2.02 Homeowners Insurance Personal Property

Coverage C - Personal Property

• Personal property owned or used by the insured is covered anywhere in the world. This broad coverage extends to items taken on vacation, to college, or other temporary locations. However, the full amount of coverage only applies if the property is permanently located at the insured's principal residence. If property is normally kept at another residence or a vacation home, a specific limitation applies, typically $10\%$

• The coverage also includes borrowed property while it is in the insured's care, and can be extended to cover property belonging to guests or resident employees (such as nannies or housekeepers) while it is on the insured premises.

• The base relationship to the rest of the policy is that Coverage C is a portion of the dwelling coverage (Coverage A). The policy typically states that Coverage C is automatically set at $50\%$
  of Coverage A. This percentage can be adjusted and increased if needed to adequately fit the insured’s belongings, especially for those with many valuable personal items.

• The policy establishes a formula-driven relationship between Coverage A and Coverage C. Specifically, the relationship can be written as:

$\text{Coverage C} = 0.50 \times \text{Coverage A}$

• If the insured property is normally kept at another residence or a vacation home for an extended period, a limitation applies: this limitation typically restricts coverage to $10\%$
  of Coverage C for those items. This limitation does not apply if the property was moved temporarily, for instance, while remodeling the principal residence.

• There is a limitation for items stored in self-storage facilities: the limit is typically the lesser of $10\%$
  of Coverage C or $1,000$. This means your payout for self-storage losses will not exceed this calculated amount. For study purposes, the two components can be considered as:

$\text{Self-storage limit} = \min\left(0.10 \times \text{Coverage C},\ 1000\right)$

Coverage C - Limits of Liability

Certain categories of personal property have specific internal limits, meaning the policy will not pay more than these amounts for these specific types of items, regardless of the overall Coverage C limit:

• Money (including paper currency, coins, bank notes, bullion, and coin collections): $200$

• Watercraft (including their trailers, equipment, and outboard motors): $1500$

• Jewelry, watches, furs, and precious and semi-precious stones (losses due to theft): $1500$

• Firearms (losses due to theft): $2500$

• Silverware, goldware, pewterware, and articles of gold or platinum (losses due to theft): $2500$

• If property is worth more than these specified limits (e.g., a diamond ring worth $5,000$), it should be scheduled (individually listed and insured) separately with an endorsement to the policy to ensure its full value is covered in the event of a loss.

Personal Property Not Covered

Certain types of personal property are explicitly excluded from Coverage C:

• Articles separately described and specifically insured elsewhere: If an item has its own separate insurance policy (e.g., a valuable art piece insured under a fine arts policy), it won't be covered here to prevent duplicate coverage.

• Animals, birds, and fish: These living creatures are generally not considered personal property under a standard homeowner's policy due to their unique nature and risks.

• Motor vehicles: Cars, motorcycles, and other motorized vehicles (excluding those used to service the insured premises, like a riding lawnmower) are typically covered under separate auto insurance policies.

• Aircraft and parts: Airplanes, gliders, and their components are excluded due to specialized risks.

• Hovercraft and parts: Similar to aircraft, these specialized vehicles are not covered.

• Property of roomers, boarders, and other tenants: The policy covers the insured's property, not that of renters or those living in a rented portion of the home.

• Property in a regularly rented apartment: If the insured owns and rents out an apartment, the personal property within that rented unit belonging to the tenant is not covered by the landlord's homeowner's policy.

• Property rented or held for rental to others off the resident premises: Items the insured rents out for profit from a location other than their primary residence are excluded.

• Business data: Information stored on computers or other media is typically not covered; the media itself might be, but the data's value is not.

• Credit cards, ATM cards, and other access devices: While credit card forgery might be covered under additional coverages, the cards themselves are not personal property in the traditional sense, and losses related to their unauthorized use are handled differently.

• Water or steam: These are not personal property and are typically covered under different policy sections if they cause damage.

Coverage D - Loss of Use

This additional coverage provides financial assistance when your residence becomes uninhabitable due to a covered loss.

• Percentage of Coverage A: Typically, this coverage is set at $30\%$
  of Coverage A, providing a substantial amount for living expenses and lost rent.

• Additional Living Expenses (ALE): This covers the necessary increase in living expenses incurred by the insured to maintain the family’s normal standard of living when their home is not fit to live in. Examples include hotel stays, meals eaten out, and laundry services above what would normally be spent at home. This coverage continues until the home is repaired or the family relocates permanently.

• Fair Rental Value (FRV): If the insured's house is rented to others or a portion of it is rented out (e.g., a basement apartment), and it becomes uninhabitable due to a covered loss, this sub-coverage pays for the loss of anticipated rent that the insured would have collected.

• Prohibited Use: If a civil authority (like the fire department or police) prohibits the insured from using the premises due to direct damage to a neighboring property by a peril insured against, this coverage will pay for up to $2$ weeks of additional living expenses or fair rental value. This applies even if the insured's own property has not sustained direct damage but is inaccessible.

Additional Coverages

Beyond the main sections, homeowner policies include several valuable supplementary coverages, often with specific limits:

• Debris Removal: Covers the cost to remove the debris of covered property after a covered loss.

• Reasonable Repairs: Covers the necessary costs incurred by the insured to protect the property from further damage after a covered loss (e.g., boarding up broken windows).

• Trees, Shrubs, and Other Plants: Provides limited coverage for damage to landscaping caused by specific perils (e.g., fire, lightning, explosion, riot, aircraft, vehicles not owned or operated by residents, vandalism, theft). There's usually a maximum per plant (e.g., $500$
  max per tree/shrub) and an overall limit on total landscaping coverage (e.g., $5\%$
  of Coverage A).

• Fire Department Service Charge: Reimburses the insured for charges incurred when the fire department is called to save or protect the property from a covered peril. Usually, this has a $500$
  max and does not require a deductible.

• Property Removal: Covers property while it is being removed from the premises and for up to $30$
  days while at another location, if the removal is necessary to protect it from a covered peril.

• Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money: Provides coverage for financial losses due to unauthorized use of credit/debit cards, forgery of checks, or acceptance of counterfeit money, typically up to a $500$
  max with no deductible.

• Loss Assessment by HOA: Covers assessments charged to the insured by their Homeowners Association (HOA) for damage to common property that results from a peril insured against. There's often a $1000$
  max limit.

• Collapse: Covers direct physical loss to covered property involving the sudden, entire collapse of a building or part of a building caused by specific perils listed in the policy (e.g., hidden decay, weight of snow).

• Glass or Safety Glazing Material: Covers breakage of glass or safety glazing material which is part of a covered building or storm door/window.

• Landlord’s Furnishings: For an insured who rents out a portion of their residence, this provides coverage for appliances and carpeting that they own and furnish for the rented part of the premises. There's typically a $2500$
  limit.

• Ordinance or Law: Provides coverage for the increased cost of repairs or reconstruction due to the enforcement of any ordinance or law regulating the construction, repair, or demolition of property damaged by a covered peril. This is usually limited to $10\%$
  of Coverage A.

• Grave Markers: Provides coverage for grave markers, including monuments, gravestones, and mausoleums, on or away from the residence premises. Typically, there's a $5000$
  limit.

Excluded Losses

Homeowners policies specifically list perils or types of damage that are not covered:

• Collapse: While certain types of collapse are covered under