Insurance Terms - Homeowners
DISCLAIMER -
The abbreviated outlines of coverage provided in this site are not intended to
express any legal opinion as to the nature of insurance coverage. The terms
shown on this site provide only the most basic and general description of terms
used by the insurance industry. Please read your policy for specific details of
coverage. ONLY your policy provides coverage.
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.
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.
PERSONAL INSURANCE: Personal Articles
An inland marine policy
provides coverage for property transported from one place to another, goods in
transit, bridges, tunnels, television broadcasting towers and other means of
transportation and communication. Inland marine insurance also includes various
floater policies that provide coverage for personal property. An inland marine
floater policy is used to provide coverage that floats or moves along with the
covered property as it changes locations. There are no standard inland marine
floater policies, however, most floater policies share
the following four characteristics: (1) The coverage can be tailored in order
to insure a specific type of property for the insured. (2) The insured can
select the appropriate policy limit for the property. (3) Floaters are
typically written on an all risk basis which means all direct physical losses
to property are covered, except for specially excluded losses. (4) Most
floaters cover the property anywhere in the world,
however, fine arts are usually covered only in the
An inland marine personal articles floater is used to insure valuable personal
property that often requires broader coverage than that provided by an
insured's homeowner policy, due to the various exclusions and limitations on homeowners coverages.
The personal articles floater can be used to insure the following nine optional
classes of personal property.
Jewelry
Most personal jewelry can be included on a floater, however, jewelry is given
more consideration than other personal items so should be carefully selected
before scheduling.
Furs
Fur coats, personal fur items consisting mostly of fur, garments trimmed with
fur and even imitation fur can be included on a floater. Each item must be
separately listed with a specific amount of insurance.
Fine Arts
Fine arts can include private collections of paintings, antique furniture, rare
books, glasses, ornament knickknacks, and manuscripts. Each item must also be
listed in the schedule with a specific amount of insurance. Fine arts are
insured on a valued basis which means if a loss occurs, payment would be made
for the amount of insurance stated in the schedule for that particular item .
Cameras
Most photographic equipment can be included in this class of property. Each
item must be described on a schedule with an amount of insurance. Items usually
included are, motion picture recording equipment, projection machines, films,
binoculars, and telescopes. Smaller miscellaneous items can sometimes be
insured for a total value without scheduling each item
.
Musical Instruments
Most personal musical instruments, which includes
sound and amplifying equipment, can be listed on a floater. Each item should be
listed on a schedule with the requested amount of insurance coverage.
Silverware
Silverware and gold ware can be insured under the personal articles floater.
Each item must be listed on a schedule with the amount of insurance.
Stamps and Coin Collections
Valuable stamps and coin collections can be insured under the personal articles
floater on either a scheduled basis or on a blanket basis. When the blanket
basis is used the amount of insurance would apply to the entire collection.
Golfers Equipment
Most golf equipment can be included on a floater
including the insured's golf clothes. All golfing equipment must be on a
schedule with the requested amount of insurance stated.