Section I Perils Insured Against

Section I Coverage C Personal Property

Section I Exclusions

Section I Conditions

Liability Coverages and Exclusions A-D

Exclusion E Coverages E. F and G

Section II Additional Coverages and Conditions

Property Coverages A & B

SECTION I – PROPERTY COVERAGES

A. Coverage A – Dwelling

1. 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.

B. Coverage B – Other Structures

1. 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 a 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 applies to Coverage A. Use of this coverage does not reduce the Coverage A limit of liability.

Analysis

The first two property coverages, for dwelling and other structures, have not been changed from the earlier form. Coverage is provided for the "residence premises" as defined as long as it is shown in the declarations, and structures attached to the dwelling are covered as well. Also included are materials and supplies located on or next to the dwelling if the materials and supplies are used to construct, alter or repair the dwelling or other structure. So lumber, siding, and paint would be covered, but gardening supplies and bushes to be planted would not be covered under coverage A, dwelling as those items are not used to modify or repair structures. Also not covered is land, including the land the dwelling is located on.

Coverage B is for other structures; they need to be set apart from the dwelling by a clear space, but includes structures connected to the dwelling by a fence, utility line or similar connection. A fence or utility line still leaves space between the actual walls of the structures; structures that are directly attached are covered under coverage A.

There are some exclusions under coverage B. The first is land, similar to the exclusion for land for the dwelling. Next is other structures rented or held for rental to anyone who is not a tenant of the dwelling, unless the structure is used solely as a garage. A tenant of the dwelling has access to the entire property, so other structures would be covered if a tenant was storing property there. However, if the insured rented a shed to someone to create sculptures in, that would not be covered. If the insured rented a structure to another person to store an antique auto in, that would be covered as that would be renting the structure solely for use as a garage.

Structures rented for "business" use are excluded and structures rented to store "business" property are excluded with some exceptions. Exceptions are for storing "business" property of the "insured" or a tenant, as long as the "business" property does not contain gaseous or liquid fuel, other than fuel in a permanently installed fuel tank such as that stored in a vehicle, lawn mower or other piece of equipment. The limit for coverage B is ten percent of coverage A. Coverage paid under coverage B does not affect the limits remaining on coverage A. For example, an insured has a fire. The property is insured for $200,000, which means the coverage B limit is $20,000. Both the other structure and the dwelling are burned. The damage to the other structure is $10,000. The limit for coverage A available is still the $200,000 less any applicable deductible.

Coverage C Personal Property

C. Coverage C – Personal Property

1. Covered Property We 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 $1,500, whichever is greater. However, this limitation does not apply to personal property:

(1) Moved from the "residence premises" because it is:

(a) Being remodeled, renovated or repaired; 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.

b. Self-storage Facilities Our 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 $1,500, whichever is greater. However, this limitation does not apply to personal property:

(1) Moved from the "residence premises" because it is:

(a) Being remodeled, renovated or repaired; 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".

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. $300 on money, bank notes, bullion, gold other than goldware, silver other than silverware, platinum other than platinumware, coins, medals, scrip, stored value cards and smart cards. b. $2,000 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. c. $2,000 on watercraft of all types, including their trailers, furnishings, equipment and outboard engines or motors. d. $2,000 on trailers or semitrailers not used with watercraft of all types. e. $2,000 for loss by theft of jewelry, watches, furs, precious and semiprecious stones. f. $3,000 for loss by theft of firearms and related equipment. g. $3,000 for loss by theft 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. h. $3,000 on property, on the "residence premises", used primarily for "business" purposes. 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".

j. $2,000 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. $300 on 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".

l. $2,000 on model or hobby aircraft not used or designed to carry people or cargo.

Analysis

Coverage C is for damage to personal property owned by an "insured" and while it is anywhere in the world. So when the "insured" goes on vacation, his clothes and other possessions that he travels with are still covered. After a loss and at the "insured's" request, coverage is available for property of others as long as it is on the "residence premises" occupied by an "insured" or property of a guest or a "residence employee" while the property is in any residence occupied by an "insured". Notice that for both situations for property of others, the property must be in a premises occupied by an insured. This is straightforward when the insured is entertaining guests, but what if the insured is in the hospital and someone is staying at the house to take care of the pets? Is the insured occupying the premises or not? Merriam Webster defines occupied as: to take up (a place or extent in space) or to reside in as an owner or tenant. Since the insured, even though in the hospital still resides at the premises, although is not there temporarily, the property of the person caring for the pets and the house should be covered if something happens.

