June 24, 2016
Property Coverage Agreements
Summary: These pages examine section I (property) homeowners coverage in the most recent ISO program, the homeowners 2011. Included in the homeowners 2011 program is comprehensive form HO 00 05 05 11, which gives special perils coverage on personal property, and broader coverage for items included in the special limits of liability. Where relevant, any significant differences between the current 2011 edition and the 2000 edition are indicated.
This discussion focuses on the principal coverage agreements (coverages A, B, C, D, and the additional coverages) of the homeowners policy.
Topics covered:
Except in the case of form HO 00 06 05 11, the state pages of the homeowners manual specify the minimum amount for which homeowners coverage A (dwelling coverage) may be written. (With respect to form HO 00 04 05 11, which does not include coverage A, the state pages specify the minimum amount for coverage C—personal property.) The countrywide general rules provide for a $5,000 minimum amount of dwelling coverage (sometimes referred to as additions and alterations coverage) under the HO 00 06, and allow for an increase in the minimum limit.
Minimum limits of liability are also prescribed by the general manual rules for other section I coverages, defined as percentages of whatever amount has been chosen for coverage A. These limits are:
• Coverage B—Other Structures: 10 percent of the coverage A amount.
• Coverage C—Personal Property: 50 percent of the coverage A amount, but refer to the state pages in the case of forms HO 00 04 and HO 00 06.
• Coverage D—Loss of Use: Has been changed to 10 percent of the coverage A amount for form HO 00 08 in the 2011 form; 30 percent of coverage A for forms HO 00 02 05 11, HO 00 03 05 11 and HO 00 05; 30 percent of the coverage C amount for form HO 00 04; and 50 percent of coverage C for form HO 00 06. The limit of liability for coverages C and D may be increased over the specified minimum limits in any of the homeowners forms. A lower limit of liability may be selected for coverage C under forms HO 00 02, HO 00 03, or HO 00 05. The lower limit must be not less than 40 percent of the coverage A limit.
Insurance provided under Section I of the homeowners policy is divided into five coverage parts:
1. Coverage A—Dwelling. Includes on-premises construction materials and supplies (and, in form HO 00 06, building additions and alterations and certain items of real property used by the insured or which the insured is responsible for insuring—see Homeowners Form HO 00 06—Unit Owners Insurance. Coverage A is not included in tenants' coverage form HO 00 04 (but a limited amount for additions and alterations is included in the additional coverages; more coverage may be purchased by endorsement).
2. Coverage B—Other Structures. Covers other structures located on the premises and not connected to the dwelling. This is not included in forms HO 00 04 or HO 00 06, although coverage A of form HO 00 06 applies to items of real property or structures on the residence premises.
3. Coverage C—Personal Property. Applies anywhere in the world to property owned or used by an insured. At the insured's request, also covers property of others while it is located on the part of the residence premises occupied by an insured, and property of a guest or residence employee while in any residence occupied by an insured.
4. Coverage D—Loss of Use. Consists of three loss of use coverages: (1) additional living expense; (2) fair rental value; and (3) prohibited use.
5. Additional Coverages. There are twelve additional coverages for incidental exposures: (1) debris removal; (2) reasonable repairs; (3) trees, shrubs, other plants; (4) fire department service charge; (5) property removed; (6) credit card, fund transfer card, forgery and counterfeit money; (7) loss assessment; (8) collapse; (9) glass or safety glazing material; (10) landlord's furnishings; (11) ordinance or law; and (12) grave markers. Not all of the additional coverages are included in each form. Form HO 00 04, for example, omits landlord's furnishings but includes as additional coverage (10) building additions, alterations, fixtures, improvements, and installations made or acquired by the named insured. A detailed discussion of the property coverages follows.
Deductible
The deductible clause has been removed from the property coverage agreements and is now contained in the conditions section. The language is basically the same except for specifications that if two deductibles apply that only the highest deductible will be applied to the loss. This makes it clear that unless otherwise noted, the deductible applies.
A.Coverage A—Dwelling1.We cover:
a.The dwelling on the "residence premises" shown in the Declarations, including structures attached to the dwelling; and
b.Materials and supplies located on or next to the "residence premises" used to construct, alter or repair the dwelling or other structures on the "residence premises."
2.We do not cover land, including land on which the dwelling is located.
Analysis
In forms HO 00 02, HO 00 03, HO 00 05, and HO 00 08, coverage A applies to the dwelling on the residence premises designated in the policy declarations; to structures attached to the dwelling (such as an attached garage); and to materials and supplies located at the residence premises or adjacent to it to be used in the construction, alteration, or repair of the dwelling or another insured structure (i.e., insured under either coverage A or B). The last provision is of importance when a policy is written, as it may be, on a dwelling still under construction.
The insured dwelling under coverage A must be used principally as a private residence. Under current ISO rules, a dwelling containing up to four units may be written on a homeowners policy, so long as the named insured resides in one unit. Land is excluded from any coverage.
B.Coverage B—Other Structures1.We cover other structures on the "residence premises" set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line, or similar connection.
2.We do not cover:
a.Land, including land on which the other structures are located;
b.Other structures rented or held for rental to any person not a tenant of the dwelling, unless used solely as a private garage;
c.Other structures from which any "business" is conducted; or
d.Other structures used to store "business" property. However, we do cover a structure that contains "business" property solely owned by an "insured" or tenant of the dwelling provided that "business" property does not include gaseous or liquid fuel, other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure.
3.The limit of liability for this coverage will not be more than 10% of the limit of liability that applied to Coverage A. Use of this coverage does not reduce the Coverage A limit of liability.
Analysis
Coverage B insures "other structures" on the residence premises set aside from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line, or similar connection. Sometimes questions arise about the status of sidewalks, driveways, or inground pools that appear to be connected by a concrete patio to the dwelling. These structures are not dwellings, nor are they attached to the dwelling. Concrete walks and patios are not laid so that they become "at one" with the dwelling. Therefore, coverage B applies to these structures.
On the other hand, a case can be made that the large screen structures that are used in some parts of the country to cover inground pools should be considered a part of the dwelling, much like a deck or carport, if they are securely attached to the dwelling.
Coverage B in the earlier editions insured "appurtenant structures," a term more specific—and therefore somewhat more restrictive—than "other structures." Appurtenant structures are generally understood to be permanently affixed to the land—a part of the realty, title to which passes with the title to the land itself. By this definition, an in ground swimming pool, for example, is an appurtenant structure, but an above-ground pool is not. Simplified language homeowners coverage B applies to any unexcluded "structure," a term that refers (according to standard dictionary definitions) to the very broad category of "something constructed." By this definition, an "other structure" can include a storage shed or an ornamental rock garden.
While an other structure used to conduct a business is excluded from coverage, an other structure used to store business property is covered so long as the property is owned by an insured or a tenant of the dwelling. The business property cannot consist of gaseous or liquid fuel, unless the fuel is in a permanently installed fuel tank of a vehicle or craft. This provision makes it clear that if the insured parks his business-use auto in his detached garage, coverage for the garage will not be precluded in event of a loss. Previously, the matter was open to question.
