Other Personal Lines Policies

Every residential property insurance issued or delivered or initially renewed in California must include an

an offer of coverage for loss or damage caused by the peril of earthquake.

The coverage of these forms may be written on either

an open-peril or a named-peril basis. Under a named-peril policy, the exclusions are common to most named-peril contracts, that is, losses from perils not insured against are excluded.

Catastrophe Insurance

an umbrella or excess policy provides coverage over the underlying policy. These types of policies are commonly written to provide a minimum of $1,000,000 in additional coverage. There is usually a minimum limit of liability the insured must carry and maintain on the basic policies.

The broadest policies cover the watercraft while being operated on

any inland body of water within continental U.S., Canada, and coastal waters in the same area up to a limit of 10 to 25 miles (depending on the insurer)

However, given the state of California has experienced more earthquake activity than

any other state in the U.S., most Earthquake insurance is written through the CEA, primarily due to the fact any company offering Homeowners insurance in California must also offer Earthquake insurance, referred to as the "mandatory offer law."

Inland Marine coverages

are either filed or unfiled with state regulatory authorities. Filed coverages have standardized coverage forms. Unfiled Inland Marine classes are those that present a unique exposure to loss and in which standardized forms have not been developed.

Filed Forms

are those that are filed with state insurance departments by insurers or on their behalf by bureaus.

Nonfiled Forms

are those that are not standardized by a rating bureau, but are developed by individual insurers.

Claim related expenses are paid as

as additional coverage, similar to the Personal Auto policy.

However, every insurance agent or broker transacting basic property insurance must either

assist persons in making application for insurance through the plan, or provide persons who desire that insurance with the toll-free number established by the association

-Although the Plan was established by the state, it is not a state agency. It is an

association of all property insurers in the state of California. All insurers participate according to the amount of business they write in the state. If a company writes 10% of the property insurance in California, it underwrites 10% of each policy issued by the California FAIR Plan

Actual cash value (ACV)

at the time of loss — replacement cost minus depreciation;

-The Standard Fire Policy was used in most states as the basis for providing property coverage on both personal and commercial insurance policies.

basis for providing property coverage on both personal and commercial insurance policies.

The NFIP offers limits of insurance up to maximum amounts that may or may not

be adequate to cover and insured's loss. Insurance markets exist for flood coverage above the NFIP amounts.

The Insurance Services Office (ISO) has filed approved umbrella policies for

both personal lines and commercial lines. While the form is standardized, there is still flexibility that allows insurers to tailor a policy to meet their requirements in terms of underlying limits and eligibility.

The FAIR Plan does not have insurance agents. Insurance agents and brokers cannot bind or commit the FAIR Plan in any way. All business submitted to the FAIR Plan is on a

brokerage basis. A licensed insurance agent or broker is the representative of the insured - not the FAIR Plan - and places business with the FAIR Plan on behalf of his/her client.

The National Flood Insurance Program does not offer any

business income or extra expense coverage. Also, producers have no binding authority with the NFIP. In order to place flood insurance through the NFIP, a 3-hour training course must be completed in accordance with Section 207 of the Flood Insurance Reform Act of 2004.

Special Valuation may be applied...

by the use of agreed amount endorsements or stated value

Inland Marine Coverage

can be written on almost any type of property that is portable. In addition, instruments of transportation and communication, such as bridges, wharves, and docks, are also covered on Inland Marine coverage forms. Personal inland marine policies are often called floaters, since the coverage floats with the insured property, anywhere in the world. Inland Marine should be differentiated from Ocean Marine, which covers property being transported over water. Inland Marine exposures pertain to property located on land.

Another important consideration is a home's ignition potential during an extreme wildfire, which is determined by the

characteristics of its exterior materials (wood, masonry or fire resistive) and their response to burning objects and embers within 100 feet, which is known as the "ignition zone."

Hull coverage also provides a

collision clause that pays for damage to other boats for which the insured is legally liable. This is an additional amount of coverage equal to the limit of insurance written on the hull.

If a claim made or suit brought against an insured is caused by an offense to which

coverage applies and underlying coverage is in effect, the umbrella insurer may join in the investigation and settlement of any claim, but the umbrella insurer will not contribute to any expenses incurred by the underlying insurer.

Today's policy will also provide

coverage for insured property removed because of endangerment by an insured peril even though a loss has not yet occurred.

With the amendments of 1943 standardization, the policy included

coverage for not only fire, but also lightning and the removal of property after a fire to protect undamaged insured property from further damage.

-California Department of Insurance initiated an effort to create

create economic incentives for insurers to mitigate fire risks and increase disaster preparedness among insurers and consumers.

If an underlying policy is primary coverage, in a covered loss, there is no

deductible that needs to be satisfied to access the umbrella or excess policy limits. However, in the case of a true umbrella policy, the potential exists for coverage on a primary basis within the umbrella. In other words, the primary or underlying policy does not cover the loss, but the umbrella does.

The value of the land is excluded when

determining the value of the condominium, as it relates to the earthquake loss assessment coverage offered by the authority.

Note that insurers may offer a condominium earthquake loss assessment policy for

different amounts of coverage other than those offered by the authority.

