Homeowners 2000 Program July 1 2011 Austin 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 ID: 738059
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Insuring Personal ResidentialHomeowners 2000 Program
July 1, 2011Austin, TXSlide2
Learning ObjectivesThey are found at the beginning of each section and will be reviewed as each section is introduced.
(c) The Society of CISR, Inc.1-2Slide3
Course FocusMultiple Homeowners Forms will be briefly discussed
Our primary focus is ISO’s Homeowners 3- Special Form (HO 3)(c) The Society of CISR, Inc.
3Slide4
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.
(c) The Society of CISR, Inc.
4Slide5
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.
(c) The Society of CISR, Inc.
4Slide6
Eligibility
Learning 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
(c) The Society of CISR, Inc.
5Slide7
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)
(c) The Society of CISR, Inc.
5Slide8
Eligibility
Trust ArrangementsResidence Held In Trust (HO 05 43)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
H
omes
Dwelling Under Construction
Insured must occupy upon completion
Theft is excluded
(c) The Society of CISR, Inc.
6Slide9
Policy Overview(c) The Society of CISR, Inc.
7Slide10
Policy Structure(c) The Society of CISR, Inc.
8Slide11
Forms Available
Learning 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
(c) The Society of CISR, Inc.
9Slide12
Forms AvailableHO-4 Contents Broad Form
Covers tenants of dwellings or apartmentsNo dwelling coverage because not owner-occupiedNamed 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
(c) The Society of CISR, Inc.
9Slide13
Forms AvailableHO-6 Unit Owner’s
FormIndividual condominium units
Unit-owner’s coverage needs vary by community
Basic limit of $5000 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)
(c) The Society of CISR, Inc.
10Slide14
Forms AvailableHO-8 Modified CoverageOlder or low value owner-occupied dwellings
Very limited named perils coverageImportant to note: The Liability Section is the same on all ISO Homeowners Policies
(c) The Society of CISR, Inc.
10Slide15
Declarations Page
(c) The Society of CISR, Inc.
11Slide16
Homeowner Coverage PartsCoverage A – Dwelling
Coverage B – Other StructuresCoverage C – Personal Property
Coverage D – Loss of Use
Coverage E – Personal Liability
Coverage F – Medical Payments
to Others
(c) The Society of CISR, Inc.
Section I
Section II
12Slide17
Endorsements: General Purpose
Broaden coverageRestrict coverageClarify coverage
Possibly state specific
(c) The Society of CISR, Inc.
12Slide18
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
Coverages
Coverage A
Dwelling
Value of house
Insured
selects
Coverage 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 I
I – Liability
Coverages
Coverage
E
Personal Liability
$100,000 per Occurrence -
Minimum
Insured Selects
Coverage F
Medical Payments to Others
$1,000 per Person -
Minimum
Insured Selects
13Slide19
Conditional ContractInsured must:
Pay the premiumComply with policy provisionsInsurer must:
Provide the insurance
(c) The Society of CISR, Inc.
Insuring
Agreement
14Slide20
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
(c) The Society of CISR, Inc.
14Slide21
Definitions(c) The Society of CISR, Inc.
“Aircraft Liability”
“Hovercraft Liability”
“Motor Vehicle Liability”
“Watercraft Liability”
Defined for liability exclusion
Very broad definition!
Sub-definitions for aircraft,
h
overcraft, watercraft and
“motor vehicle”
15Slide22
And Includes . . . Ownership
Maintenance, occupancy, operation, use, loading or unloading
Entrustment
Failure to supervise or negligent supervision
Vicarious liability
(c) The Society of CISR, Inc.
15Slide23
“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 (HO 24 82) endorsement
Should be on every policy!
(c) The Society of CISR, Inc.
16Slide24
“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 . . .
(c) The Society of CISR, Inc.
17Slide25
“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)
(c) The Society of CISR, Inc.