Care must be taken with regards to this coverage. Say a businessowner, John Smith, owns and stores business personal property in his detached garage. If the business is in the name of Tools 'R Us, Inc., then is the property covered? Tools 'R Us, Inc. is not an insured.
Excluded under coverage B is any structure rented or held for rental to anyone other than a tenant of the dwelling. (An exception is made for a rented structure used solely as a private garage.) There are endorsements available to provide coverage for business or rental situations. See Standard Homeowners Endorsements, for discussions of endorsements HO 04 40 10 00 and HO 04 42 10 00. As under coverage A, coverage B does not cover the value of land itself, including the land on which insured other structures are located.
Coverage B applies to any number of "other structures" situated on the residence premises. The amount specified in the declarations as the limit of liability for this coverage is a blanket amount that may be applied to one or several structures as the nature of the loss dictates. The amount of insurance does not apply separately to each separate structure; it applies as a single amount over all. When the insurable value of all other structures on the premises exceeds the limit of insurance for coverage B, specific additional amounts of coverage may be scheduled by endorsement for individual structures. See Standard Homeowners Endorsements for a discussion of endorsement HO 04 48 10 00 and an explanation of the way this coverage applies.
There are two options for covering off-premises structures. Endorsement HO 04 91 10 00 extends the coverage B blanket coverage to off-premises structures that are used in connection with the residence premises. Endorsement HO 04 92 05 11 is used for insurance written on a specific structure located away from the residence premises.
C. Coverage C—Personal Property
1. Covered PropertyWe cover personal property owned or used by an "insured" while it is anywhere in the world. After a loss and at your request, we will cover personal property owned by:
a.Others while the property is on the part of the "residence premises" occupied by an "insured"; or
b.A guest or a "residence employee," while the property is in any residence occupied by an "insured."
2. Limit for Property at Other Locations
a. Other Residences
Our limit of liability for personal property usually located at an "insured's" residence, other than the "residence premises", is 10% of the limit of liability for Coverage C, or $1,000, whichever is greater. However, this limitation does not apply to personal property:
(1) Moved from the "residence premises" because it is:
(a) Being repaired, renovated or rebuilt; and
(b) Not fit to live in or store property in; or
(2) In a newly acquired principal residence for 30 days from the time you begin to move the property there.
Analysis
Homeowners coverage C applies worldwide coverage to personal property owned or used by an insured. Say, for example, an insured travels to Europe. While there, personal property is stolen including the borrowed suitcase containing the property. Coverage C responds to both owned and borrowed property.
Coverage C also applies, at the option of the named insured, to personal property of others while it is "on the part of the residence premises occupied by an insured." If the insured rents an apartment, this coverage on property of others applies only to property in the insured's half of the dwelling or to the insured's own apartment, not to other portions of the building not occupied by the insured. Also covered, if the insured wants, is property owned by guests and residence employees while the property is in any residence occupied by any insured.
There is a slight distinction between "others" and a "guest." An "other" might be a salesperson whose briefcase is damaged by a burst pipe; "guest" implies a social occasion. "Guest" coverage applies to any residence—the insured's lakefront seasonal cottage, or a rented hotel room—so long as the residence is occupied by an insured.
ISO introduced endorsement HO 05 41 10 00 extended theft coverage, which may be added to cover loss by theft from the portion of the residence premises usually occupied by the insured while it is being rented on an occasional basis. The endorsement is unnecessary if the insured has special perils coverage on contents, as in the HO 00 05 05 11 or where the insured has added HO 17 31 05 11 to form HO 00 06. (Note, with the introduction of the HO 00 05, endorsement HO 00 15 special personal property coverage, has been withdrawn.)
On property usually situated at a residence of the insured other than the "residence premises" (refer to the definition of this term) coverage is limited to the larger of 10 percent of the full coverage C limit or $1,000. This limitation affects the amount of coverage available, for example, on the furniture at the insured's vacation cottage but not on other property, such as clothing, that the insured takes along to the cottage even for an extended vacation, so long as the clothing is usually located somewhere else. The limitation also applies to a student's property away at school except for items that normally accompany the student while away from the premises: a purse, a wallet, a watch, certain pieces of jewelry or clothing. Of course, there may be a difference of opinion under actual loss circumstances as to which items may be exempt.
The limit on personal property usually located in other residences can be increased by adding endorsement HO 04 50 05 11—increased limit on personal property at other residences. See "Standard Homeowners Endorsements", Personal Lines Volume, Dwellings section for information about the use of this endorsement.
Note also that the limitation applies to the property wherever it is located at the time of loss as long as it is property that is usually situated at the other residence. Suppose an insured is moving from one seasonal residence to another. Neither place is a "residence premises" so the insured has only 10 percent (or $1,000) coverage on the property wherever it is actually located, including while in transit.
There are two exceptions to the away from premises limitation. Personal property removed from the residence premises because renovations or repairs are underway, and the premises are not fit to live or store property in, is not subject to the limitation. This is not a broadening of coverage, but it is a clarification in that the property is not usually situated in another residence. The residence premises need not have sustained a covered loss; occasionally, a dwelling's being renovated will cause a family temporarily to seek other lodging.
The second exception is that the limitation does not apply to personal property in a newly acquired principal residence for thirty days during the course of the move. The coverage C limit applies in full to this personal property during the thirty-day period. This provision gives the insured a chance to arrange for proper coverage.
b.Self-storage FacilitiesOur limit of liability for personal property owned or used by an "insured" and located in a self-storage facility is 10% of the limit of liability for Coverage C, or $1,000, whichever is greater. However, this limitation does not apply to personal property:
(1)Moved from the "residence premises" because it is:
(a)Being repaired, renovated or rebuilt;
and
(b)Not fit to live in or store property in;
or
(2)Usually located in an "insured's" residence, other than the "residence premises".
Analysis
This section is new in the 2011 form. It provides coverage for property stored off premises in a self storage facility. The same parameters for property off premises apply here: 10 percent of the limit of liability for coverage C or $1,000 is available for losses. However, the limitation does not apply if property is moved due to the dwelling being repaired and being not fit to live in. For example the insured has a house fire and while the home is being restored any undamaged belongings are moved to storage to keep them safe; the full coverage C limit will apply if the property is damaged while in storage.
Certain categories of personal property, although covered by standard homeowners insurance, are subject to special limits of liability much smaller than the overall coverage C limit. Property items included in these various categories for the most part are of potentially high value, in compact and readily portable form, attractive to thieves, and—for the average homeowner, for whom the homeowners policy pricing is designed—the value of such property generally does not exceed the special limits of insurance provided.
For insureds with values in excess of any of these limits, increased limits or separate inland marine coverage can be arranged at added premium. (See Scheduling Personal Property for the Homeowners Insured.) Coverage C special limits may be increased by adding endorsement HO 04 65 05 11—coverage C increased limits of liability. If the insured has special perils coverage on personal property (the HO 00 05, or where an HO 00 06 policy is endorsed with HO 17 31), the special limits may be increased by adding HO 04 65 or HO 04 66 05 11 as appropriate.