FEMA's Local Multi-Hazard Mitigation Planning Guidance helps local governments to develop and adopt

effective mitigation plans. Part of the plan is to conduct a risk assessment and define and clearly describe the conditions in the area that contribute to risks and hazards

Scheduled Personal Property Endorsement

endorsement is used to insure items that either would not be insured in a property policy or need more coverage than normally provided in a property policy.

Additional protection is available either by

endorsement or through the purchase of a Boatowners policy.

Umbrella policy

excess policy limits above that of an underlying policy

FIMA

federal insurance and mitigation administration

Inland Marine coverage may be found as...

filed and nonfiled forms

All inland marine policies contain exclusions

for loss by war or nuclear events. For both named-peril and open-peril forms, the actual insuring agreement and the exclusions must be examined to determine the scope of coverage.

Upon purchase of a flood policy, a 30-day waiting period is in place beginning

from the time of application and premium payment. This waiting period can be waived in certain circumstances surrounding new or revised loans, map revisions or if a loan exists on a property that should have obtained flood insurance but did not.

The state of California has created the California Earthquake Authority (CEA), a publicly managed, not-for-profit organization that must be administered under

the authority of the Commissioner.

Automatic Coverage

— Automatic coverage is provided on replacements for the boat, motor or trailer listed in the Declarations, provided the insured notifies the insurer within 45 days of acquisition and pays any additional premium required.

The standard fire policy excludes coverage for the following: Accounts;

Accounts; Currency; Deeds; Bills; and Evidence of debt, money or securities.

Multiple Limits can also be expressed in terms of coverages available with the following:

Coverage A, B, C, and D. -Both have advantages and disadvantages. Combined single limit (CSL) can have the advantage of simplifying the amount of coverage available for an Earthquake event, for however the damage may have manifested itself, where a Multiple Limit restricts coverage to each component of coverage.

Only $1,500 of coverage is provided in the

Homeowners policy for damage to watercraft, accessories, equipment and trailers, and liability for watercraft is limited by the size of the boat.

The federal emergency flood insurance program goes into effect when a community applies for the program and ends when all NFIP criteria have been met and the regular program can begin. It provides a limited amount of coverage with subsidized rates. Limits are as follows:

LOOK AT TABLE

Reasonable Repairs

— Coverage applies for the expenses necessary to repair or to protect the covered property from further damage from an insured peril. Payment for loss under the Reasonable Repairs provision does not increase the policy limit.

Chronic condition

— Any physical condition that is treatable but not curable;

Under freight insurance coverage,

, the owner of the ship is reimbursed for the loss of these charges.

Coverage A

- Building Property covers the building, building property, additions and extensions attached to and in contact with the building, certain fixtures, machinery and equipment (e.g. fire sprinkler system, awnings, light fixtures), construction materials and supplies to be used on the building, manufactured homes or travel trailers, and certain property items in a basement;

Coverage D

- Increased Cost of Compliance covers the extra costs necessary to comply with any law or ordinance during the repair or reconstruction of a building damaged by flood.

Coverage C

- Other Coverages covers debris removal, loss avoidance measures, removal of property for safety, and pollution damage; and

Coverage B

- Personal Property covers personal property owned by the insured against direct physical loss by or from flood;

Types of Ocean Marine Insurance

- Yacht policies - Hull Insurance -Protection and Indemnity -Cargo Insurance -Freight Insurance

A personal umbrella or excess liability policy may or may not

- extend excess liability coverage for an Uninsured or Underinsured Motorist (UM/UIM) claim, depending on the language contained in the policy form.

General Property Policy Form

- insures other residential and non-residential structures and their contents; and

Dwelling Policy Form

- insures residential structures and their contents;

Residential Condominium Building Association Policy Form

- insures the entire condominium building under a single policy.

Exterior Wildfire Exposure Protection

- this law requires property owners to construct buildings so that they have less chance of catching fire from burning embers. -Recently adopted building codes and standards reduce the risk of burning embers igniting buildings by placing standards on roofing construction, attic venting, siding, exterior doors, decking, windows, eaves, wall vents and enclosed overhanging decks. -The new California Building and Fire Code requires that ignition resistant constructions standards and methods be used for all new buildings in fire-prone wildland urban interface areas.

Defensible Space

- this law requires property owners to reduce flammable material around homes to keep direct flames and heat away from the building by creating 100 feet of defensible space. -Proper clearance to 100 feet dramatically increases the chance of a home surviving a wildfire, while also providing for fire fighter safety when protecting a home during a wildland fire.

Pet insurance is designed to

- to cover veterinary expenses, which include costs associated with medical advice, diagnosis, care, and treatment provided by a veterinarian, including prescription drug costs. Pet insurance is closely related to health insurance for humans, which require a deductible be met before coverage begins.

As specified in the California Insurance Code, earthquake loss assessment coverage may be issued in the following minimum amounts:

-$50,000 for individual condominium units valued at more than $135,000; -$25,000 for individual condominium units of $135,000 in value or less.

All of the following are specifically excluded losses (caused either directly or indirectly):

-Any act of war; -Ordinances of civil authority; -Insured's neglect to reasonably save or preserve the property; -Theft; -Loss occurring while the hazard is increased within the knowledge or control of the insured; and -Any loss occurring when building is vacant or unoccupied for 60 days or more.

