220 Homeowners Program
What are the additional coverages?
"Additional Coverages," which are automatically provided. A major benefit is that they are paid in addition to the $100,000 policy limit. Covered events start with, first, the " Cost of Defense." The next benefit is "First Aid Coverage." What is First Aid Coverage? It provides for immediate care. If a person gets hurt on the insured's property, the insured can go to a CVS pharmacy to purchase a box of Band-Aids, and can then call the paramedies or obtain the care the injured person deserves. After the insurance company finds out what occurred, and reimburses the insured for the Band-Aids, then the carrier will take the insured back up to the Liability or the Medical Payments category in order for payment to be made. Number three covers "Property of Others. "The maximum coverage limit is $1,000. This provides voluntary coverage if the insurer desires to pay a limited amount without admitting fault. The original Section Il limit was up to $100,000, which limit requires the insured to be legally liable. In contrast, this lower amount of $1,000 for property damage to others is goodwill money. The damage may not be the fault of the insured; however, damage to others' property may occur. Example: The insured borrows a lawn mower and picks up all the items in his back yard (branches, trash, rocks, paper, and more), in a complete manner. While mowing, the insured experiences the incident of a rock flying up from under the mower, which breaks the blade. These kinds of situations are just flukes. The insured was not negligent. The insurance company will offer the $1,000 as goodwill money to the owner of the lawn mower. Another built-in feature is "Loss Assessment." Previously, Section I - Loss Assessment paid up to $1,000 for a qualified assessment from the Homeowners' association. The other difference is the limit for condo association assessments. Condo associations' assessments are $2,000. Why is an additional amount provided when Section I provides coverage? The difference is that under Section One, that amount was for damage to the association's common property. Under Section I - Liability, the coverage is for resulting damage caused by or from the association's property. Example: The insured has an HO-6 po
Coverage A:
"Dwelling" covers the dwelling building and structures attached, as well as construction materials and supplies on or adjacent to the premises. Under Form HO-6, Coverage A covers building additions and alterations, other real property at the condominium premises, and property for which the insured has insurance responsibility under an association agreement. Condominium association agreements vary as to what the association insures and what the unit-owner is responsible for. Not only will a unit-owner need Cor- erage A, but an increased amount over the HO-6 basic Coverage A limit is almost always necessary. Coverage A does not appear in Form HO-4, as the build- ing structure is never covered under that form. A limited amount of building additions and alterations coverage is provided. See "Additional Coverages.
Coverage D:
"Loss of Use" covers increases over normal living costs if damage from a covered peril makes the residence unfit for occupancy. loss of use including coverage for additional living expense (the increase in cost to maintain the insured's normal standard of living, if a covered loss causes the living quarters to become uninhabitable) and fair rental value (the loss of rents or rental value the insured sustains because a covered loss renders any portion of a residence premises rented or held for rental uninhabitable.) Coverage D is basically: (1) 30% of Coverage A under HO-2, HO-3, or HO-5; (2) 30% of Coverage C under HO-4; (3) 50% of Coverage C under HO-6; and (4) 10% of Coverage A under HO-8. These limits (except under HO-8) may be increased to any higher amount.
Coverage B:
"Other Structures" covers private structures on the residence premises that are not attached to the main dwelling, such as a detached garage, guest house, fence, tennis court or storage building. It does not include structures that are used for certain business purposes or are rented or held for rental to anyone who is not a tenant of the main dwelling, unless the rental is solely for private garage purposes. Coverage B does not appear in forms HO-4 or HO-6. Limit 10%
Coverage C:
"Personal Property" covers personal property, wherever it is located, that is owned or used by "an insured." Additionally, it is optional for the insured to give the benefit of the coverage to property owned by others while such property is located at any residence occupied by the insured. Property of a guest or a resident's employee is covered while at any residence occupied by an insured..
