Chapter 5 - Homeowners Policy
Business means:
A trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis. Any other activity engaged in for money or other compensation, EXCEPT: Volunteer activities for which no compensation is received other than expense reimbursement. Home daycare services for which no compensation is received other than the mutual exchange of day care services. Rendering home daycare services to a relative of an insured. Any other activity not described above for which no insured receives more than $2,000 in compensation during the 12 months before the current policy term.
Eligibility
All homeowners forms with the exception of the Contents Broad Form (HO-4) and Unit-owners Form (HO-6) require the named insured to be the owner - Occupant of the insured dwelling. The dwelling must be the principal residence of the named insured, and incidental business occupancies, such as offices, studios, and schools, are permitted. The Contents Broad Form (HO-4) and Unit-owners Form (HO-6) are written to insure the personal property and personal liability of the named insured who does not own the building in which he/she lives
Residence Employee means:
An employee of, or leased under an agreement to, an insured, whose duties are related to the maintenance or use of the residence premises. These duties include household and domestic services, such as those of a gardener or nanny. A person who performs similar duties elsewhere that are not related to any business of the insured, such as a person hired to paint the insured's house, as long as the insured doesn't own a business that paints houses.
Earthquake Endorsement
Coverage for a loss caused by earthquake, including land shock waves or tremors before, during, or after a volcanic eruption, is provided to property insured under Coverage A (Dwelling), B (Other Structures), and C (Personal Property). A single earthquake is defined as 1 or more earthquake shocks that occur within a 72-hour period. The coverage does not cover loss resulting from flood of any nature, or the cost of filling land. A deductible that is a percentage of Coverage A (Dwelling) or Coverage C (Personal Property), whichever is greater, is included.
Property Removed -
Coverage is provided for loss to covered property by any cause while being removed from a premises endangered by a peril insured against. Coverage applies for no more than 30 days while removed. For example, if a wildfire threatens the insured's home and property is removed, loss to the removed property that is caused by flood or earthquake would be covered during the first 30 days the property is removed. However, if flood threatened the insured's home, coverage wouldn't apply because the endangering peril is not a peril insured against.
Collapse
Coverage is provided for the abrupt falling down or caving in of a building, or a portion of a building, if the building cannot be occupied for its intended purpose after the collapse. Direct physical loss from collapse must be caused by a Coverage C named peril, hidden decay, hidden insect or vermin damage, weight of contents, equipment, animals, people, the weight of rain collecting on a roof, or the use of defective materials or construction methods. The policy does not cover collapse of awnings, fences, patios, swimming pools, underground pipes, cesspools, etc., unless damage is the direct result of the collapse. This coverage does not increase the limit of insurance that applies to the damaged property.
Trees, Shrubs, and Plants
Coverage is provided for trees, shrubs, plants, or lawns on the residence premises for the following perils: fire or lightning, explosion, riot or civil commotion, aircraft, vehicles not owned or operated by a resident of the residence premises, vandalism or malicious mischief, and theft. Coverage is NOT provided for any other peril, including windstorm or hail. The limit of insurance is up to 5% of the Coverage A limit of liability and applies to all trees, shrubs, plants, or lawns. The most paid for loss to any one tree, shrub, or plant is $500. This limit is additional insurance. No coverage is provided for property grown for "business" purposes.
Loss Assessment
Coverage up to $1,000 is provided for the named insured's share of loss assessment charged during the policy period by a corporation or association of property owners. The assessment must be made because of direct loss to property owned collectively by all members AND that was caused by a Peril Insured Against under this policy. This coverage is additional insurance.
Credit Cards, Electronic Fund Transfer Card, Forgery, and Counterfeit Money
Coverage up to $500 is provided for the insured's legal responsibility because of theft or unauthorized use of credit cards, electronic fund transfer cards or access devices issued to an insured. Loss to an insured caused by forgery, alteration of a check or negotiable instrument, or counterfeit money is also covered. Exclusions exist for use of a covered card or device by a resident of the named insured's household, by a person entrusted with a card or access device, the insured's failure to comply with credit card requirements, business use of a card, or the insured's dishonesty. This coverage also includes defense.
