Homeowners Policy (Chapter 5)

Section II - Additional Coverages:

1. Claim Expenses (Supplementary Payments) 2. First Aid Expenses 3. Damage to Property of Others

Coverage A - Dwelling covers:

1. Dwelling on the residence premises, including structures attached to the dwelling 2. Materials and supplies located on or next to the premises being used for construction

Section II Endorsements

1. Home day care 2. Personal Injury 3. Additional Residence - Rented to Others 4. Watercraft Liability 5. Workers' Compensation Residence Employees Endorsement

Coverage A - Dwelling doesn't cover:

1. Land on which the dwelling is located 2. Theft from a dwelling under construction, or material used in the construction 3. Vandalism and malicious mischief if dwelling has been vacant for more than 60 days 4. To qualify for replacement cost, the amount of insurance at the time of the loss must equal or exceed 80% of the replacement cost at the time of the loss

Selected Property Endorsements

1. Mobile home insurance 2. Increased limit - other structures endorsement 3. Inflation guard endorsement 4. Guaranteed/extended replacement cost endorsement 5. Personal Property Replacement Cost Endorsement 6. Personal Property Endorsement 7. California Residential Property Insurance Disclosure Form 8. Earthquake Endorsement 9. The California Earthquake Authority (CEA)

Insured locations

1. The residence premises 2. Any other premises used by the insured as a residence that is shown in the Declarations 3. Any premises not owned by the insured where the insured is temporarily residing 4. Vacant land, other than farmland, owned by or rented to an insured 5. Land owned or rented by an insured where a residence is being built for the insured 6. Individual and family cemetery plots, or burial vaults of an insured 7. Any part of a premise occasionally rented to an insured for non-business use

Insured

1. You and residents of your household who are your relatives; or other persons under the age of 21 and in the care of any person named in the declarations. 2. A student enrolled in school full time 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 under 21 and in your care. 3. Any person legally responsible for animals or watercraft owned by an insured, unless used in the course of business 4. With respect to a motor vehicle to which coverage applies, persons using the vehicle on an insured location with insured's consent

Residence Premises

A 1- to 4-family dwelling where the insured resides, including other structures and grounds at that location.

Limits of Liability

A per occurrence limit applies to losses covered under Coverage E. A per person limit applies to losses covered under Coverage F.

Residence Employee

An employee whose duties are related to the maintenance or use of the residence premises, including household and domestic services.

Duties After Occurrence

An insured must: 1. Give written notice of an occurrence to the insurer as soon as is practical 2. Cooperate with the insurer in the investigation, settlement, or defense of any claims 3. Promptly forward any notice, demand, summons, or other process to the insurer 4. At the insurer's request, aid the insurer in making a settlement, pursuing subrogation attempts, taking the case to court, and procuring evidence 5. For Damage to Property of Others, submit to the insurer, within 60 days after a loss, a sworn statement of loss showing the damaged property

Nuclear Hazard

Any nuclear reaction, radiation, or radioactive contamination, whether controlled or uncontrolled, except that fire resulting from the nuclear hazard is covered.

Bankruptcy of an Insured

Bankruptcy or insolvency of an insured does not relieve the insurer of its obligations under the policy.

HO-6 (Unit-Owners Form)

Broad form named peril coverage is provided on the property of a condominium unit-owner. Coverage includes real property for which the insured is responsible under the association's agreement, and the insured's personal property while anywhere in the world. No coverage is provided for the dwelling or other structures.

Intentional Loss

Losses arising out of any act committed by or at the direction of an insured with the intent to cause a loss.

Section II Coverage F exclusions:

Coverage does not apply to bodily injury to: 1. A residence employee if the injury occurs off the insured location and does not arise out of or in the course of employment by an insured 2. Any person eligible to receive benefits by Workers' Compensation or Non-Occupational Disability law 3. Any person, other than a residence employee, regularly residing on the insured location

Section II Coverage E exclusions:

Coverage does not apply to: 1. Damage to property owned by an insured 2. Damage to property rented to, occupied or used by, or in the care of an insured 3. Bodily injury to any person eligible to receive any benefits if: Voluntarily provided Required to be provided by an insured under a Workers' Compensation law, Non-Occupational Disability law, or Occupational Disease law 4. Bodily injury to an insured

