Chapter 24
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Chapter 24. Other Property and Liability Insurance Coverages. Agenda. ISO Dwelling Program Mobilehome Insurance Inland Marine Floaters Watercraft Insurance Government Property Insurance Programs Title Insurance Personal Umbrella Policy. ISO Dwelling Program.

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Chapter 24

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Chapter 24

Chapter 24

Other Property and Liability Insurance Coverages



ISO Dwelling Program

Mobilehome Insurance

Inland Marine Floaters

Watercraft Insurance

Government Property Insurance Programs

Title Insurance

Personal Umbrella Policy

Iso dwelling program

ISO Dwelling Program

Some dwellings that are ineligible for coverage under the HO policy can be insured under an ISO dwelling policy

The forms are narrower in coverage and there is no coverage for theft or personal liability, unless the policy is endorsed

Dwelling Property 1 (basic form) provides coverage similar to Coverages A-D of the Homeowners Policy

Only a limited number of named perils apply to both the dwelling and the personal property

Additional perils can be added for an additional premium

Coverage D covers the fair rental value if part of the dwelling is rented Coverage E can be added to provide coverage for additional living expenses

All covered property losses are paid on an actual cash value basis, with some exceptions

Iso dwelling program1

ISO Dwelling Program

Dwelling Property 2 (broad form) covers losses to the dwelling and other structures on a replacement cost basis

The form also includes a benefit for additional living expense (Coverage E)

The list of named perils is expanded

Dwelling Property 3 (special form) covers the dwelling and other structures on an “all-risks” basis

All direct physical losses to the dwelling and other structures are covered except those losses specifically excluded

Personal property is covered for the same named perils found in the broad form

Endorsements to the dwelling form include:

Theft coverage

Personal liability supplement

Mobilehome insurance

Mobilehome Insurance

Under the ISO program, mobilehome insurance is written by adding an endorsement to an HO-2 or HO-3 policy

The mobilehome must be at least 10 feet wide and 40 feet long, and capable of being towed on its own chassis

The coverage is similar to the HO policy

Coverage A covers the mobilehome on a replacement cost basis

An optional actual cash value endorsement can be added to reduce the cost

An additional coverage pays up to $500 for the cost incurred in transporting the mobilehome to a safe place to avoid damage when it is endangered by a covered peril, such as a fire

Inland marine floaters

Inland Marine Floaters

An inland marine floater is a policy that provides broad and comprehensive protection on property frequently moved from one location to another

Coverage can be tailored to the specific type of personal property to be insured, e.g., jewelry, coins, or stamps

Desired amounts of insurance can be selected

Broader and more comprehensive coverage can be obtained

All direct physical losses are covered unless excluded

Most floaters cover insured property anywhere in the world

Inland marine floaters typically do not impose a deductible

Inland marine floaters1

Inland Marine Floaters

The personal articles floater (PAF) is an inland marine floater that provides comprehensive protection on valuable personal property

This coverage can be written as a stand-alone contract

Insures certain classes of property on an “all-risks” basis

Classes of property that can be covered include jewelry, furs, cameras, fine arts, etc.

The coverage can also be added as a scheduled personal property endorsement to an HO policy

Coverage is essentially the same as provided by the freestanding PAF

Watercraft insurance

Watercraft Insurance

The homeowners policy provides limited coverage for boats

A boatowners package policy combines physical damage insurance on the boat, medical expense insurance, liability insurance, and other coverages into one policy

Physical damage is covered on an “all-risks” basis

The insured is covered for property damage and bodily injury liability arising out of negligent use of the boat

The policy also includes medical expense coverage and an uninsured boaters coverage (may be optional)

Watercraft insurance1

Watercraft Insurance

Yacht insurance is designed for larger boats

Policies are not standard, but have many common features

Physical damage to the yacht and its equipment is covered on an “all-risks” basis

The policy includes liability coverage, medical expense coverage, and uninsured boaters coverage

Government property insurance programs

Government Property Insurance Programs

Some government insurance programs are necessary because certain perils are difficult to insure privately

Coverage may not be available or may not be affordable

The National Flood Insurance Program provides insurance coverage to property owners in flood-prone areas

Flood insurance is purchased from agents or brokers who represent private insurers

The private insurers sell federal flood insurance under their own names, collect the premiums, and receive an expense allowance