Applicants Eligible for FAIR Plan

-Any person having an insurable interest in real or tangible personal property who, after diligent effort, has been unable to obtain basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker, is entitled upon application to the FAIR plan facility to an inspection of the property by representatives of the inspection bureau.

Who is eligible to submit applications and extent of binding authority

-Broker-agents and agents who wish to participate in the FAIR plan program must be admitted by the association. .

Insurers issuing residential property insurance in this state may comply with this provision in any of the following ways:

-By offering to underwrite the risk of loss or damage caused by the peril of earthquake directly; -By arranging for earthquake coverage to be offered by an affiliated insurer; or -By arranging for earthquake coverage to be offered through an insurance agent or broker under a policy or certificate of insurance issued by a nonaffiliated insurer.

A pet insurer that uses a benefit schedule to determine claim payment under the policy must do the following:

-Clearly disclose the applicable benefit schedule in the policy; and -Disclose all benefit schedules used by the insurer under its pet insurance policies through a link on the main page of the insurer's internet website.

In addition to an exclusion for loss by war and nuclear hazard, policies usually include the following physical damage exclusions:

-Damage due and confined to wear and tear, gradual deterioration, inherent vice, latent defect, mechanical breakdown, faulty manufacture, damage caused by any repairing or restoration process, and service or maintenance operation unless fire results and then for loss caused by the resulting fire; -Damage while carrying persons or property for a fee, or while the covered property is rented to others; and -Damage while the covered property, except sailboats, is being operated in any official race or speed test.

The 165-line New York Standard Fire Policy of 1943, without endorsement, sets forth in the Insurance Agreement coverage on an ACV basis for loss or damage by the following perils:

-Fire: while the peril of fire is not defined in the Standard Fire Policy, its meaning is established by courts as oxidation sufficiently rapid to cause a flame or glow. This becomes important in the settlement of losses denied for such occurrences as charring and scorching. Fires have also been defined into the following 2 classes: Friendly fire, which is a deliberately ignited flame or glow that stays within its intended confines; and Hostile fire, a fire that escapes its intended confines. Although not specifically stated in the Standard Fire Policy, coverage is provided for loss by hostile fires, only. -Lightning: damage caused by natural electricity is covered, but damage from artificially generated electricity is not covered unless it results in hostile fire, in which case, only damage from the fire is covered. -Removal: coverage is provided for 5 days at another location for insured property that is removed to protect the property from an insured peril. While property is covered at another location, it is insured against all types of perils (all-risk), on a pro-rata basis.

National Flood Insurance

-Floods cause more property damage in the United States than any other type of natural disaster. The National Flood Insurance Program (NFIP) was created by the federal government to fill the gap left by the private insurance industry, and is administered by the Federal Insurance and Mitigation Administration (FIMA), a part of the Federal Emergency Management Agency (FEMA).

Endorsement vs. Separate Policy

-Generally speaking, a disadvantage of purchasing a separate Earthquake insurance policy is due to its high deductible.

A pet insurer that determines claim payments under a pet insurance policy based on usual and customary fees, or any other reimbursement limitation based on prevailing veterinary service provider charges, must do the following:

-Include a usual and customary fee limitation provision in the policy that clearly describes the insurer's basis for determining the fees and how that basis is applied in calculating claim payments; and -Disclose the insurer's basis for determining usual and customary fees through a link on the main page of the insurer's internet website.

Under the open-peril contracts, the following are common exclusions:

-Inherent vice — there is no coverage for loss or damage to the insured property that is natural to the property or material it is made of (metal cannot be insured against rusting, produce cannot be insured against spoiling, colors cannot be insured against fading, etc.) -Intentional damage by an insured — losses resulting from the intentional acts of an insured or intentional neglect of the insured are not covered

There are some policies used in both commercial and personal insurance situations that are not designed to cover

-first-party property exposures. Umbrella or excess policies are used when an insured either is required or chooses to purchase limits that are higher than what is offered in the primary policy.

WYO (" Write Your Own")

-insurers write the coverage on their own "paper", but the NFIP reinsures 100% of the coverage

The initial memorandum issued by the Commissioner of Insurance and the Fire Director proposed the following measures:

-Initiate a public awareness campaign in the wildland-urban interface; -Make insurer education programs available to all personal and commercial lines property insurers in this state; -Create a statewide emergency services database for hazardous areas; -Develop strategies to share fire activity information before, during and after wildfires to ensure faster deployment of fire-fighting resources to affected communities; -Re-evaluate inspection procedures of the California FAIR Plans Association for currency and appropriateness; -Increase incentives (such as lower premiums) for homeowners, business and insurers to actively prevent and mitigate fire risks.

The coverage provided by the umbrella policy does not apply to the following:

-Intentional injury or damage; -Personal injury arising out of the publication of material, if done by or at the direction of an insured with knowledge of its falsity; -Bodily injury or property damage from the ownership, maintenance, use, loading, or unloading of any recreational vehicle owned by any insured; -Loss from the use of any motor vehicle without the reasonable belief that that person is entitled to do so; Loss from the use of any motor vehicle or watercraft while being operated or preparing for a prearranged race or speed contest; or -Bodily injury or property damage from an act or omission of an insured as an officer or member of a board of director of a corporation.

