homeowners policy (property)

PERMITTED INCIDENTAL OCCUPANCIES

although certain types of incidental businesses, such as an office or studio, are permitted for eligibility, a separate permitted incidental occupancies endorsement must be attached to cover the liability exposures arising out of the business. permitted incidental occupancies endorsement allows coverage for an incidental business that is conducted in the dwelling or in another structure on the location of the residence premises

HO-2 THROUGH HO-6

homeowners policies are designed to cover dwellings used primarily as private homes. forms HO-2, HO-3, and HO-5 may be written only for the owner-occupant of a dwelling used exclusively for private residential purposes and not as a vacation home. (the owner must occupy the dwelling.) however, the homeowner rules permit incidental office or professional occupancy (such as a beauty shop or a private school), as long as there are no retail sales or more than two people working at any one time. the dwelling may not contain more than four families nor more than two roomers or boarders per family. the HO-2, HO-3, and HO-5 homeowners forms provide building coverage on a replacement cost basis if the building is insured for 80% of more of its replacement cost. the modified form HO-8 provides coverage on an actual cash value basis. HO-2 (broad form) provides protection for losses from named perils. there are some noticeable limitations that should be pointed out to a client. the following are not covered: *the inside of a building for damage by rain, snow, sleet, sand, or dust unless wind or hail damage find creates the opening *the inside of a building for loss by a falling object unless the falling object first damages the roof or an outside wall *fences, driveways, and walks for damage from a vehicle owned or operated by a resident *damage from water or stream if dwelling is vacant for a period of more than 60 days HO-3 (special form) provides protection for dwelling and other structures on an open peril basis, and personal property is covered only for broad perils. unlike under the HO-2 (broad form), vehicle damage to fences, driveways, or walks is covered even if caused by an insured or resident the HO-3 (special form) exclusions to the dwelling or other structures are as follows: *all property, losses, and perils not covered because of limitations of the insuring agreement and the general exclusions *damage caused by freezing while the dwelling is vacant, unoccupied, or being constructed unless the insured takes reasonable care to maintain heat in the premises or to shut off and drain the water supply *theft in or to a dwelling or structure under construction *vandalism and Malicious mischief if the dwelling has been vacant for a certain period of time *gradual, preventable, or expected losses such as wear&tear, latent defect, contamination, bulging, or expansion of foundations, pavements, walls or floors *faulty, inadequate, or defective planning, zoning, surveying, design, etc *losses caused by weather conditions to the extent that they contribute to causes found in the general exclusions *acts, decisions, of the failure to act HO-4 (contents broad form), also referred to as tenant broad form insures personal property for broad perils. Coverage may not be issued to an owner-occupant. the HO-4 form may be written for a tenant who resides in a rented dwelling or apartment, but does not provide coverage on the dwelling HO-5 (comprehensive form) covers both the dwelling and other structures on an open peril basis. it also covers personal property on an open peril basis, with the exception of landlord furnishings in an apartment that is rented (or held for rental to others). Landlord furnishings is limited to $2500 limit and provided on a named peril basis. another expansion of coverage is found in the definition of theft. in the HO-5, theft includes misplacing or losing of insured property, also known as mysterious disappearance. the HO-6 (condominium unit owners) also expands coverage to include parts of the building, such as alterations and appliances that the insured is required to insure because of the condominium association agreement. the HO-6 unit-owners form is designed for the owner-occupant of a condo. under coverage A (dwelling), the HO-6 policy insures the following: *the alterations, appliances, fixtures and improvements that are a part of the building contained within the residence premises. *items of real property that pertain exclusively to the residence premises *property that is the insured's insurance responsibility under a corporation or association of property owners agreement *structures owned solely by the insured, other than the residence premises, at the location of the residence premises the HO-6 under coverage A does not cover any of the following: *land, including land on which the residence premises, real property, or structures are located. *structures rented or held for rental to any person that is not a tenant of the dwelling, unless used solely as a private garage *structures from which any business is conducted *structures used to store business property. however, it does cover a structure that contains business property solely owned by an insured or a tenant of the dwelling, provided that the business property does not include gaseous or liquid fuel, other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure. under coverage C (personal property), the HO-6 insures the following: *personal property owned or used by an insured while it is anywhere in the world *after a loss and at the insured's request, it will cover personal property owned by: -others while the property is on the part of the residence premises occupied by an insured -a guest or residence employee, while the property is in any residence occupied by an insured under coverage D (loss of use), the HO-6 limit of liability is the total limit for the coverages in the following areas: *additional living expense *fair rental value *civil authority prohibits use the HO-6 coverage form does not cover loss or expense due to cancellation of a lease or agreement

