Section I Perils Insured Against

Section I Coverage C Personal Property

Section I Exclusions

Section I Conditions

Section II Liability Coverages

Section II Exclusions

Section II Additional Coverages

Section II Conditions

Sections I and II Conditions

Agreement and Definitions

AGREEMENT We will provide the insurance described in this Policy in return for the premium and compliance with all applicable provisions of this Policy. DEFINITIONS

A. In this Policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse if a resident of the same household. "We", "us" and "our" refer to the Company providing this insurance. B. In addition, certain words and phrases are defined as follows:

1. "Aircraft Liability", "Hovercraft Liability", "Motor Vehicle Liability" and "Watercraft Liability", subject to the provisions in b. below, mean the following:

a. Liability for "bodily injury" or "property damage" arising out of the:

(1) Ownership of such vehicle or craft by an "insured"; (2) Maintenance, occupancy, operation, use, loading or unloading of:

(a) An aircraft, hovercraft or watercraft by any person; or (b) A motor vehicle by an "insured";

(3) Entrustment of such vehicle or craft by an "insured" to any person; (4) Failure to supervise or negligent supervision of any person involving such vehicle or craft by an "insured"; or (5) Vicarious liability, whether or not imposed by law, for the actions of a child or minor involving such vehicle or craft.

b. For the purpose of this definition:

(1) Aircraft means any contrivance used or designed for flight except model or hobby aircraft not used or designed to carry people or cargo; (2) Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles; (3) Watercraft means a craft principally designed to be propelled on or in water by wind, engine power or electric motor, except model or hobby watercraft not designed to carry people or cargo; and (4) Motor vehicle means a "motor vehicle" as defined in 11. Below.

Analysis:

The agreement is just that; the agreement between the insurer and the insured, where the insurer agrees to provide coverage in exchange for premium and compliance with any and all policy provisions within the policy.

Insurers define terms so that there is no confusion between the insurer and the insured. By defining terms, it is clear how the insurer intends to use the term. Without these definitions, courts will turn to a standard desk reference if the issue of a definition arises since that is what the average insured has access to. The definitions section is the insurer's opportunity to make it perfectly clear what is meant by terms used within the policy.

The first definition combines aircraft, hovercraft, motor vehicle, and watercraft liability and uses the same definition for all. It is defined as liability for injury or property damage arising out of the ownership, maintenance, occupancy, operation, use, loading or unloading of an aircraft, hovercraft, or watercraft by any person, or a motor vehicle by an insured. The specific reference to aircraft, hovercraft, watercraft, or motor vehicle is new to the wording. Previously the policy simply referenced "such vehicle or craft"; with the terms now specified, it is clear exactly what type of vehicles are being referred to.

The definition continues and includes entrustment of such vehicle to another person, failure of an insured to supervise someone using a vehicle or craft, or vicarious liability, whether or not imposed by law for actions of a child or minor operating such a vehicle or craft. Liability is covered under the liability section of the policy and is designed to provide coverage for incidents that occur on the dwelling premises or by acts of an insured. Vehicle liability, such as that which would occur when operating a motor vehicle, aircraft, hovercraft, or watercraft, is generally not covered by the homeowners policy; such liability should be provided by a policy designed for the type of craft in question.

The definition then describes what is meant by aircraft, hovercraft, watercraft or motor vehicles. Aircraft are vehicles designed for flight except for hobby or model aircraft not used or designed for carrying people or cargo. It needs to be made clear that anything capable of carrying people or cargo is not covered under this policy. Remote-controlled hobby aircraft and small drones do not fall under the definition of aircraft. Hovercraft is defined as a self-propelled motorized ground effect vehicle and includes flarecraft and air cushion vehicles. A ground effect vehicle is one that moves over the surface of the water or ground by way of the reaction of air against the surface below it. Watercraft are vehicles designed to be propelled on or in water by wind, engine power, or electric motor. Therefore sailboats and powered watercraft would be included. Not included are hobby or model watercraft not capable of carrying people or cargo. Similar to aircraft, hobby or model boats are not included in the definition. By not including hobby or model craft in these definitions, it allows the insured to have liability coverage should an accident occur. For example, an insured is out with his model aircraft flying around the hobby field. The airplane's motor stops and the model plane falls out of the sky hitting and injuring a bystander. Since it was a model airplane that does not fall into the definition of aircraft, the exclusion for "aircraft liability" would not apply and the insured would have coverage for this occurrence. Motor vehicles have a separate definition.

