DWELLING & HOMEOWNERS EXPOSURES AND …

1 DWELLING & HOMEOWNERS EXPOSURES AND insurance SANDI KRUISE insurance TRAINING 1-800-517-7500 2004-2015 Sandi Kruise insurance Training, Sandi Kruise Inc, All rights reserved. 1 DWELLING & HOMEOWNERS EXPOSURES AND insurance First Edition Copyright 2004 WRITTEN BY: Sandi Kruise, CPCU, CPIW PUBLISHED BY: Sandi Kruise insurance Training P O BOX 786 BONITA, CA 91908-0786 1-800-517-7500 Copyright 2004 - 2015, All Rights Reserved. No portion of this book may be reproduced in any manner whatsoever without express written permission of the publisher. 2004-2015 Sandi Kruise insurance Training, Sandi Kruise Inc, All rights reserved. 2 TABLE OF CONTENTS PERSONAL insurance EXPOSURES .. 12 LOSS EXPOSURES OF INDIVIDUALS AND FAMILIES .. 12 PROPERTY LOSS EXPOSURES .. 13 Property Exposed to 13 Real Property .. 13 Personal Property.

2 13 Causes of Loss Affecting Property .. 14 Financial Consequences of Property 14 LIABILITY LOSS EXPOSURES .. 14 Law and Liability insurance .. 15 Tort Liability .. 15 Negligence .. 15 Intentional Torts .. 16 Absolute Liability .. 16 Contractual Liability .. 16 Statutory Liability .. 16 PERSONAL RISK MANAGEMENT .. 17 BASICS OF PERSONAL RISK MANAGEMENT .. 17 HOW A PERSONAL RISK MANAGEMENT PROGRAM WORKS .. 18 insurance AS A RISK MANAGEMENT TECHNIQUE .. 18 OTHER TECHNIQUES TO TREAT LOSS EXPOSURES .. 18 Avoidance .. 19 Loss Control .. 19 Noninsurance Transfer .. 19 Retention .. 20 PERSONAL insurance POLICIES .. 21 TYPES OF PERSONAL insurance POLICIES .. 21 OVERVIEW OF HOMEOWNERS POLICIES .. 22 PACKAGE POLICY .. 22 TWO SECTIONS .. 22 SECTION I-PROPERTY .. 23 Coverage A- DWELLING .. 23 Coverage B-Other Structures .. 23 Coverage C-Personal Property .. 23 Coverage D-Loss of Use .. 23 SECTION ON II-LIABILITY .. 24 Coverage E-Personal Liability.

3 24 Coverage F-Medical Payments to Others .. 24 HOMEOWNERS FORMS .. 24 BASIC, BROAD AND SPECIAL DEFINED .. 24 Basic Form .. 24 Broad Form .. 24 Special Form .. 25 THE homeowner POLICY FORMS CURRENTLY AVAILABLE ARE: .. 25 Basic Form (HO 1) .. 25 Broad Form (HO 2) .. 25 Special Form (HO 3) .. 25 Contents Broad Form (HO 4) .. 25 Comprehensive Form (HO 5) .. 25 Condominium Unit Owners Form (HO 6) .. 25 2004-2015 Sandi Kruise insurance Training, Sandi Kruise Inc, All rights reserved. 3 Modified Coverage Form (HO 8) .. 25 ELIGIBILITY .. 26 DWELLING And Contents Coverage (HO 1, HO 2, HO 3, And HO 8) .. 26 Contents Coverage (HO 4 and HO 6) .. 26 SPECIAL ELIGIBILITY REQUIREMENTS .. 27 Dwellings Under Construction .. 27 Secondary and/ or Seasonal Residences .. 27 INELIGIBLE FOR HOMEOWNERS POLICIES .. 27 Farm Property .. 27 Mobile Homes/Trailer Homes/House Trailers .. 28 Incidental Businesses .. 28 POLICY MODERNIZATION -- HOW THE HOMEOWNERS POLICY EVOLVED.