Mobile Home Insurance
Depending upon the insurer, insurance for mobile homes may be insured on a homeowners policy by adding a Mobile Home endorsement. If the insurer doesn't allow the addition of such an endorsement to its homeowners policy, a separate Mobile Homeowners policy must be written. Under ISO (Insurance Services Office) rules, an owner occupied mobile home may be covered under an HO-2 or HO-3 by endorsement. The endorsement amends the definition of Coverage A (Dwelling) to include a mobile home. Tenants of a mobile home may insure their personal property under an HO-4 if the insurer's underwriting guidelines permit.
Coverage A - Dwelling
Dwelling on the residence premises shown in the declaration, including structures attached to the dwelling. Materials and supplies located on or next to the residence premises used to construct, alter, or repair the dwelling or other structures on the residence premises. For example, the pile of lumber in the insured's back yard that will be used to construct a deck off the kitchen. The policy does not cover: Land on which the dwelling is located. Theft in, to, or from a dwelling under construction, including materials used in the construction. Vandalism and malicious mischief including ensuing loss, if the dwelling was vacant for more than 60 consecutive days immediately before the loss. When a limit of liability is chosen for Coverage A - Dwelling, the other three property coverages (B, C, and D) are automatically issued at limits equaling a specific percentage of the Coverage A limit of liability. If these limits are inadequate, the insured may purchase higher limits. In most cases, the insurer requires the named insured to purchase insurance in an amount that is no less than 80% of the dwelling's replacement value. If, at the time of a loss, the amount of insurance on the dwelling is less than 80% of the dwelling's replacement value, a penalty will be applied to partial losses. If 80% Replacement cost is not carried, ACV will apply.
Other Structures on the Residence Premises - Increased Limits
If the Coverage B limit of insurance is inadequate to insure all other structures on the residence premises (10% of Coverage A), this endorsement allows the insured to purchase increased limits for other structures listed in the endorsement. The increased limits generate an additional premium charge.
HO-3 (Special Form)
In the Special Form (HO-3), the dwelling and other structures (Coverages A and B) are insured on an open perils basis, meaning all perils are insured if they aren't specifically excluded in the policy. Losses to the dwelling and other structures are valued on a replacement value basis just as they are in the HO-2. The Special Form (HO-3) specifically excludes the following causes of loss under Coverage A and B: Collapse, except as provided by Additional Coverages Freezing of household appliances or a plumbing, heating, air conditioning, or automatic fire protective system unless the insured has taken reasonable care to maintain heat in the building or shut off the water supply and drained the appliances and systems of water. Freezing, thawing, pressure or weight of water or ice on patios, fences, swimming pools, foundations, piers, docks, retaining walls. Theft in or to a dwelling under construction, including construction-related materials and supplies. Vandalism and malicious mischief, including ensuing loss, if the dwelling has been vacant for more than 60 consecutive days immediately before the loss. Mold, fungus, or wet rot unless resulting from accidental discharge or overflow of water or steam that is hidden from view. Wear and tear, marring, deterioration, mechanical breakdown, latent defect, inherent vice, smog, rust, corrosion, dry rot. Smoke from agricultural smudging or industrial operations. Pollution including discharge, dispersal, seepage, migration, or release of smoke, vapor, fumes, acids, or other chemicals unless such discharge is caused by a Coverage C Peril Insured Against. Settling, cracking, bulging, or expansion of foundation, walls, floors, pavements, patios. Birds, vermin, rodents or insects. Animals owned or kept by an insured. Personal property (Coverage C) is insured on a named perils basis that includes the same 16 named perils in the Broad Form (HO-2). Coverage C losses are valued on an actual cash value basis. It Includes losses to a fence, driveway or walk caused by a vehicle owned or operated by the insured. The burden of proof for losses to the dwelling and other structures falls to the insurer because coverage is provided on an open perils basis. On the other hand, the burden of proof for losses to personal property falls to the insured to show which of the 16 named perils caused the loss.
