Homeowner Insurance (New)

Coverage E&F: Liability and Payments - Section 2: Additional Coverages

Claims Expense First Aid Damage to Others' Property Loss Assessment Claims expense Cost of defense, interest on judgments and reimbursement of expenses related to defense such as loss of earnings of $250 per day. First Aid First Aid expenses paid for others at the time of the accident Damage to the property of others $1,000 maximum, if caused by the insured without regard to legal liability and not covered under Section I. Imagine that you borrowed your neighbor's lawn mower and accidentally drove it into the lake. You could ask your company to reimburse your neighbor for the value of their mower. Loss Assessment $1,000 maximum for assessments against the insured by their homeowner association from an occurrence at the residence premises. The claim has to be one that would be a covered claim under Section II or resulting from actions of unpaid officers of the association.

Section 1: Additional Coverages - Collaps

Collapse by Peril - Not apply to HO-8 ----- Collapse coverage pays for loss to property involving the collapse of a building caused by a covered peril. However, this coverage does not apply to the HO-8. For insurance purposes collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building, or part of the building, cannot be occupied for its intended purpose. The policy does not provide for additional money for collapse.

Section 1: Additional Coverages - Credit Cards, Forgery, etc.

Have you been affected or know someone who has been affected by credit card or debit card fraud? This is widespread problem and can be very costly. The homeowner policy provides $500 for the insured's legal obligation to pay as a result of theft or unauthorized use of credit or debit cards, forgery of the insured's checks or counterfeit U.S. or Canadian money taken in good faith.

Home Policy Overview - Owner Occupied

Let's begin by considering the typical homeowner policy such as the HO-3 that might cover an owner-occupied single-family home. The homeowner policy is a package policy meaning that each of the coverage parts are automatically included. Owner-occupied policy forms (HO-2, HO-3, HO-5, HO-8) establish Coverage A - Dwelling as the primary coverage. • The amount selected to cover the dwelling determines the amount of the other coverages in the section. • Each coverage is represented as a percentage of Coverage A. Here's an example of how the policy limits would be determined based on the Coverage A - Dwelling. A - Dwelling Primary $100,000 B - Other Structures 10% of A $10,000 C - Personal Property 50% of A $50,000 D - Loss of Use 30% of A $30,000

Coverage D: Loss of Use - What's covered?

Los of use - 2 coverage types: 1) additional living expense 2) fair rental value ------ Loss of Use includes two coverage parts that apply when a covered loss makes the residence uninhabitable: 1) additional living expense, and 2) fair rental value. Additional Living Expense is to pay for increased expenses to maintain your normal standard of living such as a hotel room or meals away from home. For example, A homeowner may need to move his family into a hotel for two weeks while his home is repaired after a kitchen fire. Coverage D will pay for the hotel, increased expenses due to eating meals away from home, dry cleaning and increased transportation expenses. Fair Rental Value reimburses the owner for any lost rent from a portion of the dwelling that was rented. Here is an example: If the homeowner had a renter who was also displaced due to the loss, the homeowner will be reimbursed the rent they lost during that time period. However, keep in mind that the tenant's expenses in living elsewhere are NOT covered by the owner's homeowner policy. If the tenant had their own HO-4, they could look for coverage in their own policy's Coverage D. If the local authorities require you to move out because of the danger of a gas leak from your neighbor's home that was damaged when a tree fell on their home in a hurricane (windstorm). Would you have loss of use coverage? Loss of Use also applies when a civil authority forces a policyholder to move out due to direct damage to a neighboring premises by a peril insured against in the policy. Only two weeks of expenses are covered in this case.

Section 1: Additional Coverages - Building Additions and Alterations

Only in the HO-4 Coverage Limit 10% of Coverage C. ----- The Building Additions and Alterations coverage is only available in the HO-4. Since there is no Coverage A for the renter, this additional coverage pays for fixtures and improvements made at the insured's expense. Coverage is limited to 10% of Coverage C. Example: The insured added a built in bookcase in the home he was renting with permission from the landlord. Building Additions and Alterations coverage from his HO-4 will respond to reimburse him for the bookshelf in the event of a loss.