Floods may be caused by

-Overflow of inland or tidal waters; -Unusual and rapid accumulation or runoff of surface waters from any source; -Mudflow (a river of liquid and flowing mud on surfaces of normally dry land) and collapse; or -Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

When transacting pet insurance in the state of California, insurers must disclose all of the following to consumers:

-Policy exclusions (including those for pre-existing conditions, hereditary disorders, congenital anomalies or disorders, and chronic conditions); -A statement for additional exclusions reading: "Other exclusions may apply. Please refer to the exclusions section of the policy for more information." -Provisions which limit coverage through waiting or affiliation periods, deductibles, coinsurances, or annual or lifetime policy limits; -Reductions in coverage or premium increases based on an insured's claim history; -A summary description of the basis or formula used for determining claim payments, customary fee limitations, and benefit schedules, either within the policy or through a link on the main page of an insurer's website; -A benefit schedule for insurers that use a benefit schedule to determine claim payment; -A usual and customary fee limitation provision for insurers that determine claim payments through usual and customary fees or any other reimbursement limitation; -A free-look provision allowing an insured to return a policy within 30 days of delivery for a full refund of premiums, unless a claim has or will be paid prior to cancellation; and -A summary of policy provisions in a separate document, titled "Insurer Disclosure of Important Policy Provisions:"The "Insurer Disclosure of Important Policy Provisions" must be provided to a policyowner of a new pet insurance upon the delivery of the policy and must be posted on the main page of the insurer's internet website.

Additional coverages for Physical Damage are the following:

-Reasonable Repairs -Recovery -Automatic Coverage

4. Administrative Proceedings

-Should the Commissioner suspect a person is in violation of the Insurance Code in relation to the sale or solicitation of pet insurance, the Commissioner may issue and serve upon that person an order containing a statement of the charges, a statement of that person's potential liability, and a notice of a hearing, which may not be less than 30 days after the notice is served. -If any of the charges are found to be justified, the Commissioner will issue a cease and desist order. A person who violates the Code may be liable for a civil penalty of up to $5,000 for each violation and $10,000 for each willful violation.

Deductibles

-Single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program. -All other buildings and all contents are insured on an actual cash value basis. Standard deductible amounts apply separately to building and contents losses, with higher deductibles available.

Upon issuance or delivery of a pet insurance policy, an insurer must provide a policyowner with a written disclosure in 12-point boldface type which includes:

-The Department's mailing address, toll-free telephone number, and website address; -The address and customer service telephone number of the insurer or the agent; -A statement explaining that an insured should contact the Department only after consulting an insurer and not being able to reach a satisfactoryresolution of the problem; and -A statement advising an insured to contact the agent delivering the policy for further assistance.

NFIP Policy Forms

-The National Flood Insurance Program (NFIP) offers 3 different standard flood insurance policy forms: 1) Dwelling Policy Form 2) General Property Policy Form 3) Residential Condominium Building Association Policy Form

Section II

-The liability coverages of the Boatowners Policy parallel the coverages of the Personal Auto Policy. -They include the following: Operations liability; Passenger liability; Uninsured boaters liability; and Flotilla (small fleet) liability.

The personal umbrella policy defines insured as any of the following:

-The named insured; -A family member; -Any person using an auto or recreational motor vehicle (all-terrain vehicle, dune buggy, golf cart, snowmobile, or any other motorized land vehicle designed for recreational use off public roads) that is owned by the insured and covered under the policy; any person using a temporary substitute for such auto or recreational vehicle also is an insured; -Any other person or organization, but only with respect to the legal responsibility for acts or omissions of the insured or any family member while using an auto or recreational vehicle (however, the owner or lessor of an auto or recreational vehicle loaned or hired for use by an insured or on an insured's behalf is not an insured); or -Any person or organization legally responsible for animals owned by the insured or any family member (however, a person or organization using or having custody of such animals in the course of any business or without the consent of the owner is not an insured).

The private insurers that participate in a WYO program write and service policies on a

-no risk-bearing basis through a special arrangement with the Federal Insurance Administration (FIA). -They retain part of the flood insurance premium to pay for commissions and administrative costs. -The remaining premiums, plus investment, are used to cover losses. -If the premium is insufficient to cover losses, the insurers will be reimbursed for the excess costs by the NFIP. Coverage purchased through the NFIP and through the WYO insurance plan is identical. Any licensed property and casualty producer may place business with the NFIP.

Watercraft liability coverage provides

-protection up to the specified limits, for claims or suits against a covered person for damages because of bodily injury or property damage caused by a watercraft occurrence. -In addition to the promise to pay judgments arising out of such suits, the insurer also agrees to defend the insured, but reserves to the insurer the right to make settlement if it deems it expedient. As in the case of other liability policies, coverage for the cost of defense is payable in addition to the policy's limits.

The General Property Policy Form is used to insure commercial structures such as apartment buildings, schools and office buildings. The General form contains 4 coverages:

1) Coverage A 2) Coverage B 3) Coverage C 4)Coverage D

The Nationwide Marine Definition defines 4 general classes of risks that may be the subject of Inland Marine coverage. These risks are as follows:

1) Domestic shipments and transportation risks; 2) Bridges, tunnels, and other instrumentalities of transportation and communication; 3) Commercial property floater risks; and 4) Personal property floater risks.