17Slide26
“Employee”Any employee or leased employee other than a “residence employee”
(c) The Society of CISR, Inc.
17Slide27
“Insured”
Learning Objective 7: Identify who is an “insured” under the Homeowners Policy.
“You”
Resident relatives
Anyone under 21 in “your” 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
(c) The Society of CISR, Inc.
18Slide28
“Insured”
Non-resident student relative over 24Additional 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)
(c) The Society of CISR, Inc.
18Slide29
“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”
(c) The Society of CISR, Inc.
19Slide30
Learning Objective 8: List the places that are considered an “insured location” under the Homeowners Policy.
Identifies locations where premises liability is extendedDoes not limit personal activities exposures
(c) The Society of CISR, Inc.
“Insured Location”
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“Insured Location”“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)
(c) The Society of CISR, Inc.
19Slide32
“Insured Location”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
(c) The Society of CISR, Inc.
20Slide33
“Motor Vehicle”Self propelled land or amphibious vehicles
Riding lawn mowersChildren’s motorized riding toysMotorized scooters
Etc.
Trailer while carried, towed by or hitched for towing
(c) The Society of CISR, Inc.
20Slide34
Other Definitions“Occurrence”
“Property Damage” “Residence Employee”
“Residence Premises”
(c) The Society of CISR, Inc.
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DeductibleShown in Declarations
Applies to Section I – Property(c) The Society of CISR, Inc.
22Slide36
Property Coverages Learning Objectives
Section 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
.
(c) The Society of CISR, Inc.
23Slide37
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.
(c) The Society of CISR, Inc.
23Slide38
Property Coverages Learning Objectives
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.
(c) The Society of CISR, Inc.
23Slide39
Coverage A - Dwelling
Learning 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
(c) The Society of CISR, Inc.
24Slide40
Coverage B – Other StructuresDetached structures
Webster’s Dictionary d
efines a structure as anything built
(c) The Society of CISR, Inc.
25Slide41
Examples of Other Structures(c) The Society of CISR, Inc.
Swimming
Pool
Playscape
Shed
Fence
25Slide42
Coverage B – Other StructuresExcludes 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)
(c) The Society of CISR, Inc.
25Slide43
Coverage B – Other Structures
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)
(c) The Society of CISR, Inc.
26Slide44
Coverage B – Other Structures
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)
(c) The Society of CISR, Inc.
26Slide45
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”
(c) The Society of CISR, Inc.
27Slide46
Coverage C – Personal Property
Limits at other residencesProperty 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
(c) The Society of CISR, Inc.
28Slide47
Coverage C – Personal Property
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
(c) The Society of CISR, Inc.
28Slide48
Special Limits of Liability – Coverage C – Personal Property
(c) The Society of CISR, Inc.
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(c) The Society of CISR, Inc.
Limit
Item
All Perils
$2,500
Property on the “residence premises” used primarily for “business” purposes
Yes
$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 sources
Yes
$1,500
Electrical apparatus used primarily for “business” while away from the “residence premises”, not in or upon a “motor vehicle” equipped to be powered by electrical system of a vehicle and other sources
Yes
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Special Treatment of Personal Property ExposuresLearning 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.
31Slide51
Special Treatment of Personal Property Exposures
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
(c) The Society of CISR, Inc.
31Slide52
Special Treatment of Personal Property Exposures
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
(c) The Society of CISR, Inc.
32Slide53
Special Treatment of Personal Property Exposures
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
(c) The Society of CISR, Inc.
32Slide54
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 20% of specified limit
Does not broaden causes of loss
(c) The Society of CISR, Inc.
32Slide55
Coverage C – Personal Property Not Covered
Articles specifically insured (Example- Scheduled personal property)
Animals, birds, or fish
(c) The Society of CISR, Inc.
33Slide56
“Motor vehicles”
Includes accessories, equipment, parts, tapes, discs, etc. While in or upon the “motor vehicle”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 an “insured’s” residence; or
Designed to assist the handicapped
(c) The Society of CISR, Inc.