Insured Location means:
"Residence premises" • Part of other premises, used by you as a residence a Listed on Declaration page, or • Acquired by you during the policy period
Residence premises is:
. The one-family dwelling where the Named Insured resides; . The two, three, or four family dwelling where the Named Insured resides in at least one of the family units; or . That part of any other building where insured resides * Must be shown as the residence premises" in the Declarations * Includes other structures and grounds at that location
Business means:
. Trade, profession or occupation engaged in or a full-time, part-time, or occasional basis, or Engaged in for money or other compensation except the following: • An activity for which the insured receives less than $2,000 in total compensation for the 12 months prior to the policy effective date • Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity; • Home day care services where no compensation is received, other than the mutual exchange of such services; or • Home day care services to a relative of an "insured"
Sources for Underwriting
1. Insurance Policy Application 2. Insurer questionnaires 3. Inspections 4. In-house indexes 5. Producer visits 6. Public Records 7. Credit Reports
The most accurate description of Pure Risk is which of the following? A. Insurable B. chance of financial loss C. Only eligible if the insured can see the damage D. Not insurable
A. Insurable
The insured has a home. During a fire loss, one wall is damaged but the other is not damaged. If the insured is required to tear down the undamaged wall, what will pay to build it back to specifications? A. Ordinance and Law B. Replacement Cost C. Actual Cash Value D. Coinsurance
A. Ordinance and Law Ordinance and Law The course reviewed this concept in the Dwelling Property. To review: this coverage is to assist the insured after a covered loss, to build their property back to code. Two options were provided by Florida law One was 25% and the other one was 50%.
What is a Deposit Premium? A. Partial premium placed as a down payment at the start of the policy B. Full amount of premium due for the policy C. No premium paid yet, a promissory note to pay the premium in the future D. A direct wire of premium into the insurance company's bank account
A. Partial premium placed as a down payment at the start of the policy
Which of the following can be found in Definitions? A. Who is an insured? B. Duties of the Insured at time of loss C. Intentionally causing damage to their property D. Coverage territory
A. Who is an insured?
What is the amount provided for Vicarious Parental Liability coverage? A. $1, 000 B. $10.000 C. $50.000 D. 20,000
B. $10.000 Parental Vicarious Liability: This coverage is provided in response to a Florida law. The insured will not be able to find this coverage in the policy. Parental Vicarious Liability covers the negligent supervision of the insured's child. If the insured is sued for the intentional actions of his child, the policy will defend the insured child and pay for the damage the insured child caused. Parents were sued for negligent supervision. After losing the court case, the insurance companies included an exclusion for Parental Vicarious Liability, which is negligent supervision. Subsequently, a law was passed in Florida. The law now states that the insurance policy will pay for negligent supervision of the insured's child, up to a $10,000 maximum.
If the insured's money is stolen, under the HO-2, how much is payable? A. None B. $200 C. $500 D. Unlimited
B. $200 Feedback/Explanation: Endorsement from $200 to $1,000
Which of the following can be found in "Conditions"? A. Who is an insured? B. Duties of the Insured at time of loss C. Intentionally causing damage to their property D. Coverage territory
B. Duties of the Insured at time of loss
What is an "Exclusion?" A. Loss Settlement B. Events not payable under the policy C. Hazard D. Events payable only if insurer agrees coverage exist
B. Events not payable under the policy
What section in the PAP describes payments to others if the insured damages others? A. Uninsured Motorist B. Liability C. Medical Payments D. Other than Collision
B. Liability
For which of the following roof types, does Florida legislation require a discount on an insured's homeowners policy? A. flat B. hip C. gable D. tar & gravel
B. hip
Under "Special Limits" in the Homeowners' policy, if jewelry, watches, and furs are stolen, what is the maximum amount paid? A. $6.000 B. $9,000 C. $1,500 D. $10,000
C. $1,500 Special Limits of Liability $200 Money, bank notes, bullion, gold other than gold ware $1,500 Securities, accounts, deeds, evidences of debt, letters of credit, notes and other bank notes, manuscripts, passports, tickets and stamps $1,500 Watercraft including trailers, furnishings, equipment and outboard engines or motors $1,500 Trailers, or semitrailers not used with watercraft $1,500 Theft of Jewelry, watches, furs, precious and semiprecious stones $2,500 Theft of firearms and related equipment $2.500 Theft of Silverware, silver-plated ware, gold ware, gold-plated ware, platinum ware, platinum-plated ware and pewter ware $2,500 Property on "residence premises" used primarily for "business" $1,500 Property away from the "residence premises" used primarily for business • Does not apply to antennas, tapes, wires, records, disks, or other media used with: • Electronic equipment that reproduces, receives, or transmits audio, visual, or data signals and • Is in or on a motor vehicle. $1,500 Electronic apparatus while in or upon a "motor vehicle" but only if equipped to be operated by power from vehicle electrical system while still being operated by other power sources $250 Antennas, tapes, wires, records, disks, or other media used with: • Electronic equipment that reproduces, receives, or transmits audio, visual, or data signals and • Is in or on a motor vehicle. Personal property refers to the insured's contents.