Home Policy Overview - Homeowner Forms

Owner-Occupied Home HO-2 HO-3 HO-5 HO-8 Tenant / Renter HO-4 Condominium HO-6 ----- There are six coverage forms: HO-2, HO-3, HO-4, HO-5, HO-6, and HO-8. Each of those forms provides identical liability coverage in Section II, but the property coverage in Section I varies depending on the form used. The policy forms differ by the coverages included and the perils they insure against. The different policy forms provide basic, broad, or special (also known as open perils) coverage. As the terms imply, broad perils are a longer list than basic and special forms afford the greatest protection. • HO-3 is the most commonly used by insurance companies across the country to insure owner occupied homes. It provides broad coverage for personal property and open peril coverage for loss to the dwelling and other structures. • HO-2 is used when the risk is ineligible for HO-3. It provides broad coverage for the dwelling, other structures, and personal property. • HO-5 is considered the "Cadillac" of homeowners. It provides special/open perils coverage on the dwelling, other structures, and personal property. • HO-8 offers 'bare bones' basic coverage on dwelling, other structures, and personal property. It is no longer available in most areas. • HO-4 insures renters/tenants, people who do not own the building where they reside. It provides broad coverage for personal property and no coverage for the dwelling. • HO-6 provides broad coverage on personal property of condo owners and very limited dwelling coverage. Condo buildings themselves are owned and insured by the Condominium Association. Associations purchase a Condo Master Policy to cover the buildings and common areas. Unit owners are responsible for insuring their own units. Please note that at one time companies sold an HO-1 policy which is very similar to the HO-8 in that it provides very basic protection. Most companies no longer offer this policy form and it is not included in the state exam for most states.

Home Policy Overview - Perils-HO Program

Perils Insured Against The homeowner program includes basic, broad or special (open perils) coverage. These peril groups help insurance professionals quickly identify the level of protection for the coverage part in the policy form. The table below illustrates the perils. Take a few moments to review them and think about why policyholders need to be insured against those perils. IMAGE: Perils: Basic: Windstorm, Civil Commotion, Smoke, Hail, Aircraft, Vehicles, Volcano, Explosion, Riot, Fires and Lightning, Theft, Vandalism and Malicious Mischief. Plus Broad: Falling objects, Weight of ice snow or sleet, Discharge or overflow of water or stream from systems or appliances, Rupture of systems, Freezing of systems, Artifically generated electrical current. Special: Open perils - covered unless specifically excluded Remembering the Basic Perils One way to memorize these lists is to come up with a mnemonic that you'll remember. If you want to remember the list of Basic Perils you can use the acronym - W.C. SHAVVER, FTV. This is W.C. Shavver, an anchorman for Fire TV also known as FTV news: a 24-hour news channel focusing on disasters! Remembering the Broad Perils To remember the Broad Perils, try coming up with your own mnemonic, or use one of these below: FFRAWD - Falling, Freezing, Rupture of Systems, Artificial Electrical, Weight of Snow/Ice, Discharge of Water/Steam DFW FAR - Discharge of Water/Steam, Falling, Weight of Snow/Ice, Freezing, Artificial Electrical, Rupture of Systems Study Tip! You can connect the Basic Perils to the Broad Perils by remembering something like this: W.C. SCHAVVER of FTV goes as FAR as DFW to get a story! or W.C. SHAVVER of FTV reports on insurance FFRAWD.

Coverage C: Personal Property - Where does coverage apply?

Personal property is truly covered anywhere in the world and is intended for the personal property that is customarily at the insured's residence. However, the policy is so generous that it will also allow for a small amount of coverage to extend to other personal property the insured owns that is kept in another residence or in a self-storage facility. In those cases, the insured really should insure that personal property separately, but the HO policy will allow the insured to use 10% of C or $1,000 whichever is greater. If the insured is moving to a new principle residence, his personal property is fully covered for a maximum of 30 days from the start of the move.

Coverage E&F: Liability and Payments - Exclusion - Watercraft

The Homeowner policy was designed to only cover those boats that would typically be stored in the homeowner's garage. However, the Homeowner policy considers that sometimes homeowners will borrow or rent boats and in those instances are not likely to purchase separate boat owners policies. Therefore, you will see that liability coverage is offered in the homeowner policy for some of those borrowed or rented boat scenarios depending on the type of boat. Most boat owners should purchase a boat policy to fully protect them for both the physical damage and liability exposures. Review the watercraft physical damage and liability information below.

Coverage A: Dwelling - How is it covered?

The dwelling is covered for the insured amount and the perils according to the policy form purchased. So, if I purchased an HO-3 policy, what coverage would I get? Open Perils or Special

Section 1: Additional Coverages - Landlord's Furnishings

Up to $2500 for furnishings for regularly rented aptartments. Included only in HO-2, HO-3, and HO-5 ----- The insurance company will pay up to $2.500 for the insured's household furnishings in an apartment on the premises regularly rented to others by the insured. The landlord's furnishings coverage is only included in HO-2, HO-3, and HO-5.

