Part 3 – Perils Insured Against, Exclusions

Part 4 – Conditions Section I

Part 5 – Section II liability

SECTION I – CONDITIONS

A. Insurable Interest And Limit Of Liability Even if more than one person has an insurable interest in the property covered, we will not be liable in any one loss:

1. To an "insured" for more than the amount of such "insured's" interest at the time of loss; or 2. For more than the applicable limit of liability.

B. Deductible Unless otherwise noted in this Policy, the following deductible provision applies: With respect to any one loss:

1. Subject to the applicable limit of liability, we will pay only that part of the total of all loss payable that exceeds the deductible amount shown in the Declarations. 2. If two or more deductibles under this Policy apply to the loss, only the highest deductible amount will apply.

C. Duties After Loss In case of a loss to covered property, we have no duty to provide coverage under this Policy if the failure to comply with the following duties is prejudicial to us. These duties must be performed either by you, an "insured" seeking coverage or a representative of either:

1. Give prompt notice to us or our agent; 2. Notify the police in case of loss by theft; 3. Protect the property from further damage. If repairs to the property are required, you must:

a. Make reasonable and necessary repairs to protect the property; and b. Keep an accurate record of repair expenses;

4. Cooperate with us in the investigation of a claim; 5. Prepare an inventory of damaged personal property showing the quantity, description, actual cash value and amount of loss. Attach all bills, receipts and related documents that justify the figures in the inventory; 6. As often as we reasonably require:

a. Show the damaged property; b. Provide us with records and documents we request and permit us to make copies; and c. Submit to examination under oath, while not in the presence of another "insured", and sign the same;

7. Send to us, within 60 days after our request, your signed, sworn proof of loss which sets forth, to the best of your knowledge and belief:

a. The time and cause of loss; b. The interests of all "insureds" and all others in the property; c. Other insurance which may cover the loss; d. Changes in occupancy during the term of the Policy; e. The inventory of damaged personal property described in 5. above; and f. Receipts for additional living expenses incurred and records that support the fair rental value loss.

Analysis:

Conditions are part of every insurance policy and are fairly standard. They lay out the duties of the insured and insurer, settlement provisions, fraud statements and other instructions. The conditions begin with a basic statement that the carrier will not be liable for more than the amount of insurable interest an insured has in the property at the time of loss or the limits of liability.

In event of a loss, payment is not made until the total of the loss exceeds the deductible shown in the declarations. If two deductibles apply to the same loss, only the larger deductible will be applied.

Duties after a loss outline what steps the insured needs to do in notifying the insurer of the loss, documenting the damage to property, notifying police if applicable, preparing an inventory of damaged property, and other steps. The duties are straightforward. Any damaged property needs to be protected from further damage, and the insured should keep receipts for any temporary repairs. If property was stolen the police should be notified.

The insured is to provide records as requested by the insurer and allow it to make copies, as well as submit to an examination under oath without other insured's present, and sign the same. Reviewing records helps the insurer verify the extent of the loss. Examinations under oath give the insurer a recorded statement to refer to while assessing the claim. A proof of loss is required within sixty days of the insurer being notified of the claim, and the proof of loss must contain an inventory of the damaged property, any other insurance that may also provide coverage for the property, changes in occupancy that occurred during the policy period, and receipts for additional living expenses or fair rental value.

D. Loss Settlement

1. Eligible Property Covered losses to the following property are settled at replacement cost at the time of the loss:

a. Coverage C; and b. If covered in this Policy:

(1) Awnings, outdoor antennas and outdoor equipment; and (2) Carpeting and household appliances; whether or not attached to buildings.

2. Ineligible Property Property listed below is not eligible for replacement cost loss settlement. Any loss will be settled at actual cash value at the time of loss but not more than the amount required to repair or replace.

a. Antiques, fine arts, paintings and similar articles of rarity or antiquity, which cannot be replaced. b. Memorabilia, souvenirs, collectors items and similar articles, whose age or history contribute to their value. c. Jewelry. d. Furs and garments:

(1) Trimmed with fur; or (2) Consisting principally of fur;

e. Cameras, projection machines, films and related articles of equipment; f. Musical equipment and related articles of equipment; g. Silverware, silver-plated ware, goldware, gold-plated ware and pewterware, but excluding:

(1) Pens or pencils; (2) Flasks; (3) Smoking implements; or (4) Jewelry; and

h. Golfer's equipment meaning golf clubs, golf clothing and golf equipment. i. Articles not maintained in good or workable condition. j. Articles that are outdated or obsolete and are stored or not being used.