The insured's property is also covered while away from the premises. First is coverage for property usually located at an "insured's" residence other than the "residence premises", and coverage is limited to ten percent of coverage C or $1,500, whichever is greater. The $1,500 is an increase from the previous $1,000 limit. A residence other than the "residence premises" would be an insured's second or vacation home. The coverage limitation amount does not apply if the property is being moved from the premises because the premises is being remodeled, renovated, or repaired and is not fit to store property in or live in. This clause has been updated with minor changes, but the intent is the same. The words renovated or rebuilt have been replaced by remodeled, renovated. The limit also does not apply when property is in a newly acquired principal residence for 30 days from when the insured first begins moving.

Property is also covered when stored offsite at a self-storage facility. Again the limit is ten percent of Coverage C or $1,500, and this is again increased from the $1,000 in the previous policy. The exceptions for property being moved from the premises because it is under repair or renovation are the same. Another exception is for property usually located in an "insureds" residence other than the "residence premises". If an insured has a secondary residence and stores some of the property in a storage facility, the limit does not apply.

Special limits of coverage apply to several types of items. The items may be easy to lose, high value, difficult to replace or quantify, or would be better covered by an endorsement or different type of policy. Many of the special limits have been increased in this edition. The following chart indicates the changes. The only limit unchanged is property away from the residence premises primarily used for "business". That limit does not apply to antennas, tapes, wires, records, disks or other media that are used with electronic equipment that reproduces, receives or transmits audio, visual or data signals and at the time of loss is in or upon a "motor vehicle".

A few things should be noted. The limit for securities, deeds, tickets, personal records, passports, etc. applies regardless of the medium, such as paper or computer software on which the material exists. With many people buying tickets and storing records and other information online, it is important to note that the limit applies regardless. The limit includes the cost to research, replace or restore information from lost or damaged records.

Three categories are limited only for loss by theft; if the property is damaged by another peril, then the limit does not apply. These categories are jewelry, watches, furs and precious stones, firearms and related equipment, and silverware, silver-plated ware, and other metalware, flatware, hollowware, tea sets, trays and trophies made of or including silver, gold, or pewter. As gold and other metals are valuable and also easy to melt down and make unidentifiable, they are targets for thieves. Jewelry and firearms are also valuable and common targets, so all these items are limited for theft. They can be scheduled by endorsement for broader coverage.

A new limit has been added for model or hobby aircraft not used or designed to carry people or cargo. With the growth of the popularity of drones, and the increased value of certain makes and models, ISO received feedback that there was increased property coverage exposure from these items and that a limit would be appropriate. Increased limits can be made by endorsement.

Property Not Covered

4. Property Not Covered We do not cover:

a. Articles separately described and specifically insured, regardless of the limit for which they are insured, in this or other insurance; b. Animals, birds or fish; c. "Motor vehicles". This includes a "motor vehicle's" equipment, and parts, that are in or upon the "motor vehicle". 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;

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; f. Property of:

(1) A "home-sharing occupant"; (2) Any other person occupying the "residence premises" as a result of any "home-sharing host activities"; and (3) Roomers, boarders and other tenants, except property of roomers and boarders related to an "insured";

g. Property in:

(1) A space while rented or primarily held for rental to a "home-sharing occupant"; or (2) Subject to Paragraph g.(1), an apartment regularly rented or held for rental to others by an "insured", except as provided in E.9. Landlord's Furnishings under Section I – Property Coverages;

h. Property used primarily for "home-sharing host activities"; i. Property rented or held for rental to others off the "residence premises"; j. "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;

k. Credit cards, electronic fund transfer cards or access devices used solely for deposit, withdrawal or transfer of funds; l. Water or steam; m. Virtual currency of any kind, by whatever name known, whether actual or fictitious including, but not limited to, digital currency, crypto currency or any other type of electronic currency; or n. Any:

(1) Controlled Substances, other than "cannabis", as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812; and (2) "Cannabis" regardless of whether such "cannabis" is considered a Controlled Substance. Controlled Substances include but are not limited to cocaine, LSD and all narcotic drugs. However, this Paragraph 4.n. does not apply to: (3) Prescription drugs obtained following the lawful orders of a licensed health care professional; or (4) Goods or products containing or derived from hemp, including, but not limited to:

(a) Seeds; (b) Food; (c) Clothing; (d) Lotions, oils or extracts; (e) Building materials; or (f) Paper.

However, this Paragraph 4.n.(4) does not apply to the extent any such goods or products are prohibited under an applicable state or local statute, regulation or ordinance in the state where such goods or products are located.

Analysis

The Property Not Covered section is just that; a listing of various types of property not covered. The first is property separately described and insured, as on a schedule either within this policy or covered on another policy, such as an inland marine floater for jewelry, or a boat policy, for example. If covereage is provided by a schedule or other policy, then this policy will not provide duplicate coverage. Remember, the purpose of insurance is to restore the insured to his preloss condition, not to provide the insured with a windfall.

