Module 6 Other Insurance Policies
Personal Umbrella Liability Policy as "Drop Down" Coverage
"drops down" and picks up where the underlying policy provides no coverage.
Additional Perils for MHC (think car)
The following additional perils are covered in Mobile Homeowners C policy: 1. Sinking, 2. Burning, 3. Collision, 4. Derailment of any conveyance transporting the mobile home.
Watercraft PD
pays for property losses on an "open perils" basis for physical damage, theft, sinking of the vessel, its tackle, passenger fittings, equipment, stores, and ordinances.
Personal Umbrella Liability Policy as Excess Coverage
provides "excess" coverage when the limits of underlying liability policies are exhausted The reason for this is because the Personal Umbrella Liability Policy is designed to pay after the underlying coverage pays the full amount available
Deductibles in the Flood Insurance Policies
$500 for buildings and $500 for contents (Two deductibles)
Covered Perils under MH
1. Fire or lightning (not scorching), 2. Windstorm or hail, 3. Explosion, smoke or smudge, 4. Aircraft and vehicles, 5. Flood and rising water, 6. Theft including vandalism and malicious mischief (VMM), 7. Falling objects, 8. Breaking glass or safety glazing material.
Property Excluded
1. Money; 2. Lawns, trees, shrubs, plants, growing crops and livestock; 3. Fences, retaining walls, outdoor swimming pools, bridges and docks; 4. Buildings that are in, on or over water; 5. Underground structures such as wells and septic tanks.
The two flood insurance programs
1. The NFIP Emergency flood insurance program 2. The NFIP Regular Flood Insurance Program
Eligibility for the Preferred Risk Policy (PRP) based on Loss History
1. Two (2) flood insurance claim payments, each more than $1,000; 2. Three (3) or more flood insurance claim payments, regardless of amount; 3. Two (2) federal flood disaster relief payments, each more than $1,000; 4. Three (3) federal flood disaster relief payments (including loans and grants), regardless of amount; 5. One (1) flood insurance claim payment and one (1) federal flood disaster relief payment (including loans and grants), each more than $1,000.
Comprehensive Peronal Liability (CPL) Policy includes:
A Comprehensive Personal Liability (CPL) Policy provides protection for an insured and his or her family members against liability exposures of bodily injury or property damage caused by risks such as pets, bicycles, children, participation in sports activity, operating some watercraft and other non-business activities. The Comprehensive Personal Liability (CPL) Policy typically provides $100,000 limit with higher limits available. Medical payments are included with a $500 minimum benefit. Liability for property damages to others is covered up to $250. Supplementary payments are made for legal defense, loss of earnings, premiums for bail bonds and first aid expenses.
Claims Handling (Flood)
Claims for damages must be submitted within sixty (60) days after the loss occurs by the claimant.
Mobile home Coverage Parts
Coverage Part A - Dwelling, Coverage Part B - Other structures, Coverage Part C - Personal property, Coverage Part D - Loss of use.
Waiting Period
During the first thirty (30) days after a community becomes eligible for the Emergency (Flood Insurance) Program, an individual's policy is effective at 12:01 a.m. on the day after he or she applied for the policy and paid the premium.
Eligibility for the NFIP Emergency and Regular Flood Insurance Programs
Eligible buildings for the Emergency and Regular Programs are residential structures, multiple dwellings (apartments, town homes and condominiums) and non-residential buildings (commercial).
Flood Insurance Rate Maps (FIRM)
Flood Insurance Rate Maps (FIRM) is official maps of the community published by the Federal Emergency Management Agency (FEMA) containing detailed actuarial risk premium zones. In order to determine premium rates for insurance coverage, maps indicating the degree of flood hazards of a participating community are used. The Flood Insurance Rate Map (FIRM) provides the: 1. Limits for mapped flood hazard areas in a community, 2. Insurance zone designations used to determine insurance rates and premiums, 3. Information that can be used to help design and construct new buildings or repair existing buildings.