Coverage C – Personal Property Not Covered
33Slide57
Aircraft and partsExcept model or hobby aircraft
Hovercraft and partsDefined as a self-propelled motorized ground effect vehicle and includes, but is not limited to
flarecraft
and air cushion vehicles
(c) The Society of CISR, Inc.
Coverage C – Personal Property Not Covered
34Slide58
Property of roomers and tenants unless related to an “insured”
Personal property in a rental apartmentAdditional 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
(c) The Society of CISR, Inc.
Coverage C – Personal Property Not Covered
34Slide59
Credit cards, fund transfer cards, etc.
Additional Coverage #6 gives back $500
Water or steam
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Coverage C – Personal Property Not
Covered
35Slide60
Coverage D – Loss of UseLearning
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
(c) The Society of CISR, Inc.
35Slide61
Coverage D – Loss of Use 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
(c) The Society of CISR, Inc.
36Slide62
Coverage D – Loss of UseCivil 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 A
gainst
No coverage for loss due to cancellation of a lease
Loss of use coverage is not limited by expiration of policy
(c) The Society of CISR, Inc.
36Slide63
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
(c) The Society of CISR, Inc.
37Slide64
Section I - Additional Coverages
Debris removal for tree removalRemoval 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
(c) The Society of CISR, Inc.
38Slide65
Section I - Additional Coverages
Reasonable repairsReasonable cost necessary to protect damaged property from further damageNot 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
(c) The Society of CISR, Inc.
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39Slide66
Section I - Additional Coverages
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
(c) The Society of CISR, Inc.
40Slide67
Section I - Additional Coverages
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.
41Slide68
Section I - Additional Coverages
Loss Assessment$1,000 limit as additional insuranceExposure 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 Loss Assessment Coverage (HO 04 35)
(Assessment due to large deductible still limited to $1,000)
(c) The Society of CISR, Inc.
42Slide69
Section I - Additional Coverages
CollapseExcluded 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)
(c) The Society of CISR, Inc.
43Slide70
Section I - Additional Coverages
Glass or safety glazing materialGlass 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
Not additional insurance
(c) The Society of CISR, Inc.
44Slide71
Section I - Additional Coverages
Landlord furnishingsCoverage C Perils
Theft excluded
$2,500 in each apartment on the “residence premises”
Not additional insurance
(c) The Society of CISR, Inc.
45Slide72
Section I - Additional Coverages
Ordinance Or LawIncreased 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
(c) The Society of CISR, Inc.
45Slide73
Section I - Additional Coverages
Ordinance or Law (Continued)Excludes loss of value due to ordinanceExcludes 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
(c) The Society of CISR, Inc.
46Slide74
Section I - Additional Coverages
Grave Markers Coverage C Perils
$5,000 limit
Not additional insurance
(c) The Society of CISR, Inc.
46Slide75
Section I- Additional Coverages
(c) The Society of CISR, Inc.
COVERAGE
LIMIT
ADDITIONAL INSURANCE
DEDUCTIBLE APPLIES
Debris Removal
Included in limit unless it exceeds limit; then 5% of covered property limit available
Only if it exceeds the limit for Covered Property
Yes
Reasonable Repairs
Included in Coverage A
No
Yes
Trees, Shrubs, Plants & Lawns
Perils
:
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 plant
Yes
Yes
Fire Department Service Charge
$500
Yes
No
Property Removed
(30 days)
Included in the limit that applies to property being removed
No
Yes
47Slide76
Section I- Additional Coverages
(c) The Society of CISR, Inc.