Coverage A: Dwelling - Where does coverage apply

Where does Coverage A apply? Coverage A only applies to the residence premises. The land where the dwelling is not covered.

Section 1: Additional Coverages - Grave Markers

up to $5000 Includes mausoleums ----- Grave Markers additional coverage: • Pays up to $5,000 for grave markers, including mausoleums, on or away from the "residence premises" for loss caused by a covered peril under Coverage C. • This coverage does not increase the limits of liability that apply to the damaged covered property.

Home Policy Overview - Eligibility Requirements

3 Main Categories - Persons - Buildings - Uses Determining Homeowner Eligibility Just like auto, the homeowners policy has eligibility criteria that must be met. The criteria can be organized by the three main categories of persons, buildings, and uses. Persons The homeowner program was designed to meet the needs of people who were living in the dwelling as opposed to owners who purchase property to rent to others. Home ownership comes in various forms such as owners of homes, condos, co-op apartments and purchasers by contract or life estate. • Co-ops are typically owned apartments. You often see these co-op buildings in large cities. • A purchaser by contract is similar to a rent to own scenario. • Purchase by life estate arrangement is when the owner by contract owns the property for their lifetime only. Sometimes life estate arrangements are used to transfer ownership and avoid probate. • A trust is ineligible unless a Trust Endorsement is added. • Renters also need protection for their personal property and personal liability and are eligible for the renter's form of the homeowner policy. Buildings Eligible buildings include single-family dwellings, duplexes, multi-family dwellings (up to 4 families), apartments, and condominiums. • Duplexes are the most common multi-family dwelling. Although 3-4 family dwellings are eligible, most companies prefer to write those risks in the Dwelling program instead of the HO program. • A renter's policy may be written for any type of building since we are insuring the possessions, not the building. If the owner of the duplex lives in one side and rents out the other side, he may qualify for a homeowner policy, but the tenant would need a renter's policy. Uses The homeowner program requires that the property be used for private residential purposes and not business use or farming. The insured may not have more than 2 roomers or boarders. Some incidental business use is permissible such as someone who telecommutes or has a home office for occasional use. Owners using a home in connection with a business or commercial operation would need to purchase a commercial property insurance policy.

Coverage E&F: Liability and Payments - Liability Coverage

A homeowner can be held liable for damages that stem from someone getting hurt on their property or from actions away from the property. Liability coverage provides liability protection for losses stemming from the personal actions of the insureds. The policy provides defense even if the suit is groundless, false or fraudulent. Keep in mind that the decision to investigate or settle lies with the company and duty to defend ends when the limit of liability has been exhausted. Liability coverage provides coverage for a claim or suit is brought against an insured under the policy for damages because of bodily injury or property damage. Coverage applies only for personal non-business liability and some exclusions apply. Liability coverage applies anywhere including: residence premises, newly acquired residences, where the insured is temporarily residing or renting for non-business use, vacant land owned or rented by the insured, insured's land where building a residence and cemetery plots or burial vaults.

Section 1: Additional Coverages - Section 1 Exclusions

All insurance policies include exclusions. Below are the exclusions listed in Section I of the homeowner policy: Ordinance or Law Amount exceeding the coverage provided in the additional coverages section. Earth Movement This includes earthquake, landslide, mudslide, mine subsidence, sinkhole or any earth sinking, rising or shifting. Insureds who are subject to these perils may purchase coverage separately to cover some of these perils such as earthquake. Water Flood and water backup from a sewer or sump pump are not covered by the policy. Flood is generally referred to as rising water or overflow of any body of water whether or not driven by wind or storm surge. Flood insurance may be purchased separately. Water back-up may be added as an endorsement. Power Failure Losses caused by power failure off the residence premises are NOT covered. (Ex: a transformer blows out in the area and neighborhood loses power - not covered) Neglect Coverage is NOT provided for an insured who does not use all reasonable means to save and preserve property at an after the time of a loss. War War includes undeclared war, civil war, insurrection, rebellion or revolution, warlike act by a military force and nuclear weapon. Nuclear Hazard No losses arising out of a nuclear hazard are covered. Intentional Loss There is no coverage for any loss that the insured commits or conspires to commit. No insured is entitled to coverage even the spouse who did not commit or conspire to the act causing the loss. Example: Fred and Ethel are heading toward a nasty divorce. Fred burns down the house out of spite. Because it was an intentional loss, the policy does not respond even for poor Ethel. Governmental Action If the government seizes, confiscates or destroys the property, there is no coverage. Sometimes homes are confiscated as part of criminal restitution. The homeowner policy will not respond to compensate the property owner.