Flood Zones
Flood zones are geographic areas that the Federal Emergency Management Agency (FEMA) has defined according to varying levels of flood risk. These zones are depicted on a community's Flood Insurance Rate Map (FIRM) or Flood Hazard Boundary Map. Each zone reflects the severity or type of flooding in the area. Flood zones are designated as either medium to low risk zones and high risk zones. Flood zones are expressed by letters indicating the flood risk. For example, an A - Zone is a high risk area while a B - Zone is a low to moderate risk area.
Who needs flood Insurance?
Floods are not restricted to people who live near water. Flood insurance is available as long as the community participates in the National Flood Insurance Program (NFIP). Nearly 25% of all floods occur in moderate to low-risk areas. One very important point for all property owners is to recognize that property policies, such as a Homeowners Policy, do not cover floods.
Replacement Cost (RC) and Actual Cash Value (ACV) (Flood)
Only single family dwellings can be written as Replacement Cost (RC) and as long as the coverage is at least 80% of the replacement cost of the structure. Contents coverage is always written as Actual Cash Value (ACV).
Perils not covered by flood insurance
Perils NOT covered by the Flood Policy are earthquakes, landslides, sewer backup (unless due to a covered flood), and earth movement.
Contents Removal (Flood)
Policies allow for the removal of property from the described insured location to protect from a flood for a period of forty-five (45) days.
Types of Flood Insurance Policies
Standard Risk, Preferred Risk
CPL Exclusions:
The Comprehensive Personal Liability (CPL) Policy Excludes: 1. Property owned by the insured, 2. Losses due to war or any act of war, 3. Losses as a result of liability assumed from a contract, 4. Bodily injury covered under Workers' Compensation, 5. Personal injury damages from libel and slander, 6. Losses that are covered under another policy such as an auto policy. The Comprehensive Personal Liability (CPL) Policy is rarely written because liability coverage is automatic in Auto Policies, Homeowners Policies and is available by endorsement for Dwelling Policies.
1. The NFIP Emergency flood insurance program
The Emergency Flood Insurance Program coverage is available after a community has: (a) Agreed but not completed the process to adopt flood control measures (including zone ordinances that prohibit new construction in the flood plain), (b) Requested federal assistance and participation in the National Flood Insurance Program (NFIP). Single family home: Building 35K, Contents: 10K Other residential structures: 100K, 100K Nonresidential Structures: 100k, 100k
Flood Peril Definition
The National Flood Insurance Program (NFIP) defines a flood as a general and temporary condition of partial or complete inundation of two (2) or more acres of normally dry land area or of two (2) or more properties from: 1. Overflow of inland or tidal waters, 2. Unusual and rapid accumulation or runoff of surface waters from any source, 3. Mudflow (Mudflow is defined as, "A river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water."), 4. 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.
National Flood Insurance Program (NFIP)
The National Flood Insurance Program was established by the United States Congress with the National Insurance Act of 1968. The purpose of the National Flood Insurance Program (NFIP) is to provide coverage against flooding (by direct loss) for all owners of insurable property (a building and/or its contents) in a community participating in the National Flood Insurance Program (NFIP). The National Flood Insurance Program (NFIP) covers individual residential properties (private dwellings) and commercial properties as well as buildings in the course of construction, townhouses and condominiums located in communities participating in the National Flood Insurance Program. All qualifying properties may be covered by the National Flood Insurance Program (NFIP) for personal and commercial property. The National Flood Insurance Program (NFIP) provides flood coverage (by direct loss) on personal and business property at subsidized rates. The National Flood Insurance Program (NFIP) encourages communities to practice methods of controlling floods and restrict development in flood areas.
Personal Umbrella Liability Policy Self-Insured Retention (SIR)
The Personal Umbrella Liability Policy features a form of policy "deductible" called a Self Insured Retention (SIR). This specified dollar amount is applied to any claim under the Personal Umbrella Liability Policy if the policy is drop down coverage.
