified causes of loss only (Coverage C perils, hidden decay or insect damage, or weight of contents, people or rain)



• Glass or safety glazing material

– Glass that is part of a covered building

– Damage to covered property damaged by broken glass

– Excluded if dwelling is vacant for more than 60 days




• Landlord furnishings

– Coverage C Perils

– Theft excluded

– $2,500 in each apartment on the “residence premises”




• Ordinance Or Law– Increased costs due to:

• Ordinance or law regulating construction, etc.

• Demolition and reconstruction of the undamaged portion of a covered building

• Remodeling, removal or replacement of the undamaged part of a covered building

– 10% of Coverage A– Additional insurance– Includes debris removal



• Ordinance or Law (Continued)– Excludes loss of value due to ordinance

– Excludes pollution testing or cleanup

– Can increase coverage by using Ordinance or Law – Increased Amount of Coverage (HO 04 77)• Options of 25%, 50%, 75% or more



• Grave Markers

– Coverage C Perils

– $5,000 limit



Section I- Additional Coverages


COVERAGE LIMITADDITIONAL INSURANCE

DEDUCTIBLE APPLIES

Debris RemovalIncluded in limit unless it exceeds limit; then 5% of

covered property limit available

Only if it exceeds the limit for Covered

PropertyYes

Reasonable Repairs

Included in Coverage A No Yes

Trees, Shrubs, Plants & LawnsPerils:

Fire/Lightning, Explosion, Riot, Civil Commotion,

Aircraft, Vehicles, V&MM and Theft

5% of Coverage A with maximum of $500 for one tree,

shrub or plantYes Yes

Fire Department Service Charge

$500 Yes No

Property Removed(30 days)

Included in the limit that applies to property being

removedNo Yes

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Section I- Additional Coverages


COVERAGE LIMITADDITIONAL INSURANCE

DEDUCTIBLE APPLIES

Credit Card, Fund Transfer

Card

$500 Yes No

Loss Assessment

$1,000 Yes Yes

CollapseIncluded in the limit that

applies to property damaged

No Yes

Glass or Safety Glazing Material

Included in the limit that applies to property

damagedNo Yes

Landlord’s Furnishings

$2,500 No Yes

Ordinance Or Law

10% of Coverage A Yes Yes

Grave Markers

$5,000 No Yes

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Section I – Perils Insured Against

Learning Objective 16: Determine if a given property loss is covered by the Perils Insured Against for Coverages A, B and/or C of the HO 3 - Special Form.

• Dwelling & Other Structures– Direct loss with exclusions

– Open perils concept

– Burden of proof is on the insurance company to prove loss is excluded



• Dwelling & Other Structures Exclusions

– Collapse except for Additional Coverages # 8• No coverage for collapse including:

– Abrupt falling down or caving in– Loss of structural integrity– Cracking, bulging, settling etc. if related

to above


Section I – Perils Insured Against• Dwelling & Other Structures Exclusions

– Freezing of plumbing unless one of two precautions taken

– Freezing, thawing, pressure or weight of water or ice to fences, swimming pools, pavement, foundations, retaining walls, piers, or docks

– Theft to a dwelling under construction• No coverage for theft of materials and supplies

until the dwelling is both finished and occupied• No theft coverage for property in a dwelling

under construction(c) The Society of CISR, Inc. 50



– Vandalism and malicious mischief

• No coverage for vandalism and any ensuing loss if the dwelling has been vacant for more than 60 days immediately prior to loss




– Mold, fungus, or wet rot

• Covered if hidden in walls or ceilings, beneath floors, above ceilings and caused by accidental discharge or overflow of water or steam within identified systems



• Dwelling & Other Structures Exclusions– Wear and tear

– Mechanical breakdown

– Smog, rust, dry rot

– Smoke from agricultural smudging or industrial operations

– Pollution unless caused by Coverage C Peril




– Settling, shrinking, bulging, etc. of walls, floors or foundations

– Birds, rodents or insects

– Nesting or infestation or release of waste or secretions by any animal

– Animals owned or kept by an “insured”

• In most cases, ensuing loss is covered unless otherwise excluded


Additional Exclusions that apply to all of Section I – Property appear later.