Animals, birds or fish, while they are considered personal property, are not covered. It is impossible to determine a fair value for family pets, so coverage is not provided.

"Motor vehicles" are definitely property not covered, since they should be covered under automobile policies, as should their equipment and parts. There are a few exceptions for portable electronic equipment that reproduces, receives or transmits audio, video or data signals and is designed so that it can be operated from a power source other than the "motor vehicle". This would be a GPS system that plugs into the cigarette lighter but can also be plugged into a socket with an adapter inside the dwelling, for example. An exception exists for two specific types of vehicles; one used solely to service a residence, and one designed to assist the handicapped. The vehicle servicing a residence can be taken off premises as long as it is still servicing a residence. An insured may have an elderly neighbor that he mows the lawn for, so he takes his riding mower over to the neighbor's house to help out. Motorized wheelchairs or scooters designed to assist the handicapped are also covered.

Aircraft are excluded as that is a specialty risk. An exception is made for hobby or model aircraft not used or designed to carry people or cargo. Radio-controlled hobby planes or drones or quadcopters would be covered. Likewise, hovercraft are not covered either, and there is no exception for model or hobby hovercraft.

"Home-sharing" has become popular enough that the policy now specifically lists property of a "home-sharing occupant", or anyone on the premises as a result of "home-sharing host activities" as property not covered. Likewise, property of roomers, boarders, and tenants is not covered, unless roomers and boarders are related to an "insured". Individuals who rent lodging on a temporary basis should have coverage for their personal property on their own policy, and not expect the owner of a property the person is temporarily staying in to provide coverage.

Because theft is a high risk whenever property is rented, property of the insured's in a location that the insured rents to "home-sharing occupants" or others is not covered except as provided under the Landlord's furnishings coverage. Property used primarily for "home-sharing occupants" is also not covered, nor is property rented or held for rental off the "residence premises". The Landlord's furnishings coverage provides $3,000 for appliances, carpeting and other household furnishings in each apartment regularly rented to others. Coverage is for perils listed in Coverage C except for theft. For example, the insured rents out the apartment over the garage to both long-term and short-term tenants. The sofa, bed, chairs, and other furnishings in that apartment are covered up to $3,000 if the garage catches fire and those furnishings are damaged. If a tenant or "home-sharing occupant" steals the television or DVD player, that is not covered. Likewise, if property off the "residence premises" is damaged there is no coverage, and that property is excluded as well. All references to "home-sharing activities" or "home-sharing occupants" in this section are new in the 2022 form.

Because the form is designed to provide coverage for an individual's personal property, "business" data, including data stored in books of account, drawings, paper records, computers and related equipment are not covered. There is coverage for the cost of blank recording or storage media and of prerecorded computer programs available on the market. Such items are readily available and need minimal effort. It is one thing to purchase blank discs to record data on, or a new copy of Microsoft Office for an insured. Recreating files and records is not covered.

Credit cards, electronic fund transfer cards or access devices used solely for deposit, withdrawal or transfer of funds are excluded. This exclusion has been modified since the coverage for credit card, electronic fund transfer card and similar coverages have been removed from this policy. Coverage is now available under the separate endorsement HO 04 53 Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage. The change has been made because it is now commonplace for many banks or financial institutions to forgive or assume losses that result from unauthorized use of an individual's credit or access card.

Water or steam are excluded. Few perils apply to such property, and quantification is difficult. Damage as a result of water or steam is a different matter, and is addressed separately.

Next are newly listed forms of property that the policy will not provide coverage for. The first is virtual currency of any kind, by whatever name known, whether actual or fictitious, including but not limited to crypto currencies and other electronic currencies. Virtual currency is relatively new and is a volatile and intangible asset. Any proof of the currency is online, and the property is not subject to standard known perils. The value swings wildly from one day to the next; a bitcoin could be worth $1,000 one day and $100 the next. The entire category of such property is too new for any carrier to be able to establish any sort of premium for any potential losses.

The next new property not covered is Controlled Substances, both other than "cannabis" as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812; and "cannabis", whether or not it is considered a controlled substance along with LSD, cocaine and all narcotic drugs. There are two exceptions; the first is for the use of prescription drugs used when following the lawful orders of a licensed healthcare professional, or goods or products containing or derived from hemp. The hemp exception includes but is not limited to seeds, food, clothing, lotions, oils, extracts, building materials or paper. However, this exception does not apply when such goods are prohibited under an applicable state or local statute, regulation or ordinance where the goods or products are located. The legalization of cannabis is continuing to expand throughout the country, but it is not legal everywhere yet. The variety of state regulations and the differing federal stance on cannabis makes it extremely difficult to provide coverage until there is greater consistency between the states and the federal government.

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