3. Replacement Cost Loss Settlement Condition The following loss settlement condition applies to all property described in D.1. above:

a. We will pay no more than the least of the following amounts:

(1) Replacement cost at the time of loss without deduction for depreciation; (2) The full cost of repair at the time of loss; (3) The limit of liability that applies to Coverage C; (4) Any applicable special limits of liability stated in this Policy; or (5) For loss to any item described in D.1.b.(1) through (6) above, the limit of liability that applies to the item.

b. If the cost to repair or replace the property described in D.1. above is more than $1,000, we will pay no more than the actual cash value for the loss until the actual repair or replacement is complete.

c. You may make a claim for loss on an actual cash value basis and then make a claim for any additional liability provided you notify us, within 180 days after the date of the loss, of your intent to repair or replace the damaged property.

E. Loss To A Pair Or Set In case of loss to a pair or set, we may elect to:

1. Repair or replace any part to restore the pair or set to its value before the loss; or 2. Pay the difference between the actual cash value of the property before and after the loss.

Analysis:

The loss settlement section outlines what property is eligible for replacement cost and what isn't, and describes how replacement cost settlement is handled. Property under Coverage C is eligible for replacement cost, as are awnings, outdoor antennas and outdoor equipment, carpeting and household appliances, whether or not attached to the building. In the standard homeowners policy, personal property, awnings, and outdoor equipment are covered at actual cash value.

A number of items are eligible for actual cash value coverage only, and settlement will be actual cash value, but no more than the cost to repair or replace. This property includes fine arts, antiques, paintings and similar items of rarity or antiquity that cannot be replaced, and memorabilia, souvenirs and similar items where age or history contributes to value. Arts and antiques are often very valuable and should be separately scheduled. Memorabilia and souvenirs, such as baseball cards, comic books, and similar items may also be scheduled once their value has been verified by a reputable appraiser. Just because some things are popular and collected by many does not necessarily mean they have significant value.

Jewelry, furs, garments mostly consisting of fur or trimmed with fur, cameras and related film equipment, musical instruments and related equipment, and silverware, goldware, pewterware, silver or gold plated wear are also all settled at actual cash value.

Lastly, golfers' equipment, articles not in good working condition, outdated or obsolete articles and articles not being used are settled at actual cash value. There is no reason to pay replacement cost on articles that don't work or are outdated, particularly items that are no longer being used. Insurance will not provide insureds with a bonus by paying replacement cost for old things the insured hasn't gotten around to disposing of yet that he has stored in the attic or basement. If an insured has antiques that could have special value, these should be scheduled separately.

Pairs and sets can often be confusing. If an insured's pair of candlesticks has one of the pair damaged, how is the insured best compensated? The candlesticks may be discontinued so the insured cannot have one replaced, so how is the insured compensated for the loss? The insurer will either replace or repair any part to restore the pair to its preloss value, or, in situations where that is not possible, the insurer will pay the difference between the actual cash value of the remaining property and the value of the property before the loss. A pair of crystal candlesticks may be valued at $800 before a loss. After a loss however, that remaining candlestick may be only worth $200. The carrier will then pay the insured $600, the difference between the value before and after the loss.

F. Appraisal If you and we fail to agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will choose a competent and impartial appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the "residence premises" is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss. Each party will:

1. Pay its own appraiser; and 2. Bear the other expenses of the appraisal and umpire equally.

G. Other Insurance And Service Agreement

1. If a loss covered by this Policy is also covered by:

a. Other insurance, except insurance provided by a "home-sharing network platform", we will pay only the proportion of the loss that the limit of liability that applies under this Policy bears to the total amount of insurance covering the loss; or b. A service agreement, protection plan or guarantee, except a service agreement, protection plan or guarantee provided by a "home-sharing network platform", this insurance is excess over any amounts payable under any such agreement.

2. Subject to Paragraph G.1., if, at the time of loss, there is:

a. Other insurance; b. A service agreement; c. A protection plan; or d. A guarantee; provided by, on behalf of, or through a "home-sharing network platform" covering the same property covered by this Policy, this insurance is primary with respect to the amount due under such other insurance, service agreement, protection plan or guarantee.

3. As used in this Paragraph G.:

a. A service agreement means a service plan, property restoration plan, home warranty or other similar service warranty agreement, even if it is characterized as insurance. b. A protection plan or guarantee means a product provided by a "home-sharing network platform" which provides property damage protection for "home-sharing host activities", even if it is characterized as insurance.

H. Suit Against Us No action can be brought against us unless there has been full compliance with all of the terms under Section I of this Policy and the action is started within two years after the date of loss.

I. Our Option If we give you written notice within 30 days after we receive your signed, sworn proof of loss, we may repair or replace any part of the damaged property with material or property of like kind and quality.

J. Loss Payment We will adjust all losses with you. We will pay you unless some other person is named in the Policy or is legally entitled to receive payment. Loss will be payable 60 days after we receive your proof of loss and:

1. Reach an agreement with you; 2. There is an entry of a final judgment; or 3. There is a filing of an appraisal award with us.