Under Section II of the Homeowners' policy, what are the basic limits available? A. $1000 - $500 B. $50.000 - $1.000 C. $100,000 - $1,000 D. $100,000 - $50,000
C. $100,000 - $1,000 Feedback/Explanation: $100,000 for Coverage E - Liability and $1,000 for Coverage F - Medical Payments to Others.
All of the following are parts of the co-insurance equation EXCEPT: A. Value of Property B. Loss C. Market Value D. Deductible
C. Market Value
Johnny owns one-quarter of a $400,000 building that has loss by a covered peril. The other three owners were not included on the policy. The cost of the covered loss is $80,000. How much is Johnny's company going pay? A. The whole $80,000 B. One-half - $40,000 C. A proportionate share D. Nothing, because it was not fully insured Another important factor for Insurable Interest states, "The insured's insurable interest must exist at the time of the loss." The next example to illustrates this point.
C. Proportionate share. If the insurance company receives premium for a policy, they will pay something. So, D is not correct. A is not correct because he does not own 100% of the building. Likewise, B is not correct because he does not own one half, there were four owners. So, the best answer would have been $20,000 because he only owns one-quarter of the loss, but that was not listed to choose. Therefore, the best response to choose is C.
Contract of Adhesion:
Contract created by the insurance company - insured cannot negotiate terms. By rule of law, any ambiguities are in favor of the insured. The basic concept of Contract of Adhesion is that the policy has been created by the insurance company and the insured cannot negotiate the terms. Whenever a customer purchases a policy, he must take it or leave it. The customer does not have the right to be able to negotiate. What does this mean to the insurance agent? The agent wants to sell a policy and the insured says, "This wording that says, if I do not pay my premium, the carrier will cancel me. I do not like that wording; can the agent cross it out?" The agent knows that the insurance company will not allow the agent to change wording in a legal document. If that would be possible, the insured would want most of the wording to be changed. So, the concept of a Contract of Adhesion basically says, "Take it or leave it. The insured cannot negotiate the terms of the contract." Modifications to the policy would be made by endorsement. Each endorsement wording also cannot be negotiated.
Under the HO-3, what pays for a detached garage?
Coverage B Coverage B- "Other Structures" covers private structures on the residence premises that are not attached to the main dwelling, such as a detached garage, guest house, fence, tennis court or storage building. It does not include structures that are used for certain business purposes or are rented or held for rental to anyone who is not a tenant of the main dwelling, unless the rental is solely for private garage purposes. Coverage B does not appear in forms HO-4 or HO-6.
Coverage C Exclusions:
Coverage C excludes the following property: 1. Specifically insured articles. 2. Animals, birds, or fish. 3. Motorized vehicles except those used solely to service a residence or designed to assist the hand- capped. Motorized vehicle exclusion includes the equipment and parts, but it does not apply to: Portable electronic equipment that reproduces, receives, or transmits audio, visual, or data signals and is designed to be operated by the power from the electronic system of a motor- ized vehicle. 4. Aircraft and parts (except model or hobby aircraft). 5. Hovercraft and parts. 6. Property of roomers, boarders or other tenants, unless such persons are related to the insured. 7. Property in an apartment that is regularly rented or available for rental to others. 8. Property that is rented or held for rental to others away from the residence premises. 9. Business data, whether contained in books and paper records or electronics software media (except the cost of blank records or media and of prere- corded retail computer programs is covered). 10. Water or steam.