Section 1: Additional Coverages - How does co-insurance work?

As we just discussed, the co-insurance clause in the homeowner policy states that the claim will only be paid if the customer insures to at least 80% of the value of the property. What do you think would happen if the customer is unwilling to insure to at least 80%? The clause says that if the customer insures to at least 80% of the replacement cost, we will go ahead and provide a full claims payment on a partial loss. If they refuse and insist on insuring below the 80% of replacement cost, then the customer is basically agreeing to share in the loss. Without a coinsurance clause in place, partial losses would be paid the same for those that insured properly and those that underinsured to save money on premiums. The company would not be getting the premium they are entitled to for the risk they are on. This meant that a clause needed to be added to stipulate how the company would respond on those claims when the customer was actually co-insuring the home by nature of purchasing less than replacement cost. There's a formula to calculate the loss settlement amount when co-insurance is involved. It is shown in the image above. In the co-insurance formula: • 'Did' refers to the amount of insurance the customer actually purchased • 'Should' is the full replacement cost of the home (in other words, what the customer should have insured it for) • 1) Amount of insurance purchased goes on top, 2) multiply replacement cost times .80 3) Divide top number by bottom number, 4) this is the percentage amount the company will pay for the claim

Coverage A: Dwelling - What are the coverage benefits?

Coverage A provides for: • Dwelling building • Structures attached to the dwelling (attached garage) • Construction materials adjacent to the premises • Condo - HO-6, Coverage A includes limited dwelling such building additions and alterations and other real property for which the insured has insurance responsibility ('from the studs in') • No Coverage A exists in the HO-4 Examples: • An insured's three-story home • Lumber delivered and placed next to the house for use in remodeling • Garage attached to the house only by an enclosed walkway • Screen enclosure over the backyard swimming pool attached to the back of the house • Screen back porch on the insured's home

Coverage B: Other Structures - What is covered?

Coverage B covers other structures on the residence premises that are separated from the dwelling by a clear space, or connected only by a fence or utility line. For example, in this image you can see a small greenhouse that is on the property, but clearly detached from the home. Coverage B does not offer coverage if: • The dwelling or other structure is used for business purposes (except those considered incidental occupancies: i.e. offices, professional or private schools, or studios.) • The other structure is rented to someone other than tenants of the dwelling, unless it is rented as a private garage.

Coverage C: Personal Property - What is NOT covered?

Coverage C has some limitations. The following property/situations are excluded from coverage: • Articles separately insured • Animals, birds, or fish • Motorized vehicles, aircraft or hovercraft (motorized vehicles used to assist the handicapped or to service the residence are covered if not required to be registered for road use) • Property in an apartment held for rental and property rented to others off the residence premises • Property of boarders (like your best friend's daughter who is living with you for a semester) • Business data (paper or electronic records) • Credit cards • Water or steam

Coverage C: Personal Property - What is covered?

Coverage C provides coverage for personal property owned or used by the insured. • The insured may also request coverage for property owned by others or property of a guest or residence employee while at the residence. • This does not include property of boarders. (They need their own HO-4)

Home Policy Overview - Peril Limitations

Covered Perils can have Limitations The homeowner policy has some covered perils that have limitations. This means that although the general peril is covered there are some situations where coverage would not apply. For example, the dwelling is insured for damage caused by freezing of a plumbing system provided the homeowner has used reasonable care to maintain heat in the building or shut off the water supply and drained all systems of water. Take a look at the table below and consider why each of these limitations is in place. Typically, it is because without the limitation, the hazard is greatly increased and the policy is not priced to handle that increased risk. Coverage C Perils Peril Limitation Windstorm Watercraft is covered only while in a fully enclosed building Smoke Not from agricultural smudging or industrial operations Theft • No coverage for theft from a part of the residence rented to others • Off premises - Trailers, campers • Off premises - watercraft Falling Objects No coverage if the object did not first damage the roof or outside wall Accidental Discharge or Overflow of Water or Steam No coverage for the system or appliance itself Freezing No coverage for freezing of a plumbing, heating, AC, indoor sprinkler system or appliance if the insured has not used reasonable care to maintain heat in the building or shut off the water supply and drain systems Covered or Not Covered? Check each of the scenarios that are covered. Marilyn's washing machine malfunctioned and overflowed while she was away damaging her furniture. Marilyn's washing machine had to be replaced at a cost of $675 after it malfunctioned. Joe's canoe was stolen from his garage during a robbery. A piece from nearby construction equipment came crashing through the roof and damaged the homeowner's glass dining room table. Elaine's kayak blew out of the backyard during a windstorm. Fred's pipes burst when a hard freeze hit and caused water damage to his furniture. He did not have the heat on as he was out of town and didn't think it would get that cold. The family's camping trailer was stolen from their campsite in the state park. The neighbor's child while visiting found a trophy in the closet and dropped it from the balcony onto a glass top table below.