For losses to dwelling or other structures . . .

if the policy doesn’t exclude the cause of loss, it is covered!



• Personal Property

– Named perils

– Broad Form perils

– Burden of proof is on the “insured” to establish the cause of loss to prove the loss is covered



• Personal Property– Fire or lightning– Wind or hail (note exclusions)– Explosion– Riot or civil commotion– Aircraft– Vehicles– Smoke (note exclusions)– Vandalism or malicious mischief



• Personal Property– Theft

• Includes attempted theft and loss of property from a known place when likely to have been stolen



• Theft Exclusions

– Committed by an “insured”

– Dwelling under construction

– From part rented to other than an “insured”

– Theft of watercraft, trailers and campers away from the “residence premises”

– Theft of property at another residence owned, rented or occupied by an “insured” unless “insured” is staying there (see exceptions)


Section I – Perils Insured Against• Personal Property

– Falling objects (see requirement)

– Weight of ice, snow or sleet

– Damage caused by accidental discharge or overflow of water or steam from an appliance, etc. (Damage to appliance or system not covered)

– Sudden and accidental tearing apart, cracking, etc. Steam or hot water heating system, etc. (not from freezing)



• Personal Property

– Freezing (Precautions must be taken)• Must maintain heat; or• Shut off water and drain

– Sudden and accidental damage from artificially generated electrical current

– Volcanic eruption



For losses to personal property…

if the policy didn’t list the peril, it is not covered!

Review of Covered Perils


PERIL INSURED AGAINST COVERAGE A - DWELLINGCOVERAGE B - OTHER STRUCTURES

COVERAGE C – PERSONAL PROPERTY

Fire or Lightning Yes Yes

Windstorm or Hail Yes Yes

Explosion Yes Yes

Riot or Civil Commotion Yes Yes

Aircraft Yes Yes

Vehicles Yes Yes

Smoke Yes Yes

Vandalism Yes Yes

Theft Yes Yes

Volcanic Eruption Yes Yes

58

Review of Covered Perils


PERIL INSURED AGAINST COVERAGE A - DWELLINGCOVERAGE B - OTHER STRUCTURES

COVERAGE C – PERSONAL PROPERTY

Weight of Ice, Sleet or Snow Yes Yes

Accidental Discharge or Overflow of Water or Steam

Yes

Yes

Cracking, Burning, Bulging ofHeating System or AC Hot

Water Heater

Yes

YesSudden and Accidental Damage

From Artificially-Generated Electrical Current

Yes

Yes

Freezing Yes Yes

Risks of Direct Loss, except:

Those perils that are specifically excluded

Yes

No

58

Section I – Property Exclusions

Learning Objective 17: Apply property exclusions to specific loss situations.

• Ordinance or Law

– Except for 10% of Coverage A provided by Additional Coverage # 11

– Ordinance or Law – Increased Amount of Coverage (HO 04 77)



• Earth Movement

– By act of nature or any other cause

– Give back of coverage for fire, explosion, and theft

– Earthquake Endorsement (HO 04 54)



• Water Damage– No coverage for:

• Flood, surface waters, tidal water• Back up of sewers or drains or overflows from

sump• Regardless of cause

– Giveback for fire, explosion and theft

– Flood Policy

– Limited Water Back Up and Sump Discharge or Overflow Coverage(HO 04 95)



• Power Failure Off Residence Premises – Refrigerated Property Coverage (HO 04 98)

• Neglect– During or after the loss

• War

• Nuclear Hazard

• Intentional Loss



• Government Action

• Weather Conditions

• Acts or Decisions

• Faulty or Inadequate Planning, Design, Materials or Maintenance


Section I – ConditionsInsurable Interest

• The insurance company will not pay more than:

– That “insured’s” interest at the time of the loss

– The applicable limit of liability


Section I – ConditionsDeductible

• Shown in Declarations

• If more than one deductible could apply to loss, only largest applies

• Applies to Section I – Property


Section I – ConditionsDuties After a Loss

• Protect property from further damage

• Inventory the damaged property

• Notify the carrier or agent and credit card company and/or police(if applicable)

• Exhibit the property to an adjuster

• Submit a sworn statement


Section I – Conditions Loss Settlement

Learning Objective 18: Calculate loss payments under the Loss Settlement Provision of the Homeowners Policy.

• Actual Cash Value vs. Replacement Cost

• Actual Cash Value for (Unendorsed HO-3):– Personal property– Awnings, carpeting, appliances and outdoor equipment

• Change the above by Personal Property Replacement Loss Settlement Endorsement (HO 04 90)

• Actual Cash Value Loss Settlement Windstorm or Hail Losses To Roof Surfacing Endorsement (HO 04 93)



• Actual Cash Value for:

– Structures that are not buildings

• Replacement Cost Loss Settlement for Certain Non-Building Structures On The Residence Premises Endorsement (HO 04 43)

– Grave markers including mausoleums




Building Insured for at Least 80% of Replacement Cost at Loss

Yes No

Smallest of: Larger of:

Limit of Liability ACV

RC of DamageFormulaLimit of Coverage X Loss RC X 80%

Amount Actually Spent to Repair or Replace

Cannot Exceed the Limit of Liability

Insured can always select an ACV Settlement

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Section I – ConditionsLoss Settlement

• Buildings covered by Coverage A or B

– Settled on RC or ACV depending on compliance with the 80% requirement

– Insured can always choose an ACV settlement if financially beneficial

– Certain items not included in determining the compliance (foundations)



• Buildings rebuilt at new premises will not increase amount paid

• RC will not be paid until repairs or replacement made unless: – The loss is less than 5% of the amount

of insurance on the building; or – The loss is less than $2,500


Loss Settlement Endorsements

• Specified Additional Amounts of Insurance for Coverage A (HO 04 20)

– Additional 25% or 50% of Coverage A available

– Does NOT increase Coverages B, C & D

• Additional Limits of Liability for Coverages A, B, C, & D (HO 04 11)

– No cap

– Increases Coverages B, C & D in proportion to increase in Coverage A


Section I – Conditions

• Loss to a Pair or Set– May pay to repair or replace or pay difference

between ACV before and after loss

• Other Insurance– Pro rata share

• Mortgage Clause– Mortgagee has rights under Policy

• No Benefit to Bailee

• Recovered Property– “Your” option



Section II - Liability Coverages

19. In specific loss situations, apply the coverage and exclusions found in Coverage E – Personal Liability of the Homeowners Policy.

20. Apply Coverage F – Medical Payments To Others in a given loss situation.

21. Determine if a type of “motor vehicle” is excluded, and those types that may be covered under Coverage E – Personal Liability and Coverage F – Medical Payments To Others.


Section II – Liability Coverages

• Coverage E – Personal Liability

• Coverage F – Medical Payments to Others


Coverage E – Personal LiabilityLearning Objective 19: In specific loss situations, apply the coverage and exclusions found in Coverage E – Personal Liability of the Homeowners Policy.

• Legal liability required

• “Bodily injury”– Remember Personal Injury Endorsement

• “Property damage”

• Prejudgment interest included in limit of liability

• Defense is in addition to the limit of liability


Coverage F – Medical Payments to Others

Learning Objective 20: Apply Coverage F – Medical Payments To Others in a given loss situation.