First Aid Expenses
Includes expenses incurred by an insured for rendering first aid to others who sustain bodily injury covered under the policy. No coverage is provided for first aid to an insured.
Claim Expenses (Supplementary Payments)
Includes the insurer's expenses for defending a claim, along with reasonable expenses incurred by an insured at the insurer's request. Also covered as claim expenses are premiums on bonds required in a suit defended by the insurer, the insured's actual loss of earnings up to $250 a day for assistance in the investigation or defense of a claim or suit, and post-judgment interest.
Coverage E - Personal Liability
Insurance is provided for claims made and suits brought against an insured because of bodily injury or property damage caused by an occurrence for which the insurance applies. The policy pays up to the limit of liability for the damages for which an insured is legally liable, including prejudgment interest awarded against an insured. The policy provides a defense, at the insurer's expense, even if the suit is groundless, false, or fraudulent. The insurer may investigate and settle any claim or suit it decides is appropriate. The duty to defend ends when the policy limits have been exhausted by payment of a judgment or settlement. Payments for defense costs are made in addition to the limit of liability appearing on the declarations.
Exclusions
Ordinance or Law - Losses resulting from the enforcement of an ordinance or law regulating the construction, repair, remodeling, renovation or demolition of a building are excluded except what is provided in the additional coverage, Ordinance or Law. Earth Movement - Losses resulting from: earthquake, including land shock waves or tremors before and after volcanic eruptions, landslides, mudslides, mudflow, subsidence, or sinkhole, and any earth sinking, rising, or shifting. Direct loss by fire or explosion that ensues is covered. This exclusion doesn't apply to loss by theft. Water Damage - Water damage means flood, surface water, tidal water, overflow of a body of water, water or water-borne material that backs up through sewers or drains or that overflows from a sump pump, and water that exerts pressure on or seeps or leaks through a building, foundation, swimming pool, or other structure. Direct loss by fire, explosion, or theft resulting from water damage is covered. Water damage is excluded whether caused by human, animal, or natural forces. Power Failure - If the failure of power or utility services takes place off the residence premises, this exclusion applies. However, if the failure of power or utility services takes place on the residence premises and is caused by a Peril Insured Against, it doesn't apply. Neglect - There is no coverage for losses if the insured fails to use all reasonable means to save and preserve covered property at and after the time of a loss. War - War includes the following, including any consequences of: undeclared war, civil war, insurrection, rebellion or revolution, warlike act by a military force or personnel, destruction, seizure or use for a military purpose. Discharge of a nuclear weapon is deemed warlike even if it occurs accidentally. Nuclear Hazard - Damage is excluded by any nuclear reaction, radiation or radioactive contamination, or a consequence of any of these. Intentional Loss - No coverage applies to any loss that arises out of any act an insured commits or conspires to commit with the intent to cause loss. In the event of intentional loss, no insured is entitled to coverage, including innocent insureds (those who did not cause the loss, but are covered on the same policy as the person who caused the loss). Governmental Action - The destruction, confiscation, or seizure of covered property by order of any governmental or public authority is excluded. The exclusion doesn't apply to such acts taken at the time of a fire to prevent its spread, if the fire loss would be covered under the policy.
Damage to Property of Others
Pays up to $1,000, at replacement cost, for property damage to property of others caused by an insured. Payment is made regardless of negligence. For example, damage caused by an insured to a borrowed lawn mower. Coverage does not apply to property damage: Covered under Section I of the policy. Caused intentionally by an insured who is 13 years of age or older. To any property owned by an insured. To property owned by or rented to a tenant of an insured or a resident of the named insured's household. Arising out of a business engaged in by an insured; acts or omissions in connection with premises owned, rented, or controlled by an insured that is not the insured location; the ownership, maintenance, occupancy, operation, use, loading or unloading of aircraft, hovercraft, watercraft, or motor vehicles.
Loss Assessment
Provides up to $1,000 of coverage for the insured's share of loss assessments charged by a corporation or association of property owners, during the policy period. The loss assessment must be the result of bodily injury or property damage not otherwise excluded by the policy or liability for an elected director, officer, or trustee who serves on the board of the association or corporation without being compensated.