Section 1: Additional Coverages - Debris Removal

Debris Removal 5% of Coverage A ----- Let's begin with debris removal. Imagine a fire destroys a home. Debris from the fire would need to be removed before reconstruction could begin. This is how debris removal coverage applies: • The policy pays to remove debris from the premises after a covered loss. The expense is included in the applicable coverage limit. For example, if the cost for damages to the building and the debris removal is greater than the Coverage A limit, an additional debris removal limit applies. • Up to 5% of the applicable coverage is available to pay for additional debris removal. • If a significant part of the debris was personal property, the insured would also have 5% of Coverage C to help with costs. This applies to all HO forms including the HO-4 and HO-6. Here is a question to check your understanding: A customer experiences a fire damaging a large portion of the home. The HO Coverage A is $100,000. The damages to the home total $90,000 and the cost of debris removal is $20,000. How much of the debris removal cost will be covered? Answer: $15,000 - The first $10,000 is paid from Coverage A and $5,000 is from the Debris Removal Additional Coverage of 5% of Coverage A.

Section 1: Additional Coverages - Loss Assessment

HOA / Condo Assoc. has loss they charge each home owner Loss assessment coverage pays up to $1000 ----- The homeowner policy provides loss assessment coverage. If an HOA or condo association has a loss they are permitted to assess each owner for the amount they are lacking. Loss assessment coverage pays up to $1,000 for the insured's share of a loss assessment charged against the insured, as a result of direct loss of the shared property and caused by a covered peril. Example: The coverage may pay a condo owner's loss assessment for a community clubhouse that was struck by lightning.

Section 1: Additional Coverages - Debris Removal - Trees

If a tree falls as a result of a windstorm, hail, or the weight of ice, snow, or sleet, the homeowner policy provides $1,000 additional coverage for removal of your trees that damage a covered structure or blocks access to a driveway or ramp designed for the handicapped. This is how coverage applies for debris removal of trees: • Debris removal of your neighbor's tree that causes damage on your property is also available provided the cause was a peril insured against under Coverage C. • No more than $500 applies for removal of any one tree ($1,000 total). ($1,000 @ $500 per tree) Let's consider a scenario and discuss how this coverage would apply. A windstorm brings down two trees in your yard. The cost to remove the one that landed on the house is $800 and the cost for removal of the one that fell in the yard is $200. How much will the homeowner policy pay? The homeowner policy will pay $500 since that is the maximum amount per tree and it only applies to the one that landed on the house. The removal of the tree that fell in the yard is not covered.

Coverage E&F: Liability and Payments - HO-4 and HO-6 Review

Let's quickly review some key points about the HO-4 and HO-6 policy. HO-4 • The HO-4 is intended for the renter in any dwelling type used for residential purposes. • No Coverage A or B. • Coverage C is considered the primary coverage. • Coverage D is 30% of C. • Since there is no Coverage A, the policy does include an additional coverage of Additions and Alterations discussed earlier. • Section II is the same in all policy forms. HO-6 • Used for condo owners and includes only limited Coverage A and no Coverage B. • Coverage C is the primary coverage with Coverage D stated as 50% of Coverage C. • Section II is identical in all policy forms. • As an agent, you need to work closely with the insured to determine the proper amount of Coverage A as typically policyholders need to cover the cost to replace their unit from the studs in.

Home Policy Overview - Definitions

Like the auto policy, the homeowner policy clearly defines WHO and WHAT is insured. The three definitions you should understand in the context of a homeowners policy are: named insured, insured, and insured location. Let's illustrate them with an example. Joe is a single dad living in sunny Florida. He lives with his twin boys and a daughter. Joe also has a teenage daughter who is a freshman at Florida State and lives on campus. • Named Insured - Joe • Insureds - Joe's children including his daughter away at school • Insured Location - Joe's home in Florida that he owns and uses as his residence Named Insured • The person named in the Declarations and their spouse (if married), provided they reside in the same household. • In the case of a claim, the check is made payable to the Named Insured. • The Named Insured should match the ownership of the property. Insured • The policy also includes the following residents of the household as insured: • Relatives • Persons under 21 and in your care • Students away at school who are under 24 and considered full-time students. Insured Location • Includes the residence premises, cemetery plots or burial vaults, vacant land (NOT farm land) owned by the insured, land where the insured is building a residence.

