Homeowners Insurance:Named Perils & EndorsementsHomeowners Insurance:Named Perils & Endorsements

Part 1: Named Perils CoveragePart 1: Named Perils Coverage

OverviewOverview

• Peril vs hazard• What is a named peril?

Fire or LightningFire or Lightning

• Direct physical loss caused by:• Flame• Smoke• Soot

• Damage caused by firefighters

Class Discussion PointClass Discussion Point

• Scorching caused by a fire

Windstorm or HailWindstorm or Hail

• Policy does not define windstorm

• Force of wind or hail causes opening in structure

• Exclusions

ExplosionExplosion

• Not defined in policy form• Large scale, rapid, bursting “out”

Class Discussion PointClass Discussion Point

• Freezing, bursting pipe• Gun discharge

Riot or Civil CommotionRiot or Civil Commotion

• Definition• Differentiating from vandalism

AircraftAircraft

• Definition• Includes self-propelled

missiles and spacecraft• What’s covered

• Direct physical contact not required

VehiclesVehicles

• Covers damage caused by vehicles

• Exclusion• Damage caused by vehicle

owned or operated by occupant of insured premises

SmokeSmoke

• Definition• Coverage

• Sudden and accidental discharge

• Fire need not be present

Class Discussion PointClass Discussion Point

• Soot from burning candles

Vandalism or Malicious MischiefVandalism or Malicious Mischief

• Restrictions on vacant buildings• Intentional acts excluded?• Definition of malicious mischief

• Legal vs common meaning

TheftTheft

Exclusions• Committed by insured• Dwelling under construction• Rented to someone who is not

an insured• Secondary residence

• College students

Falling ObjectsFalling Objects

• Damage caused by falling object

• Actual object not covered• Damage to roof or outside wall

Class Discussion PointClass Discussion Point

• Toppling water tower

Weight of Ice, Snow, or SleetWeight of Ice, Snow, or Sleet

• What’s covered• Exclusions

• Awnings• Fences• Patios

Accidental Discharge or Overflow of WaterAccidental Discharge or Overflow of Water

• What’s covered• Hidden mold, fungus, wood

rot• Exclusions

• Loss to system from which water escaped

• Surface water

Class Discussion PointClass Discussion Point

• Hose accidentally left on

Sudden & Accidental Tearing ApartSudden & Accidental Tearing Apart

• Refers to heating systems, air conditioning or automatic sprinkler system (for fire protection.)

FreezingFreezing

• Plumbing, heating, air conditioning, automatic fire protective sprinkler system or household appliance.

• Reasonable care

Sudden and Accidental Damage – Artificially Generated CurrentSudden and Accidental Damage – Artificially Generated Current

• Definition of artificially generated

• Exclusions

Volcanic EruptionVolcanic Eruption

• Developed in response to Mount St. Helens eruption.

• Coverage for airborne shock waves, volcanic ash, lava flow

• Excludes land shock waves, earthquakes, tremors

• Debris removal

We will now take a short break before proceeding to Part 2 on

Common Endorsements.

Part 2:Common EndorsementsPart 2:Common Endorsements

TopicsTopics

In this section we will cover these main topics:

1.Why endorsements are used

2.Common endorsements to the Homeowners Policy

IntroductionIntroduction

• What is an endorsement?• Why are they used?

Endorsements Modifying the InsuredEndorsements Modifying the Insured

Insuring a Personal TrustInsuring a Personal Trust

• “You” and “Your”• Endorsement HO 05 43• AAIS personal trust

endorsements

Relative in Assisted Living FacilityRelative in Assisted Living Facility

• Specific to named relative and facility

• Coverage limited for certain items

• Additional living expenses

Additional Interest or InsuredAdditional Interest or Insured

• Endorsements for non-mortgagee

• Additional interest vs. additional insured

• Premises liability coverage

Endorsements Modifying Coverage AEndorsements Modifying Coverage A

Dwelling Under Construction – Theft Dwelling Under Construction – Theft

• Only AAIS form allows coverage

• Specific dollar amount of coverage

Unit Owners Special CoverageUnit Owners Special Coverage

• Named perils basis• Endorsement for open perils

coverage

Water Back Up and Sump Discharge or OverflowWater Back Up and Sump Discharge or Overflow

• Up to $5,000 provided• Deductible• Loss due to mechanical

breakdown of sump pump covered, but loss to pump itself is not.

Endorsements Modifying Coverage BEndorsements Modifying Coverage B

Increased Limit – Other StructuresIncreased Limit – Other Structures

• Other/related private structures coverage may be increased

• Endorsements do not increase coverage B

Other Structures Away from PremisesOther Structures Away from Premises

Structure may be insured in two ways:

• Other structures away from premises endorsement

• Schedule individual structures through Specific Structures endorsement

Endorsements Modifying Coverage CEndorsements Modifying Coverage C

Computer CoverageComputer Coverage

• Computer hardware, software, operating systems, networks

• Electronic parts

Open Perils Coverage for Personal PropertyOpen Perils Coverage for Personal Property

• Tenant may attach to policy• Does not cover breakage

resulting from earthquake

Scheduling Personal PropertyScheduling Personal Property

• Clients need to be educated!• Can broaden scope of coverage

to an open perils basis:• Jewelry• Furs• Cameras• Musical Instruments• Fine Art

Scheduling Personal Property Scheduling Personal Property

• Agreed value basis• Coverage C exclusion• Settled losses• Coverage for fine arts

Other Modifying EndorsementsOther Modifying Endorsements

Personal PropertyReplacement CostPersonal PropertyReplacement Cost

• Loss settlement provisions for:• Personal property• Awnings• Carpeting• Household appliances• Outdoor equipment

• Recovery limited to smallest of five defined amounts

Personal Property Replacement CostPersonal Property Replacement Cost

• Four categories of property not eligible for replacement cost coverage

• Losses with replacement values of more than $500

Home Day CareHome Day Care

• Subordinate to homeowners forms primary coverage

• Exclusions and policy limits

Additional Residence – Rented to OthersAdditional Residence – Rented to Others

• Rental premises can be covered under homeowners policy

• Liability coverage for other locations usually indicated on declarations

Farmers LiabilityFarmers Liability

• Liability arising out of incidental farming activities

• Liability arising away from insured premises

Personal InjuriesPersonal Injuries

• Extends coverage for injuries arising out of:• False arrest• Wrongful eviction• Invasion of privacy• Malicious prosecution• Libel, slander, defamation

• Exclusions

Miscellaneous EndorsementsMiscellaneous Endorsements

Identity TheftIdentity Theft

• Respond to costs incurred with identity fraud

• Pays reasonable and necessary attorney fees

• Loss of earnings

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