The Standard Fire Policy (SFP) is a named perils contract, so it only covers those perils specified in the policy. The insuring agreement states that the policy covers direct loss resulting from any of the following 3 perils:

1) Fire (hostile fires only not friendly fires); 2) Lightning; and 3) Removal of property from premises endangered by the perils (fire & lightning) insured against. Removal coverage applies automatically for 5 days. .

Because adoption of flood insurance was slow to take hold, the federal government passed the Flood Disaster Protection Act of 1973 which mandated flood insurance in the following situations:

1) Flood insurance is required in certain flood-prone areas as a condition for receiving loans through, or backed by, the federal government; and 2) Property owners who fail to purchase flood insurance within 1 year after it becomes available will not be eligible for full disaster relief funding. The amount of disaster relief will be reduced by the amount of insurance that could have been purchased.

In 1968, Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods. The program consists of 3 main components:

1) Insurance 2) Floodplain Management 3) Floodplain mapping

To prevent overinsurance, the insuring agreement of the standard fire policy has identified limitations on the maximum amount that the insured can collect for a loss. The amounts payable may not exceed the smallest of the following amount

1) Policy Limit 2) Actual Cash Value(ACV) 3) Cost to repair or replace 4) Interest of the insured 5) Pro Rata Liability

In an Inland Marine policy conditions, "valuation" specifies 3 limits for the insured property:

1) The actual cash value of the property; 2) The cost to restore the property; 3) The cost of replacement with substantially identical property.

Given the percentages at least through CEA are from

10% to 15% of the value insured, the typical deductible for Earthquake coverage is far greater than common property deductibles. -As an example, the deductible on a $100,000 property for Homeowners Part A could be from $250 to $2,500 on average, where a 10% to 15% Earthquake deductible on the same property could be $10,000 to $15,000.

-The policy listed the applicable conditions in a

165 line format and required the attachment of additional forms which address important aspects of coverage.

The Standard Fire Policy was initially drafted by the insurance industry in

1918 and was designed to indemnify the insured from loss of or damage to the insured building, furniture, fixtures, or other personal property named in the policy, as a result of fire.

FIMA many deny coverage through a provision in the

1968 Act for any property that is in violation of state or local laws, regulations or ordinances.

Earthquake coverage purchased through sources other than those sponsored by the CEA range from

2% to 20% of the policy limits. However, given the state of California has experienced more earthquake activity than any other state in the U.S., most Earthquake insurance is written through the CEA, primarily due to the fact any company offering Homeowners insurance in California must also offer Earthquake insurance, referred to as the "mandatory offer law."

-According to a report issued by the California Department of Insurance, more than

5 million homes are currently located in California's wildland urban interface.

The following losses do not meet the definition of flood or are excluded from coverage:

: landslides, backup of sewers unrelated to a flood, windblown rain, snow, or sleet. Flooding that is within the insured's control will not be covered.

California Regulations

All fire policies issued in California must be written on the standard form and may not contain any additions. No part of the standard form can be omitted or changed except for a policy providing coverage against the peril of fire only, or in combination with coverage against other perils, provided that coverage with respect to the peril of fire is substantially equivalent to or more favorable to the insured than that contained in such standard form fire insurance policy.

Earthquake Coverage

An earthquake is defined as a trembling or shaking of the earth that is volcanic or seismic in origin, often resulting in severe damage. It is a peril excluded by most standard property forms.

FEMA

Federal Emergency Management Agency

The Personal Effects floater is used to insure personal effects carried or worn by travelers anywhere in the world, but not while the property is at home.

Coverage is usually limited to $100 for jewelry, watches and furs, and there is no coverage for vehicles, bicycles, currency or travel tickets.

Additional statutory strategies for reducing the chance of building loss or damage in a wildland urban interface area are as follows:

Defensible Space & Exterior Wildfire Exposure Protection

There is a 30-day waiting period after the application has been accepted before coverage is effective except in the following conditions:

During the first 30 days after a community enters the emergency or normal programs, then coverage begins at 12:01 a.m. the day after application and premium payment have been mailed; When an existing policy is assigned to a property purchaser; and At 12:01 a.m. on the 5th day after an endorsement request and premium have been mailed for an existing policy. No binders are issued during the waiting period.

Types of Areas Served by FAIR Plan

FAIR plans provide property insurance to accept risks in specifically designated urban, inner city areas, or brush fire-prone areas for which coverage is not available in the normal market because of the area's geographic location. In these areas, insureds are subject to losses from high winds, flooding and wave wash, and other perils for which coverage is commonly written.

Whenever the authority issues or renews a residential earthquake insurance policy, they are required to provide the following notice, in 14-point boldface type, to the insured:

GO TO NOTES TABLE

Together with the state Fire Director, the Commissioner of Insurance have signed the

Memorandum of Understanding to mutually promote awareness and collaboration among the insurance industry, fire officials and the public to prevent and mitigate losses caused by wildfires.

National Flood Insurance is sold and serviced directly through

NFIP or through a write your own (WYO) insurance program.