PERSONAL PROPERTY REPLACEMENT COST

personal property replacement cost endorsement changes the actual cash value settlement on personal property to a replacement cost basis, with the exception of certain types of property, such as fine arts and antiques. there is no requirement that the personal property be insured to 80% of replacement cost at the time of loss. however, some insurers require that the amount of coverage c be increased to 70% of coverage A amount when this endorsement is purchased.

ADDITIONAL COVERAGES

the HO-2000 forms (other than HO-8) provide additional coverages without additional premium debris removal will pay reasonable express for the removal of debris of covered property if a "peril insured against" that applies to the damaged property causes the loss; or if ash, dust, or particles from volcanic eruptions caused direct loss to the building, or property contained in the building this expense is included in the limit of liability that applies to the damaged property. if the amount to be paid for the actual damage to the property plus debris removal expense is more than the limit of liability for the damaged property, an additional 5% of that limit is available for such expense. a homeowners policy also will pay an insured's reasonable expense, up to $1,000, for the removal of the following from the residence premises: *the insured's tree(s) felled by the peril or windstorm or hail or weight of ice, snow, or sleet. *a neighbor's tree(s) felled by a peril insured against, provided the tree(s): -damages a covered structure or blocks a driveway on the residence premises that prevents a motor vehicle, that is registered for use on public road, from entering or leaving the residence premises -blocks a ramp or other fixture designed to assist a handicapped person to enter or leave the dwelling the $1,000 limit is the most homeowners will pay in any one less, regardless of the number of fallen trees. no more than $500 of this limit will be paid for the removal of any one tree. lawns, plants, shrubs, and trees are covered if loss or damage is caused by fire, lightning, explosion, riot or civil commotion, aircraft, nonowned or operated vehicles, vandalism and malicious mischief, or theft. this is an additional amount of insurance and is limited to a maximum of $500 ($250 for HO-8) per tree, shrub, or plant, and a maximum per loss of 5% of the amount of coverage on the dwelling. on forms HO-4 and HO-6, the maximum per loss is 10% of the coverage C limit. removal coverage is provided for up to 30 days for loss or damage to property removed form the premises to protect it because of endangerment by a covered peril reasonable repairs coverage is provided to cover the expenses incurred by the insured to make reasonable repairs to protect property from further damage following loss by a covered peril fire department service charge will pay up to $500 for liability assumed by agreement for fire department service charges to protect insured property, with no deductible. credit card will pay up to $500 to cover the legal obligation of an insured to pay because of the theft or unauthorized use of a credit card, electronic fund transfer card, loss caused by forgery of a check, or loss through acceptance of counterfeit money that duplicates US or Canadian currency, with no deductible glass or safety glazing material will pay for breakage of glass or safety glazing material, providing the dwelling has not been vacant for the prior 60 days before loss by any peril except earth movement. HO-8 limits this coverage to not more than $100 per loss collapse applies to property covered under Coverages A and B with respect to this additional coverage. this additional coverage does not increase the limit of liability. (not for HO-8) collapse means the 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 current intended purpose. a building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse. the policy insures for direct physical loss to covered property involving collapse of a building or any part of a building if the collapse was caused by 1 or more of the following: *the perils insured against under Coverages A&B *decay that is hidden from view, unless the presence of such decay is known to an insured prior to collapse *insect or vermin damage that is hidden from view, unless the presence of such damage is known to an insured prior to the collapse *weight of contents, equipment, animals, or people *weight of rain which collects on a roof *use of defective materials or methods in contruction, remodeling or renovation if the collapse occurs during that course of the work loss to an awning, fence, patio, deck, pavement, swimming pool, underground pipes, flue, drain, cesspool, septic tank, foundation, retaining wall, etc., is not included under the definitions of collapse, unless the loss is a direct result of the collapse of a building or any part of a building. loss assessment will pay up to $1,000 for the insured's share charged during the policy period against the insured as an owner or tenant of the residence premises by a corporation or association of property owners. the assessment must be made as a result of direct loss to property that is owned by all members collectively, of the type that would be covered by this policy if owned by the named insured, and caused by a peril insured against. landlord furnishings will pay up to $2500 for an insured's appliances, carpeting, and other household furnishings in each apartment on the residence premises regularly rented or held for rental to others. buildings additions and alterations are covered by HO-4 policy only, if they are made by the tenant in an amount equal 10% of coverage C. this coverage would be considered additional insurance. ordinance or law allows insureds to use up to 10% of the limit of liability that applies to coverage A for the increased cost incurred because of enforcement of any ordinance or law that requires one of the following: -the construction, demolition, or renovation of part of a covered building damaged by a peril insured against -the demolition and reconstruction of the undamaged part of a covered building if it must be demolished because of damage to another part of the covered building by a peril insured against. ordinance or law does not cover: -the loss in value to any covered building or other structure because of the requirements of any ordinance or law -the costs to comply with any ordinance or law that required any insured to test for, clean up, or otherwise respond to pollutants on any covered building -coverage for HO-8 grave markers will pay up to $5,000 for grave markers, including mausoleums, for loss caused by a peril insured against, on or off residence premises. this coverage does not increase the limits of liability that apply to the damaged covered property. (not for HO-8)