2. "Bodily injury" means bodily harm, sickness or disease, including required care, loss of services and death that results. 3. "Business" means:

a. A trade, profession or occupation engaged in on a full-time, part-time or occasional basis; b. The leasing of the mineral rights of an "insured location"; c. "Home-sharing host activities"; or d. Any other activity engaged in for money or other compensation, except the following:

(1) One or more activities, not described in (2) through (4) below, for which no "insured" receives more than $5,000 in total compensation for the 12 months before the beginning of the policy period; (2) Volunteer activities for which no money is received other than payment for expenses incurred to perform the activity; (3) Providing home day care services for which no compensation is received, other than the mutual exchange of such services; or (4) The rendering of home day care services to a relative of an "insured".

4. "Cannabis" means:

a. Any good or product that consists of or contains any amount of Tetrahydrocannabinol (THC) or any other cannabinoid, regardless of whether any such THC or cannabinoid is natural or synthetic. b. Paragraph 4.a. above includes, but is not limited to, any of the following containing such THC or cannabinoid:

(1) Any plant of the genus Cannabis L., or any part thereof, such as seeds, stems, flowers, stalks and roots; or (2) Any compound, by-product, extract, derivative, mixture or combination, such as:

(a) Resin, oil or wax; (b) Hash or hemp; or (c) Infused liquid or edible cannabis; whether or not derived from any plant or part of any plant set forth in Paragraph 4.b.(1) above.

c. Paragraph 4.a. above includes, but is not limited to, marijuana.

Analysis:

"Bodily injury" is bodily harm, sickness or disease, including required care, loss of services or resultant death. Again, the definition comes into play in the liability section of the policy. The term must be defined so that it is clear that mental injury is not covered. The insured really likes Halloween and sets up a haunted house for the neighborhood. One of the neighbors is so frightened that he begins having serious nightmares and requires counseling. If the neighbor files a claim against the insured, his nightmares do not fall under the description of "bodily injury". However, if the neighbor falls down the stairs while visiting and breaks his arm that does fit the definition of "bodily injury" and would be covered.

The definition of "business" has been modified from the prior policy to include leasing of mineral rights and "home-sharing host activities" as business activities along with the standard trade, profession or occupation on a full-time, part-time, or occasional basis. The exceptions remain the same except that now the limit is $5,000 instead of $2,000 earned by an insured for the preceding 12 months. Volunteer activities with only the insured's expenses covered, home day care on an exchange basis for similar services, or home day care for a relative of an "insured" are exempt from the definition of "business".

The next definition, "cannabis", is new. With the growing legalization of cannabis throughout the country, ISO saw a need to define the term so that any coverage or exclusions would be clear as to exactly what substance was being referred to. "Cannabis" is defined as any good or product containing any amount of Tetrahydrocannabinol (THC) or any other cannabinoid, regardless of whether or not the THC or cannabinoid is natural or synthetic. A cannabinoid is a naturally occurring compound of the Cannabis sativa plant; so far 144 different strains of cannabinoids have been discovered. Cannabinoids include THC, the compound with psychoactive effects, and cannabidiol, (CBD), the compound without psychoactive effects but that is purported to have medicinal value. Also included in the definition of "cannabis" is any plant of the genus Cannabis L. or any part thereof including seeds, stems, flowers, stalks and roots, any compound, by-product, extract, derivative, mixture or combination such as resin, oil, wax, hash, hemp, infused liquid or edible cannabis, whether or not derived from any plant or portion of plant of the genus Cannabis L. Marijuana is included in the definition of "cannabis" as well.