• Necessary & reasonable expenses

• Legal liability is not required

• Expenses must be incurred or ascertained within 3 years


Coverage F – Medical Payments to Others

• Does not apply to “you” or regular resident of “your” household except “residence employees”

• Applies to persons on an “insured location” with permission

• Applies to persons off an “insured location” for certain losses


Section II – ExclusionsLearning Objective 21: Determine if a type of “motor vehicle” is excluded, and those types that may be covered under Coverage E – Personal Liability and Coverage F – Medical Payments To Others.

• “Motor Vehicle Liability” – Ownership, maintenance, or occupancy– Operation or use– Loading or unloading– Entrustment– Failure to supervise or negligent supervision– Vicarious liability


Section II – Exclusions• Part I of the “Motor Vehicle Liability”

Exclusion

– Registered for use on public roads or property

– Should have been registered

– Operated in a race

– Rented to others

– Used to carry people or cargo for a fee

– Used for any “business” purposes unless a motorized golf cart on a golf facility


Section II – Exclusions

• Part 2 of the “Motor Vehicle Liability” Exclusion gives back coverage for the following “motor vehicles” as long as Part I does not apply:

– Dead storage

– Used solely to service a residence

– Designed to assist the handicapped and is being used to assist the handicapped or is parked on an “insured location”


Section II – ExclusionsAlso Covered if:

• Non-owned recreational vehicle

• An owned recreational vehicle – While on an “insured location”; or– Off an “insured location” if a toy

designed for a child seven years old or younger (Power and speed restrictions apply)


Section II – ExclusionsAlso Covered if:

• Owned motorized golf cart

– Carries up to 4 people and maximum speed 25 MPH on level ground

– On a golfing facility

– In a private residential community where “insured” has a residence, if allowed by property owners association


Recreational Vehicle Endorsements

• Owned Snowmobile (HO 24 64)– Personal Liability and Medical

Payments To Others

• Recreational Vehicle Policy

• Miscellaneous Vehicle Endorsement to a Personal Auto Policy



• “Watercraft Liability”

– Ownership, maintenance, or occupancy

– Operation or use

– Loading or unloading

– Entrustment

– Failure to supervise or negligent supervision

– Vicarious liability



• “Watercraft Liability”– Excludes watercraft

• Preparing or operating in a race except sailboats and predicted log races

• Rented to others• Used to carry people or cargo for a fee• Used for any “business” purposes

– Covers watercraft that is stored

– Covers specified types of watercraft


“Watercraft Liability” Coverage


Type of Watercraft Owned Rented Borrowed

Inboard Inboard/Outdrive No

YesIF 50 HP or

lessYes,

Not Excluded

OutboardYes, IF 25 HP or Less Or if Newly Acquired, No HP

Restriction

Yes,No HP

Restriction

Yes,No HP

Restriction

Sailboat Yes, Less than 26’

Yes,Less than

26’

Yes,No Length Restriction

82

Watercraft Endorsement

• Watercraft (HO 24 75)

– Watercraft must be listed

– Personal Liability and Medical Payments To Others Coverage

– No physical damage

– Exclusions listed



• “Aircraft Liability”

• “Hovercraft Liability”


• Expected or intended injury

• “Business”– Remember, previously defined

– Excludes all activities except renting an “insured location” for specified uses

– Covers part-time “business” pursuits of a minor



8485

Business Endorsements

• Permitted Incidental Occupancies (HO 04 42)

– On premises Personal Liability and Medical Payments to Others Coverage

– For necessary and incidental use of the premises

– Business must be operated by the “insured”

– Excludes workers compensation



• Business Pursuits (HO 24 71)

– Personal Liability and Medical Payments To Others Coverage on and off premises (clerical, sales and teachers)

– “Insured” may not own or financially control the business

– Excludes professional other than teaching

– Teachers can purchase corporal punishment



• Structures Rented to Others (HO 04 40)

– Property, Personal Liability and Medical Payments To Others Coverage for structures rented to others for use as a private residence



• Professional liability

• Uninsured locations (owned but no insurance purchased)

• War

• Transmission of a communicable disease

• Sexual molestation, corporal punishment, mental abuse

• Controlled substance(c) The Society of CISR, Inc.