Follow Form
The Personal Umbrella Liability Policy may be referred to as a "follow form" policy. Essentially this means that the Personal Umbrella Liability Policy uses the same written provisions of the underlying policy such as the Homeowners or Auto Policy
Preferred Risk Policy (PRP)
The Preferred Risk Policy (PRP) is the Standard Risk Policy adapted for moderate to low risk properties. The significant difference is the lower premiums for the Preferred Risk Policy (PRP). The Preferred Risk (PRP) also includes contents coverage automatically in the policy.
The Standard Risk Policy (SRP)
The Standard Risk Policy (SRP) is used to insure higher risk properties. The Standard Risk Policy (SRP) covers the insured dwelling (residence premises) and/or its contents. The Standard Risk Policy (SRP) consists of (1) the Dwelling Form, (2) the General Property Form, and (3) the Residential Condominium Building Association Policy (RCBAP) Form. The Standard Risk Policy covers structural, furnace, water heater and air conditioner damage, flood debris clean-up and floor surface damage such as to carpeting and tile. Contents coverage for items such as furniture, collectibles, clothing, jewelry and artwork will not be covered. However, contents coverage can be added to the policy.
Additional Perils for MHF (think fixed)
The following additional perils are covered in Mobile Homeowners F: 1. Collapse of a building; 2. Sudden and accidental tearing apart of a steam or hot water heating system, air conditioning system or an appliance for heating water; 3. Sudden and accidental damage from artificially generated electrical current; 4. Freezing from plumbing, heating or air conditioning system or household appliance; 5. Weight of ice, snow or sleet; 6. Accidental discharge or overflow of water from a plumbing, heating or air-conditioning system or within a household appliance.
Personal Umbrella Policy
The purpose of the Personal Umbrella Liability Policy is to provide high dollar amounts of liability coverage (typically $1 million or more) to help protect against catastrophic liability from third parties claims that exceed the limits of a primary insurance policy such as a Homeowners Policy. Claims for bodily injury (BI) could easily exceed the normal limits of the Homeowners or Auto Policies. (last line of defense)
2. The NFIP Regular Flood Insurance Program
To qualify for the Regular Flood Insurance Program, the community must implement the requirements that they submitted when the community became eligible for the Emergency Flood Insurance Program. Property coverage limits are higher in the Regular Flood Insurance Program than in the Emergency Flood Insurance Program. Single family: 250K, 100K Other residential: 250K, 100K Nonresidential: 500K, 500K
Write Your Own (WYO) Flood
Write Your Own (WYO) is a flood insurance program available under the National Flood Insurance Program (NFIP) that allows participating insurers to issue NFIP flood insurance policies, in contrast to policies issued directly by the NFIP. WYO insurers write the policies, but the NFIP reinsures 100 percent of the coverage. WYO companies sell policies, service policies and collect premiums on the policies the WYO issues. The WYO keeps a percentage of the premiums charged to pay potential claims. If claims exceed the amount held by the WYO Program, the NFIP pays the difference. The goals of the Write Your Own (WYO) Program are to: 1. Increase the National Flood Insurance Program (NFIP) policy base and the geographic distribution of policies, 2. Improve service to National Flood Insurance Program (NFIP) policyholders through the infusion of insurance industry knowledge, 3. Provide the insurance industry with direct operating experience with flood insurance.
The Federal Emergency The National Flood Insurance Program (NFIP)
comes under the authority of the Federal Emergency Management Agency (FEMA). FEMA comes under the Department of Homeland Security.management Agency (FEMA)
Watercraft Liability
will pay for bodily injury and property damage caused by an insured and for which the insured becomes liable to pay. Also, Section II contains a provision for medical payments that will pay reasonable and necessary medical and funeral expenses for third parties due to a boating accident filed within three (3) years of the acciden