The property subject to these internal limits in the policy and the amounts of coverage provided are given below. It should be noted that the limit specified for each category is the total amount recoverable for one loss involving any or all of the kinds of property included in the category. Also, all of the property subject to the special limits is also subject to the total coverage C limit rather than being outside that limit.
3.Special Limits of Liability
The special limit for each category shown below is the total limit for each loss for all property in that category. These special limits do not increase the Coverage C limit of liability.
a.$200 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, value cards and smart cards.
Analysis
A distinction is made between "gold," "silver," and "platinum" as metals, and objects made from them. Such objects do not fall within this limit, and are limited only if they fit the description of items subject to either special limit five or seven, discussed below under "Special Limits—Theft Only." Because platinum is being used to plate flatware, platinumware belongs with silver- and goldware; while platinum as a medium of exchange belongs in the money category. Homeowners forms once applied the limit to "numismatic property" rather than coins and medals. For issues of coverage involving policy references to "money," "coins," and "numismatic property," as well as "stamps" and "philatelic property" under the securities limit, see Numismatic and Philatelic Property.
Scrip, stored value cards, and smart cards can act as money and are included here. Scrip is often used as a fundraiser by charitable organizations. The purchaser pays a fraction of the redeemable value; the difference is donated by the retailer to the organization. Stored value cards are plastic cards that are often used for gift certificates or for phone cards. Using them is similar to a cash transaction; hence they are included in this category. Finally, smart cards are cards similar to a credit or debit card; however, they also store information about the cardholder by means of an embedded microchip.
b.$1,500 on securities, accounts, deeds, evidences of debt, letters of credit, notes other than bank notes, manuscripts, personal records, passports, tickets and stamps. This dollar limit applies to these categories regardless of the medium (such as paper or computer software) on which the material exists.This limit includes the cost to research, replace or restore the information from the lost or damaged material.
Analysis
Although it is increasingly common to store personal records on a personal computer, the $1,500 limit applies "regardless of the medium (such as paper or computer software) on which the material exists." Any research, replacement, or restoration costs of the material covered under the provision are included within the special limit. Note the distinction between personal records and "business data." Although business data is not covered property (see Property not Covered, below) the policy makes an exception for, and covers under the business property special limit, the cost of blank recording and storage media and computer programs available on the retail market.
c.$1,500 on watercraft of all types, including their trailers, furnishings, equipment and outboard engines or motors.
Analysis
A $1,500 limit applies in the aggregate to all watercraft, be they bowriders or sailboards, including their trailers, furnishings, equipment, and outboard motors.
With this low a limit, together with the exclusions of wind or hail loss to this property (unless in a fully enclosed building), and of theft away from the premises, it is generally better to provide separate coverage for watercraft and their accessories, either by a watercraft endorsement to the homeowners or by a separate policy.
d.$1,500 on trailers or semitrailers not used with watercraft of all types.
Analysis
There is no limit as to type of trailer, so a horse trailer or pull-behind camper is covered. Generally, however, a trailer of greater value may be covered separately under the auto policy—depending, of course, on underwriting criteria.
e.$1,500 for loss by theft ["theft, misplacing or losing" in form HO 00 05] of jewelry, watches, furs, precious and semi-precious stones.
Analysis
Theft losses of jewelry, precious and semiprecious stones, watches, and furs are covered up to $1,500. The stated limit applies to each theft of property in any or all of the named categories, so that if one theft results in loss of a $1,000 watch and a $600 necklace, the insured's limit is still $1,500. When coverage C is on a special perils basis (as with the HO 00 05 or by attaching endorsement HO 17 31 to form HO 00 06), the limit applies to lost or misplaced items as well as to items that have been stolen. The limit applies to loss by theft. If the jewelry was damaged by fire, the full coverage C amount is available.
Disagreement sometimes arises as to the scope of the terms jewelry and furs. Standard dictionary definitions of jewelry make it applicable to costume jewelry as well as to items containing genuine stones or precious metals, e.g., the Random House Dictionary: "any ornament for personal adornment…including those of base metals, glass, plastic, and the like."
With respect to the meaning of furs, courts have most often adopted an interpretation advantageous to the insured. In Starry v. Horace Mann Insurance Co., 649 P.2d 937 (Alaska 1982), the supreme court ruled that a bear hide wall mount worth $5,000 was not subject to the fur limitation since, in the court's opinion, the language of the limitation made it applicable only to "common, everyday effects in the nature of jewelry and fur-bearing garments."
On the other hand, a district court of appeals in Asbury v. Indiana Union Mutual Insurance Co., 441 N.E.2d 232 (Indiana 1982), held that animal pelts acquired through the insured's hunting hobby had the status of "furs" within the scope of the limit. The insurer denied any coverage at all on the pelts, contending that they were excluded as business property held for sale, since the insured did customarily sell the animal skins from his hunting trips. But the court found an ambiguity between the exclusion of furs when offered for sale as part of a business and the fur limitation which, it said, could be understood as a specific provision of coverage on furs of any kind in the limited amount. In light of this perceived ambiguity, the Indiana court overturned a judgment for the insurer and ruled that the status of the pelts with respect to homeowners coverage was a factual question to be determined by a jury.
The common element in both the Indiana and the Alaska courts' different readings of the fur limitation is that both interpretations worked to the insured's advantage.
f.$2,500 for loss by theft ["theft, misplacing or losing" in form HO 00 05] of firearms and related equipment.
Analysis
Again, the limitation is for theft. If the firearms were damaged by being run over by a vehicle, the full amount of coverage C is available. The $2,500 limit includes losing or misplacing in the case of special perils coverage of the HO 00 05. "Firearms" is a more limited term than "guns," usually applying only to small arms capable of being carried easily by an individual, but not to artillery weapons. The limit includes equipment such as gun cases, detachable gunsights, cartridges, or a cleaning kit.
g.$2,500 for loss by theft ["theft, misplacing or losing" in the HO 00 05] of silverware, silver-plated ware, goldware, gold-plated ware, platinumware, platinum-plated ware and pewterware. This includes flatware, hollowware, tea sets, trays and trophies made of or including silver, gold or pewter.
Analysis
This is the last of the theft-only special limits. This category includes items often associated with the table: flatware or cutlery; hollowware, which generally means bowls, cups, or vases; and tea sets. Trophies made of or including any of these metals are also limited in coverage. It could be argued, given the wording of the limitation, that any item that is not listed—a silver figurine, for instance—is not subject to the special limit.
h.$2,500 on property, on the "residence premises" used primarily for "business" purpose.i.$1,500 on property, away from the "residence premises", used primarily for "business" purposes. However, this limit does not apply to antennas, tapes, wires, records, disks or other media that are:
(1)Used with electronic equipment that reproduces, receives or transmits audio, visual or data signals; and
(2)In or upon a "motor vehicle".