4 28 HOMEOWNERS POLICY .. 30 DECLARATIONS PAGE .. 30 Name And Mailing Address Of The Named Insured .. 30 Policy Period .. 30 Insured Location .. 30 Limit For Each Coverage, A Through F .. 31 Forms And Endorsements That Apply To The Policy .. 31 Premium .. 31 Deductible Amount Applicable To Section I .. 31 Mortgagee Name And Address .. 32 Countersignature Date And Agent's Signature .. 32 HOMEOWNERS DEFINITIONS .. 32 "You" And "Your", "We," "Us," And "Our".. 32 Insured Location .. 32 33 Bodily Injury .. 34 Property Damage .. 34 Business .. 34 Residence Premises .. 34 Occurrence .. 34 Residence Employee .. 34 Personal Injury .. 34 Voluntary Property Damage .. 34 COVERAGE AGREEMENT (INSURING AGREEMENT) .. 34 SECTION I - PROPERTY COVERAGES .. 35 COVERAGE A - DWELLING .. 35 COVERAGE B - OTHER STRUCTURES .. 36 10% Of The Amount Written For Coverage 36 Used In Whole Or In Part For Business .. 37 Rented Or Held For Rental.

5 37 PROPERTY WHICH IS LIMITED OR NOT COVERED COVERAGE A & B .. 37 COVERAGE C - PERSONAL PROPERTY .. 37 Coverage C Applies To Covered Property Worldwide .. 38 The Coverage C Limit .. 38 Personal Property Valuation .. 38 SPECIAL LIMITS OF LIABILITY .. 39 Money Or Related Property, Coins And Precious Metals Other Than Tableware .. 39 Securities, Manuscripts And Other Valuable Papers .. 39 Watercraft, Including Their Trailers And Equipment .. 40 Trailers Not Used With Watercraft .. 40 Property On The Residence Premises Used For Business Purposes .. 40 Property Away From The Residence Premises Used For Business Purposes .. 41 Electronic Apparatus, While In, On Or Away From A Motor Vehicle .. 41 Portable Electronic Apparatus While Not In or Upon a Motor Vehicle .. 41 THE NEXT THREE LIMITATIONS APPLY ONLY TO THE PERIL OF THEFT: .. 41 Jewelry, Watches, Furs, And Precious And Semiprecious Stones .. 41 2004-2015 Sandi Kruise insurance Training, Sandi Kruise Inc, All rights reserved.

6 4 Silverware, Goldware Or Pewterware .. 42 Firearms .. 42 PROPERTY NOT COVERED .. 42 Articles Separately Described and Specifically Insured Elsewhere .. 42 Animals, Birds or Fish .. 42 Motor Vehicles Or Other Motorized Land Conveyances .. 43 Aircraft And Parts .. 43 Property Of Roomers Or Boarders .. 43 Property In An Apartment Rented Or Held For Rental To Others By An "Insured" .. 43 Property Rented Or Held For Rental To Others Off The Residence Premises .. 44 Business Data .. 44 Credit cards or fund transfer cards .. 44 COVERAGE D - LOSS OF USE .. 45 Additional Living 45 Fair Rental Value .. 46 Loss of Use Due to Civil Authority .. 46 SECTION I ADDITIONAL COVERAGES .. 47 Debris Removal .. 47 Reasonable Repairs .. 48 Trees, Shrubs And Other Plants .. 48 Fire Department Service charge .. 48 Property Removed .. 49 Credit And Fund Transfer Cards, Forgery And Counterfeit Money .. 49 Loss Assessment .. 49 50 Glass Or Safety Glazing Materials.

7 50 Landlord s Furnishings .. 51 Building Additions And Alterations .. 51 Ordinance or Law (added in multistate revisions): .. 52 CAUSES OF LOSS .. 53 PERILS INSURED AGAINST COVERAGE C - PERSONAL PROPERTY .. 53 Named Perils .. 53 Fire Or Lightning .. 53 Windstorm Or Hail .. 54 Explosion .. 54 Riot Or Civil Commotion .. 54 Aircraft .. 55 Vehicles .. 55 Smoke .. 55 Vandalism Or Malicious Mischief .. 55 Theft .. 56 Falling objects .. 57 Weight Of Ice, Snow Or Sleet .. 57 Accidental Discharge Or Overflow Of Water Or Steam .. 57 Tearing Apart, Cracking, Burning Or 57 58 Damage From Electrical Current .. 58 Volcanic Eruption .. 58 PERILS INSURED AGAINST FOR COVERAGES A AND B .. 59 Special Form - All-Risk Coverage .. 59 COVERAGES A AND B EXCLUSIONS .. 59 59 Freezing of a Plumbing, Heating, Air Conditioning, or Sprinkler System, or a Household Appliance .. 59 Freezing, Thawing, Pressure, or Weight of Water or Ice.