NFIP

National Flood Insurance Program

-In 1943 the policy was standardized into the

New York Standard Fire policy and was adopted by 46 of the then 48 states as the "standard" fire policy form. (Massachusetts adopted the New England Fire Policy, and Texas adopted its own form.)

Section I

Physical damage coverage on the boat is designated Coverage A in the Boatowners Policy. It includes coverage for the actual cash value (ACV) of: -The motor(s) described in the Declarations, including remote controls and batteries; -The boat described in the Declarations, including its permanently attached equipment; -The trailer described in the Declarations if specifically designed for the transportation of the boat; and -When covered property includes a boat, equipment and accessories manufactured for marine use.

The policy consists of 2 sections.

Section I contains the Physical Damage Coverages which includes the perils insured section, exclusions, and conditions applicable to Section I only. Section II contains the insuring agreements for watercraft liability, medical payments and uninsured boaters. There is a set of Section II conditions, as well as a set of general conditions applicable to both Section I and Section II.

Single Limit of Coverage vs. Multiple Limit

Single Limit coverage for Earthquake damage is where all component coverages within a homeowners policy can be applied toward a single event, such as an Earthquake.

The California Fire Plan was developed by the

State Board of Forestry and Fire Protection and the California Department of Forestry and Fire Protection. -The Plan serves as the state's road map for reducing the risk of wildfires, and sets goals and objectives for collaboration of government and community to enhance the protection of lives, property and natural resources.

California Fair Access to Insurance Requirements (FAIR) Plan Marketplace Needs Met By FAIR Plan

The establishment of a FAIR Plan (fair access to insurance requirements), an industry placement facility and a joint reinsurance association, was made to provide for the equitable distribution among admitted insurers of the responsibility for insuring qualified property for which basic property insurance cannot be obtained through the normal insurance marketplace.

Areas that Affect the Risks and Hazards

The factors increasing the threat of fires include the following: -Location's topography (relative position, elevations, elements); -Dry weather and frequent droughts; -Increased fuel production and consumption; -Greater urban interface and increases in population.

Flood Definition

The key to triggering a flood policy is for the damage to be caused by a flood, as defined by the NFIP. Water damage that does not meet this definition is not considered a flood.

Coverages & Limits

The maximum coverage available under the regular National Flood Insurance Program (smaller emergency limits are available until a community has been approved by the NFIP) for homes, small businesses and other nonresidential properties is as follows: LOOK AT TABLE ON NOTES

State or Federal Facilities that Provide Coverage

The participating insurer that writes the underlying policy of residential property insurance can market the authority policies, and may be reasonably compensated for the claims and policyholder services they provide on behalf of the authority.

The Personal Articles floater is used to insure certain types of personal property on a scheduled basis.

The types of property that may be covered are usually pre-printed on the form including jewelry, furs, cameras, musical instruments, or fine arts. Other types of property may also be added to the coverage form.

Cargo Insurance

This coverage is written separately from the insurance on the ship and protects the owner of the cargo from financial loss that would result if the cargo is lost or destroyed.

Freight Insurance

This coverage is written to protect the owner of the vessel from the loss of the charges made for carrying the goods. If the ship is lost, the income that would have been earned upon completion of the voyage is also lost.

Hull Insurance

This is a boat physical damage coverage.

Navigation and Territorial Definitions

This is an important part of the contract that an insured should be made aware of.

Yacht Policies

This policy is used to provided property and liability coverage on larger boats, in addition to some small sailboats and runabouts. Coverage is provided for losses that occur within defined navigational waters.

Eligibility NFIP

To be eligible for the flood program an insured must live in a community that has met the minimum floodplain management guidelines. An eligible structure must have 2 solid walls and a roof, be principally above ground, and not entirely over water

As you have already learned, in the state of California, applicants can apply for Earthquake coverage from the California Earthquake Authority

a state-sponsored private-public partnership, through participating insurance companies. Earthquake policies obtained through CEA can be offered to qualifying applicants with a deductible applied as a percentage of the value insured, ranging from 10% to 15% of the policy limits.

Medical payments coverage pays for

accidents occurring while the injured party is in, upon, getting into or out of the insured boat. Some policies include medical payments coverage for persons who are injured while water-skiing.

Many of the exclusions found in homeowners or dwelling policies for certain types of property, such as

accounts, bills, lawns, trees, aircraft, motor vehicles, fences, retaining walls, etc., are also excluded from the flood insurance policy.

Nearly 20,000 communities across the United States and its territories participate in the NFIP by

adopting and enforcing floodplain management ordinances to reduce future flood damage. In exchange, the NFIP makes federally backed flood insurance available to homeowners, renters, and business owners in these communities.

Any deductible on property insurance coverage is defined as the

amount of loss the policyowner is responsible for paying before covered benefits from the insurer are payable, usually expressed as a specific dollar amount.

Excess ( follow form)

an excess policy does not expand or restrict coverage in relation to the underlying insurance. The coverage mirrors the underlying policy, but increases the limit of liability based on the amounts selected by the insured.