Coverage B - Other Structures
Covers • Structures set apart from the dwelling Does Not Cover • Land • Structures rented to any person not a tenant of the dwelling EXCEPTION: Structure used solely as a private garage Structures such as a detached garage, shed, pool, fence, and other structures are covered if damaged by a Covered Peril. Loss to all detached structures in any one loss will be payable up to 10% of the Coverage "A" limit. Therefore, if the insured purchases Coverage "A" - Dwelling in the amount of $200,000, then the Other Structures coverage would be available up to $20,000 in the course's example. Remember, that 10% of Coverage "A" is the maximum for those other structures in any one covered event. Other structure coverage does not apply when the detached structure is used for Commercial usage. The insured cannot run a business out of the detached garage. An example would be a mechanic shop or a flooring business. Damage to the structure would not be payable if the business is operated from the detached garage
Personal Contract:
Covers persons-not property What if a customer approaches an agent and says, "I would like to purchase an auto insurance policy"? The agent sells the customer the policy and then says, "Here is the auto policy. It covers the vehicle." That statement would be incorrect. The policy does not cover the customer's car. The policy covers the insured for the financial loss that they will suffer if the car is damaged or totaled. When talking about insurance, it does not matter whether the reference is to structures, automobiles, or commercial buildings; the property and casualty policies cover persons for their financial loss, not the damage to their property.
The most accurate definition of a Contract of Adhesion is: A. Staying with the same carrier throughout policy term B. A contract that covers people, not property C. Underwriting large risks to the detriment of the carrier D. Contract created by insurance company; insured cannot negotiate terms; ambiguities in favor of insured
D. Contract created by insurance company; insured cannot negotiate terms; ambiguities in favor of insured
All of the following choices are found on Declarations page EXCEPT: A. Carrier's home address B. Who the insurer will pay C. Date of expiration D. Exclusions
D. Exclusions
What Homeowners policy is necessary if the insured owns a condo unit? A. HO-2 B. HO-3 C. HO-5 D. HO-6
D. HO-6
What is payable under HO for damage occurred to the insured's show dog? A. Full Value B. Only loss of income C. Replacement cost of the dog D. No coverage - specifically excluded
D. No coverage - specifically excluded
Billy and Susie own a home. They went out for dinner, came back, and the house was on fire. All of the following have an insurable interest except: A. Billy and Susie B. ABC financial institution who holds the first mortgage C. Mr. Smith who holds the second mortgage D. Their son who will inherit the property when they die
D. Their son who will inherit the property when they die The question is who does not have an insurable interest? Billy and Susie can suffer financially from the fire loss, because they will lose the use of the property. Therefore, letter A is not the best response because they own the structure and could suffer in cost to complete repairs Letter B says, "The ABC financial institution that holds the first mortgage." The financial institution could suffer financially, because if the house is not rebuilt back, the financial institution's collateral will be gone. Therefore, letter B is also incorrect. Answer C says, "Mr. Smith who holds the second mortgage." Yes, since Mr. Smith also will lose his collateral, this response is an incorrect choice, for the same reason as ABC financial institution. The last option says, "Their son who will inherit it when they die." He does not have a current interest, because in the example, Billy and Susie have not yet died. The son must have an insurable interest at the time of the loss. Therefore, the correct answer would be D.
What are the eligibility criteria for the Homeowners policy?
Eligibility • One to four family, owner-occupied dwelling used primarily for residential purposes • Co-owners of a duplex who do not live in the same portion of the dwelling Seasonal dwellings are acceptable, if approved by the company • Dwellings under construction * If one or two family and intended for occupancy by the Named Insured. * Contractors and speculative builders are not eligible under the Homeowners policy. • In addition, each insured family may have up to two roomers or boarders • Incidental Business Usage * Incidental office, professional, private school, or studio occupancy are eligible for Homeowners coverage * The dwelling must be used primarily for residential purposes. • Tenant Eligibility * An HO-4 policy may be written on a tenant in any type of structure, even commercial buildings * The insured must be the occupant of the unit. Eligible property is a one to four family structure. Anything more than a four-family structure should purchase a Cormercial property. In Homeowners, the insured must live in the property. It is not an option. The structure must be occupied by the owner of the policy. In Dwelling Property, the insured can own and rent to others
Which HO policy is necessary for a condo unit owner?
