Property and Casualty

Insurance Basics

What

loss

.

Exposure

used for determining the premium

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Proximate Cause

effective cause of loss

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Claim

demand made by the insured

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Indemnify

to make loss whole

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Social devices for reducing or transferring risk

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Insurable Event

event, whether past or future, which may damnify a person having an insurable interest,

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Insuring Agreement (or Clause)

Portion of an insurance contract which states the perils insured against, the persons and/or property covered, their locations and the period of the contract.

Who

Insured

Rights and Duties

Prompt notice of loss or damage

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Taking reasonable steps to protect property from further damage

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Submitting claims

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Notifying the police if the claim is for a theft

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Cooperating with the insurer after a loss.

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Important Clauses

Abandonment Clause.

prohibits the insured from abandoning partially damaged property to the insurer in order to claim a total loss.

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Morgage Clause

loss reimbursement shall be paid to the mortgagee as the mortgagee's interest

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Loss Payable Clause

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Coinsurance Clause

encourage the insured to purchase and maintain insurance to value

[Amount of Insurance Carried/ 80% of Insurance Required] times [Amount of Loss] = amount paid out

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Vacant

neither occupants nor contents

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Unoccupied

vacant with furniture in the home.

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Insurer

Rights and Duties

Pay for covered losses • Provide a legal defense against liability claims • Give advance notice of cancellation and return unused premiums

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Important Clauses

Subrogation Clause

insurer the right to pursue any course of action, in its own name or the name of a policyowner, against a third party who is liable for a loss which has been paid by the insurer.

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clause prevents collecting from both the insurer and a third party.

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Liberalization Clause

if policy or endorsement forms are broadened by legislation or ruling from rating authorities and no additional premium is required

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Other Insurance Clause

what is to be done in case any other contract of insurance covers the same property and/or hazards.

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Salvage.

Property taken over by an insurer to reduce its loss.

Admitted vs Non-admitted Insurers

Admitted Insurer – An insurance company - whether domestic, foreign or alien - authorized to transact insurance in California by the California Department of Insurance.

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Non-admitted Insurer – An insurance company not authorized to transact insurance in California

Not subject to financial solvency regulations

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Standard form used; covers average risks

Surplus Lines of Insurance

High Risk: for those types of insurance that cannot be obtained from admitted insurers.

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Must hold an individual surplus line broker license

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Domicile of Insurers

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Domestic Insurer – An insurer organized under the laws of this state

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Foreign Insurer – An insurer not organized under the laws of this state, but in one of the other states within the United States

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Alien Insurer – An insurer organized under the laws of any jurisdiction other than a state of the United States

Risk Management

Speculative Risk/not insurable

Las Vegas

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Pure Risk

no chance of winning; ex. chances of crashing your car and needing to replace it / maybe Insurable

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Ways to Deal with Risk

Sharing

Pooling the risk with other who share the same type of risk

Transfer

buying insurance products

Retention

Keeping your risk

Avoidance

Reduction

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Law of Large Numbers

the more insured members the more predictably the risk

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Insurable risk

loss must be definable

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Loss must be accidental

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Loss causes a hardship

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homogeneous group of risks large enough to make losses predictable (Law of large numbers)

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Losses must not be catastrophic to many members of the group at the same time

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Insurance company must be able to calculate the chance of loss and to be able to calculate the chance of loss

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Adverse Selection

occurs when insureds select only those coverages that are most likely to have losses

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Underwriting

protect the insurer against adverse selection by selecting risks that fall into the normal range of expected losses.

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Renew of End a Policy

Resicission

Termination by the insurer when material misrepresentation has been made by Insured.

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Lapse

Due to non payment of premiums

Insurer most give 10 days notice

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Flat Cancellation

cancelled upon its effective date. no charge

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Cancellation

60 or more days, the insurer may cancel the policy for nonpayment of premium by giving 10 days written notice, and 30 days written notice for the

Conviction of a crime for an act that increases any hazard insured against

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Grossly negligent acts or omissions

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Material misrepresentation by the insured.

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Substantial change in property, making it uninsurable.