COVERAGE B - OTHER STRUCTURES

under other structures, a basic amount of insurance equal to 10% of the coverage A limit is included for other structures. higher limits may be written. the definition of other structures is the same as that found in the dwelling policy program. coverage is not applicable on the HO-4 and HO-6 policy forms.

HO-8

The HO-8 (modified homeowners) is the most limited coverage. it is intended for use when replacement cost coverage is not practical, so the coverage usually is written for the market value of the property. it is used to insure houses with replacement cost more than their market value, or those built with irreplaceable materials (for example, a historic home). it is simply a modified basic form. this form is used when writing coverage at 80% of the dwelling replacement cost or actual cash value could cause a moral hazard. the following are coverage restrictions in the modified homeowners policy (HO-8 form): theft coverage - theft is covered for the ACV of what was stolen, with limits for certain classes or property. in addition, the separate limits for theft of certain property (such as silverware or guns) are not included in the policy. there is also a $1,000 basic limit that applies to theft losses: *worldwide coverage - coverage for personal property away from the premises is limited to the larger of 10% of the personal property limit or $1,000. *debris removal - this is not considered an additional amount of insurance and is included in the total policy limit. *trees,plants or shrubs - the maximum limit for any one tree, plant or shrub is only $250 *property of guests of residence employees - property may be covered only while on the insured premises

COVERAGE FORMS

There are 6 coverage forms available under the homeowners program: 1. HO-2 broad form 2. HO-3 special form 3. HO-4 contents broad form 4. HO-5 comprehensive form 5. HO-6 condominium unit owners 6. HO-8 modified coverage form (used in some states to insure homes that do not qualify for the other forms, usually because its replacement cost is much greater than its market value) each form provides a different level of protection, with broader coverage available for a higher premium the HO-8 has less rigorous eligibility requirements in terms of property coverages, but the coverage is more limited. the HO-8 modified form provides the most limited coverage

COVERAGE A - DWELLING

dwelling coverage is provided for the dwelling itself, structures attached to the dwelling, and material and supplies (located on or near the premises). it appears on forms HO-2, HO-3, HO-5, and HO-8. replacement cost coverage is provided in HO-2, HO-3, and HO-5. the HO-6, condominium unit-owners, policy provides $1,000 of dwelling coverage for property that is part of the owned residence if the insured is obligated to insure it because of the condominium association agreement, including appliances, fixtures, alterations, and improvements. The items included in the definition of dwelling are the same as those found in the dwelling policy forms.

EARTHQUAKE

earthquake coverage is excluded in all property policies, but usually can be purchased separately for an additional premium. the coverage can be purchased to cover the dwelling, other structures, and/or personal property. rates generally are determined by the type of construction that determines the dwelling's vulnerability to earthquake losses. frame buildings are less susceptible to severe damage than masonry buildings. therefore, they have lower rates for this coverage. earthquake coverage provided by endorsement in a homeowners form considers one or more earthquake shocks occurring within a 72 hour period as a single earthquake the deductible under earthquake coverage is stated as a percentage of loss with a minimum of $250. the deductible applies separately to buildings, other structures, personal property, and loss of use. masonry veneer is not covered unless specifically endorsed.