Coverage E&F: Liability and Payments - Medical Payments to Others

Medical Payments To Others was probably included in the policy to prevent more serious suits and losses. Imagine if a small child is bitten by your dog and you immediately take the child to the Urgent Care Center for treatment and take care of the bill. You can then file the claim with your homeowner insurance company and be reimbursed for the bill you paid. The parents of this child are far less likely to sue you than had you not immediately responded and made sure the child got the care they needed. Coverage F: Medical Payments to Others: • Pays for medical expenses to others who are injured through personal activities without regard to the insured's legal liability. Funeral services can also be included. • Claims must be filed within 3 years of the accident. Here's an example: A guest trips while entering the home and breaks her arm. The guest goes to the hospital and the claim is initially paid by her health insurance carrier. Two months later, the health insurance carrier requests reimbursement from the homeowner carrier. The claim will be paid by Coverage F-Medical Payments to Others subject to the coverage limit. Fault does not need to be established.

Coverage A: Dwelling - Who is Covered

Named Insured and Insureds Lender Interest As you saw in the Definitions section, the homeowner policy provides dwelling coverage for named insureds, insureds, and lender interests.

Coverage E&F: Liability and Payments - Policy Cancellation

Non-Payments of Premium Agent Representation What reasons do you think would be listed in the policy for cancellation? The company may cancel for non-payment of premium with 10 days written notice. Agent representation - If an agent knowingly overlooks a condition that would normally be grounds for denying coverage, as a representative of the company they have waived the right of the company to deny coverage. The insurance company is then estopped from being able to later cancel or deny coverage on those grounds. Waiver is an intentional relinquishment of a known right. Estoppel is a legal doctrine preventing a party from contradicting its own previous actions that were relied on by another party.

Section 1: Additional Coverages - Ordinance or Law

Ordinance or Law coverage: • Pays up to 10% of Coverage A for the increased cost to repair or rebuild after a covered loss due to building codes. • This is provided as additional insurance. • Pays increased costs to rebuild caused by compliance with building ordinances or laws. • Endorsement is available to increase the amount of this coverage.

Coverage E&F: Liability and Payments - Individual Assignment

Parents of Madison County boy who drowned sue owners of backyard pool Columbus, Ohio - The parents of an 8-year-old boy who drowned three months ago in a Brown Township backyard pool have filed a wrongful-death lawsuit against the pool's owners. Johnathon Miller, a second-grader at Plain City Elementary School, and his siblings were invited to swim in the pool while attending a baptism celebration with their parents at the home of Lawrence and Carolyn Battles on June 19, according to the complaint. "The defendants' pool was extremely hazy or cloudy due to a chemical" that the Battles had added to the water, the lawsuit says. "As a result, most of the pool, including the bottom area, was not visible to persons looking into the pool." Robert and Charissa Miller of Canaan Township in Madison County filed the lawsuit on Monday in Franklin County Common Pleas Court. The Millers say the Battles were negligent in failing to safely maintain the pool, in telling them that the pool was safe and in not properly supervising Johnathon. According to the lawsuit, the Millers left their son in Mrs. Battles' care for a few minutes and could not find him when they returned. "After a frantic search," he was discovered at the bottom of the pool at the Battles' Morris Road home. The boy died several hours later at Nationwide Children's Hospital. The lawsuit, filed by Columbus lawyer John Fitch, seeks compensatory damages of more than $25,000. (Source: The Columbus Dispatch) Question: How would homeowner liability coverage apply in this situation? Answer:

Coverage A: Dwelling: Why Dwelling Coverage?

Picture of a house.... Think back to our opening activity where you brainstormed various situations a customer may face. What were some of the things that you identified that really illustrated the importance and value of dwelling coverage? Jot down your thoughts below:

Section 1: Additional Coverages - Section 1 Conditions

Property ACV Co-Insurance 80% ----- There are two conditions listed in Section I of the homeowner policy. They are: Property Actual Cash Value (ACV) and Co-Insurance. As you will recall, claims for Coverages A & B are settles on a replacement cost basis. However, the policy includes a condition pertaining to certain property. Property that is settled at ACV but no more than the cost to repair or replace include: personal property, awnings, carpeting, household appliances, antennas and outdoor equipment, structures that are not buildings and grave markers. What about a claim involving a pair or a set? Imagine that you have a pair of oriental vases valued at $3,000 for the pair. One of them is damaged in a fire. The remaining vase is valued at $1,000. How will the claim be settled? Check the Homeowners - HO-3 Policy - Page 15 and see. The Co-Insurance condition requires that the insured insure to at least 80% of the replacement cost of the dwelling or share in the cost of partial losses.

