Fundamentals of Insurance Planning

1
Fundamentals ofInsurance Planning
Homeowners Insurance Nonbusiness Property
Coverages Chapter 17
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Chapter 17 Overview

• homeowners policies
• form HO-3
• other forms
• endorsements
• other residential forms

• flood insurance
• hard-to-insure residential property
• high-value residential property
• floater policies
• title insurance

3
homeowners policy --

• a series of policy forms for different types of
  situations with differing degrees of coverages
  for real and personal property, as well as
  personal liability

4
ISO (Insurance Services Office) --

• advisory organization that provides various
  services to insurance companies, including the
  development and filing of standardized insurance
  forms

5
ISO homeowners forms

• HO-2 Broad Form
• HO-3 Special Form
• HO-4 Contents Broad Form (tenants)
• HO-5 Comprehensive Form
• HO-6 Unit-Owners Form (condos)
• HO-8 Modified Coverage Form

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sections of a homeowners policy --

• Section I
• property coverage
• different in each homeowners form

• Section II
• liability coverage
• same in all homeowners forms

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who is an insured --

• the person listed in the declarations
• the spouse of the person listed (if resident)
• resident relatives
• residents under 21 in an insureds care

• full-time student away at school
• relative under 24
• under 21 and in care of an insured
• for liabilityother additional persons in some
  situations involving animals, watercraft, vehicles

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what is an insured location --

• residence premises
• other premises used as residence
• premises where an insured temporarily resides

• vacant land
• cemetery plot
• part of premises rented to an insured for business

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homeowners property coverages --

• Coverage A
• dwelling building
• Coverage B
• other structures
• limit 10 of A

• Coverage C
• contents/personal property
• limit 50 of A
• Coverage D
• loss of use
• limit 30 of A
• Additional Coverages

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HO-3 Coverages A and B provide open-perils
coverage subject to exclusions --

• catastrophic
• war, nuclear, flood, quake
• intentional losses
• neglect after loss
• government destruction
• ordinance or law

• excludable or preventable
• series of exclusions
• concurrent causation
• plugs a loophole

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HO-3 Coverage C provides named-perils coverage
for --

• vandalism
• theft
• falling objects
• weight of ice, snow, sleet
• volcanic eruption
• and more, all as defined in the form

• fire or lightning
• windstorm or hail
• explosion
• riot or civil commotion
• aircraft vehicles
• smoke

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sublimits apply to --

• money, securities, etc.
• watercraft
• trailers
• business property
• some electronic apparatus off-premises

• loss by theft of
• jewelry, watches, furs, gemstones
• guns
• silverware, goldware, platinumware, pewterware

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excluded personal property --

• insured elsewhere
• animals, birds, fish
• most vehicles
• aircraft, hovercraft
• boarders property
• some rental property

• business data credit cards, ATM cards, etc.
• water or steam
• see policy for details

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bases of loss settlement (HO-3) --

• Coverages A and B
• replacement cost
• Coverage C
• ACV unless endorsed

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additional living expense --

• Coverage DLoss of Use
• covers extra costs of maintaining a family's
  standard of living while the family's residence
  is being repaired or rebuilt following a covered
  loss

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additional Section I coverages --

• ordinance or law
• debris removal
• fallen trees
• trees, shrubs, plants
• landlords furnishings

• credit cards, ATM cards, forged checks,
  counterfeit money
• grave markers and mausoleums
• loss assessments (property)

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Coverage EPersonal Liability

• provides defense and covers defense costs
• pays damages on behalf of the insured

18
HO-3 Coverage E covers personal liability with
exclusions, such as --

• most motor vehicles
• see policy for details
• larger watercraft
• see policy for details
• aircraft/hovercraft
• business
• see policy for details

• professional liability
• other locations
• transmission of disease
• sexual molestation, abuse
• illegal drugs
• ...and more

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Coverage FMedical Payments to Others

• nominal limits, e.g., 1,000
• pays regardless of fault
• moral obligation, even without legal obligation

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additional Section II coverages --

• damage to property of others
• loss assessments (liability)

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ISO homeowners forms

• HO-2 Broad Form
• HO-3 Special Form
• HO-4 Contents Broad Form (tenants)
• HO-5 Comprehensive Form
• HO-6 Unit-Owners Form (condos)
• HO-8 Modified Coverage Form

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popular endorsements include --

• scheduled personal property
• personal property replacement cost
• ordinance or law
• loss assessment

• earthquake
• identity fraud expense
• inflation guard
• home business
• personal injury

23
dwelling policies --

• less comprehensive property coverage than
  homeowners policies
• no liability coverage (endt. avail.)
• used for rental property and other dwellings not
  eligible for homeowners policies

24
mobilehome insurance --

• similar to homeowners insurance
• provides coverage to owner-occupants of mobile
  homes

25
National Flood Insurance Program (NFIP) --

• federal program that provides insurance for the
  peril of flood, as defined in the policy

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FAIR (Fair Access to Insurance Requirements) plan
--

• state-run programs to provide property
  insurance, within limits, if a property owner is
  unable to obtain coverage in the standard
  marketplace

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high-value residential property --

• challenges include
• high values
• old homes
• unique construction
• gardens, pools, stables
• high-risk locations
• multiple locations with property
• and more

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personal articles floater --

• open-perils coverage for certain scheduled and
  valuable items of personal property
• similar to unscheduled personal property
  endorsement to HO policy

29
personal property floater --

• open perils coverage for unscheduled personal
  property on a worldwide basis

30
personal effects floater --

• open perils worldwide coverage for baggage,
  clothes, cameras, and other items commonly worn
  or carried by tourists

31
title insurance --

• protection for the purchaser of real estate
  against defects in title that occurred prior to
  the effective date of coverage but are discovered
  after the effective date