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Insured’s Right To Cancel

client may cancel at any time be letting the insurer know in writing of the date of cancellation is to take effect

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Short Rate Cancellation

In effect, the insured has paid more for each day of coverage than if the policy had remained in force for the full term.

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Pro Rata Cancellation

refund proportional to days not used.

Marketing and Distribution Systems

Independent Agent

A person who enters into agency agreements with more than one insurer

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Exclusive Agent

A person under agreement to represent a single insurer, or a group of insurers, having common ownership.

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Direct Writer

An insurer that deals directly with the insured through a salaried representative or a captive agent, as opposed to an insurer that contracts with an agent.

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Direct Mail

A marketing system that does not use an agent. Policies are usually marketed directly from the insurer’s home office.

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Insurance Brokers

A person who, for compensation and on behalf of another person, transacts insurance other than life insurance with, but not on behalf of, an insurance company

A broker may not charge a policy fee; only an insurer may require a policy fee.

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Insurance Solicitor Salesman

insurance salesperson who contacts potential customers and handles clerical responsibilities but has no authority to make insurance contracts.

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Managing General Agent

Most Managing General Agents today focus in the Excess and Surplus insurance markets.

members are entrusted to write both admitted and excess and surplus lines insurance by insurance companies who have delegated underwriting authority to them.

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E & S lines

Any type of coverage that cannot be placed with an insurer admitted to do business. E&S lines markets for policies unable to be placed in conventional markets due to a shortage of capacity.

Insurance Policy Structure

Declarations

The Who, what when, where, how much is the premium and period of the term

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Insuring Agreement

states the perils insured against, the persons and/or property covered, their locations and the period of the contract.

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Definitions

term used in the contract are defined.

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Exclusions

of Perils

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Endorsements

form attached to the policy which alters provisions of the contract to make it better fit

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Conditions

Policy Period and Territory

Concealment or Fraud

Liberalization Clause

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Valuing Insurance Coverage

Replacement Cost

replacing property without a reduction for depreciation

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Actual Cash Value

replacement cost of lost or damaged property at the time of the loss, less depreciation

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Market Value.

based on what they would sell for under current market conditions.

such as stocks and bonds

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Stated Amount

agreed amount of insurance which is shown on the policy

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Valued Policy

states that in the event of a total loss, a specific amount will be paid,

fine arts, antiques, and furs.

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Open Policy.

not agreed upon, but is left to be ascertained in case of loss.

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Agreed Amount Clause.

insurer agree that the amount of insurance carried will automatically satisfy the coinsurance clause.

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Blanket Insurance.

covers, in a single contract, either multiple types of property at a single location or one or more types of property at multiple locations.

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Specific Insurance

describes specifically the property to be covered. This is in contrast to a policy which covers on a blanket basis

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Other Legal Principles in Insurance Law

Concealment

failure to disclose a material fact

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Fraud

Deceipt, trickery or misrepresentation

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Waiver

giving up or surrendering a right or privilege that is known to exist.

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Estoppel

example, if an insurer allows an insured to violate one of the conditions of the policy, the insurer cannot at a later date void the policy because the condition was violated.

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Warranty

A statement made on an application for most kinds of insurance that is warranted as true in all respects.

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Representation

correct to the best of his or her knowledge and belief.

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Misrepresentation

oral or written statements that do not truly reflect the facts

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Business Model

Actuarial

statistician

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Sales & Marketing

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Underwriting

evaluates policy holder's risk

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Rating Bureaus

Insurance Services Office (ISO)

is the advisory organization that develops forms for the standard market.

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Claims Handeling

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Elements of an Insurance Contract

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legally binding contract between two parties

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Insurance Policy

describes the rights and obligations of both parties.

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Anatomy of a Contract

Agreement

offer made by one party has been accepted by the other

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Legal Purpose

no Crack contracts

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Consideraton

Insured: promises to pay the premium

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Insurer: promises to pay the covered loss

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Competency

Must have a working brain

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Insurance types of Contracts

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Aleatory Contract

Un equal pay out: relative low premium compared to total cost that maybe paid out by the Insurer.

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Contract of Adhesion

Most insurance policies are contracts of "adhesion," because the terms are drawn up by the insurer and the insured simply "adheres."