COVERAGE
LIMIT
ADDITIONAL INSURANCE
DEDUCTIBLE APPLIES
Credit Card, Fund Transfer Card
$500
Yes
No
Loss Assessment
$1,000
Yes
Yes
Collapse
Included in the limit that applies to property damaged
No
Yes
Glass or Safety Glazing Material
Included in the limit that applies to property damaged
No
Yes
Landlord’s Furnishings
$2,500
No
Yes
Ordinance Or Law
10% of Coverage A
Yes
Yes
Grave Markers
$5,000
No
Yes
47Slide77
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
Risk of direct loss with exclusions
Open perils concept
Burden of proof is on the insurance company to prove loss is excluded
(c) The Society of CISR, Inc.
48Slide78
Section I – Perils Insured Against
Dwelling & Other Structures ExclusionsCollapse except for Additional Coverages
# 8
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
(c) The Society of CISR, Inc.
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49Slide79
Section I – Perils Insured Against
Dwelling & Other Structures Exclusions (Continued)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.
49Slide80
Section I – Perils Insured AgainstDwelling & Other Structures Exclusions
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
(c) The Society of CISR, Inc.
50Slide81
Section I – Perils Insured AgainstDwelling & Other Structures Exclusions
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
(c) The Society of CISR, Inc.
50Slide82
Section I – Perils Insured Against
Dwelling & Other Structures ExclusionsWear and tear
Mechanical breakdown
Smog, rust, dry rot
Smoke from agricultural smudging or industrial operations
Pollution unless caused by Coverage C Peril
(c) The Society of CISR, Inc.
51Slide83
Section I – Perils Insured Against
Dwelling & Other Structures ExclusionsSettling, shrinking, bulging, etc. of walls, floors or foundations
Birds, vermin, rodents or insects
Animals owned or kept by an “insured”
In most cases, ensuing loss is covered unless otherwise excluded
(c) The Society of CISR, Inc.
51
52Slide84
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!
(c) The Society of CISR, Inc.
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Section I – Perils Insured AgainstPersonal 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
(c) The Society of CISR, Inc.
53Slide86
Section I – Perils Insured AgainstPersonal Property
Fire or lightningWind or hail (note exclusions)Explosion
Riot or civil commotion
Aircraft
Vehicles
Smoke (note exclusions)
Vandalism or malicious mischief
(c) The Society of CISR, Inc.
53Slide87
Section I – Perils Insured AgainstPersonal Property
Theft Includes attempted theft and loss of property from a known place when likely to have been stolen
(c) The Society of CISR, Inc.
54Slide88
Section I – Perils Insured Against
Theft ExclusionsCommitted 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)
(c) The Society of CISR, Inc.
54Slide89
Section I – Perils Insured Against
Personal PropertyFalling 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)
(c) The Society of CISR, Inc.
55Slide90
Section I – Perils Insured Against
Personal PropertyFreezing (Precautions must be taken)
Sudden and accidental damage from artificially generated electrical current
Volcanic eruption
(c) The Society of CISR, Inc.
56Slide91
(c) The Society of CISR, Inc.
For losses to personal property…
if the policy didn’t list the peril, it is not covered!
Slide92
Review of Covered Perils(c) The Society of CISR, Inc.
PERIL INSURED AGAINST
COVERAGE A - DWELLING
COVERAGE 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
57Slide93
Review of Covered Perils(c) The Society of CISR, Inc.
PERIL INSURED AGAINST
COVERAGE A - DWELLING
COVERAGE 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 of
Heating System or AC Hot Water Heater
Yes
Yes
Sudden 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
57Slide94
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 Endorsement (HO 04 77)
(c) The Society of CISR, Inc.
58Slide95
Section I – Property Exclusions
Earth MovementGive back of coverage for fire, explosion, and
theft
Earthquake Endorsement (HO 04 54
)
Water Damage
Flood, surface waters, tidal water
Back up of sewers or drains or overflows from sump
Giveback for fire, explosion and theft
Flood Policy
Water Back Up and Sump Discharge or Overflow Endorsement (HO 04 95)
(c) The Society of CISR, Inc.