Section 1: Additional Coverages - Reasonable Repairs

Reasonable repairs refers to reasonable costs paid by the insured to protect the property from further loss after damage by a covered peril. What do you think those reasonable repairs might be? Here is an example: Jim's roof sustains damage in a windstorm. The homeowner policy pays a contractor to apply tarps to his damaged roof. There is 'No set amount' for reasonable repairs coverage.

Home Policy Overview - Tenant & Condo

Since the primary focus of protection on the HO-4 and HO-6 is on personal property and not the dwelling, the primary coverage for these two forms is Coverage C-Personal Property. Let's consider an HO-4 Renter's Policy first. The renter does not own the dwelling so there is no need for coverage for the dwelling or other structures. The customer chooses how much coverage they need for their personal property and then automatically receives 30% of that amount for Coverage D-Loss of Use. The HO-6 Condo Owner policy also establishes Coverage C Personal Property as the primary coverage and provides 50% of Coverage C for Loss of Use. Condo owners may also need some Coverage A as they often are responsible for insuring the interior finishes in their condo unit. Condo owners may select the Coverage A amount. HO-4 - C-Personal Property Primary $20,000 HO-4 - D-Loss of Use 30% of C $6,000 HO-6 - C-Personal Property Primary $50,000 HO-6 - D-Loss of Use 50% of C $25,000

Section 1: Additional Coverages - Fire Department Service Charge

The homeowner policy provides $500 for a charge by the fire department to respond to save a home from a peril you are insured against. However, coverage does not apply if the home is inside the district furnishing the response. Let's discuss an example: Ben is sent a bill from the Glenridge Fire Department for their services in saving his home from a total fire loss. Ben lives in the Bently Fire District, but all of their trucks were deployed at the time of the alarm so Glenridge responded. Will the policy pay the bill from Glenridge? The policy will pay up to $500 for the bill from Glenridge because it is a fire department operating outside the city/district of the home.

Section 1: Additional Coverages - Property Removal

The homeowner policy provides 30 days of coverage for property removed from the premises because it was endangered by a covered peril. For example: Sherry moves as much of her personal property from the home as she can when a brush fire is headed for her house. Two weeks later before she has had a chance to move her belongings back into her home, all of her electronics are stolen from the storage facility. Will Sherry have coverage for her stolen property? Yes, she would.

Section 1: Additional Coverages - Glass or Safety Glazing Material

The homeowner policy provides glass or safety glazing material coverage. This coverage: • Provides breakage of glass or safety glazing material which is part of a building, storm door, or storm window is covered. • Does not include loss on the residence premises if the dwelling has been vacant for more than 60 consecutive days immediately before the loss. A dwelling being constructed is not considered vacant. Loss for damage to glass will be settled on the basis of replacement with safety glazing materials when required by ordinance or law.

Home Policy Overview - Policy Sections & Coverages

The homeowners policy is divided into two sections. Section one provides property insurance and Section two provides liability coverage. Consider a typical single-family home as an example and a family who owns and lives in the home. Section I includes: • Coverage A-Dwelling to cover the house • Coverage B-Other Structures for structures like a detached garage • Coverage C-Personal Property to cover all of the contents (furniture, clothing, appliances, etc.) and • Coverage D-Loss of Use to cover those expenses the insured may have when living away from home while their home is being repaired. Section II includes: • Coverage E - Personal liability • Coverage F - Medical payments to others Since the homeowners policy is a package policy, all coverages applicable to the homeowners form are included. For example, if an insured does not have any Other Structures on the premises, they cannot reduce their premium by deleting Coverage B. The policy is priced as a package of coverages.

Coverage C: Personal Property - What is covered? How is it covered?

The insured is covered under Coverage C. They may also request coverage for property owned by others while on the residence premises or to the property owned by others while in the part of the residence premises occupied by the insured or to the property of a guest or residence employee while in any residence occupied by the insured. The Coverage C limit is an automatic 50% of Coverage A for most HO forms. For HO-4 and HO-6, Coverage C amount is selected. The perils insured against is typically Broad form with the exceptions of HO-5 and HO-8.

