Homeowners
The homeowners policy provides protection against the
financial consequences of personal losses. A homeowners policy
is a combination of property and liability coverages. The
homeowners policy is tailored to meet the needs of a homeowner.
The following is a basic outline of the homeowners (HO-3) policy
and the endorsements most widely used on the HO-3 policy.
The HO-3 policy provides coverages for one or two family
dwellings that are owner occupied. The HO-3 policy provides
coverage against risks of direct physical loss to real property,
except for those causes of loss that are specifically excluded.
Personal property is covered against direct physical loss caused
by a specified peril. In addition to the coverages stated under
Section I, several additional coverages are included. Some of
the coverages included are; debris removal, fire department
charges, reasonable repairs charges, property removal charges,
and coverage for trees, shrubs and plants. Coverage is also
included for loss involving credit cards, forgery, and
counterfeit money. These additional coverages are included to
provide protection for the insured following a covered property
loss. Each additional coverage has limitations and is subject to
certain conditions.
Dwelling
This amount of insurance applies to the dwelling and attached
structures. The limit of insurance for the dwelling is based on
the value of the home and what it would cost to replace the
home.
Other Structures
This coverage limit applies to detached structures such as a
garage or storage shed. The limit of coverage is set at 10% of
the dwelling. The insured can purchase a higher limit.
Personal Property
Coverage C provides worldwide coverage for personal property
of the insured. Special limits apply to some types of property,
and some property is excluded from coverage. The overall limit
for coverage C is 50% of the dwelling limit. Coverage C can be
modified in several ways with endorsements.
Loss of Use
This coverage applies in the event of a loss under Coverage
A. If the insured was to temporarily lose use of the dwelling
this coverage would apply. Payment would be made for expenses
incurred to live elsewhere following a loss that makes the home
unsuitable for living. Another method used to determine payment
for loss of use is fair rental value, which is the amount of
rent that could reasonably be charged for the premises, less any
expenses that do not continue while the premises are unsuitable
for living.
Personal Liability
Section II of the homeowners policy provides liability
coverage for personal loss exposures. The insuring agreement
under Coverage E provides liability coverage if a claim is made
or suit is brought against an insured because of bodily injury
or property damage. Coverage is provided for the residence
premise as well as any other premises used by the insured, as a
residence, permanently or temporarily. Liability coverage is
provided for the named insured and members of the named
insured's household who are relatives. Personal liability has a
basic limit of $100,000 per occurrence, which the insured may
increase for an additional premium. In addition to the basic
limit, Coverage E also provides additional coverages for
expenses such as defense cost, expenses incurred providing first
aid to others, damage to property of others and loss assessment
charges. The additional coverages provided under Section E are
subject to limitations and certain conditions.
Medical Payments
This coverage will pay the necessary medical expenses for
bodily injury of others. Coverage applies to accidents that
occur on the insured premises or any location when caused by
action of the insured. The coverage has a basic limit of $1,000
per person. The insured may select higher limits.
Endorsements
Inflation Guard Endorsement
When this endorsement is added to the policy, it increases
the limit of coverage for A, B, C, and D. The insured selects
the percentage of increase for the year and the limits are
automatically increased at certain dates throughout the year.
Earthquake Coverage Endorsement
Earthquake coverage is excluded under Section I of a
homeowners policy. Adding this endorsement removes the
exclusion and adds earthquake coverage which is subject to a
deductible for each coverage under Section I.
Increase Other Structures Limit
This endorsement increases the limit under coverage B,
Other Structures. The limit for unattached structures on the
residence premise would be increased, and the increase would
be in addition to the limit already provided.
Increase Special Limits
Certain types of personal property under Coverage C have
special limits of liability. Adding this endorsement increases
the limit for those particular types of property.
Scheduled Personal Property
The scheduled personal property endorsement is used to
provide coverage for risk of direct loss for such items as
jewelry, furs, cameras, musical instruments, silverware,
golfer's equipment, fine arts, postage stamps and rare coins.
Scheduled property can be insured for any amount the insured
requires.
Personal Property Replacement Cost
Property loss settlements under the homeowners policy are
made on an actual cash value basis. When the replacement cost
endorsement is added, the loss settlement payment would be
sufficient to replace the item for the cost at the time of loss
without deductions for depreciation.
|