Residence Premises means:
The 1-family dwelling where the named insured resides. The 2-, 3-, or 4-family dwelling in which the named insured resides in at least one of the family units. That part of any other building where the insured resides. The residence premises also includes other structures and the grounds at that location, such as the 5 acres upon which the insured resides, including the barn, detached garage, and swimming pool.
HO-5 (Comprehensive Form)
The Comprehensive Form provides the broadest coverage of any of the homeowners forms. Coverages A - Dwelling, Coverage B - Other Structures, and Coverage C - Personal Property provide insurance on an open perils basis. Losses to the dwelling and other structures are valued on a replacement cost basis, losses to personal property are valued on an actual cash value basis.
HO-4 (Contents Broad Form)
The Contents Broad Form is also known as the renter's or tenant homeowners policy. It doesn't provide any coverage for the dwelling or other structures because it's designed to insure those who are tenants. The HO-4 insures personal property under Coverage C against loss from the 16 named broad form perils found in the HO-2 and HO-3 forms. Personal property losses are valued on an actual cash value basis, as they are on the HO-2 and HO-3 forms.
Motor Vehicle Liability (exclusion)
The Motor Vehicle Liability exclusion applies to all coverages in Section II. No coverage is provided for "motor vehicle" liability if at the time of an occurrence, the "motor vehicle" involved in the loss was registered for use on public roads or wasn't registered but was required to be registered. In addition, no coverage is provided for vehicles that are being operated in or practicing for racing, rented to others, used to carry people or cargo for a fee, or used for any business purpose. Exceptions to the exclusion, meaning coverage is given back, exist for the following: Vehicles in dead storage on an insured location, meaning they are physically unable to be driven, because their batteries have been removed and they're up on blocks. Vehicles used solely to service an insured's residence. Vehicles designed to assist the handicapped, so long as the vehicle is being used to assist a handicapped person, or it is parked on an insured location. A motorized golf cart used on a golfing facility for purposes approved by the facility or within a private residential community and used as approved by the community. Vehicles designed for recreational use off public roads IF they are not owned by an insured OR are owned by an insured and used on an insured location. Aircraft Liability - No coverage is provided for "aircraft liability" as defined in the policy. Hovercraft Liability - No coverage is provided for "hovercraft liability" as defined in the policy.
Unit-Owners Form (HO-6)
The Unit-owners Form provides named perils coverage to the owner of a condominium or cooperative unit under Coverage A - Dwelling and Coverage C - Personal Property. Coverage B does not appear in this form; however, if the owners of condominiums or cooperative units wish to insure other structures, the value of other structures may be included in the Coverage A limit of insurance. The form insures real property (building and building items) for which the insured is responsible under the bylaws of the condominium association or cooperative corporation. It also insures personal property of the insured while anywhere in the world.
Homeowner Section II
The language contained in Section II - Liability Coverages is identical in each of the homeowners forms. It provides the same coverages contained in a standalone Comprehensive Personal Liability (CPL) policy. Section II coverages are not subject to a deductible.
Glass or Safety Glazing Material
The breakage of glass or safety glazing material that is part of a covered building, storm door, or storm window, including loss caused by earth movement. Direct physical loss to covered property caused solely by the pieces, fragments, or splinters of broken glass or safety glazing material. NO coverage is provided for loss occurring on the residence premises if the dwelling was vacant for more than 60 consecutive days before the loss, except coverage is provided for loss caused by earthquake. This coverage does not increase the limit of insurance that applies to the damaged property.
Ordinance or Law
The insured may use up to 10% of the Coverage A limit of insurance for increased costs the insured incurs due to the enforcement of any ordinance or law that requires or regulates: Construction, demolition, remodeling, renovation, or repair of that part of a covered building damaged by an insured peril. The demolition or reconstruction of the undamaged part of a covered building, when that building must be totally demolished because of damage by an insured peril to another part of that covered building. The remodeling, removal, or replacement of the portion of the undamaged part of a covered building to complete the remodeling, repair, or replacement to that part of the covered building damaged by an insured peril. This coverage is additional insurance.