Analysis:

The appraisal clause is for when the insured and the insurer disagree as to the value of the loss. This does not deal with coverage, just the dollar amount. In instances of disagreement, either party may ask for an appraisal. Each party selects an appraiser and the appraisers select an umpire. Each appraiser determines a value; if they agree that is the amount of the loss. If they disagree they submit their appraisals to the umpire, and an agreement by any two of the three sets the dollar amount. Each party pays its appraiser and other expenses are shared equally.

Other insurance may exist on covered property. In such cases, the insurer only pays its proportion of the loss. If coverage is in the form of a service agreement, protection plan or guarantee this policy is excess over that coverage. If the coverage is through a "home-sharing network platform" then this policy is primary over such other coverage.

Insureds may file suit against the insurer. In order to do so, the insured must have complied with all duties after a loss and filed suit within two years of the date of the loss. The insurer has the option of repairing or replacing any property with material of like kind and quality if it provides the insured written notice within thirty days of receipt of the insured's signed, sworn proof of loss.

Losses are adjusted with the insured unless another person is listed in the policy or legally entitled to receive payment. Payment will be sixty days after receipt of the proof of loss, the insured and insurer reach an agreement on the amount, or there is an entry of a final judgment or a filing of an appraisal award. Most states have statutes dictating how soon payment should be made after a loss.

K. Abandonment Of Property We need not accept any property abandoned by an "insured". L. No Benefit To Bailee We will not recognize any assignment or grant any coverage that benefits a person or organization holding, storing or moving property for a fee regardless of any other provision of this Policy. M. Recovered Property If you or we recover any property for which we have made payment under this Policy, you or we will notify the other of the recovery. At your option, the property will be returned to or retained by you or it will become our property. If the recovered property is returned to or retained by you, the loss payment will be adjusted based on the amount you received for the recovered property. N. Volcanic Eruption Period One or more volcanic eruptions that occur within a 72-hour period will be considered as one volcanic eruption. O. Concealment Or Fraud We provide coverage to no "insureds" under this Policy if, whether before or after a loss, an "insured" has:

1. Intentionally concealed or misrepresented any material fact or circumstance; 2. Engaged in fraudulent conduct; or 3. Made false statements; relating to this insurance.

P. Loss Payable Clause If the Declarations shows a loss payee for certain listed insured personal property, the definition of "insured" is changed to include that loss payee with respect to that property. If we decide to cancel or not renew this Policy, that loss payee will be notified in writing. Q. Nuclear Hazard Clause

1. "Nuclear Hazard" means any nuclear reaction, radiation or radioactive contamination, all whether controlled or uncontrolled or however caused, or any consequence of any of these. 2. Loss caused by the nuclear hazard will not be considered loss caused by fire, explosion or smoke, whether these perils are specifically named in or otherwise included within the Perils Insured Against. 3. This Policy does not apply under Section I to loss caused directly or indirectly by nuclear hazard, except that direct loss by fire resulting from the nuclear hazard is covered.

Analysis:

If an insured tries to abandon damaged property, the insurer will not accept it. An insured cannot leave a damaged sofa in the yard and expect the insurer to clean it up for him. Insurers may take partially damaged property that can be repaired after settlement with the insured, but the insurer does not have to accept any property the insured tries to abandon.

The no benefit to bailee clause states that if a storage or moving company, or individual performing the same services has an insured sign an assignment of benefits to that company or individual, that the insurer will not recognize that document. Coverage in this policy is for the benefit of the insured, and not companies an individual may work with in handling of the insured's property.

Stolen property may be recovered before or after settlement, and it may be recovered intact or damaged. If either the insurer or the insured recover such property, the other party must be notified. The insured has the option to take back the property and return payment to the insurer, or to let the insurer dispose of the property as it sees fit. If the property is damaged but repairable and the insured wants to keep it, the company will adjust the settlement amount. For example, an insured had several porcelain figurines stolen. The insurer agreed to pay the insured $5,000 for the figurines. The figurines were recovered before the insurer made the payment, but the figurines were damaged and needed repair. The insurer modified the settlement amount to $2,000 to repair the figurines and return them to the insured.

As volcanic eruptions may last for an extended period of time, the policy states that all eruptions within a seventy-two-hour period are considered to be one eruption. This removes the problem of determining the number of eruptions and application of multiple deductions.

Fraud is an enormous issue within the insurance industry. The policy makes it clear that coverage is not granted if the insured engages in fraudulent behavior, intentionally conceals or misrepresents any material facts, or makes false statements related to the policy or a claim.

The loss payable clause applies when a loss payee exists for certain personal property covered by the policy. An insured may buy an expensive piece of furniture that has a loss payee attached.

Nuclear hazards, like war, are not perils insurers traditionally cover on personal policies. The Nuclear hazard clause defines "nuclear hazard" and clearly states that coverage does not apply in event of damage to property caused by "nuclear hazards", except for fire resulting from the nuclear hazard.

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