59Slide96
Section I – Property Exclusions
Power Failure Off Residence Premises Refrigerated Property Coverage (HO 04 98)
Neglect
During or after the loss
War
Nuclear Hazard
Intentional Loss
(c) The Society of CISR, Inc.
60
61Slide97
Section I – Property Exclusions
Government Action
Weather Conditions
Acts or Decisions
Faulty or Inadequate Planning, Design, Materials or Maintenance
(c) The Society of CISR, Inc.
62Slide98
Section I - ConditionsThe insurance company will not pay more than:
That “insured’s” interest at the time of the lossThe applicable limit of liability
(c) The Society of CISR, Inc.
63Slide99
Section I – ConditionsDuties After a Loss
Protect property from further damageInventory the damaged property
N
otify the carrier or agent and credit card company and/or police
(if applicable)
E
xhibit the property to an adjuster
S
ubmit a sworn statement
(c) The Society of CISR, Inc.
64Slide100
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
)
(c) The Society of CISR, Inc.
65Slide101
Section I – Conditions Loss Settlement
Actual Cash Value for:Structures that are not buildings
Replacement Cost Loss Settlement for Certain Non-Building Structures On
T
he Residence Premises Endorsement (HO 04 43)
Grave markers including mausoleums
(c) The Society of CISR, Inc.
65Slide102
Section I – Conditions Loss Settlement(c) The Society of CISR, Inc.
Building Insured for at Least
80% of Replacement Cost at Loss
Yes
No
Smallest of:
Larger
of:
Limit
of Liability
ACV
RC of Damage
Formula
Limit 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
66Slide103
Section I – ConditionsLoss Settlement
Buildings covered by Coverage A or BSettled on RC or ACV
d
epending 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)
(c) The Society of CISR, Inc.
66Slide104
Section I – Conditions Loss Settlement
Buildings rebuilt at new premises will not increase amount paidRC 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
(c) The Society of CISR, Inc.
66Slide105
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
(c) The Society of CISR, Inc.
68
69Slide106
Section I – Conditions Loss to a Pair or Set
May pay to repair or replace or pay difference between ACV before and after lossOther Insurance
Pro rata share
Mortgage Clause
Mortgagee has rights under Policy
No Benefit to
Bailee
Recovered Property
“Your” option
(c) The Society of CISR, Inc.
70
71Slide107
Property Coverages Learning Objectives
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
.
(c) The Society of CISR, Inc.
72Slide108
Section II – Liability CoveragesCoverage E – Personal Liability
Coverage F – Medical Payments to Others(c) The Society of CISR, Inc.
73
74Slide109
Coverage E – Personal Liability
Learning 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
(c) The Society of CISR, Inc.
73Slide110
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
(c) The Society of CISR, Inc.
74Slide111
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
(c) The Society of CISR, Inc.
74Slide112
Section II – Exclusions
Learning 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
(c) The Society of CISR, Inc.
75Slide113
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
(c) The Society of CISR, Inc.
75
76Slide114
Section II – ExclusionsPart 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 an “insured’s” residence
Designed to assist the handicapped and is being used to assist the handicapped or is parked on an “insured location”
(c) The Society of CISR, Inc.
76Slide115
Section II – Exclusions
Also Covered if:Non-owned recreational vehicle
An owned recreational vehicle while on an “insured location”
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
(c) The Society of CISR, Inc.
77Slide116
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
(c) The Society of CISR, Inc.
78Slide117
Section II – Exclusions
“Watercraft Liability”Ownership, maintenance, or occupancy
Operation or
use
Loading or
unloading
Entrustment
Failure to supervise or negligent
supervision
Vicarious
liability
(c) The Society of CISR, Inc.
79Slide118
Section II – Exclusions“Watercraft Liability”
Excludes watercraftPreparing or operating in a race except sailboats and predicted log racesRented 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
(c) The Society of CISR, Inc.
79Slide119
“Watercraft Liability” Coverage(c) The Society of CISR, Inc.