HOME DAY CARE COVERAGE

if the insured operates a home day care business out of the insured residence, the home day care coverage endorsement may be attached to the policy to cover the liability exposure associated with the business. coverage excludes loss of damage that results from sexual molestation, corporal punishment, physical or mental abuse, or draft and saddle animals - including vehicles used with such animals, motor vehicles, aircraft, or watercraft. the premium is based on the number of children kept in the home.

SCHEDULED PERSONAL PROPERTY

if the insured requires higher limits for certain types of property, the scheduled personal property endorsement may be used to schedule individually described items. this endorsement is used when the insured wants to insure specific designated items on an open peril basis for a stated amount. the endorsement provides for the scheduling of 9 different classes of property: jewelry, furs, cameras, musical instruments, silverware, golfer's equipment, fine arts (including porcelains and glassware), postage stamps, and rare and current coins. the following are additional features of the scheduled personal property endorsement: *the coverage c limits no longer apply for the property scheduled on this endorsement. *insured locations: scheduled personal property endorsement covers eligible property worldwide *insured perils: this endorsement ensures against direct physical loss to property caused by any of the following perils: -wear and tear -insects or vermin -war -nuclear hazard -if fine arts are covered - breakage caused by fire or lightning, windstorm, earthquake or flood, explosions, and malicious damage or theft -if postage stamps are covered - fading, creasing, denting or scratching, transfer or colors, and disappearance

LIMITED FUNGI, WET OR DRY ROT, OR BACTERIA COVERAGE

limited fungi, wet or dry rot, or bacteria coverage is an endorsement that may be used to add special limits for losses caused by fungi, dry or wet rot, and bacteria. this endorsement applies to both property and liability losses

PERSONAL INJURY

personal injury coverage, including injuries that result from false arrest, libel, slander, defamation of character, and invasion of privacy, may be added by endorsement

COVERAGE C - PERSONAL PROPERTY

personal property coverage is provided in all homeowners policy forms. coverage is equal to 50% of the coverage A limit in all policies, except the HO-4 and HO-6. this limit may be increased of decreased, but not below 40%. in the HO-4 and HO-6 policy forms, the amount of insurance is selected by the insured, with coverage minimums varying by state. the personal property coverage in the homeowners policy is broader than that included in the dwelling coverage forms. the primary differences are as follows: *worldwide coverage - the full coverage C limit applies to personal property while it is located anywhere in the world (except for coverage under the HO-8) *property of others - property of others may be covered while it is on the residence premises *property located at another residence premises - personal property usually located at another residence of the insured is covered for the larger of $1,000 or 10% of the coverage C limit. the personal property coverage has several special limitations that limit the amount payable for loss of certain types of property. these limitations are listed below: *$200 for money, bank notes, bullion, gold, silver, platinum, coins, and other metals. *$1500 for securities, accounts, deeds, evidences of debt, letters of credit, notes other than bank notes, manuscripts, passports, tickets, and stamps *$1500 for watercraft and their trailers, furnishings, equipment, and outboard motors *$1500 for other trailers *$1500 for theft of jewelry, watches, furs, precious, and semiprecious stones *$2500 for theft of firearms *$2500 for theft of silverware and silver-plated ware, gold ware and gold-plated ware, and pewter ware, including flatware, hollowware, tea sets, trays, and trophies *$2500 for property on the premises used for business purposes *$500 (HO '00) or $1500 (HO '11) for property away from the premises used for business purposes *$1500 for loss of portable electronic equipment that produces, receives, or transmits audio, visual, or data signals while in a motor vehicle *$250 for loss of antennas, wires, or any media used with the electronic equipment in a motor vehicle