Analysis
Special limit h. imposes a $2,500 limit on business property on the residence premises and special limit i. limits coverage for business property away from the premises to $1500 (increased from $500). These limits can be increased, using endorsement HO 04 12 05 11, except with respect to business property (a) in storage or held as a sample or for sale or delivery after sale, or (b) pertaining to a business actually conducted on the residence premises. Increasing the limit on premises automatically increases the off-premises limit as well, so that the off-premises limit is always 20 percent of the on-premises limit. In the case of a business actually conducted on the premises, endorsement HO 04 42 10 00 can be used to increase business property limits on furnishings, supplies, and equipment. Many people, for example, use a home computer for household records and accounts, but may also use it to work on a business report. So long as the business use is not "primary"—that is, first in importance—there is coverage.
A significant change has been made in the 2011 form. An exception to the limit for business property away from the residence premises exists for antennas, tapes, wires, records, disks or other media that are used with electronic equipment receiving, reproducing, or transmitting audio, visual or data signals in or upon a motor vehicle. Therefore, if the insured has a GPS unit with disks updating the geographic location in the vehicle, those disks are covered up to the Coverage C limit in the policy. The $1,500 restriction does not apply.
j.$1,500 on portable electronic equipment that:(1)Reproduces, receives or transmits audio, visual or data signals;
(2)Is designed to be operated by more than one power source, one of which is a "motor vehicle's" electrical system;
and
(3)Is in or upon a "motor vehicle".
k.$250 for antennas, tapes, wires, records, disks or other media that are:
(1)Used with electronic equipment that reproduces, receives or transmits audio, visual or data signals; and
(2)In or upon a "motor vehicle".
Analysis
Limit j. has been changed in the 2011 form to apply to portable electronic equipment that is designed to be operated by more than one power system and is in or upon the motor vehicle at the time of loss. The form no longer requires that the equipment run specifically from the auto's electrical system and another power source, just that the equipment can be operated by more than one power system. For example such equipment includes portable televisions, cellular phones, CD players, or laptop computers. Limit j. no longer includes antennas, tapes, wires, records, discs, or other media that are used with the electronic apparatus. Those are included in limit k. which has been reduced to $250 (from $1,500). Limit k. now covers only antennas, tapes, wires, records or other media that are used with equipment that reproduces, transmits or receives audio, visual or data signals and is in or upon a motor vehicle. In the prior form limit k. was for electronic apparatus used primarily for "business" use when away from the residence premises and not in a motor vehicle.
The question is often raised about how the homeowners deductible affects recovery under the special limits. The deductible provision form does not clearly spell out how to apply the deductible in adjusting a claim where loss exceeds one or more of the special limits. A general rule, though, is to pay the insured the maximum amount that can be justified.
As an example, assume an insured with a $75,000 coverage C personal property limit and a standard $250 deductible is robbed of jewelry and watches with a value of $2,500, cash totaling $500, and other personal property amounting to $1,000—for a total loss of $4,000. According to policy provisions regarding the coverage C special limits of liability, the insured can recover no more than $1,500 from the special limit for jewelry and watches and $200 from the special money limit, leaving a $1,300 excess of loss ($1,000 of jewelry; $300 of money).
Since the loss exceeds the special limits that are available (and the coverage C limit is adequate), the $250 deductible can apply against the excess of loss above the special limits ($1,300) and does not serve to reduce the special limit amounts that are available. Therefore, the total recoverable amount is $2,700—$1,500, the total special limit for jewelry and watches; $200, the total special limit for money; and $1,000 towards the other stolen personal property.
4.Property Not CoveredWe do not cover:
a.Articles separately described and specifically insured, regardless of the limit for which they are insured, in this or other insurance;
Analysis
The policy reference to "articles" that are "specifically" insured by another policy or under another coverage of the homeowners policy makes this exclusion applicable only to other coverage written on a more specific basis than the broad, blanket terms of coverage C.
The restriction is most often applicable when personal property has also been scheduled under a personal articles floater, scheduled personal property endorsement to the homeowners policy, or other inland marine policy. In any of these situations, a homeowners insured should be certain that the separate scheduled coverage is for the full amount of protection desired on the property because homeowners coverage C will not contribute in the event of a loss. Say an insured has a scheduled silver service for six, and a nonscheduled silver vase and bowl. The "property not covered" applies to the silver service, but not to the vase and bowl. Special limit g. applies to those.
The question is sometimes raised whether this exclusion does not also apply to property on which there is other insurance that describes the particular kind of property more specifically than does the homeowners policy, and covers any property that fits that description. The exclusion does not apply in such a case, as it refers only to "articles," meaning specific, identifiable objects, each described separately and insured individually. Therefore, the normal rules for apportioning loss among nonconcurrent policies apply.
b.Animals, birds or fish;
Analysis
Animals, birds, and fish are not covered. Not mentioned in the exclusion are insects or any other forms of lower animal life, subclasses of animal life as separate from the narrow concept of "animals" as are fish or birds. While the apparent spirit of the exclusion would suggest no intent to cover any kind of animal life, the beekeeper or the biology student with a collection of living lower animal specimens might well argue for coverage and perhaps a court would agree.
c."Motor vehicles".This includes a "motor vehicle's" equipment and parts. However, this Paragraph 4.c. does not apply to:
(1)Portable electronic equipment that:
(a)Reproduces, receives or transmits audio, visual or data signals; and
(b)Is designed so that it may be operated from a power source other than a "motor vehicle's" electrical system.
(2)"Motor vehicles" not required to be registered for use on public roads or property which are:
(a)Used solely to service a residence;
or
b)Designed to assist the handicapped;
Analysis
This exclusion has been changed significantly in the 2011 version of the policy. The prior form had no exception for portable electronic equipment; those items were excluded in the 2000 form. That exclusion has been deleted in the 2011 form, and those items are covered as long as they may be operated by a power source other than the motor vehicle's electrical system. This is a substantial broadening of coverage. The exception for motor vehicles not registered for use on public roads or used solely to service a residence or designed to assist the handicapped has not changed.
d.Aircraft, meaning any contrivance used or designed for flight, including any parts whether or not attached to the aircraft.We do cover model or hobby aircraft not used or designed to carry people or cargo;
e.Hovercraft and parts. Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles;
Analysis
Aircraft and parts are excluded from coverage C. Aircraft, under the definition of "any contrivance used or designed for flight," therefore includes hang gliders and ultra-lites. On the other hand, aircraft accessories or equipment used in the aircraft but not physically attached to it—navigational maps, parachutes, etc.—are not subject to the exclusion, unlike comparable equipment for a motor vehicle.
An exception to the exclusion clarifies that model and hobby aircraft not used or designed to carry people or cargo are covered property. Note that a similar exception applies to the section II liability aircraft exclusion, but not to the peril of aircraft. To summarize, model and hobby aircraft are treated as aircraft in providing coverage against the peril of damage to insured property by aircraft, but they are not aircraft for the two aircraft exclusions—so the insured has coverage in all three instances.