Insured means:
The named insured and his or her resident spouse if the resident spouse is a member of the named insured's household. Other residents of the named insured's household who are: Relatives of the named insured, meaning they are related by blood, marriage, or adoption. Under the age of 21 and in the care of any insured. Full-time students living away at college if they: Are under age 24 and related to the named insured, Were a resident of the named insured's household before moving away to college, OR Are under age 21 and in the care of the named insured or a resident relative. Under Section II Liability Coverages, any person or organization legally responsible for covered animals or watercraft owned by an insured, unless custody of such animals or watercraft is in the course of "business" - as defined by the policy. With respect to a "motor vehicle," to which liability coverage applies, persons using a covered vehicle on an insured location with insured's consent and persons while engaged in the employment of the named insured or a resident relative.
Coverage B - Other Structures
The policy covers other structures on the residence premises that are set apart from the dwelling by a clear space. Structures connected to the dwelling by only a fence or utility line are considered set apart, for example, sheds, detached garages, built-in pools. No coverage is provided under Coverage B for 4 types of property: Land, including land on which the other structures are located. Other structures rented or held for rental to anyone who isn't a tenant of the dwelling, unless the other structure is used solely as a private garage. Other structures from which any "business" is conducted. Other structures used to store business property that is owned by someone other than an insured or a tenant of the dwelling. This insurance limit is 10% of the Coverage A limit of liability, does not reduce the Coverage A limit of liability, and may be increased by endorsement.
Coverage C - Personal Property
The policy covers personal property owned or used by an insured while it's anywhere in the world. After a loss, and at the named insured's request, it covers property owned by others while it's on the residence premises occupied by an insured or property owned by a guest or residence employee while located in any residence occupied by an insured. Coverage for property at another residence is limited. If personal property is usually located at an insured's residence other than the residence premises, coverage is limited to 10% of Coverage C or $1,000, whichever is greater. For example, property usually located in a student's dormitory or at the insured's summer home. This limit doesn't apply to property being moved because it's being repaired or rebuilt, located in a newly acquired principle residence during the first 30 days after being moved, or the residence premises is not fit to live in or store property in.
Grave Markers
The policy will pay up to $5,000 for grave markers, on or away from the residence premises, for loss caused by a peril insured under Coverage C. This coverage does not increase the limits of insurance that apply to the damaged, covered property.
Coverage F - Medical Payments to Others
The policy will pay necessary medical expenses that are incurred or medically ascertained within 3 years from the date of an accident causing bodily injury. Legal liability, negligence, and fault do not trigger this coverage. Medical payments to others is a goodwill coverage and designed to discourage the submission of liability claims. Medical expenses are the reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral services. Coverage does not apply to the insured or regular residents of the insured's household (except residence employees). However, coverage does apply to: A person on the insured location with the permission of an insured. A person off the insured location if the bodily injury: Arises out of a condition on the insured location or the immediate surroundings. Is caused by the activities of an insured. Is caused by a residence employee in the course of employment by the insured. Is caused by an animal owned by or in the care of an insured.
Debris Removal
The policy will pay the named insured's reasonable expenses for the removal of debris of covered property if a covered loss occurs. Payment is included in the limit of insurance for covered property that is damaged. If debris removal expenses and expenses for damaged property exceed the applicable limit of insurance, this coverage will provide additional insurance equal to 5% of the limit available for such expense. For example, the insured's shed burns to the ground. The Coverage B limit of liability is $10,000. This coverage will pay a total of $10,000 plus $500 ($10,000 times 5 %) for the replacement value of the shed plus debris removal expenses. A limit of $1,000 applies for reasonable expenses to remove from the residence premises debris of the insured's trees felled by windstorm, hail, or the weight of ice, snow, or sleet.