Courts will favor the Adherer when in doubt

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Conditional Contract

conditions which must be met by both parties before the contract is legally enforceable

conditions for both the insurer and insured are spelled out in the policy form.

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Personal Contract

Insurance policies are usually not transferable unless the insurer agrees to do so.

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Unilateral Contract

only one party to the contract, the insurer, makes any enforceable promise

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Utmost Good Faith

Contract requires that each party is entitled to rely upon the representations of the other without attempts to conceal or deceive

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Types of Insurers

Stock Insurance company

owned by stockholders

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electing directors and officers

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receive taxable stock dividends

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Mutual Insurance Company

owned by its policyholders

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Policyholders choose a Board of Trustees or Directors

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Profits are returned to policyholders as nontaxable dividends.

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non-assessable, meaning they cannot charge members a pro rata share of loss and expense at the end of the policy period

.

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Fraternal Benefits Societies

social organizations that engage in charitable and benevolent activities that provide insurance, primarily life insurance to its members.

.

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Reciprocal Insurance Company

insurer is unincorporated, and is an aggregation of individuals, firms, and business corporations, which exchange insurance on one another. Each member is known as a subscriber.

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exchange of insurance is affected through an Attorney-In-Fact. Each subscriber assumes a part of the risk of all other subscribers. If premiums collected are insufficient to pay losses, an assessment of additional premium can be made.

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Risk Retention Groups

group-owned insurer who assumes and spreads the liability risks of its members. b. They are an insurance company

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Lloyd’s of London.

group of high-net worth individuals who share in the risk of the insured. Each group of individuals, known as syndicates, are responsible for the amount of insurance they write on different classifications of risk.

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Types of Insurance

Personal or Commercial Lines

Casualty Insurance

Legal liability for losses caused by injury to persons or damage to the property of others.

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Property Insurance

indemnifies a person with an interest in physical property for its loss or the loss of its income producing abilities

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Property Policies, Casulty Policies and Package Policies

.

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Property Insurance Principles

Losses

Peril.

Actual cause of a possible loss (fire, theft, rain, etc.)

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Named Perils

Perils specifically covered on property insured.

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Open Perils

damage to property arising from any cause except those that are specifically excluded.

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Concurrent Causation.

two or more perils act together (concurrently) or in a sequence to cause a loss.

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Direct Loss (or Damage).

direct consequence of a particular peril.

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Consequential Loss (or Damage).

not directly caused by a peril insured against

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Loss Reserve.

Funds a company is required by law to set aside to cover claims

Loss Ratio

dividing paid losses plus loss reserves by total earned premiums.

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Expense Ratio

dividing an insurer’s total operating expenses by total earned premiums

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Hazards

Physical Hazard.

Any hazard arising from the material, structural, or operational features of the risk itself

smoking is a physical hazard that increases the likelihood of a house fire and illness.

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Moral Hazard.

morals or habits that increases the probability of loss from a peril.

Purchasing insusrance for gain; Arson

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Morale Hazard.

insured's indifference to loss because of the existence of insurance.

Attitude of insured to think “Its insured so why should I worry about safety of my house/property/own health.

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Legal Hazard.

likelihood that a loss will occur because of court actions.

Regulations that force insurance companies to cover risks that they would otherwise not cover, such as including coverage for alcoholism in health insurance.

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General Insurance Market Regulation

Legislation

McCarran Ferguson Act of 1945

States will regulate it's insurance providers

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Insurance code

Changes are made by amending an existing section

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Are created via State legislation and then to the Governor.

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CCR California Administrative Code and Regulation

issued by the commissioner

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Insruance Commissioner

elected to a 4 year term and may only run twice

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He can enforce the law

supervising Licensing

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cannot write or change law

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Determine the insurer reserves

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overseeing marketing practices

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Unfair Practices

Unfair Method of Competition

Boycott, monopoly, intimidation, discrimination and cooking the books

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Name misrepresents terms

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Defamation of another Insurer

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Using a Name that its not it true Nature

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Unfair Claim Practices

Failure to acknowledge act promptly on claims

.

.