Type of Watercraft
Owned
Rented
Borrowed
Inboard
Inboard/Outdrive
No
Yes
IF
50 HP or less
Yes,
Not Excluded
Outboard
Yes, 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
79Slide120
Watercraft Endorsement
Watercraft (HO 24 75)
Watercraft must be listed
Personal Liability and Medical Payments To Others Coverage
No physical damage
Exclusions listed
(c) The Society of CISR, Inc.
80Slide121
Section II – Exclusions
“Aircraft Liability”“Hovercraft Liability”
(c) The Society of CISR, Inc.
81Slide122
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
(c) The Society of CISR, Inc.
Section II – Exclusions
82Slide123
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
(c) The Society of CISR, Inc.
83Slide124
Business Endorsements
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
(c) The Society of CISR, Inc.
83Slide125
Business Endorsements
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
(c) The Society of CISR, Inc.
83Slide126
Section II – Exclusions
Professional liabilityUninsured 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.
84
85Slide127
Coverage E – Personal Liability Exclusions
Loss Assessment$1,000 available in Section II – Additional CoveragesOwned 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
(c) The Society of CISR, Inc.
86Slide128
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”
(c) The Society of CISR, Inc.
87Slide129
Coverage F – Medical Payments to Others Exclusions
“Residence employee” off premises unless during course of employmentWorkers compensation (voluntarily or required)
Nuclear
Regular residents except a “residence employee”
(c) The Society of CISR, Inc.
88Slide130
Section II – Additional Coverages
Claims expensesIn addition to limits of liabilityFirst aid expenses
(c) The Society of CISR, Inc.
89Slide131
Section II – Additional Coverages
Damage To Property Of OthersCaused 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”
(c) The Society of CISR, Inc.
90Slide132
Section II – Additional CoveragesLoss Assessment
No defense
$1,000 coverage
Loss Assessment Coverage Endorsement (HO 04 35) to increase limits to $50,000
(c) The Society of CISR, Inc.
91Slide133
Section II – Conditions
Duties after a lossConditional contract
Duties of an injured person
Must submit to medical exam by doctor of the insurance company’s choice
(c) The Society of CISR, Inc.
92
93Slide134
Section II – ConditionsOther insurance
Excess coverage except for excess/umbrella coveragePolicy period
Loss must occur during policy period
Cancellation and nonrenewal
Modified by state specific endorsements
(c) The Society of CISR, Inc.
93
94Slide135
Section II – ConditionsAssignment
Must have written consent of insurance companySubrogation
May waive before a loss
Must be in writing
Subrogation does not apply to Medical Payments and Damage to Property of Others
(c) The Society of CISR, Inc.
95Slide136
Learning ObjectivesDwelling Policy
List the eligibility requirements for Dwelling Policies.
Point out the differences between Homeowners Policies and Dwelling Policies.
Discuss endorsements applicable to Dwelling Policies.
(c) The Society of CISR, Inc.
1Slide137
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)
(c) The Society of CISR, Inc.
2Slide138
Dwelling Fire Occupancy
Owner, seasonal or tenant occupiedWider range of incidental occupancies
No more than 5 roomers or boarders per unit
(c) The Society of CISR, Inc.
2Slide139
Dwelling Fire Coverage Parts
Coverage A - DwellingCoverage 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
(c) The Society of CISR, Inc.
3Slide140
Dwelling Fire Forms
DP-1 BasicDP-2 Broad
DP-3 Special
(c) The Society of CISR, Inc.
3Slide141
Dwelling Fire – Eligibility Comparison (c) The Society of CISR, Inc.
5Slide142
Dwelling Fire - Limitations No TheftNo Liability and Medical Payments Coverage
No Loss Assessment(c) The Society of CISR, Inc.
7Slide143
Dwelling Fire – Perils Insured Against (c) The Society of CISR, Inc.
143Slide144
Dwelling Fire - EndorsementsBroad 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.
7-9Slide145
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(c) The Society of CISR, Inc.