The California Earthquake Authority (CEA)

Coverage is offered in the form of a California Earthquake Authority Policy issued by a participating homeowners insurer, or through Earthquake Policies offered by nonaffiliated insurers admitted to transact insurance in California. The CEA was created to sell insurance to owners and residents of homes, condos, mobile homes, and apartment residences up to 4 units. It is a publicly managed non-profit, and has no authority to sell any other type of insurance. Policies are marketed and serviced by participating insurers. All CEA policies conform to one of two policy forms: Homeowners Choice or Standard Homeowners, with deductibles ranging from 5% to 25% of the Combined Single Limit for Coverages A and B (which must be the same as the underlying Homeowners policy). Homeowners Choice policies offer separate deductibles for personal property. Minimum premium for any CEA policy in 2016 is $100 per month. Non-CEA policies may offer higher limits, lower deductibles, and lower premiums. CEA policies must be attached to a companion policy (homeowners or dwelling). When the companion policy terminates, the CEA policy terminates with it.

Personal Property Endorsement

Coverage is provided on an open-perils basis with exceptions for jewelry, furs, cameras, musical instruments, silverware, golfer's equipment, fine arts, postage stamps and rare and current coins. Newly acquired property of a class already insured is automatically covered. The insurer must be notified within 30 days (90 days for fine arts) of the acquisition of the property. Coverage for the described property is worldwide. The Section I deductible does not apply to this endorsement. The scheduled personal property endorsement covers breakage of glassware caused by an earthquake.

Trees, Shrubs, and Plants

Coverage is provided up to 5% of the Coverage A limit to pay for loss to trees, shrubs, or plants damaged by the perils of fire, lightning, explosion, riot, civil commotion, aircraft, vehicles not owned or operated by a resident, vandalism or malicious mischief, and theft. This limit is provided as an additional amount of insurance and has a sublimit of no more than $500 for loss to any one tree, shrub, or plant. A loss from a windstorm, hail, or the weight of snow, ice or sleet, is not covered.

Coverage C - Personal Property

Coverage provides an additional amount of insurance equal to 50% of Coverage A. Coverage applies to the personal property owned or used by the insured, including borrowed property damaged by the insured. Coverage is provided anywhere in the world.

Claim Expenses (Supplementary Payments)

Covers the insurer's expenses of defending a claim and reasonable expenses incurred by an insured at the insurer's request, including the insured's actual loss of earnings up to $250 a day for assistance in the investigation or defense of a claim or suit.

Earth Movement

Earthquake, including: land shock waves; tremors; landslide; mine subsidence; mudflow; mudslide; earth sinking, rising, or shifting. If a direct loss by fire, explosion, or breakage of glass or safety glazing material should occur from earth movement, the policy would then pay only for the resulting loss.

Water Damage

Flood, tidal water, water that backs up through sewers or drains, or water below the surface of the ground that seeps through basement walls. If a direct loss by fire or explosion due to water damage should occur, the resulting damage would be covered.

Selected Endorsements Applying to Section I & Section II

Home Business

Exclusions

Homeowners Section I Exclusions are the same as those found in the Dwelling policy. Forms don't insure against losses caused by any of the following: 1. Ordinance or Law 2. Earth movement 3. Water damage 4. Power failure 5. Neglect 6. War 7. Nuclear hazard 8. Intentional loss

Coverage E - Personal Liability

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which this coverage applies, the policy will pay up to the limit of liability for the damages, including prejudgment interest awarded against an insured. The policy will also provide a defense, at the insurer's expense, even if the suit is groundless, false, or fraudulent. The insurer may investigate and settle any claim or suit that it decides is appropriate.

Fire Department Service Charge

If the insured has liability to a fire department when it responds to protect the insured property from an insured peril, this coverage will pay up to $500 without a deductible.

Debris Removal

If the insured incurs expenses removing debris from a loss, the policy will pay from the limits of insurance applicable to the covered property following a covered loss. When the covered loss exhausts the coverage limit, debris removal coverage will pay up to an additional 5% of Coverage A.