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Self Regulation

NAIC

developing guide lines

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Liability Basics

Tort Law

Unintentional Torts / Civil wrong

negligence

Duty to act

act in a reasonably prudent manner toward another

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Breach of the duty to act.

does not act in a reasonably prudent manner toward another

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Occurrence of injury or damage.

Another party actually must suffer an injury or damage. Standard of Care.

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proximate cause

tortfeasor’s breach of duty is actually what caused the injury or damage

Intentional wrong

Criminal

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Defenses

Common Law (judicial or court decisions)

Contributory Negligence

Prevents recovery for damages caused by a negligent party if the claimant was also negligent

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Assumption of Risk

plaintiff who consciously exposes himself to danger assumes some risk of possible injury.

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Intervening Cause

disrupted chain of events, thus freeing the defendant from liability.

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Statutory Law (enactment of legislatures)

Comparative Negligence

Damages are reduced in proportion to the degree of negligence.

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Statute of Limitations

length of time in which a person may file suit.

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No-Fault Concept

pure no-fault

tort system is completely abolished for bodily injuries caused by auto accidents.

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modified no-fault

no-fault concept, limited immunity is provided from tort action

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Absolute Liability

Claimant does not have to prove anything. (Employers are absolutely liable for employees work related injuries regardless of fault.)

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Strict Liability

If a claimant can prove that a product caused the injury, the manufacturer will be held liable whether or not the product was defective.

Propery Owner's Obligation

Invitee

The property owner must warn of hidden dangers

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Licensee

A property owner has a lesser duty than to an invitee

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Trespasser

person on the premises without the owner’s permission. It is not necessary to warn of hidden dangers.

Damages

Occurrence.

An event that results in an insured loss

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Bodily Injury Liability

liability arising from physical injury, including sickness, disease, and death caused by the negligent or purposeful acts or omissions of an insured.

.

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Accident

unplanned event which occurs suddenly and at a definite place.

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Property Damage Liability

Damage to tangible property, including loss of use of that property caused by the insured’s negligence

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Personal Injury Liability

Libel (in print),

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slander (spoken),

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false arrest,

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defamation

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Advertising Injury Liability

Legal liability arising from the misappropriation of advertising ideas or style of doing business; infringement of copyright, title or slogan

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Attractive Nuisance

Some properties attract and are a threat to children

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Specific Damages

Compensation to an injured party for actual or known expenses such as bills, loss of earnings, or costs of repairing or replacing damaged property. Specific damages do not include pain and suffering

.

General Damages

Compensation to an injured party for pain, suffering, mental anguish, disfigurement

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Punitive Damages

general damages as a punishment for extreme conduct by a negligent party, as in the case of gross negligence

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Medical Payments Coverage

expenses incurred by invitees and licensees on the insured’s premises. Payments are made regardless of fault or negligence, and payment is not an admission of fault.

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Gross Negligence

A willful, or reckless disregard of the consequences affecting the life or property of another.

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Vicarious Liability

liability on one person for the actionable conduct of another (Such as: employer and employee)

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Absolute Liability

Employers are absolutely liable for employees work related injuries regardless of fault

Strict Liability

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If a claimant can prove that a product caused the injury, the manufacturer will be held liable whether or not the product was defective.

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Notices of loss

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Arbitration

Third party settles disagreements between claimant and the insurer

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Certification of Insurance

Includes the effective date, name of the insurer, name of the insured, and limits of liability.

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Libel

printed matter tending to unjustly injure a person’s reputation

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Slander

oral falsehood that damages another’s reputation

Limit of Liability

Per Occurrence Limit

most the coverage will pay for a loss arising out of any one occurrence

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Per Person Limit

maximum amount that the coverage will pay for loss to any one person regardless of the overall policy limits.

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Aggregate Limits

The maximum amount payable for loss (per location and/or per person) from all occurrences within a policy period

fully restores on the anniversary date.

Commercial Package Policy

Coverage Parts

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1) Building and Personal Property Coverage Form. 2) Commercial Builders Risk Coverage Form. 3) Condominium Association Form. 4) Condominium Unit-Owners Coverage Form. 5) Business Income Coverage Form. 6) Extra Expense Coverage Form. 7) Legal Liability Coverage Form.

Causes of Loss Forms contains the exclusions

Basic Form

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Broad Form

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Special Form

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Earthquake Form

.

