Unit 7 Cram Sheet HO Basic & Section 1

What type of policy is homeowners

A package or Multiline policy because it automatically includes both property and liability insurance

Benefits of multiline policies

Avoid gaps in coverage, problems with overlapping polices, and simplify process

Basic eligibility requirements for homeowner’s policy

• Must be owner occupied (diff special form for renters)

• No more than 4-family dwelling

• Primary purpose of property must be residence

• Dwellings under construction for owners occupancy ellibilge

• Mobile homes can be added through endorsement

Are farm dwellings eligible for dwelling or homeowner’s policies

NO

Who counts as an insured

Named insured, resident spouse, resident relatives, anyone under the age of 21 and in the care of the insured

Full time relative, student under age 24 who was a prior resident

Representative of the named insured in the event of death

Cancellation by the insured

Company can cancel for any reason in first 60 days with minimum 10 days notice

After 60 days, company can cancel due to material misrepresentation or substantial change in rick with a minimum of 30 days notice

Company can cancel for nonpayment of premium at any time with 10 days advance notice

Nonrenewal by company

They hold the right to Nonrenewal, but are required to give 30 days’ advance notice

The Standard Mortgagee Clause specifies the rights and duties of the mortgagee to include:

• paying the premium

• Filing a claim up to insurable interest

• Receiving advance notice of cancellation by the insurer

• *States dishonesty of insured does not prevent the mortgagee from collecting their due

6 Homeowner’s Policies

• HO-2 - Broad form for owner occupant

• HO-3 - Special form for owner occupant

• HO-4 - Tenant / renter

• HO-5 - Comprehensive form for owner occupant

• HO-6 - Condominium Owners

• HO-8 - Modified form

Which coverages are in section 1

A, B, C, and D

Coverage A

Dwelling, includes all attached property and materials on the premises used in the construction of the main structure

*No coverage for a renter

What does Coverage A look like in HO-6

It covers inside walls and floors only with a $5000 limit

Coverage B

Covers Other Structures that are separated by a clear space from main dwelling.

*Does NOT insure buildings used for business or renters

Which HO forms include Coverage C

All of them

Coverage C

Covers personal property, including guests property if requested

How does Coverage C work anywhere in the world

When you are away, you are covered up to 10% of Coverage C limit up to $1000

3 Common exclusions under Coverage C

1. Pets

2. Motorized vehicles (unless they’re used to service property)

3. Property of renters or boarders

Special categories and limits for theft

1. Jewelry, watches, and furs - $1500

2. Firearms - $2500

3. Silverware, goldware, and pewter ware - $2500

6 special limits for ALL losses

1. Money and securities - $200

2. Watercraft - $1500

3. Trailers - $1500

4. Business property on the premises - $2500

5. Business property away from the premises - $1500

6. Portable electronic apparatus away from premises - $1500

Coverage D

Coverage for indirect losses, such as additional living expenses or lost rental income, due to the loss of use of a home by a covered peril

*rental income only covered 2 weeks if damage is to neighboring property

8 additional coverages in all homeowners policies

1. Debris removal

2. Reasonable repairs

3. Trees, shrubs, and other plants

4. Fire department service charge

5. Property removal

6. Credit cards, forgery, and counterfeit money

7. Broken glass coverage (HO-8 excluded)

8. Loss Assessment

Debris removal limit

$1000 for tree debris per occurrence and $500 per tree

Trees coverage

Max of 5% of Coverage A in addition to limit. Increases to 10% for HO-4&6

Fire Department charge

Maximum of $500 with no deductible

Property removal period

30 days

Credit cards limit

$500 with no deductible

What does loss assessment cover

Covers loss assessment by a homeowners association, such as a community club house

Max of $1000 with one time deductible

5 other additional coverages are available under which policies?

HO-2, 3, and 5

5 other additional coverages

1. Collapse

2. Building Additions

3. Landlords furnishings (2500)

4. Grave Markers (5000)

5. Ordinance or law (up to 10% Coverage A)

Basic Perils

Fire, lightning, explosion, WCSHAVVER, V&MM, and theft

HO policies and theft

Theft is automatically covered under basic perils.

*Note that theft is NOT automatically covered under dwelling policies

5 main theft exclusions

1. Theft by the insured

2. Theft from dwelling under construction

3. Theft from rental portion of premises

4. Theft of watercraft off the premises

5. Mysterious disappearance

Excluded perils in all homeowners policies (1-5)

1. Enforcement of law or ordinance regulating construction/repair

2. Earth movement, including earthquake and mine subsidence

3. Flooding and overflow from a sump pump

4. Power interruption that takes place off the resident premises

5. War

Excluded perils in all HO policies (6-9)

6. Nuclear hazard

7. Insured’s failure to save and preserve property after a loss or to protect it from the loss entirely

8. Losses caused intentionally by the insured or at their direction

9. Destruction, confiscation, or seizure of property by the government

Coverage levels HO-2

Broad coverage for all

HO-3 coverage

A&B - special

C - broad

D - special

HO-4 coverage

No coverage for A or B

C - broad

D - broad

HO-5 coverage

Special for all

HO-6 coverage

Broad for all except B

*No B coverage since condos can’t have other detached structures

HO-8 coverage

Basic for all

*ACV used for coverage A&B

What is the average deductible for HO policies

$500 - $2500

Which property is covered at ACV or max of repair / cost to replace

Personal property, awnings, structure that isn’t building, outdoor equipment

What is valued at replacement value

The dwelling, if 80% coinsurance met

Personal property replacement cost endorsement

Insures personal property on replacement cost instead of ACV

Scheduled personal property endorsement

Insures schedules items against open perils with replacement coverage and no deductible

*Used for valuable items

Permitted incidental occupancies endorsement

Removes the $2500 limit and/or exclusions on business personal property

Earthquake endorsement

Covers land movement including volcanic eruption

*Includes one deductible per 72 hours to help also cover aftershocks

Limited fungi, wet or dry rot, or bacteria endorsement

Can only be added to HO 3 or HO 5

Home day care endorsement

Gives liability coverage to day care operations. Changes the occurrence limit to an aggregate limit and bases the premium on the number of children attending