The rise of the use and popularity of drones needs to be mentioned. The policy has not been modified to address them, and as long as they are not used to carry people or property they fall under the category of hobby aircraft. However cargo can be problematic; is a camera cargo? Or does cargo apply only to items to be delivered? That is something yet to be sorted out.
Also excluded are ground effect and hovercraft vehicles. A hovercraft generates a static cushion of air on which to move, while a ground effect vehicle creates the cushion through its own forward motion. A ground effect vehicle has wings (a flarecraft has reverse-delta wings), and may travel up to a height of about 1 ½ times wing span on this cushion. Obviously, these vehicles are best insured elsewhere.
f.Property of roomers, boarders and other tenants, except property of roomers and boarders related to an "insured;"
Analysis
The homeowners policy contains four business-related exclusions. The first is for personal property belonging to roomers, boarders, and other tenants. This is not covered except for property belonging to roomers or boarders who are related to an insured. Therefore, resident relatives who pay rent or board money to the named insured do not lose the coverage on personal property that they would otherwise have as insureds if they did not pay.
g.Property in an apartment regularly rented or held for rental to others by an "insured," except as provided in E.10 Landlord's Furnishings under Section I—Property Coverages;
Analysis
In another business-related exclusion, personal property of an insured who is a landlord of an apartment regularly rented or held for rental to others is not covered, except as provided in additional coverage 10. Property of a relative renting an apartment is not covered even though it would be if the relative rented a room or lived as a boarder. Therefore, if coverage is desired, separate insurance should be arranged, such as under a dwelling contents form.
h.Property rented or held for rental to others off the "residence premises."
Analysis
The third business-related exclusion applies to rented property away from the residence premises (furnishings in an off-premises apartment rented to others, for example). This exclusion, strictly applied, could rule out coverage for any property, whether real or personal, rented by the insured to others while it is off-premises.
i.Business" data, including such data stored in:(1)Books of account, drawings or other paper records; or
(2)Computers and related equipment.
We do cover the cost of blank recording or storage media, and of prerecorded computer programs available on the retail market.
Analysis
The final business-related exclusion rules out coverage for the expense of reproducing business records otherwise insurable as personal property. The cost of blank or unexposed records and media is covered. There is coverage for the cost of blank recording or storage media, and for pre-recorded computer programs the insured has purchased through retail outlets.
j.Credit cards, electronic fund transfer cards or access devices used solely for deposit, withdrawal or transfer of funds except as provided in E.6. Credit Card, Electronic Fund Transfer Card of Access Device, Forgery and Counterfeit Money under Section I—Property Coverages; or
Analysis
Credit and fund transfer cards are not covered as personal property. Some coverage for losses arising out of the misuse of such cards is provided by additional coverage six (see below). Note the addition of "access devices used solely for deposit, withdrawal, or transfer of funds." This is in recognition of on-line banking, in which an insured can electronically transfer funds by means of a home computer. But unless such transfer is the computer's sole purpose, the computer is covered.
k.Water or steam.
Analysis
In older forms, it was possible to argue that once water had passed through the insured's water meter it became personal property. Water and steam are not covered property no matter how delivered—whether by municipal service or from the insured's own well.
D.Coverage D—Loss of Use
The limit of liability for Coverage D is the total limit for the coverages in 1. Additional Living Expense, 2. Fair Rental Value and 3. Civil Authority Prohibits Use below.1.Additional Living Expense
If a loss covered under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living.
Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere.
Analysis
Three related coverages are grouped under the title "Loss of Use" as homeowners coverage D. The first is Additional Living Expense. The period for which additional living expense will be paid is limited to the shortest time required to repair or replace the premises or, if the household moves to a new permanent residence, the shortest time required for the relocation to be completed. These coverage periods apply even if the policy expires in the meantime.
Many an increase above normal in household expenses can be paid under this coverage. Although the most common examples are meals in a restaurant or lodging in a hotel, an insured may incur additional expense to keep the family pet in a kennel, or even to lodge a relative who was visiting to help out during a family illness at the time of the loss. Remember, the coverage is designed for the family to maintain its normal standard of living, whatever that may be.
2.Fair Rental Value
If a loss covered under this Section makes that part of the "residence premises" rented to others or held for rental by you not fit to live in, we cover the fair rental value of such premises less any expenses that do not continue while it is not fit to live in.Payment will be for the shortest time required to repair or replace such premises.
Analysis
If a part of the residence premises is rented or held for rental to others and a covered section I loss makes that part of the premises not fit to live in, this coverage will pay the lost rental value. To be deducted from the amount paid is any expense that does not continue during the rented premises' period of uninhabitability (disconnected utilities, for example). Loss or expense due to cancellation of a lease or agreement is not covered. Like additional living expense, this coverage provides payment only for the shortest period required to repair or replace the affected premises and is not terminated by expiration of the policy.
Sometimes the question arises as to whether the rental value is for furnished or unfurnished premises. The form does not state. Therefore, if an insured normally rents the premises on a furnished basis, rental value would encompass this amount.
3.Civil Authority Prohibits UseIf a civil authority prohibits you from use of the "residence premises" as a result of direct damage to neighboring premises by a Peril Insured Against, we cover the loss as provided in 1. Additional Living Expense and 2. Fair Rental Value above for no more than two weeks.
4.Loss or Expense Not Covered
We do not cover loss or expense due to cancellation of a lease or agreement.
The periods of time under 1. Additional Living Expense, 2. Fair Rental Value and 3. Civil Authority Prohibits Use above are not limited by expiration of this policy.
Analysis
Additional living expense and fair rental value coverages are triggered by damage to the residence premises making it unfit to occupy only as a result of a covered section I loss to those premises. But there are circumstances in which insureds may be barred from access to their own residences as a result of damage to surrounding premises (as in the case of major fires or windstorms) that leaves their own homes with little or no damage and fit for occupancy. Prohibited use coverage pays additional living expense and fair rental value when an insured is prohibited from the use of the residence premises by a civil authority as a result of damage from an insured peril to neighboring premises. It is important to note the damage must be caused by an insured peril. Note that it must be a peril insured against, but not necessarily a peril insured against in this policy. If an insured has flood insurance and is prohibited from accessing the residence premises because of a flood, an argument can be made for coverage, since the capitalized words appear as a preface to the section I property coverages and elsewhere in the policy, but have no particular status.
The maximum period during which this coverage applies is two weeks. Like the other loss of use coverage, prohibited use coverage may continue beyond the expiration date of the policy.
The limit of liability specified for coverage D in the policy declarations constitutes an aggregate limit for the three loss of use coverages. The policy deductible is applied to coverage D losses. Since an additional living expense or fair rental value claim can arise only in connection with an insured property loss substantial enough to make the premises uninhabitable, the standard policy deductible of $250 will, in virtually all cases, be used up by the direct loss itself. The deductible will be a factor, for the most part, only in the event of a prohibited use claim, which may occur without any other section I loss at all.