8 60 Theft of Construction Materials .. 60 Vandalism and Malicious Mischief to Vacant Dwellings .. 60 Natural Deterioration .. 60 Smoke From Agricultural Smudging or Industrial Operations .. 61 Pollutants .. 61 Animals .. 61 2004-2015 Sandi Kruise insurance Training, Sandi Kruise Inc, All rights reserved. 5 EXCEPTION TO EXCLUDED PERILS .. 61 SECTION I GENERAL EXCLUSIONS .. 62 Ordinance or Law .. 62 Earth Movement .. 62 Water Damage .. 62 Power Failure .. 63 Neglect .. 63 War .. 63 Nuclear Hazard .. 63 Intentional Loss .. 64 Concurrent Causation Exclusions .. 64 Weather Conditions .. 64 Acts or Decisions .. 64 Faulty Workmanship .. 65 PROPERTY CONDITIONS .. 66 SECTION I PROPERTY CONDITIONS .. 66 Insurable Interest And Limit Of Liability .. 66 Your Duties After Loss .. 66 Give prompt notice: .. 67 Notify the police: .. 67 Notify the credit card or fund transfer card company: .. 67 Protect the property from further damage.

9 67 Prepare an inventory: .. 67 Verify the loss: .. 67 Sign a sworn proof of loss: .. 67 Loss Settlement .. 68 Actual Cash Value .. 68 Coverage C and Miscellaneous Items .. 68 Broad Evidence Rule .. 68 Replacement Cost .. 69 Coverages A and B .. 69 Loss To A Pair Or Set .. 70 Glass Replacement .. 70 70 Other insurance .. 70 Suit Against The Insurer .. 71 Option To Repair Or Replace Property .. 71 Loss Payment .. 71 Abandonment .. 71 Mortgage Clause .. 71 No Benefit To Bailee .. 72 Nuclear Hazard .. 72 Recovered Property .. 72 Volcanic Eruption Period .. 72 HOMEOWNERS SECTION II: LIABILITY COVERAGES .. 73 Section II Minimum Limits .. 73 COVERAGE E PERSONAL LIABILITY .. 73 Prejudgment Interest .. 74 Defense Costs 75 COVERAGE F MEDICAL PAYMENTS TO OTHERS .. 75 Medical Expenses Include: .. 75 Minimum Limit .. 76 Insured Locations .. 76 Persons Covered and Not Covered .. 76 Residence 77 Medical Payments To Others Coverage Is No-Fault Coverage.

10 77 Time Limitation .. 78 SECTION II ADDITIONAL COVERAGES .. 78 Claim Expenses .. 78 2004-2015 Sandi Kruise insurance Training, Sandi Kruise Inc, All rights reserved. 6 Expenses We Incur .. 78 Premiums on Bonds .. 78 Reasonable Expenses .. 80 Postjudgment Interest .. 80 First-Aid Expenses .. 80 Damage to Property of Others .. 80 Loss Assessment Coverages .. 81 SECTION II EXCLUSIONS .. 81 COVERAGE E AND F EXCLUSIONS - APPLYING TO LIABILITY AND MEDICAL 81 Expected or Intended Injury or Damage .. 81 Business Activity .. 81 Insured's Premises Rented To Others .. 82 Professional Services .. 82 Locations That Are Not Insured Locations .. 82 Motor Vehicles .. 82 Watercraft .. 83 Aircraft .. 84 War And Warlike Actions .. 84 Communicable Disease .. 85 Sexual Molestation and Physical or Mental Abuse .. 85 Controlled Substances .. 85 EXCLUSIONS THAT APPLY ONLY TO COVERAGE E - PERSONAL LIABILITY .. 85 Loss Assessment.