Exclusions under the Boatowners policy

include bodily injury or property damage which is expected or intended by the insured, and the liability of any person using a watercraft without permission. -Other exclusions are bodily injury to persons eligible for Workers Compensation, damage to owned or rented property in the care, custody and control of the insured, and liability of a person engaged in the business of selling, repairing, storing or moving watercraft. The policy also excludes liability arising out of racing, speed test, war and nuclear hazards.

Wildfires also cause

injuries and death to members of the public who live in the affected areas, and to the state's fire department and law enforcement personnel.

According to the California Insurance Code, basic property insurance means

insurance against direct loss to real or tangible personal property at a fixed location from perils insured under the standard fire policy, and may include extended coverage endorsement for vandalism and malicious mischief, and such other insurance coverages as may be added with respect to such property by the industry placement facility with the approval of the Commissioner, but it does not include insurance on automobile or farm risks.

An annual transit policy is an unfiled coverage form that can be used to

insure the property interest of the shipper or the consignee. This policy is used by those businesses that ship goods on a regular basis.

-The reverse will be true for a lower deductible, where the premium will be higher, due to the

insurer being subject to paying a greater amount on a policy claim in the event of a covered loss.

As defined by the NFIP, a flood

is a general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area, or of 2 or more properties (at least one of which is the insured's property).

Nationwide Marine Definition

is a statement about the types of coverage that may properly be written on Inland Marine and Ocean Marine insurance forms. The National Association of Insurance Commissioners (NAIC) adopted a Nationwide Marine Insurance Definition in 1953, and revised it in 1976. This definition is used principally for classification purposes, rather than as a definition of underwriting powers.

The only type of loss covered by the Standard Fire Policy

is direct losses caused by the named perils. Direct loss means actual physical damage to, or destruction of, the insured property.

The primary difference between Earthquake deductibles and commonly applied property deductibles

is the percentages used to calculate Earthquake deductibles, as opposed to set dollar amounts with other property deductibles.

The personal umbrella policy states that

it will pay damages in excess of the primary or underlying insurance for bodily injury or property damage for which an insured becomes legally liable due to a covered occurrence, and personal injury for which an insured becomes legally liable due to one or more of the offenses listed under the definition of personal injury.

Some states require that all property policies issued in the state contain

language which, at a minimum, is equal to the policy language of the Standard Fire Policy.

Rates for Earthquake insurance depend on

location and the probability of an earthquake, as well as the type of structure.

Coverage for the peril of earthquake may be added by endorsement to most property policies, or coverage may be writtenadded by endorsement to most property policies, or coverage may be written in a Difference in Conditions Policy. in a Difference in Conditions Policy.

may be added by endorsement to most property policies, or coverage may be written in a Difference in Conditions Policy.

This type of policy, while extremely useful in cases when the entire home is destroyed,

may be too expensive in cases when a home is merely damaged.

An insured must maintain the underlying insurance at the full limits stated in the declarations with

no change to more restrictive conditions during the term of the policy. If any underlying insurance is canceled or not renewed and not replaced, the insured must notify the insurer immediately.

The inability to obtain such insurance after diligent effort through .

normal channels may, in the discretion of the association, be demonstrated by a signed general statement to that effect on a form prescribed by the association.

The disadvantage of offering earthquake coverage by endorsement is

that endorsements affect the premium paid for the entire HO policy, and Earthquake endorsement would most likely require an adjustment of the base premium.

Interest of the insured

the amount equal to the insured's interest in the property at the time of loss; and

Most personal lines Inland Marine insurance is written on an

open-peril form

Replacement cost coverage is provided for

partial losses, while total losses are covered for an amount stated in the policy form.

The deductible options are set by the insurance company for property insurance from which the .

policyowner can select, and typically start as low as $250, and can range higher in various increments from $500 to $5,000 or more.

Protection and Indemnity provides coverage for .

potential legal fees if a boatowner is sued by a third party.

. The coverage provides that the watercraft must be used solely for

private, pleasure use and that coverage is excluded if the boat is hired out, chartered, used in an official speed or race contest, or used to transport people or property for a fee

Property covered is limited to the

property actually described in the policy, for loss by a peril insured against in the policy.

In these cases the insured will be required to pay a deductible known as a

self-insured retention or SIR

SIR

self-insured retention; a deductible that must be paid by an insured in order to access the umbrella policy's funds when the insured's underlying coverage will not cover the loss

.In recent years, the state of California has been under the

serious threat of wildfires that destroy not only thousands of acres of land, but also thousands of residential and business structures, and case millions of dollars in property damage.

The state recently updates its State Hazard Mitigation Plan (SHMP), approved by FEMA, that

serves as the primary guidance document and provides current hazard analysis, mitigation strategies, goals, and objectives.

Since umbrella policies are often written as non-standardized forms, some do not

some do not provide any excess coverage for UM/UIM at all; some may provide a limited amount of excess coverage for UM/UIM, such as $25,000, for no additional premium charge, and some may cover up to $1,000,000 or more, by adding an excess UM/UIM endorsement to the umbrella for an additional premium charge.

The most restrictive policies provide coverage only on a

specific body of water and within a narrow parameter around that particular area. Many policies provide no coverage for offshore waters, such as the Gulf of Mexico.

Multiple Limit coverage would include

specific limits for specific parts of a dwelling property, such as chimney, debris removal, building code upgrades, emergency repairs, land, additional living expenses, loss of rent, other structures, etc.