In forms HO 00 02, HO 00 03, and HO 00 05, twelve "additional coverages" round out the section I coverage agreements of the homeowners policy. HO 00 04 has twelve additional coverages, but does not include landlord's furnishings. Instead, the form provides an additional coverage for building additions, alterations, fixtures, improvements, and installations, made or acquired by the named insured, to the part of the residence premises used exclusively by the named insured (with a limit of liability for this coverage that is 10 percent of the coverage C amount). Form HO 00 06 is identical to forms HO 00 02 and 00 03 in additional coverages one through nine, but omits coverage for landlord's furnishings. Additional coverage ten in the HO 00 06 is ordinance or law.
Six of the additional coverage agreements (debris removal; trees, shrubs and other plants; fire department service charge; credit card, etc., loss assessment, and ordinance and law) specifically stated that they constitute an additional amount of insurance. Conversely, six of the agreements specifically stated that they do not constitute additional coverage amounts (reasonable repairs, property removed, collapse, glass or safety glazing material, landlord's furnishings, and grave markers).
This is no longer the case.
E.Additional Coverages1. Debris Removal
a.We will pay your reasonable expense for the removal of:
(1)Debris of covered property if a Peril Insured Against that applies to the damaged property causes the loss; or
(2)Ash, dust or particles from a volcanic eruption that has caused direct loss to a building or property contained in a building.
This expense is included in the limit of liability that applies to the damaged property. If the amount to be paid for the actual damage to the property plus the debris removal expense is more than the limit of liability for the damaged property, an additional 5% of that limit of liability is available for such expense.
b.We will also pay your reasonable expense, up to $1,000, for the removal from the "residence premises" of:
(1)Your tree(s) felled by the peril of Windstorm or Hail or Weight of Ice, Snow or Sleet; or
(2)A neighbor's tree(s) felled by a Peril Insured Against under Coverage C;
provided the tree(s):
(3)Damage(s) a covered structure; or
(4)Does not damage a covered structure, but:
(a) Block(s) a driveway on the "residence premises" which prevent(s) a "motor vehicle", that is registered for use on public roads or property, from entering or leaving the "residence premises"; or
(b) Block(s) a ramp or other fixture designed to assist a handicapped person to enter or leave the dwelling building.
The $1,000 limit is the most we will pay in any one loss regardless of the number of fallen trees. No more than $500 of this limit will be paid for the removal of any one tree.
This coverage is additional insurance.
Analysis
If a covered loss leaves debris of covered property that must be removed, this coverage pays for the cost of that removal. These costs are included in the limit of liability applicable to the covered property, except when payment of the covered loss, including the debris removal, exhausts the applicable coverage limit. In that case, debris removal coverage will pay up to an additional five percent of the exhausted limit. Also covered is the cost of removing volcanic ash and dust causing direct damage to a building or property in a building.
Coverage is also provided—subject to a $1,000 aggregate limit—for debris removal of fallen trees. Coverage is limited to the insured's trees felled by windstorm, hail, or the weight of ice, snow, or sleet, or to a neighbor's trees that are felled by a coverage C peril. But before coverage under this provision is triggered, the tree must either damage a covered structure or must block a driveway or ramp designed to assist the handicapped. In the case of the driveway, the felled tree(s) must block access to the residence premises. A drive that leads from the dwelling to an outbuilding, but does not provide access to the residence premises, does not meet this criterion.
A question raised by the additional coverage for removal of trees is whether the limit applies to the cost of removing the part of the tree that rests on the damaged structure, or whether that cost is considered to be part of the cost of repairing the structure. For example, if a tree is felled by windstorm and falls onto the dwelling, causing extensive damage, no repairs can begin until the parts of the tree resting on the building are cut away, so it would seem logical to categorize such costs as repair costs. However, the policy language, if strictly interpreted, would include those costs within the $1,000 limit. The policy provides that the insurer "will also pay [the] reasonable expense, up to $1,000, for the removal from the 'residence premises' of" trees felled by the described perils. "Residence premises" is defined in the policy as "the one to four family dwelling, other structures, and grounds…where [the insured] reside[s]." Thus, the $1,000 limit appears to apply to the removal from the dwelling and other structures as well as to removal from the grounds. However, under this arrangement the cost of removing the tree from the structure should still be considered part of the repair cost. If the insurance coverage for repairs is insufficient, the "additional coverage" (coverage in addition to that otherwise provided for in the policy) may then be called upon.
2.Reasonable Repairs.
a.We will pay the reasonable cost incurred by you for necessary measures taken solely to protect covered property that is damaged by a Peril Insured Against from further damage.b.If the measures taken involve repair to other damaged property, we will only pay if that property is covered under this policy and the damage is caused by a Peril Insured Against. This coverage does not:
(1)Increase the limit of liability that applies to the covered property; or
(2)Relieve you of your duties, in case of a loss to covered property, described in B.4. under Section I—Conditions.
Analysis
When insured property has been damaged by a covered peril, this additional coverage pays the reasonable cost of necessary measures (note, not necessary repairs) taken solely to protect covered property from further damage. Necessary measures taken to protect covered property may include repairs, but only those repairs made to covered property. Say, for example, a tenant may decide to clean up graffiti on the wall of a rented dwelling. The rented dwelling is not covered property, and so there is no coverage for this expense, unless the vandalism extended to the insured personal property. Payments under the additional coverage are part of the limit of liability applicable to the property being repaired. Further, the coverage does not relieve the insured of duties as prescribed under section I condition B.4., namely, to "protect the property from further damage." Therefore, the insured is obligated to make repairs to protect covered property but may not be able to recover all the monies expended.
Reasonable repairs coverage is designed principally to address loss situations in which quick action must be taken to minimize the extent of a loss. An insured with a broken picture window or smashed door cannot wait to file a claim before getting the damage repaired since damage of this sort exposes the interior of the building and its contents to additional loss. When such a loss results from a covered peril, the repair made exclusively to protect any covered property from further damage, and made to property covered by the policy, will be reimbursed for the cost of the repair.
Sometimes coverage is not clearly defined. For example, coverage for the cost of digging down to a broken underground water line on the insured's property to repair a leak is not specifically addressed in homeowners forms, although the cost of tearing out part of a building or other structure is included in special perils coverage on the dwelling. The cost of getting at broken pipes, however, may constitute part of the cost of repairs to prevent further damage—if actual damage is caused—and thus would be a subject of reasonable repairs coverage if coverage is not otherwise spelled out. Under the current language of the coverage, digging down to get to a leaking pipe is covered as a necessary measure "to prevent further damage," but the actual repair of the pipe is covered only if the pipe is covered property (not the case where a tenant is involved) and the damage to the pipe is caused by a covered peril.
3.Trees, Shrubs and Other Plants.
We cover trees, shrubs, plants or lawns, on the "residence premises", for loss caused by the following Perils Insured Against:a.Fire or lightning;
b.Explosion;
c.Riot or Civil Commotion
d.Aircraft;
e.Vehicles not owned or operated by a resident of the "residence premises";
f.Vandalism or Malicious Mischief; or
g.Theft.
We will pay up to 5% of the limit of liability that applies to the dwelling for all trees, shrubs, plants or lawns. No more than $500 of this limit will be available for any one tree, shrub, or plant. We do not cover property grown for "business" purposes.