Insured Location means:
The residence premises. The part of any other premises, structures, or grounds used by the insured as a residence if it is shown in the Declarations or acquired by the named insured during the policy period for use as a residence. Any premises described above used by the named insured, such as a boat slip Any premises not owned by an insured and where the insured is temporarily residing, such as hotel rooms and summer vacation rentals. Vacant land, other than farm land, owned by or rented to an insured. Land owned by or rented by an insured on which a 1, 2, 3, or 4-family dwelling is being built as a residence for an insured. Individual and family cemetery plots or burial vaults of an insured. Any part of a premises occasionally rented to an insured for other than business purposes, such as a banquet hall where a wedding reception is hosted.
Water Back Up and Sump Discharge or Overflow
This endorsement allows the insured to buy back some coverage that is excluded under the Water Damage exclusion. It provides up to $5,000 of coverage for direct physical loss to property insured under Section I (Coverages A, B, and C) caused by water or waterborne material that: Backs up through sewers or drains, or Overflows from a sump, sump pump, or related equipment. Coverage is provided even if the sump overflow is caused by equipment breakdown. A special deductible of $250 applies and replaces any other deductible that may otherwise apply. Coverage doesn't apply if damage is caused by the negligence of an insured.
Personal Property Replacement Cost Endorsement
This endorsement changes the valuation method for most property insured under Coverage C from actual cash value (ACV) to replacement cost. It also applies to awnings, outdoor antennas and equipment, carpeting, and household appliances. If the following classes of property are separately described and specifically insured in this policy and NOT subject to agreed value loss settlement, the endorsement also applies to jewelry, furs and fur garments, cameras and related equipment, musical instruments and related equipment, silverware, goldware, pewterware, and golfer's equipment. Other classes of property separately described and specifically insured are NOT subject to this endorsement. Property NOT eligible for coverage under this endorsement - and that is subject to actual cash value loss settlement includes antiques, fine arts, paintings and similar articles of rarity or antiquity that cannot be replaced, memorabilia, souvenirs, collectors' items, articles whose ages and histories contribute to their value, articles not maintained in good or workable condition, and articles that are outdated or obsolete and are stored or not being used. This endorsement only changes loss valuation - it doesn't change other policy provisions, including perils insured against or exclusions.
Scheduled Personal Property Endorsement
This endorsement is used to increase limits of liability for certain categories of personal property and to broaden the perils insured against that apply to that property. Coverage is provided on an open-perils basis and contains very few exclusions; including wear and tear, insects or vermin, war, and nuclear hazard. Some additional exclusions and restrictions apply for fine arts, postage stamps, coins, and the breakage of art glass windows, glassware, statuary, marble, bric-a-brac, porcelains, and similar fragile articles. This endorsement is also referred to as a Personal Article Floater. Newly acquired property of a class already insured on the endorsement is automatically covered. The insurer must be notified within 30 days (90 days for fine arts) if new property is acquired. Scheduled property is insured worldwide and the Section I deductible does not apply to this endorsement.
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement
This endorsement provides a basic property limit option of $10,000 on an annual aggregate basis during the policy period for: Loss caused by fungi, wet or dry rot, or bacteria. Cost of: Testing the air or property to confirm the existence of fungi, wet or dry rot, or bacteria. Removal of fungi, wet or dry rot, or bacteria. Tearing out and replacing any part of the building or other covered property to gain access to fungi, wet or dry rot, or bacteria. Insurers also can offer higher optional coverage limits of $25,000 and $50,000.
Identity Theft Expense
This endorsement will pay up to $15,000 for expenses resulting from an instance of identity fraud discovered during the policy period. The endorsement does not cover losses arising out of business activity. It carries a $500 deductible and the insured must notify the insurer within 60 days of the loss.
HO-2 (Broad Form)
This form provides named perils coverage for the dwelling (Coverage A), other structures (Coverage B), and personal property (Coverage C). The 16 named perils are: Fire or lightning Windstorm or hail Explosion Riot or civil commotion Aircraft Vehicles Smoke Volcanic eruption Vandalism or malicious mischief Theft (limited) Falling objects Weight of ice, snow, or sleet Accidental discharge or overflow of water or steam Sudden and accidental tearing apart, cracking, burning, or bulging of heating or air conditioning systems (HVAC) Freezing Sudden and accidental damage from artificially generated electrical current Losses under Coverages A and B are valued on a replacement cost basis. Although coverage for personal property (Coverage C) is provided on the same named perils basis as the dwelling and other structures are, losses are valued on an actual cash value (ACV) basis. This form does not cover loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured.