CONDITIONS

the conditions found in the homeowners policy forms are divided into 3 sections: 1. property conditions 2. liability conditions 3. conditions that apply to both property and liability you may be familiar with some of these conditions: insurable interest and limit of liability - the insurer will not pay for more than the insured's interest in property insured duties after a loss - if a loss occurs, the insured is required to do the following: -provide the insurer with prompt notice of the loss -notify the police if a loss is caused by death -notify the credit card or fund transfer card company if the loss is covered under the credit card and fund transfer card coverage -protect the property from further damage and keep records of any repair expenses -prepare and inventory of damaged and undamaged property, including bills, receipts, and related documentation -allow the insurer to inspect the property as often as reasonably necessary -if requested, submit to an examination under oath -within 60 days of the insurer's request, send a signed, sworn proof of loss loss settlement - covered property losses will be settled as follows: -ACV for personal property and awnings, carpeting, household appliances, outdoor antennas and equipment, and structures that are not buildings -replacement cost for buildings and other structures if covered for at least 80% of its replacement costs: (insurance carried / insurance required) X loss amount -if the cost to repair or replace damaged property is less than 5% of the total amount of insurance, or less than $2,500, the insurer will settle the loss without the requirement that the property actually be repaired or replaced pair or set clause - in the event of loss or damage to a pair or set, the insurer may elect to restore the set to its value before the loss, or pay the difference between the AVC or the property before and after the loss glass replacement - covered glass loss or damage will be settled based on replacement with safety glazing material when required by law appraisal - in claims handling, if the insurer and the insured are unable to reach an agreement as to the value of damaged property, either party may make a written request for appraisal other insurance - if other insurance applies to the same loss, the insurer is liable only for the portion of the loss that the limit of insurance bears to the total amount of all insurance on the property suit against the insurer - no action may be brought against the insurer until the insured has complied with all policy provisions. in addition, the action must be brought within the specific time limit set by state statutes. insurer option to repair or replace - within 30 days of receiving the proof of loss, the insurer may repair or replace the damaged property with like kind. loss payment - all losses will be paid within 60 days of receiving the proof of loss or after one of the following: -an agreement has been reached as to the amount of loss -there is a final judgment -there is a filing of an appraisal award with the insurer abandonment - the insured cannot abandon property to the insurer mortgage holders clause - if the insurer denies a claim, the denial will not apply to the mortgage if the mortgagee has notified the insurer of any change in ownership or occupancy, pays any premiums due, and submits a signed proof of loss within 60 days. in addition, if the insurer decides to cancel or nonrenew coverage, it will provide the mortgage holder with 10 days advance written notice. if the insurer pays the mortgagee for any loss and denies payment to the insured, the insurer: -is subrogated to all the rights of the mortgagee granted under the mortgage on the property -at the insured's option, may pay to the mortgagee the whole principal on the mortgage plus any accrued interest. in this case, the insurer will receive a full assignment and transfer of the mortgage and all securities held as collateral to the mortgage debt. no benefit to bailee - the insurer will not recognize any assignment or provide any coverage that benefits a person or organization holding, storing, or moving property for a fee, regardless of any other provisions of the policy nuclear hazard clause - losses caused by a nuclear hazard are not considered a fire and are not covered under the policy recovered property - if either party recovers property after a settlement has been paid, the insured has the option to accept the property and return the amount paid, or to transfer ownership of the property to the insurer volcanic eruption period - all volcanic eruptions that occur within a 72 hour period will be considered one event bankruptcy - bankruptcy of the insured will not relieve the insurer of its obligations under the policy limit of liabilty - the total limit of liability shown in the declaration is the insurer's total liability for any one occurrence, regardless of the number of suits filed or claimants involved. the insurer's duty to settle or defend suits ends when the limit of liability for the occurrence has been exhausted by payment of a judgment or settlement. severability of insurance - the insurance applies separately to each insured. this condition does not increase the insurer's liability for any one occurrence duties after offense - in the event of a covered offense, the insured must perform the following duties that apply. the insurer has no duty to provide coverage under this policy if the insured fails to comply with the following duties: *give written notice to the insurer or agent as soon as practical that identifies: -the identity of the policy and named insured -reasonably available information on the time, place and circumstances of the offense -names and addresses of any claimants and witnesses *cooperate with the insurer in the investigation, settlement, or defense of any claim or suit. *promptly forward to the insurer every notice, demand, summons, or other process relating to the offense *at the insurer's request, assist the insurer: -to make settlement -to enforce any right of contribution or indemnity against any person who may be liable to an insured -with the conduct of suits and attend hearings and trials -to secure and give evidence and obtain the attendance of witnesses *no insured may, except at such insured's own cost, voluntarily make payment, assume obligation, or incur expense other than for first aid, to others at the time of the personal injury *assist the insurer in any subrogation rights *if the loss involves property damage to others, submit to the insurer a signed, sworn proof of loss within 60 days of their request duties of an injured person - coverage f - medical payments to other injured parties or someone representing the injured party - must provide the insurer with written proof of claim and authorization to obtain any medical records. the injured person also must submit to a physical examination by a doctor of the insurer's choice, as often as requested. payment of claim - coverage f - medical payments to others - payment of any claim under the medical payments section is not considered an admission of liability by the insured or the insurer. suit against the insurer - no action may be brought against the insurer until all policy provisions have been complied with, and no one has a right to join the insurer in any action against the insured other insurance - coverage e - personal liability - the insurance will be considered excess over any other valid and collectible insurance, unless the other insurance is intended to be excess coverage policy period - coverage only applies to losses which occur during the policy period. concealment or fraud - the entire policy will be voided if the insured commits fraud either before or after a loss liberalization clause - if the insurer adopts any changes that broaden coverage in the policy, those changes will automatically apply to the policy at no additional premium as of the date the insurer implements the change in the insured's state, provided that this implementation date falls within 60 days prior to or during the policy period stated in the declarations waiver or change of policy provisions - any waiver or change of policy provisions must be in writing by the insurer cancellation and nonrenewal - the insured may cancel the policy at any time by returning the policy to the insurer or by providing the insurer with written notice. if the insurer cancels coverage, it must provide the insured with a 10-day advanced written notice for cancellation due to nonpayment of premium or if the policy has been in force for fewer than 60 days. for all other cancellations or nonrenewal, the insurer must provide the insured with at least a 30-day advanced written notice. the insurer can only cancel a policy after it has been in force for 60 days for 2 reasons: 1. material misrepresentation, which would have prevented the insurer from issuing the policy. 2. substantial change in the risk since the policy was issued assignment - the insured may not assign the policy to any other person without the written consent of the insurer subrogation - the insured may waive all rights of recovery against any other person; however, that must be done in writing and prior to a loss. if the rights are not waived, the insurer may require an assignment of rights of recovery for a loss to the extent that payment is made by the insurer. if an assignment is sought, an insured must sign and deliver all related papers and cooperate with the insurer. death - if any insured died, the deceased's legal representative will be considered an insured under the policy