Property Removed

If the insured removes insured property from the premises because it is endangered by a covered peril, this coverage will provide coverage for damage (including damage while being moved) for 30 days. This coverage does not change the limit of insurance that applies to the property being removed.

Earthquake Endorsement

In California, no residential insurance policy may be issued or delivered on dwellings up to 4 units unless the insured is offered coverage for loss or damage by earthquake. The coverage may be offered in the policy itself, either by a provision or endorsement, or in a separate policy that provides coverage for loss or damage by the peril of earthquake. A single earthquake is defined as one or more earthquake shocks that occur within a 72-hour period. The deductible for earthquake coverage added by endorsement is calculated as a percentage of Coverage A (Dwelling) or Coverage C (Personal Property), whichever is greater.

Pair and Set

In the case of partial loss to a pair or set, the insurer will either: 1. Repair or replace any part to restore the pair or set to its value before the loss; or 2. Pay the difference between actual cash value of the property before and after the loss.

First Aid Expenses

Includes first aid to others, for bodily injury that is covered under the policy. This does not cover first aid to an insured.

Other Insurance

Insurance is excess over any other collectible insurance, except insurance written specifically as excess insurance over this policy.

Mobile Home Insurance

Insurance on mobile homes may be written by adding a Mobile Home Endorsement to a Homeowners Policy, or by writing a separate Mobile Homeowners Policy. When added as an endorsement to a HO-2 or HO-3, the endorsement modifies or removes coverage as necessary and reduces the policy limits for Coverage C and D. Not all mobile homes can be added by endorsement. The separate Mobile Homeowners Policy, under Coverage A (Mobile Home), is inclusive of the mobile home itself; property installed on a permanent basis, such as appliances, floor coverings, dressers and cabinets; attached structures; and utility tanks. Coverages B, C, and D are nearly identical to the same coverages under the Homeowners Policy, except that Coverage C (Personal Property) is generally written at 40% of Coverage A, instead of 50% under the Homeowners Policy.

Severability of Insurance

Insurance under the policy applies separately to each insured. This condition does not increase the insurer's limit of liability per any one occurrence.

Loss Settlement

Losses to structures under Coverage A and B are subject to a coinsurance requirement of 80% of the value of the dwelling or structure. In the event of a partial loss, if the insured carries less than this amount, the insurer will pay only the proportion of the insurance carried to the 80% required.

Damage to Property of Others

Pays the replacement cost, up to $1,000 per occurrence, for property damage caused by an insured to the property of others. Payment is made regardless of negligence. Coverage does not apply to: 1. Damage caused intentionally by an insured who is 13 years of age or older 2. Damage to any property owned by an insured 3. Damage to property owned by or rented to a tenant 4. Damage arising out of business pursuits engaged in by an insured

Increased Limit - Other Structures Endorsement

Provides for increased limits for other structures, if the automatic amount equal to 10% of the dwelling coverage is inadequate for other structures. The structures and applicable limits must be scheduled (specified), and an additional premium charge will be made for increased limits.

Inflation Guard Endorsement

Provides for automatic increases in limits of insurance for all Section I - Property coverages in order to avoid underinsurance due to inflation. The specified percentage increase is effective on a pro rata basis during the policy period.

HO-5 (Comprehensive Form)

Provides the broadest coverage of any Homeowner policy. Both the dwelling and other structures and personal property and contents are insured against all direct physical damage (open perils). Losses to the dwelling and other structures are paid on a replacement cost basis, with losses to the personal property and contents paid on an actual cash value basis.

Deductible

Subject to policy limits that apply, the insurer will only pay that part of the total of all loss payable under Section I that exceeds the deductible amount shown in the Declarations. The standard deductible is $250.

Coverage D - Loss of Use (Indirect Loss)

The Coverage D limit under an HO-2, HO-3, and HO-5 is 30% of the Coverage A limit. Under an HO-4, it is 30% of the Coverage C limit. Under an HO-6, it is 50% of the Coverage C limit. Under an HO-8, it is 10% of the Coverage A limit.