HO-6 is for condominium unit-owners and cooperative apartment dwellers and can be written even if the unit is held for rental
What does Ordinance and Law pay for?
It covers the additional costs incurred to comply with local building codes or regulations when repairing or rebuilding a property after a loss. 1. Upgrading to Current Codes 2. Demolition Costs 3. Increased Construction Costs 4. Additional Costs Feedback/Explanation: Ordinance or Law is provided up to 10% of Coverage A. If additional amounts are desired, options include 25% or 50%, if purchased
What division has web pages devoted to consumer education concerning wind mitigation?
Legislation requires discounts when an insured retrofits his/her home for hurricane protection. A licensed contractor, inspector, architect, engineer or certified building code inspector must inspect the home. Free inspections were available through Florida Comprehensive Hurricane Damage Mitigation program. Roof Shapes: Gable (2-slopes with A shape) -- no discount Hip: A slope upward on all sides, lowest portion of the roof is consistent all the way around the building Roof Coverings: Shingles, tiles, metal panels - must be tested, approved and installed according to code. Roof Decking: Plywood, oriented strand board, dimensional lumber (boards nailed across the trusses) and concrete decking. Roof Deck Attachment: Attached by 8-d nails at 6-inch intervals on edges and in middle. OR 8-d nails at 6-inch intervals on edges and 12-inch in field; screws or bolts: or adhesive materials. Roof to Wall Connections: Trusses connected to wall-frame: straps-clips (single or double clips)
Homeowners' policies follow a standard format.
Primary Coverage Section I - Coverage . Coverage A: Dwelling . Coverage B: Other Structures . Coverage C: Personal Property . Coverage D: Loss of Use Section II- Liability Coverage . Coverage E Personal Liability . Coverage F: Medical Payments to Others Other Conditions and Forms . Forms and endorsements made part of the policy . Special state provisions . Deductible - Section I Coverage . Mortgagee/Lienholder
Basic Limits Available
SECTION I - Liability Coverage Liability defends the insured for Bodily Injury and Property Damage to Others when the insured is legally liable. Coverage E - Liability Insured must be legally liable. The standard limit is $100,000 per occurrence for all Bodily Injury and Property Damage in one happening. If the insured is sued, the cost of defense is in addition to the policy limit. Coverage F - Medical Payments Insurers may determine that the bodily injury was not the insured's fault. Medical Payments coverage is voluntary coverage to pay for medical expenses or a funeral if authorized by the insurer. Standard limit is $1,000 per person.
How many different Homeowners form?
Six different Homeowners forms, which are most frequently referred to simply by number, are: HO-2, Broad Form HO-3, Special Form HO-4, Contents Broad Form (Apartment Dwellers Coverage) HO-5, Comprehensive Form HO-6, Unit-Owners Form (Condominium or Cooperative Apartment Coverage) HO-8, Modified Coverage Form Forms HO-2, HO-3, HO-5 and HO-8 apply only for owner-occupants of one- to four-family dwellings. HO-4 applies for renters, or those who occupy a residence in an ineligible building (such as an apartment in a commercial building that the insured owns). HO-6 is for condominium unit-owners and cooperative apartment dwellers and can be written even if the unit is held for rental HO-2 - First, we will discuss the Homeowners 02, or HO-2. The HO-2 is also referred to by the title of the Homeowners Broad Form. In comparing the HO-2 Broad Form with the DP-2, there are many similarities. The perils insured against under the DP-2 are similar to the perils insured against under the HO-2. The DP-2 and HO-2 are similar as it relates to the insured's property coverage; as long as he realizes there is no liability coverage provided under dwelling property, whereas Homeowners Section Il provides protection for bodily injury and property damage to others. HO-3 - The next form is referred to as the HO-3. The HO-3 is referred to as the Special Form. Just as there was "Open Peril" or "All-Risk" on the dwelling structures and named perils on the contents under DP-3, the HO-3 provides similar coverage. HO-4 - The HO-4 is a renter's coverage form. This form provides a tenant in a dwelling coverage for Personal Property and is sometimes referred to as the HO-4 - Contents Broad Form. The HO-4 only provides coverage to pay for damage to the dwelling contents, also known as personal property. There is no coverage available for the dwelling under an HO-4. The basic HO-4 does afford some liability coverage for Persona»Liability and Medical Payments to Others. HO-5 - The HO-5 is called the Comprehensive Policy. Similar to the HO-3, the Comprehensive policy has open perils on structures. However, unlike the HO- 3's named perils on contents, the HO-5 provides open peril coverage on structures and contents. HO-6 - The purpo