EXCLUSIONS

the following types of property are not covered in any of the homeowners coverage forms: *land *structures used for business purposes *structures, other than a garage. rented to others who are not tenants of the dwelling *specifically described items covered by other insurance *animals, birds, or fish *aircraft *property rented or held for rental to others away from the premises *property of tenants, except on the HO-4 tenant broad form *property in an apartment rented to others, except as noted under the additional coverage for landlord furnishings *motor vehicles and motorized land conveyances, including equipment and accessories, except motorized vehicles used to service the premises that are not subject to vehicle registration *vehicles sound recording, receiving, or transmitting devices, including tapes or other media used with the equipment while in the vehicle *paper records and electronic data in addition, all policies exclude losses that are caused by or result from any of the following: *the ordinance or law, meaning a homeowners policy will not pay for a loss of value of the insured property because of requirements of an ordinance or law, but it will pay for increased cost of repair because of enforcement of such ordinance. *power failure *intentional acts *the insured's neglect to preserve or save property *earth movement the following exclusions apply only to coverage E - personal liability: *damage to property owned by the insured *damage to property of others in the care, custody, or control of the insured (damage caused by fire, smoke, or explosion is covered) *bodily injury to any person eligible for workers comp or similar benefits *bodily injury to the named insured or any relative or minor residing in the household *liability for any assessment charged against the insured as a member of an association, corporation, or community of property owners. *contractual liabilty the following exclusions apply only to coverage F - medical payments: *bodily injury resulting from any nuclear hazard *bodily injury to a residence employee if it does not arise in the course of employment *bodily injury to anyone, other than a resident employee, who regularly resides in the premises *bodily injury to any person eligible to receive benefits under workers compensation or another similar law the policy also contains additional exclusions that apply to both personal liability and medical payments. the policy does not cover bodily injury or property damage caused by the following: *war *expected or intended losses *rendering or failure to render professional services *any business engaged in by the insured *transmission of a communicable disease *sexual molestation, corporal punishment, or physical or mental abuse *the use, sale, manufacture, delivery, transfer, or possession of illegal drugs by any person *rental or holding for rental any part of the premises in violation of use and occupancy rules *premises owned by or rented to an insured which is not an insured location *ownership, maintenance, use, loading or unloading of an excluded vehicle, watercraft or aircraft, including entrustment by an insured to any person, or vicarious liability for the actions of a minor