5. "Employee" means an employee of an "insured", or an employee leased to an "insured" by  a labor leasing firm under an agreement between an "insured" and the labor leasing firm, whose duties are other than those performed by a "residence employee". 6. "Home-sharing host activities" means:

a. The:

(1) Rental or holding for rental; or (2) Mutual exchange of services; of the "residence premises", in whole or in part, by an "insured" to a "home-sharing occupant" through the use of a "home-sharing network platform"; and

b. Any other related property or services made available by an "insured" for use during such:

(1) Rental; or (2) Mutual exchange of services; except those property or services provided by another party.

7. "Home-sharing network platform" means an online-enabled application, web site or digital network that:

a. Is used for the purpose of facilitating, for money, mutual exchange of services or other compensation, the rental of a dwelling or other structure, in whole or in part; and b. Allows for the agreement and compensation with respect to such rental to be transacted through such online-enabled application, web site or digital network.

8. "Home-sharing occupant" means a person, other than an "insured", who:

a. Has entered into an agreement or arranged compensation with an "insured" through the use of a "home-sharing network platform" for "home-sharing host activities"; or b. Is accompanying or staying with a person described in Paragraph 8.a. above under such "home-sharing host activities".

9. "Insured" means:

a. You and residents of your household who are:

(1) Your relatives; or (2) Other persons under the age of 21 and in your care or the care of a resident of your household who is your relative;

b. A student enrolled in school full-time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of:

(1) 24 and your relative; or (2) 21 and in your care or the care of a resident of your household who is your relative; or

c. Under Section II:

(1) With respect to animals or watercraft to which this Policy applies, any person or organization legally responsible for these animals or watercraft which are owned by you or any person described in 9.a. or b. "Insured" does not mean a person or organization using or having custody of these animals or watercraft in the course of any "business" or without consent of the owner; or (2) With respect to a "motor vehicle" to which this Policy applies:

(a) Persons while engaged in your employ or that of any person described in 9.a. or b.; or (b) Other persons using the vehicle on an "insured location" with your consent. Under both Sections I and II, when the word an immediately precedes the word "insured", the words an "insured" together mean one or more "insureds".

10. "Insured location" means:

a. The "residence premises"; b. The part of other premises, other structures and grounds used by you as a residence; and

(1) Which is shown in the Declarations; or (2) Which is acquired by you during the policy period for your use as a residence;

c. Any premises used by you in connection with a premises described in a. and b. above; d. Any part of a premises:

(1) Not owned by an "insured"; and (2) Where an "insured" is temporarily residing;

e. Vacant land, other than farm land, owned by or rented to an "insured"; f. Land owned by or rented to an "insured" on which a one-, two-, three- or four-family dwelling is being built as a residence for an "insured"; g. Individual or family cemetery plots or burial vaults of an "insured"; or h. Any part of a premises occasionally rented to an "insured" for other than "business" use.

Analysis:

The definition of "employee" is unchanged from the previous form. An "employee" of an insured, including an employee leased to the insured by a labor leasing firm under an agreement is considered an employee. The duties of the employee from the labor leasing firm must be different from those performed by a "residence employee". "Residence employees" are those whose duties relate to the maintenance of the household, including household or domestic services. An "employee" may serve in an insured's business, while a "residence employee" would be the housekeeper or gardener.

The next three definitions are new and relate to home-sharing. Home-sharing has become popular in recent years as homeowners use online applications to list their homes, or rooms in their homes for rent. The rental is coordinated through the online app, and potential renters are put in contact with those willing to rent all or part of their premises for a short period. Insureds may rent the home while they are on vacation to earn some extra money, or they may rent a room once or twice a month again, to earn some extra money.

The first definition is "home-sharing host activities", which are defined as the rental or holding for rental, or mutual exchange of services, of the "residence premises" in whole or part by the insured through a home-sharing application. It includes any other related property or services made available by the insured for use during the rental or exchange of services except those provided by another party. For example, an insured may decide to rent out his home occasionally, and allow renters to make use of his hot tub and bicycles while the renters are on the property.