Guaranteed/Extended Replacement Cost Endorsement

The Guaranteed Replacement Cost Endorsement requires the insurer to replace damaged structures without regard to dollar limits or percentage of policy limits. It's also supposed to cover costs related to building code upgrades. This endorsement is uncommon in California and will not be issued by most insurers, because of the open-ended nature of the risk when rebuilding a home to revised code standards. The Extended Replacement Cost Endorsement increases coverage of the structure by a fixed amount to match increased construction or remodeling costs (usually a percentage of the Coverage A amount). This increased coverage is not always applicable to code upgrades, which may be subject to a smaller coverage increase. Producers are required to give dwelling and homeowner insureds a copy of the California Residential Property Insurance Disclosure, which outlines the parameters of these endorsements. Extended Replacement Cost coverage does not apply if the loss settlement is subject to the coinsurance provision. Producers also must provide, along with the Disclosure, the California Residential Property Insurance Bill of Rights, which informs the client as to his/her rights regarding property valuation, claims, policy limits, cancellation/non-renewal, etc. If a policy does not have any replacement cost endorsements, it must clearly state: "This policy does not include building code upgrade coverage."

HO-4 (Contents Broad Form - Renter's or Tenant's Form)

The contents and personal property are insured against the broad form perils with losses paid on an actual cash value basis. No coverage is provided for the dwelling or other structures.

HO-3 (Special Form)

The dwelling and other structures are insured against all direct physical damage (open perils), with losses paid on a replacement cost basis. The contents and personal property are insured against the broad form perils with losses paid on an actual cash value basis. Included are losses to a fence, driveway or walk caused by a vehicle owned or operated by the insured.

HO-2 (Broad Form)

The dwelling and other structures are insured against the broad form perils with losses paid on a replacement cost basis. The contents and personal property are insured against the broad form perils, with losses paid on an actual cash value basis. The HO-2 does not cover loss to a fence, driveway, or walk caused by a vehicle owned or operated by the insured.

Ordinance or Law

The enforcement of any ordinance or law regulating the use, construction, repair, or demolition of a structure, unless specifically provided under the policy. This would include, for example, remodeling necessary to make a building compliant with the Americans With Disabilities Act (ADA).

Power Failure

The failure of power or other utility service if the failure takes place off the described premises. If an insured peril occurs on the described location as a result of the power failure, the loss would be covered.

Abandonment

The insured may not abandon the property for which a total loss is claimed.

Ordinance or Law

The insured may use up to 10% of the Coverage A limit of insurance for increased costs the insured incurs due to the enforcement of any ordinance or law which requires or regulates: 1. Construction, demolition, remodeling, renovation, or repair of that part of a covered building damaged by an insured peril 2. The demolition or reconstruction of the undamaged part of a covered building, when that building must be totally demolished because of damage by an insured peril to another part of that covered building 3. The remodeling, removal, or replacement of the portion of the undamaged part of a covered building to complete the remodeling, repair, or replacement to that part of the covered building damaged by an insured peril This coverage is additional insurance.

Suit Against Insurer

The insured must comply with policy provisions before any suit may be brought by the insured against the insurer.

Duties after a Loss

The insured must: Report the loss to the insurer as promptly as possible Submit a sworn, signed proof of loss Notify the police in case of theft Cooperate with the insurer's investigation Inventory and document all property damage

Concealment or Fraud

The insurer will not provide coverage to an insured who, whether before or after a loss, has intentionally concealed or misrepresented any material fact or circumstance, engaged in fraudulent conduct, or made false statements relating to insurance.

Neglect

The neglect of the insured to use all reasonable means to save and preserve property at and after the time of a loss.

Policy Period

The policy applies only to bodily injury or property damage that occurs during the policy period.

Collapse

The policy covers a direct loss to covered property involving the collapse of a building, or to any part of the building, caused by the following specified perils: 1. Hidden decay 2. Hidden insect and vermin damages 3. Weight of contents, animals, people or equipment 4. The weight of rain collected on a roof, or 5. The use of defective material or methods of construction Note: The policy does not cover collapse of awnings, fences, or patios caused by these perils. This coverage does not increase the limit of insurance that applies to the damaged property. Also excluded is collapse due to earth movement or subsidence even if construction materials or methods were defective.

Glass or Safety Glazing Material

The policy covers the breakage of glass or safety glazing material that is part of a covered building, storm door, or storm window. The policy does not cover loss when the dwelling has been vacant for more than 60 consecutive days immediately before the loss, unless the loss results directly from earth movement. This does not increase the limit of insurance that applies to the damaged property.