This coverage is additional insurance.
Analysis
Property in this category, eligible for neither coverage A as part of the dwelling nor coverage C (since it is technically part of the realty), is insured on a limited basis by this additional coverage. Trees, shrubs, plants, and lawns on the residence premises are covered only against the perils of fire, lightning, explosion, riot, civil commotion, aircraft, vehicles (if not owned or operated by a resident of the residence premises), vandalism, malicious mischief, and theft, but not wind, hail, weight of ice or snow, or any unnamed peril that would be covered under special perils coverage. The aggregate limit for a loss under this coverage is five percent of the coverage A limit, provided as an additional amount of insurance, with a sublimit of $500 ($250 in the case of form HO 00 08) for loss to any one tree, shrub, or plant.
4.Fire Department Service Charge
We will pay up to $500 for your liability assumed by contract or agreement for fire department charges incurred when the fire department is called to save or protect covered property from a Peril Insured Against. We do not cover fire department service charges if the property is located within the limits of the city, municipality or protection district furnishing the fire department response.This coverage is additional insurance. No deductible applies to this coverage.
Analysis
If the named insured is liable under a contract or other agreement for fire department charges when firefighters are called to protect covered property from an insured peril, this coverage will pay up to $500 (free of deductible) for such charges. Coverage does not apply if the property is located within the governmental unit or protection district providing the fire protection. Likewise, if a protection district begins charging for services rendered as is happening in some states, there is no coverage for such fees.
5.Property Removed
We insure covered property against direct loss from any cause while being removed from a premises endangered by a Peril Insured Against and for no more than 30 days while removed. This coverage does not change the limit of liability that applies to the property being removed.
Analysis
This coverage applies to insured property removed from a premises endangered by a covered peril and applies anywhere, against loss from any cause, for up to thirty days while the property is removed. This is significant; even normally excluded losses such as flood or earthquake are covered in this situation. If the insured moves his property due to an approaching wildfire and an earthquake damages the property while at the temporary location, there is coverage. This coverage does not increase the limit of liability on the removed property.
6.Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money
a.We will pay up to $500 for:(1)The legal obligation of an "insured" to pay because of the theft or unauthorized use of credit cards issued to or registered in an "insured's" name;
(2)Loss resulting from theft or unauthorized use of an electronic fund transfer card or access device used for deposit, withdrawal or transfer of funds, issued to or registered in an "insured's" name;
(3)Loss to an "insured" caused by forgery or alteration of any check or negotiable instrument; and
(4)Loss to an "insured" through acceptance in good faith of counterfeit United States or Canadian paper currency.
All loss resulting from a series of acts committed by any one person or in which any one person is concerned or implicated is considered to be one loss.
This coverage is additional insurance. No deductible applies to this coverage.
b.We do not cover:
(1)Use of a credit card, electronic fund transfer card or access device:
(a) By a resident of your household;
(b) By a person who has been entrusted with either type of card or access device; or
(c) If an "insured" has not complied with all terms and conditions under which the cards are issued or the devices accessed; or
(2)Loss arising out of "business" use or dishonesty of an "insured."
c.If the coverage in a. above applies, the following defense provisions also apply:
(1)We may investigate and settle any claim or suit that we decide is appropriate. Our duty to defend a claim or suit ends when the amount we pay for the loss equals our limit of liability.
(2)If a suit is brought against an "insured" for liability under a.(1) or (2) above, we will provide a defense at our expense by counsel of our choice.
(3)We have the option to defend at our expense an "insured" or an "insured's" bank against any suit for the enforcement of payment under a.(3) above.
Analysis
With the advent of online banking, an insured can electronically transfer funds via a home computer. Therefore, the coverage grant reflects this. Five hundred dollars of coverage is provided under this heading for four categories of loss: (1) the legal obligation of an insured to pay for unauthorized use of credit cards issued to an insured or registered in an insured's name; (2) loss resulting from theft or unauthorized use of an insured's electronic fund transfer card (often referred to as an ATM card) or other access device; (3) loss caused by forgery or alteration of a check; and (4) loss caused by the good-faith acceptance of counterfeit United States or Canadian paper money. In order for coverage to apply, the insured must comply with the terms and conditions under which the credit card is issued. Losses involving use of a card by a member of the named insured's household or anyone who has been entrusted with the card are not covered. Losses arising out of business use or the dishonesty of an insured are also excluded. The $500 limit functions as an aggregate with respect to a series of acts committed by one person. The limit may be increased by adding endorsement HO 04 53 10 00.
Since this coverage has as its subject certain legal liabilities of the insured (to pay for purchases illicitly made by others through use of a stolen credit card, for instance, or to meet the obligations imposed by the amount of a forged or altered check), it also includes an element of defense coverage similar to that associated with liability insurance.
7.Loss Assessment
a.We will pay up to $1,000 for your share of loss assessment charged during the policy period against you, as owner or tenant of the "residence premises", by a corporation or association of property owners. The assessment must be made as a result of direct loss to the property, owned by all members collectively, of the type that would be covered by this policy if owned by you, caused by a Peril Insured Against under Coverage A, other than:(1)Earthquake; or
(2)Land shock waves or tremors before, during or after a volcanic eruption.
The limit of $1000 is the most we will pay with respect to any one loss, regardless of the number of assessments. We will only apply one deductible, per unit, to the total amount of any one loss to the property described above, regardless of the number of assessments.
b.We do not cover loss assessments charged against you or a corporation or association of property owners by any governmental body.
c.Paragraph Q. Policy Period, under Section I—Conditions does not apply to this coverage.
This coverage is additional insurance.
Analysis
Loss assessments charged against the insured as owner or tenant of the residence premises are covered for up to $1,000 when the assessments are made by a corporation or association of property owners as a result of direct loss to property owned by all members collectively. The $1,000 limit is the maximum amount available for all assessments arising from one loss. Loss must be caused by a coverage A peril (or coverage C peril, in the case of an HO 00 04) other than earthquake or land shock waves or tremors before, during or after volcanic eruption. It is required that the assessments occur during the policy period, but the event(s) causing the assessments may occur before the policy takes effect.
The coverage does not apply to assessments made by a government body. If, for example, an association fails to comply with a fine assessed for failure to comply with a building code, there is no coverage.
Endorsements are available to increase the amounts of loss assessment coverage—both for additional coverage seven and the companion section II liability additional coverage D—and to add earthquake loss assessment coverage. Endorsement HO 04 35 05 11 is used to increase the limit and endorsement HO 04 36 05 11 is used to add earthquake loss assessment. Endorsement HO 04 35 may also be used to add loss assessment coverage for up to two additional locations.
