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Insuring Personal Residential Homeowners 2000 Program
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  1. Insuring Personal ResidentialHomeowners 2000 Program July 1, 2011 Austin, TX

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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 (c) The Society of CISR, Inc.

  9. Policy Overview (c) The Society of CISR, Inc.

  10. Policy Structure (c) The Society of CISR, Inc.

  11. 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.

  12. 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 (c) The Society of CISR, Inc.

  13. 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) (c) The Society of CISR, Inc.

  14. 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 (c) The Society of CISR, Inc.

  15. Declarations Page (c) The Society of CISR, Inc.

  16. 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 Section I Section II (c) The Society of CISR, Inc.

  17. Endorsements: General Purpose • Broaden coverage • Restrict coverage • Clarify coverage • Possibly state specific (c) The Society of CISR, Inc.

  18. 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.

  19. InsuringAgreement • Conditional Contract • Insured must: • Pay the premium • Comply with policy provisions • Insurer must: • Provide the insurance (c) The Society of CISR, Inc.

  20. 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.

  21. Definitions Defined for liability exclusion Very broad definition! Sub-definitions for aircraft, hovercraft, watercraft and “motor vehicle” (c) The Society of CISR, Inc. “Aircraft Liability” “Hovercraft Liability” “Motor Vehicle Liability” “Watercraft Liability”

  22. 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.

  23. “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.

  24. “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.

  25. “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.

  26. “Employee” • Any employee or leased employee other than a “residence employee” (c) The Society of CISR, Inc.

  27. “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 (c) The Society of CISR, Inc.

  28. “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) (c) The Society of CISR, Inc.

  29. “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.

  30. “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 (c) The Society of CISR, Inc.

  31. “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.

  32. “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.

  33. “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 (c) The Society of CISR, Inc.

  34. Other Definitions • “Occurrence” • “Property Damage” • “Residence Employee” • “Residence Premises” (c) The Society of CISR, Inc.

  35. Property CoveragesLearning 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.

  36. Property CoveragesLearning 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.

  37. Property CoveragesLearning 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.

  38. 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.

  39. Coverage B – Other Structures • Detached structures • Webster’s Dictionary defines a structure as anything built (c) The Society of CISR, Inc.

  40. Examples of Other Structures (c) The Society of CISR, Inc.

  41. Coverage B – Other Structures • 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) (c) The Society of CISR, Inc.

  42. 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.

  43. 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.

  44. 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.

  45. Coverage C – Personal Property • Limits at other residences • Property usuallylocated 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.

  46. 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.

  47. Coverage C – Personal Property • 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) (c) The Society of CISR, Inc.

  48. 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.

  49. Special Limits of Liability – Coverage C – Personal Property (c) The Society of CISR, Inc.

  50. 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.