DEFINITIONS

the homeowners policy form include a section that defines several key terms. understanding the definitions that apply to certain words used throughout the policy is critical to comprehending the extent of coverage provided. some of the more important terms defined in the policy include the following: *insured - the policy defines the insured as the named insured and residents of the premises who are relatives or other residents that are under age 21 and in the care of the insured. the term insured also includes full-time students under age 24. in addition, for section II - liability coverage, any person legally responsible for animals or watercraft owned by the insured also is considered an insured. *insured location - the insured location is defined as the following: -the residence premises or any other premises at the same location, or part of it used by the insured as a home and described in the declarations -a premises newly acquired for use as a residence by the insured during the policy period -a premises not owned by the insured, but where the insured is living temporarily (a motel room) -vacant land owned or rented by the insured, excluding farmland -land owned or rented by the insured where a residential dwelling is being constructed -individual or family cemetery plots or burial vaults -any part of premises occasionally rented to an insured, except for business purposes *residence employee - residence employee includes employees of the insured whose duties are related to the maintenance or use of the home, including doing similar duties elsewhere. *residence premises - residence premises includes the one-family dwelling in which the insured resides and is described in the declarations, including other structures and grounds. it also includes up to a four-family dwelling if described in the declarations and if the insured resides in at least one side of the dwelling

SECTION I - PROPERTY COVERAGES

the homeowners policy form includes property coverage for the insured residence (coverage a - dwelling), other structures (coverage b), and personal property (coverage c - contents) similar to that in the dwelling forms. the fourth coverage, loss of use (coverage d), is similar to the fair rental value and additional living expense coverage described in the broad and special dwelling forms. all coverage forms include a basic deductible of $250, which applies to all coverages except the fire department service charge and credit card and forgery coverages. the deductible may be increased to reduce the premium.

HOMEOWNERS POLICY

the homeowners policy is similar to the dwelling policy, but includes liability coverage. because homeowners policy is more comprehensive than dwelling, it has stricter eligibility requirements. every homeowners policy requires that coverage be provided for both personal property and personal liability. if the insured owns the dwelling, the structure and its contents must be insured. if the insured is a tenant, then only the personal property owned by the insured must be covered. homeowners insurance is a standardized package policy that was first introduced in 1958 by the Multi-Peril Insurance Conference, an advisory and rating organization and predecessor to the Insurance Service Office. Each homeowners form must include property coverage under Section I, and personal liability coverage under Section II. Section I has 3 cause of loss forms, while the coverage provided under section II is identical regardless of the form.

COVERAGE D - LOSS OF USE

the loss of use coverage in the homeowners policy will pay for either additional living expenses related to maintaining the normal standard of living of the household or fair rental value if the premises become uninhabitable due to a covered loss. these are the same coverages as those offered under the broad and special dwelling policy forms. if loss of use is due to civil authority, the additional living expenses and fair rental value payments are limited to a maximum period of 2 weeks. loss of use coverage usually is governed by the amount of coverage on the home. the HO-6 coverage form does not cover loss of expense due to cancellation of a lease or agreement

ORDINANCE OR LAW

the ordinance or law endorsement of a homeowners policy provides for losses or damage to covered property of the building containing covered property to be settled on the basis of any ordinance or law that regulates construction, repair, or demolition of this property. an additional premium will be charged for this endorsement.

PERILS INSURED AGAINST

the perils insured against for damage to property in the homeowners HO-2 include the following: *fire or lightning *windstorm or hail *explosion *riot or civil commotion *aircraft *vehicles *smoke *vandalism or malicious mischief *theft *falling objects *weight of ice, snow or sleet *accidental discharge or overflow or water or steam *sudden and accidental tearing apart, cracking, burning, or bulging *freezing *electrical damage *volcanic action these are also the perils insured against by coverage C in HO-3, HO-4, and HO-6 with HO-3 and HO-5, the perils insured against under coverages A and B are on an open peril basis. all direct causes of loss are covered unless specifically excluded.

SELECTED ENDORSEMENTS

there are numerous endorsements available under the homeowners policy program that broaden the coverage provided under the basic policy forms. the following are optional endorsements available on the homeowners policy.

SPECIAL PROVISIONS - LOUSIANA

this is a mandatory endorsement that must be attached to ISO policies so that they conform to Louisiana laws