That coverage may be provided in the policy of residential property insurance itself, either by

specific policy provision or endorsement, or in a separate policy or certificate of insurance, which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils

The Personal Property floater provides coverage to personal property on an all-risk basis anywhere in the world, as long as the property is not

specifically excluded by the policy. Property is usually written on an unscheduled basis. Certain categories of property are subject to special limits.

The State spends hundreds of millions of dollars annually on

suppressing and disaster recovery efforts required as a result of natural and human-caused fires. Property damages to residential homes and businesses amount to over $200 million each year. Wildfires also cause injuries and death to members of the public who live in the affected areas, and to the state's fire department and law enforcement personnel.

Policy limit

the amount specified in the policy;

If the insured fails to maintain underlying insurance,

the insurer will not be liable under the policy for more than it would have been liable if that underlying insurance was in effect.

Coverage can be written for all outgoing shipments or incoming shipments (or both) that occur during

the policy period

However, if described property is removed from the original location to protect it from the insured perils,

the policy will automatically cover the property for 5 days at the other location for virtually all types of perils.

If underlying coverage is not in effect,

the umbrella insurer will provide defense at the insurer's expense by counsel of the insurer's choice.

Although insureds may increase their UM/UIM limits to provide excess UM/UIM limits of liability,

they cannot increase their UM/UIM limits above the limits of Bodily Injury liability they carry on their policy.

The FAIR association is formed by insurers licensed to

to write and engaged in writing basic property insurance within this state to assist persons in securing basic property insurance.

Even though Standard Fire Policy identifies covered property, an additional coverage form must be attached that actually describes

type of property being covered. Manuscripts or bullion are only covered if specifically named in the policy. -For example: Joe's building and contents are insured. The building catches on fire, so Joe begins removing the contents and puts them in a warehouse so they too will not burn. That night the contents that had been removed are stolen. Even though theft is not a covered peril under the policy, Joe would collect for the loss under the removal provision.

Umbrella ( stand-alone)

umbrella policy differs from an excess policy in that the coverage provided can be greater or less than the underlying policies.

Uninsured motorist/underinsured motorist coverage is also excluded by the

umbrella policy, but can be reinstated through an endorsement in states where such coverage is required.

In addition, other property that is particularly prone to flood damage also is excluded. These include

underground structures and equipment, newly constructed buildings in, on, or over water, and structures that are primarily considered containers.

If covered, claims would only be paid for UM bodily injury that is in excess of the

underlying primary UM/UIM insurance as shown on the Umbrella Declarations. Property damage liability is not covered.

Uninsured Boaters coverage

usually provides a stipulated amount of coverage (e.g. $10,000) which can apply for accidents with uninsured watercraft. Increased limits are available for additional premium.

Ocean Marine Coverage

was one of the earliest forms of insurance written. It provides coverage for property while in transit over water.

A common exclusion, called the

water skiing clause, excludes bodily injury to any person skiing or otherwise being towed by the insured boat.

The umbrella policy follows the underlying policies' coverage for

watercraft and recreational vehicles. However, optional endorsements to exclude coverage for designated recreational vehicles are available to the insurer.

Homeowners policies limit the amount of property and liability coverage available for

watercraft.

Waiting or affiliation period

— A period of time specified in a pet insurance policy that must pass before coverage can begin.

Congenital anomaly or disorder

— A physical condition present at birth, either due to inherited or environmental factors, that contributes to illness or disease;

Veterinary expenses

— All costs resulting from advice, care, diagnosis, or drug treatment from a veterinarian; and

Hereditary disorder

— An illness or disease resulting from a genetically transmitted abnormality from a parent to their offspring;

Veterinarian

— An individual licensed by the Veterinary Medical Board to practice veterinary medicine;

Pre-existing condition

— Any condition for which a veterinarian provided medical advice, a pet received medical treatment, or a pet displayed signs or symptoms of a medical condition, prior to the effective day of the policy or during the waiting period;

Recovery

— Coverage applies for the reasonable cost incurred by the insured to recover the insured property in the event of stranding or sinking. This coverage is derived from an Ocean Marine provision entitled Salvage. However, unlike the Ocean Marine Salvage charges, which are payable in addition to the limits of coverage on the hull, the Recovery coverage of the Boatowners policy does not increase the limits of liability under the policy

Pet insurance

— Individual or group insurance that provides coverage for veterinary expenses;

Perils Insured Against

— The Boatowners Policy insuring agreement is usually of the open-peril type, providing that the insurer will pay for direct and accidental loss to the property insured.

Protection and Indemnity

— The coverage, commonly called P&I, provides bodily injury and property damage liability coverage.

Pro rata liability

— limits the liability of the insurer to a portion of the loss no greater than the amount the insured bears to the whole insurance covering the property whether collected or not. Pro rata prevents an insured from collecting overinsurance from multiple policies. For example, if a $100,000 building were insured under two separate standard fire policies, each insurer would only have to pay one-half of any loss. Without this clause, the insured might attempt to collect $200,000 for the total loss of the $100,000 building.

Cost to repair or replace

— replacement with property of like kind and quality within a reasonable time;