Coverage D: Loss of Use - What's not covered?

This is Fred. His house sustained damage during a storm. His tenant, Paul, moved out a month ago while the house underwent repairs. The contractor has estimated that the repairs will take an additional 4 weeks and Paul has had it. He decides to cancel his lease. Do you think Fred would be able to claim the lost rent for the remainder of the lease? Loss/expenses due to cancellation of a lease or agreement: • Fred's policy will pay him for 1 month of lost rent only. • Fred cannot claim the lost rent for the remainder of the lease.

Section 1: Additional Coverages - Trees, Shrubs, and Plants

Tree removal up to $1000 Tree replacement up to $500 per tree shrup or pland but not to exceed 5% of Coverage A ----- The value of trees is provided separately from the debris removal of trees. Perils insured against are Fire, Lightning, Explosion, Aircraft, Riot, Vehicles, Vandalism and Theft. Notice the value of trees is not provided for windstorm. The policy provides 5% of Coverage A limited to a $500 maximum for any one tree, plant or shrub. The tree, shrub, plant or lawn must have been damaged by lightning, fire, explosion, riot or civil commotion, aircraft, vehicles not owned or operated by a resident of the premises, vandalism, malicious mischief or theft. Note that in the HO-4 or HO-6, coverage is 10% of Coverage C.

Coverage D: Loss of Use - Who, How, and Where of Coverage D

Who - Named Insured How - As long as it takes (Section 1) Where - Residence listed on Dec page ----- WHO - Named Insured • The named insured and household members are covered in Coverage D in order to help them maintain their normal standard of living. HOW - As long as it takes • Coverage is for the time it takes to repair or replace the premises. WHERE - Residence listed on Dec page • Damage must have been to the residence premises listed in the policy declarations.

Coverage E&F: Liability and Payments - Exclusion - Activities

Why do you think it makes sense for the homeowner policy to exclude business activities? The policy is intended to protect against liability arising from personal activities. Most business people would seek coverage from insurance purchase by their business. There are a few exceptions that are related to business that the homeowner policy does not exclude. So, it it's not excluded, it means it is covered. Liability that is not excluded: • Occasional rental of the dwelling to others as a residence • Partial rental of the dwelling, like renting a bedroom to a boarder • Part of the home used for an office, school or studio - incidental business • Garage rented to someone for storage of a vehicle • Business in home if insured receives less than $2,000 per year • Childcare for no compensation or even for pay if only for a relative • Child under 21 that has their own business with no employees like mowing lawns or babysitting.

Coverage B: Other Structures - Why Other Structures Coverage?

Why is Coverage B important? Many people have different kinds of structures on their property besides their residence. For example: pools, gazebos, detached garages, sheds, fences, greenhouses, etc. Even if a home does not have a pool or gazebo today, if the homeowner decides to add one later, since Coverage B is already baked in to the policy, they will have this important coverage automatically.

Coverage E&F: Liability and Payments - Exclusion - Motorized Vehicles

Why would auto liability be excluded from the homeowner policy? This is what the Personal Auto Policy is for. However, there are a few vehicles for which the homeowner policy provides liability protection either because it is insignificant or the vehicle is used in connection with the home. Liability arising from the vehicle is covered, not the item itself. The following liability of vehicles is covered by the homeowners insurance: • Vehicle in dead storage at the insured location • Golf carts owned by the insured and used on an insured location or at a golf course or in a community designed for golf carts to be used on the roads • Off-road recreational vehicles (ATVs) covered on an insured location if owned and anywhere if not owned • Vehicles designed to assist the handicapped anywhere in the world if used by a handicapped person at the time of the occurrence

Coverage E&F: Liability and Payments - Other Insurance

You may recall that the Other Insurance condition sets out how other insurance the insured may have on the same property affects reimbursement under the policy when a loss occurs. There are two ways that policies may handle this: 1) primary/excess, and 2) pro-rata. Excess insurance pays only the excess beyond what the primary policy pays. For example, if Company A (the primary insurance) pays $10,000 of a $15,000 loss, then Company B (the excess insurance) would pay no more than $5,000 of that loss. The Pro-Rata formula is displayed above. Let's see how it works: Say you have two homeowner policies totaling $700,000 - one for $500,000 and one for $200,000. You have a loss of $75,000. How much will each policy pay? The answer is $53,571 and $21,428. See if you can arrive at the same answer using the pro-rata formula.