Coverage D - Loss of Use
Three types of coverage are provided under Coverage D and all are for indirect, or consequential, loss. The limit of insurance appearing on the declarations for Coverage D is the total limit payable for all three types of coverage provided. For example, a wildfire burns near the insured's home. If direct damage from the wildfire occurs to the residence premises, Additional Living Expense and Fair Rental Value coverages are triggered. If direct damage from wildfire occurs to the named insured's neighbors, and a civil authority evacuates the named insured, Civil Authority Prohibits Use coverage is triggered. Additional Living Expense If a property loss covered by Section I of the policy makes the residence premises unfit to live in, the policy pays for any necessary increase in living expenses incurred by the named insured to maintain the household's normal standard of living. Payment is made for the shortest time necessary to repair or replace the damage. If the insured must relocate permanently, payment will be made for the shortest time it takes the insured to settle at the new location. Fair Rental Value If a property loss covered by Section I of the policy makes that part of the residence premises rented to others unfit to live in, the policy pays for the fair rental value of such premises - less any continuing expenses - while it's unfit to live in. Payment is for the shortest time required to repair or replace the rented portion of the premises. Civil Authority Prohibits Use If a civil authority prohibits the named insured from using the residence premises as a result of direct damage to neighboring premises by a peril insured against under the homeowners policy, the policy pays losses under Additional Living Expense and/or Fair Rental Value for no more than two weeks. Loss and expenses due to the cancellation of a lease or agreement are NOT covered. Limits of Coverage - The automatic limits of insurance for Coverage D vary by the homeowners form of coverage: 30% of Coverage A for forms HO-2, HO-3, and HO-5 30% of Coverage C for form HO-4 50% of Coverage C for form HO-6 10% of Coverage A for form HO-8
Landlord's Furnishings
Up to $2,500 coverage is provided for appliances, carpeting, and household furnishings owned by the named insured and located in each apartment on the residence premises that is rented to others. Coverage is provided for the 15 named perils (the Coverage C perils, with the exception of theft). This coverage does not increase the limit of insurance applying to the damaged property.
Reasonable Repairs
When the insured's property has been damaged by a covered peril, this coverage pays the reasonable costs incurred by the named insured to take necessary measures to protect covered property damaged by a covered peril against further damage. For example, a tree falls on the dwelling's roof. The insured's expenses to place a tarp over the hole in the roof would be covered. This coverage does not increase the limit of insurance that applies to the covered property.
Permitted Incidental Occupancies Endorsement
With respect to Section I, Coverage B (Other Structures), this endorsement covers a structure of the residence premises, specifically described, for direct physical loss by an insured peril for a specified limit of insurance when used to conduct a business. The endorsement also allows the Coverage C (Personal Property) special limit of $2,500 to apply to the described business.
Modified Form (HO-8)
he Modified Coverage Form is used to insure older homes when the replacement and market values of the dwelling are disproportionate or if a moral hazard would be created if insurance were written at 100% of replacement cost. An example of dwelling that would be insured under this coverage form is an old 3-story Victorian home in which the insured lives on the first two floors. If the dwelling were destroyed in a loss, the insured would not want to restore or replace it exactly as it was before the loss. Instead of insuring the dwelling for its replacement value of $1,200,000, the insured would insure it for a much lower amount of insurance. The limit of insurance chosen should represent the functional replacement value of the dwelling, which is the cost to replace damaged property with property that will perform the same function and efficiency even if it isn't of like kind and quality. The HO-8 does not cover the following perils: Falling objects Weight of ice, sleet, or snow Accidental discharge of water or steam Accidental tearing apart, cracking, burning, or bulging of heating or air conditioning systems Freezing Sudden and accidental damage from artificially generated electrical current