The federal government is responsible for all underwriting losses

The program is not currently self-supporting, due to losses from Hurricane Katrina and other hurricanes in 2005

Government property insurance programs1

Government Property Insurance Programs

Buildings and their contents can be covered by flood insurance if the community agrees to adopt and enforce sound flood control and land use measures

A flood hazard boundary map shows the general areas of flood losses

Residents can purchase limited amounts of insurance at subsidized rates under the emergency portion of the program

A flood is defined in the Standard Flood Insurance Policy as:

A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source, or from mudflow

Exhibit 24 1 amount of federal flood insurance under the emergency and regular programs

Exhibit 24.1 Amount of Federal Flood Insurance under the Emergency and Regular Programs

Government property insurance programs2

Government Property Insurance Programs

Flood insurance coverage is available in three Standard Policy Forms:

The Dwelling Form is used to insure one- to four-family residential buildings and single family dwelling units in a condominium building

The General Property Policy Form is used to insure five or more family residential buildings and non-residential buildings

The Residential Condominium Building Association Policy Form is issued to residential condominium associations on behalf of association and unit owners

Government property insurance programs3

Government Property Insurance Programs

There is a 30-day waiting period for new applications and endorsements for flood coverage

This prevents property owners from waiting to purchase coverage until an imminent flood threatens their property

The cost of protection is relatively low

The average flood insurance policy costs about $400 annually, and is less expensive than interest on federal disaster loans

The federal flood insurance program faces several critical problems, for example:

The NFIP has a substantial deficit, largely due to Hurricane Katrina

Some have proposed adding windstorm coverage to the program

There is a low level of participation by property owners who reside in flood zones

Exhibit 24 2 summary of property covered under national flood insurance program nfip

Exhibit 24.2 Summary of Property Covered under National Flood Insurance Program (NFIP)

Government property insurance programs4

Government Property Insurance Programs

The Urban Property and Reinsurance Act of 1968 created FAIR plans (Fair Access to Insurance Requirements)

Plans provide coverage to urban property owners who are unable to obtain coverage in the standard market

Covers property for fire and extended-coverage perils, vandalism, and malicious mischief

Seven states have beach and windstorm plans, where property is vulnerable to damage from severe windstorms and hurricanes

A state with a FAIR plan creates a pool or syndicate of private insurers to provide basic property insurance

Each insurer in the pool is assessed its proportionate share of losses and expenses based on the proportion of property insurance premiums written in the state

Title insurance

Title Insurance

Title insurance protects the owner of property or the lender of money for the purchase of property against any unknown defects in the title to the property under consideration

If there is a defect in a title, the owner could lose the property to someone with a superior claim

Examples of defects to the title include an invalid will, incorrect description of the property, and undisclosed liens

The policy provides protection against title defects that have occurred in the past, prior to the effective date of the policy

The insurer assumes no losses will occur

The premium is paid only once when the policy is issued

The policy term runs indefinitely into the future

If a loss occurs, the insured is indemnified in dollar amounts up to the policy limits (usually the purchase price of the property)

Personal umbrella policy

Personal Umbrella Policy

The personal umbrella policy provides protection against a catastrophic lawsuit or judgment

Excess liability insurance is provided in amounts from $1–$10 million

Certain minimum amounts of liability insurance must be carried on the underlying contracts

Coverage is broad and includes protection against certain losses not covered by the underlying contracts

For example, the policy covers liability for personal injury (e.g., false arrest, slander)

A self-insured retention must be satisfied for losses covered by the umbrella policy but not by any underlying contract

The umbrella policy is reasonable in cost

Exhibit 24 3 typical underlying coverage amounts required to qualify for a personal umbrella policy

Exhibit 24.3 Typical Underlying Coverage Amounts Required to Qualify for a Personal Umbrella Policy

Personal umbrella policy1

Personal Umbrella Policy

Insurers can use a standard Personal Umbrella Policy developed by the ISO

The policy pays for damages in excess of the retained limit for bodily injury, property damage, or personal injury for which the insured is legally liable

The retained limit is either:

The total limits of the underlying insurance or any other insurance available to an insured, or

The deductible stated in the declarations if the loss is covered by the umbrella policy but not by any underlying insurance or other insurance

Exclusions include liability for expected or intentional injury, certain personal injury losses, business liability, and professional services

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