Credit Cards, Electronic Fund Transfer Card, Forgery, and Counterfeit Money

The policy provides $500 of coverage under this additional coverage for: 1. The legal obligation of an insured because of theft or unauthorized use of credit cards 2. Loss resulting from theft or unauthorized use of an insured's fund transfer card 3. Loss to an insured caused by forgery or alteration of a check or negotiable instrument 4. Loss to an insured caused by good-faith acceptance of counterfeit United States or Canadian currency Note: In the event of a credit card loss, the insured must notify the bank that issued the card and give prompt notice to the insurer. This coverage is additional insurance, and no deductible applies to this coverage.

Loss Assessment

The policy provides up to $1,000 of coverage for loss assessment against an insured as the owner or tenant of the residence premises. This coverage is additional insurance.

Landlord's Furnishings

The policy will pay up to $2,500 in any one loss for the insured's appliances, carpeting, and other household furnishings, in each apartment on the residence premises regularly rented to others by the insured, for loss caused by a covered peril other than theft. This coverage does not increase the limit of insurance applying to the damaged property.

Grave Markers

The policy will pay up to $5,000 for grave markers, on or away from the residence premises, for loss caused by a peril insured under Coverage C. Does not increase the limits of insurance that apply to the damaged, covered property.

Duties of an Injured Person - Coverage F

This condition applies to third party claimants who are pursuing medical payments coverage under the policy. The injured person must: 1. Give the insurer written proof of the claim as soon as practical 2. Authorize the insurer to obtain medical records 3. Submit to a physical exam by a doctor of the insurer's choice when and as often as the insurer requires

Payment of Claim - Coverage F

This condition states that payment by the insurer under Coverage F is not an admission of liability.

Coverage B - Other Structures

This coverage provides an additional amount of insurance equal to 10% of the Coverage A. It applies to covered losses to related structures on the premises when they are separated by a clear space from the dwelling. Structures connected to the dwelling by only a fence or utility line are considered separate. Structures cannot be used for mercantile or manufacturing use, such as renting them to a neighbor for a woodworking business. This insurance limit may be increased by endorsement.

Personal Property Replacement Cost Endorsement

This endorsement changes the Coverage C valuation method from actual cash value (ACV) to replacement cost. The endorsement does not pay replacement cost coverage for antiques, fine arts, paintings, memorabilia, souvenirs, articles whose ages and histories contribute to their value.

California Residential Property Insurance Disclosure Form

This form is required by California Law and describes the principle insurance coverage forms for residential dwellings. It indicates the method of valuation the insured has purchased, and contains only a general description of coverages. It is not part of an insured's residential property insurance policy. The form states that an insured should read his/her policy very carefully and if there is any part that is not understood, he/she should contact his/her insurance agent or company, or call the California Department of Insurance consumer information.

HO-8 (Modified Form)

This form is used when insuring older homes where replacement value and market value are disproportionate, or where a moral hazard would exist if insurance were written in amounts equal to 80% of replacement cost. The insurance limit is written for the market value of the dwelling, and losses to the contents are paid on an actual cash value basis.

Coverage F - Medical Payments to Others

Under this coverage, the policy will pay necessary medical expenses within 3 years from the date of an accident causing bodily injury. Medical expenses include reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral services. Coverage does not apply to an insured or regular residents of the insured's household (except residence employees), but provides coverage to a person on the insured location with the permission of an insured, or a person off the insured location if the bodily injury: 1. Arises out of a condition on the insured location or the immediate surroundings 2. Is caused by the activities of an insured 3. Is caused by a residence employee in the course of employment of the insured 4. Is caused by an animal owned by or in the care of an insured

War

War, including undeclared war, civil war, insurrection, rebellion, revolution, or any warlike act by a military force. The discharge of a nuclear weapon will be deemed a warlike act, even if accidental.

Reasonable Repairs

When the insured's property has been damaged by a covered peril, this coverage pays the reasonable cost of necessary measures taken to protect covered property from further damage. This coverage does not increase the limit of insurance that applies to the covered property.