Insurable Interest:
Someone must possibly suffer an economic loss. The extent of insurable interest establishes the percentage paid. It must exist at the time of the loss. The first part of the statement above says, "Someone must possibly suffer an economic loss." At the time of the loss, the insured must show that they would suffer financially. If that is the case, then they are going to be considered to have an insurable interest. If the insured has fire damage to their home, they already know that they will suffer financially because they will want to build their house back, and replace the contents. The next concept in Insurable Interest statement above states that the insured will get paid to the percentage of their insurable interest. Example: Johnny owns one third of a $300,000 building. Johnny bought insurance coverage on his share of the building; the other two owners did not. At some time, a loss occurs to the building in the amount of $30,000. For how much is Johnny's insurance company going to be responsible?" Remember, we have to determine what Johnny's insurable interest is. Johnny owns one third of the building Therefore, the insurance company for Johnny is only responsible for up to one third of the damage because Johnny only owns one third of the loss
Limits
The insured selects a limit for Coverage A, minimum amounts being subject to each individual company's underwriting rules. (For HO-6, a basic limit for Cov- erage A of $5,000 applies, subject to any desired higher limits.) Coverage B is automatically 10% of the amount insured for Coverage A and may not be increased or decreased. Coverage C is normally 50% of Coverage A, 61
Conditional Contract:
The obligation of the insurer may be based on insured satisfying certain conditions. What is a "Conditional Contract? All policies have rules with which the insured and the insurance company must comply. If the insured does not live up to the rules, the terms and conditions could allow the company to cancel the policy. The same concept applies with insurance companies. Insurance companies have to follow rules, too, and if they do not follow the rules, then that could terminate the contract, as well.
How many coverage sections does the Homeowners policy have?
Two Section I - Property Ins Section I provides coverage for damage to the insured's property, known as "Property Insurance." This section mirrors the design of the Dwelling Property policies. Each of the major coverages are identified by a letter. Section II: Liability Coverage In comparing the format of the Dwelling Property policy with the Homeowners policy, the Dwelling Property had no Liability Coverage, unless the insured purchased the coverage. Under Section Two of the Homeowners policy, Liability coverage, eligibility criteria exist. Liability for bodily injury and property damage must arise from insured locations: . Premises . Personal activities . Temporary location . Home under construction . Child living with the insured under the age of 21 - not related . Vacant land . Cemetery plot The first thing listed is that Liability must arise out of the insured's premises. This means the location listed on the Declaration page. Liability incidences include things such as slips and falls, or harm to others arising out of the premises. In addition, if the insured is sued arising out of his own personal activities, coverage is afforded. For example, the insured plays golf and accidentally hits a person with the golf ball, which would be a covered activity.
Insured means:
You and residents of your household who are: • Your relatives; or • Other persons under the age of 21 and in your care or the care of a resident of your household who is your relative; A student enrolled in school full-time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of: • 24 and your relative; or • 21 and in your care or the care of a resident of your household who is your relative
Homeowners Definitions
You" and "your refers to the "named insured" and spouse listed on the Declaration page if a resident of the same household.
Bodily injury means:
bodily harm, sickness, disease, including death, and loss of services
Coverage G:
other farm structures, which includes farm buildings and structures other than dwelling. This includes barns, silos, fences and outdoor radio and equipment, as well as other farm structures.
Coverage E:
scheduled farm personal property that includes property for which a limit is shown in the Declarations, including such equip ment as grain, farm produce, poultry, livestock, machinery, vehicles and equipment incidental to farm use. Growing crops are not covered.
Coverage F:
unscheduled farm personal property that covers farm personal property on a blanket basis both on and off the insured premises.