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Commercial Property Coverage

7 Forms

.

Commercial Automobile

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General Liability CGL

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Commercial Crime

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Commercial inland Marine

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Farmer Coverages

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Boiler and Machinery Equipment Breakdown

Minimum Requirement

Declaration Page-stating premium charges andcoverage limits

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Policy Conditions - six conditions

Cancellation

10 days prior for non payment of premiums

.

30 days prior for any other allowwagle reason

.

Two or more Coverage/Modules

.

.

California Amendetory endorsements

Under 60 days insurer can cancel for any reason

.

Over Under 60 days insurer can not cancel without state cause

.

Non renewal insurer 60 before expiration date

Common Policy Declaration Page

a. The insured and the insurer. b. The inception and expiration date. c. A description of the business. d. The premium charge for the coverage parts included in the policy.

Common Policy Conditions Page legal obligations and duties of the insured and insurer

Personal Lines

Home Owner's Policy

HP 2 Broad Form

Broad Form =Named Peril

Owner's premises, dwelling and other structures

.

Losses

Structures;

replacement cost basis

.

contents and personal property

actual cash value

.

.

Wharves

Wind, hail, aircraft, riot, vehicles, explosion, and smoke (WHARVES), and volcanic eruption

.

VMM

excludes loss for vandalism occurring after 60 days of vacancy

.

Does not cover

loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured.

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HP 3

Special Form = Open Peril

Special Form = Open Peril

Owner's premises, dwelling and other structures

.

Losses

Structures;

replacement cost basis

.

Broad form: contents and personal property

actual cash value

.

Does not cover

loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured.

.

HP 3 contains HP 2

.

HP 4 Renter's Form

'Content Only' Broad Form - Renter's Form

contents and personal property.

.

Losses are paid on an actual cash value

.

HO-5 (Comprehensive Form) Open Peril

.

Special Form = Open Peril

Open Peril

Owner's premises, dwelling and other structures

.

Open Peril

contents and personal property

actual cash value

.

Losses

Structures;

replacement cost basis

.

contents and personal property

actual cash value

.

.

HO-6 (Unit-Owners Form) Broad Form

condominium unit-owner

.

real property for which the insured is responsible under the association’s agreement

.

personal property while anywhere in the world.

Actual Cash Value

.

HO-8 (Modified Form)

older Home where replacement value and market value are disproportionate

Could create a Moral Hazard

.

For example older home

Replacement Value would be much higher than Market Value

.

of the dwelling, and losses to the contents are paid on an actual cash value basis.

.

Losses

Owner's premises

market value

.

.

Coverages that can be added to any HomeOwner Form

A- Dwelling

.

Does Apply

residence premises including structures attached to the dwelling

.

building equipment and outdoor equipment located on the described location are considered as dwelling

.

.

Does not Apply

land, including land on which the dwelling is located

.

Vandalism and malicious mischief if dwelling has been vacant for more than 60 days.

.

A limits of Insurance

qualify for replacement cost, the amount of insurance at the time of the loss must equal or exceed 80% of the replacement cost

.

B - Other Structures

Does Apply

clear space from the dwelling detached from the dwelling, such as a detached garage, carport, outdoors storage building

.

rent a private garage to another for garage purposes

.

Does not Apply

land, including land on which the dwelling is located

.

cannot be used for mercantile or manufacturing business

.

B limit of insurance

10% of the Coverage A limit for all forms

.

C - Personal Property

Does Apply

household and personal property

.

property of a guest or servant

.

newly acquired principal residence for 30 days

.

.

It would cover theft of an insured’s camera stolen by a visitor

.

C limit of insurance

50% of the Coverage A

anywhere in the world

.

Secondary residence

coverage is limited to 10% of Coverage C or $1,000 whichever amount is higher

.

student’s property when away at school

.

new principal residence is covered automatically for up to 30 days without the 10% limit.

.