8788

Coverage E – Personal Liability Exclusions

• Loss Assessment– $1,000 available in Section II – Additional

Coverages

• Owned property (can’t be liable to self)

• Property in the care, custody or control of an “insured” except for damage by fire, smoke or explosion


Coverage E – Personal Liability Exclusions

• Workers compensation (If provided or required to be provided by an “insured”)

• Nuclear energy liability

• “Bodily injury” to an “insured”


Coverage F – Medical Payments to Others Exclusions

• “Residence employee” off premises unless during course of employment

• Workers compensation (voluntarily or required)

• Nuclear

• Regular residents except a “residence employee”


Section II – Additional Coverages

• Claims expenses–In addition to limits of liability

• First aid expenses



• Damage To Property Of Others

– Caused by an “insured”

– Up to $1,000

– Excludes intentional damage if “insured” is 13 or older

– Gives back coverage for recreational vehicles not required to be licensed and not owned by an “insured”



• Loss Assessment

– No defense

– $1,000 coverage

– Supplemental Loss Assessment Coverage (HO 04 35) to increase limits to $50,000


Section II – Conditions

• Duties after a loss– Conditional contract– Any “insured” paying, assuming or

incurring costs other than first aid does so at own risk



• Duties of an injured person– Must submit to medical exam by

doctor of the insurance company’s choice

• Other insurance– Excess coverage except for

excess/umbrella coverage

• Policy period– Loss must occur during policy period



• Cancellation and nonrenewal

– Modified by state specific endorsements



• Assignment– Must have written consent of insurance

company

• Subrogation– May waive before a loss

– Must be in writing

– Subrogation does not apply to Medical Payments and Damage to Property of Others


Learning Objectives

Dwelling Policy

1. List the eligibility requirements for Dwelling Policies.

2. Point out the differences between Homeowners Policies and Dwelling Policies.

3. Discuss endorsements applicable to Dwelling Policies.


Dwelling Policy

Learning Objective 1: List the eligibility requirements for Dwelling Policies.

• Eligibility– Family dwelling up to 4 units

– Not more than 4 apartments per dwelling or unit

– Under construction

– Townhouse or row house

– Mobile or trailer home (Basic Form only & on permanent foundation)


Dwelling Fire

• Occupancy

– Owner, seasonal or tenant occupied

– Wider range of incidental occupancies

– No more than 5 roomers or boarders per unit


Dwelling Fire • Coverage Parts

– Coverage A - Dwelling– Coverage B - Other Structures – Coverage C - Personal Property– Coverage D - Fair Rental Value– Coverage E - Additional Living Expenses

(Not in Basic Form)

• Liability Parts by Endorsement– Coverage L - Personal Liability – Coverage M - Medical Payments to Others


Dwelling Fire

• Forms

– DP-1 Basic

– DP-2 Broad

– DP-3 Special


Dwelling Fire – Eligibility Comparison


Dwelling Fire - Limitations

• No Theft

• No Liability and Medical Payments Coverage

• No Loss Assessment


Dwelling Fire – Perils Insured Against


Dwelling Fire - Endorsements

• Broad Theft Coverage (DP 04 72)• Limited Theft Coverage (DP 04 73)• Loss Assessment Property Coverage (DP 04

63)• Personal Liability (DL 24 01)• Business Pursuits (DL 24 05)• Watercraft (DL 24 06)• Loss Assessment Liability Coverage

(DL 24 14)• Snowmobiles (DL 24 07)

(c) The Society of CISR, Inc. 7-9

Thank you!

Please Complete Your Evaluation Form

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http://www.thenationalalliance.com/

insuring personal residential homeowners 2000 program july 1, 2011 austin, tx

Documents

society of cisr

specific c

policy overview c

definitions c

policy structure c

personal property ho

property coverage parts

tx slide