8.Collapse
a.The coverage provided under this Additional Coverage – Collapse applies only to an abrupt collapse.b.For the purpose of this Additional Coverage – Collapse, abrupt collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended purpose.
c.This Additional Coverage – Collapse does not apply to:
(1)A building or any part of a building that is in danger of falling down or caving in;
(2)A part of a building that is standing, even if it has separated from another
part of the building; or
(3)A building or any part of a building that is standing, even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage or expansion.
d.We insure for direct physical loss to covered property involving abrupt collapse of a building or any part of a building if such collapse was caused by one or more of the following:
(1)The Perils Insured Against named under Coverage C;
(2)Decay, of a building or any part of a building, that is hidden from view, unless the presence of such decay is known to an "insured" prior to collapse;
(3)Insect or vermin damage, to a building or any part of a building, that is hidden from view, unless the presence of such damage is known to an "insured" prior to collapse;
(4)Weight of contents, equipment, animals or people;
(5)Weight of rain which collects on a roof;
or
(6)Use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling or renovation.
Analysis
Damage both to buildings and personal property by collapse caused by any of these perils is covered, except for form HO 00 08, which does not include collapse coverage. ISO has changed the additional coverage of collapse, probably as a response to some jurisdictions' findings that "collapse" did not necessarily mean a falling to a state of rubble, but could mean structural impairment. (See Meaning of Collapse, for a review of judicial decisions.) The 2011 edition now defines collapse as "an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended use."
The policy now specifically states that causes of loss may apply to a building or any part of a building; as long as the resultant damage is collapse, coverage is available.
9.Glass or Safety Glazing Material
a.We cover:(1)The breakage of glass or safety glazing material which is part of a covered building, storm door or storm window;
(2)The breakage of glass or safety glazing material which is part of a covered building, storm door or storm window when caused directly by earth movement; and
(3)The direct physical loss to covered property caused solely by the pieces, fragments or splinters of broken glass or safety glazing material which is part of a building, storm door or storm window.
b.This coverage does not include loss:
(1)To covered property which results because the glass or safety glazing material has been broken, except as provided in a.(3) above; or
(2)On the "residence premises" if the dwelling has been vacant for more than 60 consecutive days immediately before the loss, except when the breakage results directly from earth movement as provided in a.(2) above. A dwelling being constructed is not considered vacant.
c.This coverage does not increase the limit of liability that applies to the damaged property.
Analysis
In forms HO 00 04 and HO 00 06, additional coverage nine, glass or safety glazing material, requires that the glass or safety glazing material be covered as building additions and alterations. Damage to covered property by glass or safety glazing material, however, is covered in all forms. The damage must be caused by pieces of the glass. For example, suppose sun shining directly through a broken window (previously glazed with low-E type glass) scorches a piece of furniture. Since the damage was not caused solely by the broken glass, the scorching is not covered.
If the building has been vacant for more than sixty consecutive days immediately before the loss, only glass breakage resulting from earth movement is covered. A building under construction is not considered vacant.
It is important to note that under construction is different than under renovation. Construction is the act of building a structure from the ground up, from the foundation to framing, wiring, plumbing, walls, and ceilings. Renovation is remodeling or repairing the building—even if the walls are gutted, the structure still stands as does the foundation, roof, and most of the rest of the structure.
The coverage does not increase the limit that applies to the damaged property. A $100 limit applies to this additional coverage in the case of form HO 00 08.
10.Building Additions and Alterations. We cover under Coverage C the building improvements or installations, made or acquired at your expense, to that part of the "residence premises" used exclusively by you. The limit of liability for this coverage will not be more than 10% of the limit of liability that applies to Coverage C.This coverage is additional coverage.
Analysis
This coverage is specific to form HO 00 04. Ten percent of the coverage C amount may be used to cover items such as built in bookshelves installed by the named insured in his or her apartment. It is an additional amount of insurance.
10.Landlord's Furnishings
We will pay up to $2500 for your appliances, carpeting and other household furnishings, in each apartment on the "residence premises" regularly rented or held for rental to others by an "insured," for loss caused by a Peril Insured Against in Coverage C, other than Theft.This limit is the most we will pay in any one loss regardless of the number of appliances, carpeting, or other household furnishings involved in the loss.
This coverage does not increase the limit of liability applying to the damaged property.
Analysis
This coverage is not included in forms HO 00 04, HO 00 06, or HO 00 08. Landlord's property is covered for the same perils as apply to coverage C in the particular form, except that theft coverage is omitted. All of the forms provide up to $2,500 coverage for loss to the landlord's appliances, carpeting, and other household furnishings located in each apartment, on the residence premises, that is regularly rented or held for rental. Remember, the homeowners forms may now be written for one to four family dwellings. The insured must reside in one unit; however, the others may be rented. Since the coverage is on a per-unit basis, up to $7,500 is available if the entire building is destroyed by a covered cause of loss.
The form is silent as to application of the deductible if property in all units were damaged as a result of one covered event; therefore, the insured is entitled to a favorable reading and one deductible should be applied.
11.Ordinance or Law
a.You may use up to 10% of the limit of liability that applies to Coverage A [for Form HO 00 04, the insured may use up to 10% of the limit of liability that applies to Building Additions and Alterations] for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates:(1)The construction, demolition, remodeling, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against;
(2)The demolition and reconstruction of the undamaged part of a covered building or other structure, when that building or other structure must be totally demolished because of damage by a Peril Insured Against to another part of that covered building or other structure; or
(3)The remodeling, removal or replacement of the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against.
b.You may use all or part of this ordinance or law coverage to pay for the increased costs you incur to remove debris resulting from the construction, demolition, remodeling, renovation, repair or replacement of property as stated in a. above.
c.We do not cover:
(1)The loss in value to any covered building or other structure due to the requirements of any ordinance or law; or
(2)The costs to comply with any ordinance or law which requires any "insured" or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollutants in or on any covered building or other structure.
Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
This coverage is additional insurance.
Analysis
Coverage for certain increased costs of demolition, construction, remodeling or repair because of enforcement of an ordinance or law is included as an additional coverage, except for HO 00 08. Ten percent of the limit of liability that applies to Coverage A, and in form HO 00 04 05 11, up to 10 percent of the amount that applies to building additions and alterations, is available. So, if a dwelling is insured for $150,000, $15,000 is available to meet increased expense resulting from enforcement of any law or ordinance governing repair or rebuilding. Endorsement HO 04 77 10 00 may be used to increase the amount of coverage.
A covered building or other structure must have been damaged by a peril insured against. There is no coverage for loss in value or for removal or cleanup of pollutants.
Coverage for compliance with any ordinance or law pertaining to pollutants is excluded. Therefore, asbestos in a building—perhaps wrapping furnace pipes—is excluded as is asbestos on a building—shingles, perhaps.
12.Grave Markers
We will pay up to $5,000 for grave markers, including mausoleums, on or away from the "residence premises" for loss caused by a Peril Insured Against under Coverage C [by a Peril Insured Against in form HO 00 05].This coverage does not increase the limits of liability that apply to the damaged covered property.
Analysis
There has often been confusion as to whether grave markers were other structures, and therefore covered under coverage B (by endorsement, since they were often away from premises), or personal property, and therefore covered under coverage C. The editors of the FC&S Bulletins are of the opinion that they are personal property, since in essence they are the property of various family members, although "affixed" to realty.