Personal property with special limits are:

\na. $200 on money, bank notes, bullion, coins, medals, etc. b. $1,500 on securities, deeds, evidences of debt, manuscripts, passports, tickets and stamps. c. $1,500 on watercraft, including their trailers, furnishings, equipment, and outboard motors. Loss from wind or hail is excluded unless in a fully enclosed building. d. $1,500 on trailers not used with watercraft. e. $1,500 for loss by theft of jewelry, watches, furs, precious or semiprecious stones. f. $2,500 for loss by theft of silverware, gold ware, pewter ware, etc. g. $2,500 for loss by theft of firearms. h. $2,500 on property used for business while on the residence premises. i. $500 on business property off the residence premises. j. $1,500 for loss to electronic apparatus including accessories, antennas, tapes, records, discs, etc while in or upon a motor vehicle or other motorized land conveyance. k. $1,500 for loss to electronic apparatus and accessories used primarily for business.

.

.

.

Does not Apply

Articles separately described and specifically insured in this or other insurance. b. Animals, birds, and fish (pets) including guard dogs. c. Motor vehicles or motorized land conveyances, unless exempt from motor vehicle registration and used to service the insured’s residence or assist the handicapped. d. Aircraft and aircraft parts. e. Credit cards and fund transfer cards. (Unauthorized use of cards is covered.) f. Property of a roomer, boarder or tenant. g. Radio equipment permanently installed in an auto. h. Windstorm damage to personal property contained in the building unless the opening is caused by a covered peril. i. Committed by an insured. j. Watercraft, trailers, and campers while away from the residence premise. NOTE: It would cover theft of an insured’s camera stolen by a visitor

.

roomers or boarders

.

.

D - Loss of Use

indirect loss

Does Apply

property loss covered by Section I

necessary increase in living expenses required to maintain the household’s normal standard of living.

.

Fair Rental Value

less any expenses that do not continue, such as an electric bill, etc.

.

Civil Authority Prohibits Use

prohibits the insured from the use of the residence premises as a result of direct damage to neighboring premises by a peril insured against, the insurer would cover the loss as provided in 1., and 2., for no more than 2 weeks.

.

Does not Apply

non rented dwellings

.

D limit of insurance

the shortest time required to repair or replace the damage

will extend even beyond the policy expiration date, and payments do not affect the policy’s liability limit

.

HO-2, HO-3, and HO-5 is 30% of the Coverage A

.

HO-4, it is 30% of the Coverage C limit

.

HO-8, it is 10% of the Coverage A limit

.

.

.

.

.

General Exclusions

Ordinance or Law

example, remodeling necessary to make a building compliant with the Americans With Disabilities Act

.

Earth Movement

If a direct loss by fire, explosion, or breakage of glass or safety glazing material should ensue from earth movement, the policy would then pay only for the ensuing loss.

.

Water Damage

not pay for losses caused by flood, tidal water, water that backs up through sewers or drains, or water below the surface of the ground which seeps through basement walls.

.

If a direct loss by fire or explosion resulting from water damage should occur the ensuing damage would be covered.

.

Power Failure

will not pay for losses caused by the failure of power or other utility service if the failure takes place off the described premises

.

If an insured peril ensues on the described location as a result of the power failure, the ensuing loss would be covered.

.

Neglect

.

War

.

Nuclear Hazard

.

Intentional Loss

.

Governmental Action

The destruction, confiscation, or seizure of property

.

Selected Property Endorsements

Mobile Home Insurance

Mobile Home Endorsement to or by writing a separate Mobile Homeowners Policy.

.

Coverage C (Personal-Property) is generally written at 40% of Coverage A, instead of 50% under the Homeowners Policy.

.

Increased Limit – Other Structures Endorsement

if the automatic amount equal to 10% of the dwelling coverage is inadequate for other structures

.

Inflation Guard Endorsement

.

Guaranteed/Extended Replacement Cost Endorsement

,

Personal Property Endorsement

provided on an open-peril basis with certain exceptions for jewelry, furs, cameras, musical instruments, silverware, golfer’s equipment, fine arts, postage stamps and rare and current coins.

.

also called a Personal Article Floater

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.

.

Workers’ Compensation Residence Employees Endorsement

a. Been engaged in such employment by the insured for no less than 52 hours b. Earned no less than $100 in wages.

,

California Residential Property Insurance Disclosure Form

indicates the method of valuation

.

Home Owner's Liability Coverage; HO SECTION II

Overview

Protection is provided for legal claims against the insured or family members from occurrences in and around the premises, personal activities, and pets, both on and away from premises. Coverage is intended to protect against non-business, non-automobile exposures.

.

Coverage E - Personal Liability

If there is a covered Occurance

bodily injury or property damage

1. Pay up to the limit of liability for the damages for which an insured becomes legally liable, including prejudgment interest awarded against an insured.

.

2. 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 the insurer decides is appropriate.

.

Coverage F - Medical Payments to Others

pay necessary medical expenses that are incurred or medically ascertained within 3 years from the date of an accident causing bodily injury

.

1. A person on the insured location with the permission of an insured. 2. A person off the insured location if the bodily injury: a. Arises out of a condition on the insured location or the ways immediately adjoining. b. Is caused by the activities of an insured. c. Is caused by a residence employee in the course of employment of the insured. d. Is caused by an animal owned by or in the care of an insured

.

Additional Coverages

Claim Expenses (Supplementary Payments)

insured’s actual loss of earnings up to $250 a day for assistance in the investigation or defense of a claim or suit; premiums on bonds required in a suit.

.

First Aid Expenses

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

.

Damage to Property of Others

replacement cost, up to $1,000 per occurrence, for property damage caused by an insured to the property of others. Example: Damage caused by an insured to a borrowed lawn mower.

.

No Fault

Payment is made regardless of negligence.

.

.

No Covered

an insured or regular residents

.

a. Any property that is covered under Section I. b. Damage caused intentionally by an insured who is 13 years of age or older. c. Damage to any property owned by an insured. d. Damage to property owned by or rented to a tenant. e. Damage arising out of business pursuits engaged in by an insured.

.

Exclusions

Same as the Dwelling exclusions.

.

.

Personal Auto Policy

Personal Inland Marine Insurance

Dwelling Policy Non owner occupied [landlord insurance]

DP 1

Basic Form

Perils

FLIE

fire

.

Internal explosion

.

lightning

.

Basic is the only for available for Manufactured homes only

.

No more than 4 units

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up to 5 boarders

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Losses are paid on Actual cash value = Replacement value - Depreciation

.

DP 2

Broad Form= Named Perils

ECE = Extended Coverage Endorsement

WHARVES

wind

.

hail

.

aircraft

.

riot

.

vehicles

vehicle peril does not include loss to a fence, driveway, or walk caused by a vehicle owned or operated by the insured.

.

explosions

.

smoke

.

.

All Perils from DP1 included in DP2

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VMM = Vandalism and Malicious Mischief Endorsement

excludes loss for vandalism occurring after 60 days of vacancy

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FWA-SAFA-HA

Falling Objects

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weight of snow, ice, and sleet

.

Accidental Discharge

or overflow of water or steam

.

tearing apart

Cracking

.

Collapse

.

steam or hot water heating system

.

air conditioning

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freezing of a plumbing

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automatic fire protective sprinkler system

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household appliance

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artificially generated electrical current.

.

.

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dwelling and other structures are paid on a replacement cost basis, and losses to contents are paid on an actual cash value

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burglary damage peril includes damage to the covered property caused by the burglar, but not theft of property

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DP 3 Special Forms = Open Perils

.

Theft of property that is part of the dwelling or other structures are covered as long as the dwelling or other structures have not been vacant for more than 60 days.

.

dwelling and other structures are covered for all direct physical damage (open peril), except for perils specifically excluded.

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Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to contents are paid on an actual cash value

.

Personal property or contents are covered for the Broad Form (DP-2) perils

.

Coverages that can be added to any Dwelling Form

A- Dwelling

Does Apply

dwelling including structures attached to the dwelling

.

building equipment and outdoor equipment located on the described location are considered as dwelling

.

Does not Apply

land, including land on which the dwelling is located

.

B - Other Structures

Does Apply

detached from the dwelling, such as a detached garage, carport, outdoors storage building

.

rent a private garage to another for garage purposes

.

Does not Apply

land, including land on which the dwelling is located

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B limit of insurance

10% of the Coverage A limit for all forms

only DP2 and DP3 are the insurance limit increased .

.

C - Personal Property

Does Apply

household and personal property

.

property of a guest or servant

.

newly acquired principal residence for 30 days

.

Does not Apply

accounts, bank notes, coins and currency; birds, animals, and fish; watercraft other than rowboats or canoes; motor vehicles other than those used to service the described location or to assist the handicapped; electronic data processing tapes, wires, and records; and credit cards or fund transfer cards.

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C limit of insurance

50% of Coverage A.

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secondary coverage

10% of the Coverage C limit for all forms

anywhere in the world

.

D - Fair Rental Vlaue

indirect loss coverage

Does Apply

fair rental value of that part of the described location

.

.

Does not Apply

non rented dwellings

.

D limit of insurance

20% of the Coverage A limit for each form

only DP2 and DP3 are the insurance limit increased .

.

E - Additional Living Expense

indirect loss coverage

Does Apply

property described in Coverages A, B, or C by an insured peril, and is automatically

.

Additional Living Expenses are deemed those sustained by an insured household in order to maintain its normal standard of living.

.

Does not Apply

non rented dwellings

.

E limit of insurance

Coverage E limit of insurance is up to 20% of the Coverage A limit

only DP2 and DP3 are the insurance limit increased .

.

Other Coverages

Debris Removal

.

Improvements, Alterations, and Additions

tenant, and at their own expense make improvements

they may use up to 10% of the Coverage C limit of insurance for loss by an insured peril to such improvements

.

DP3 and DP2 don't lower the total benefits available for coverage C. DP1 does reduce

.

Reasonable Repairs

insurer will pay the reasonable costs incurred by the insured for necessary measures taken to protect the property

property against direct loss from any cause while being removed from a premises endangered by an insured peril. In the case of the DP-1 the property is covered for 5 days while removed, and in the case of the DP-2 and DP-3 the property is covered for 30 days while removed

.

Trees, Shrubs, and Other Plants

DP-2 and DP-3 forms, coverage is provided for trees, shrubs, plants or lawns on the described location

for all WHARVES

.

5% of the Coverage A limit, with no more than $500 for any one tree, shrub, or plant

.

Fire Department Service Charge

$500 for the insured’s liability assumed by contract or agreement for fire department charges

.

no coverage in City Limits

.

Collapse

DP-2 and DP-3 forms, coverage is provided for direct physical loss to covered property involving collapse of a structure

.

No increase the limit of the insurance

Glass or Safety Glazing Material

.

breakage of glass or safety glazing material

included with DP-2 and DP-3 forms

.

not included when vacant for more than 30 consecutive days.

.

Broad Theft

none of the Dwelling Forms automatically cover theft of personal property or contents,

covers theft, including attempted theft, and vandalism and malicious mischief damage resulting from theft or attempted theft.

.

Dwelling Under Construction

dwelling (Coverage A) while under construction. The premium is based on an average amount of insurance during construction

.

.

General Exclusions

Ordinance or Law

example, remodeling necessary to make a building compliant with the Americans With Disabilities Act

.

Earth Movement

If a direct loss by fire, explosion, or breakage of glass or safety glazing material should ensue from earth movement, the policy would then pay only for the ensuing loss.

.

Water Damage

not pay for losses caused by flood, tidal water, water that backs up through sewers or drains, or water below the surface of the ground which seeps through basement walls.

.

If a direct loss by fire or explosion resulting from water damage should occur the ensuing damage would be covered.

.

Power Failure

will not pay for losses caused by the failure of power or other utility service if the failure takes place off the described premises

.

If an insured peril ensues on the described location as a result of the power failure, the ensuing loss would be covered.

.

Neglect

.

War

.

Nuclear Hazard

.

Intentional Loss

.

.

Dwelling Forms do not automatically cover personal liability

Coverage L

Personal Liability

residence premises as well as personal (non-business) activities worldwide resulting in bodily injury or property damage to a third party arising out of the insured’s negligence.

.

Coverage M

Medical Payments to Others

medical payments to a third party for injury after an accident if the accident occurs on the insured location, as well as off the premises under certain conditions, regardless of fault or negligence

.

provides additional coverages for claim expenses, first aid expenses, and physical damage to the property of others.

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