"Home-sharing network platform" is defined next, and is an online-enabled application, website or digital network that allows an insured and a potential renter to make a connection for the exchange of money or services for the renting of the property in whole or in part. Again, an insured may rent out his whole house or may just rent out a room. The online platform or application allows for the parties to agree on compensation and exchange funds securely, and many perform basic background checks on hosts and renters. Airbnb, VRBO and others are home-sharing platforms.

A "home-sharing occupant" is the person renting the premises through the use of the network platform, and includes those staying with the individual who arranged for the rental of the premises.

The definition of "insured" remains the same, and includes You, and residents of the household who are the insured's relatives or other people under the age of 21 in the care of an insured or a resident relative. Students enrolled in school full-time who were residents before moving out to attend school and are under the age of 24 and a relative, or are under the age of 21 and are in the care of a resident relative are also insureds. A son, daughter, niece or nephew who had been living in the home before going to college, for example. The key point is that they must be a relative or under the care of a resident relative.

There are two additional provisions that apply under Section II, the liability portion of the policy. The first is with respect to animals or watercraft. If someone is legally responsible for animals or watercraft owned by the insured that are covered under this policy and that responsibility is not related to that person or organization's business, there is coverage. For example, a teenager who dog sits for the insured. If the dog bites someone while the insured is on vacation, there is coverage. However, if the insured has boarded his dog at the Puppy Palace and the dog bites someone, there is no coverage for the Puppy Palace under the homeowner's policy. The Puppy Palace is a business and should carry its own policy for liability coverage.

The second provision is related to "motor vehicles". Coverage applies to persons in the insured's employment, or insureds as defined, or other persons using the vehicle on an "insured location" with the insured's consent. Note that it only applies to "motor vehicles" that receive coverage under the homeowners policy, which is quite limited.

There are two definitions related to the premises itself; "insured location" and "residence premises". The definition of "insured location" contains eight provisions, and not just the dwelling is insured. There are other areas that receive coverage. Remember the policy provides not only physical damage coverage for the dwelling, but liability coverage for the insured. So an "insured location" may not be covered for physical damage, such as an unowned property the insured rents, but it is covered for the liability of the insured since the insured is using the premises, or the insured may have some other liability exposure depending on the nature of the "insured location".

The first is the "residence premises". The "residence premises" which is the dwelling within which the insured resides, is definitely part of the "insured location".

Next is the part of other premises, grounds or structures used by the insured as a residence, and which is either shown in the Declarations or is acquired during the policy period for the insured's use as a residence. Being listed on the Declarations indicates that this is the property to be insured. The insured may buy a new house and plan to move; that dwelling is covered since it is acquired during the policy period. The insurer needs to be notified so coverage can be appropriately provided.

A premises used by the insured in connection with the dwelling is also covered. This is often confusing, since how is a separate premises used in connection with an insured's dwelling? What this is covering is if an insured rents a property for a function—a family reunion, a wedding reception, etc. The insured wants to entertain a large number of guests but the house is too small, so he rents a facility. That facility is being used in connection with an insured premises.

Locations that the insured does not own, but where an insured is temporarily residing are also considered part of an "insured location". An insured may be on an extended vacation, or may be relocated due to a natural catastrophe. Regardless, if an insured is temporarily residing in a premises he does not own, that is part of the "insured location".

Vacant land other than farm land that is owned or rented to an insured is also an "insured location". The definition of vacancy is important; vacant land is just that, vacant, which means it contains no manmade structures, such as buildings but also such things as fences or sheds. If the insured has land that any sort of manmade object on it, underwriting should be consulted to ensure coverage.

Land on which a one-, two-, three-, or four-family dwelling is being constructed as a residence for an insured is included. Cemetery plots or family burial vaults are included, as is part of a premises occasionally rented to an insured for other than business purposes. The insured may rent a studio on occasion to use for painting or welding, for example.

11. "Motor vehicle" means:

a. A land or amphibious vehicle that is self-propelled or capable of being self-propelled; or b. Any trailer or semitrailer which is being carried on, towed by or hitched for towing by a vehicle described in 11.a. above.

12. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results, during the policy period, in:

a. "Bodily injury"; or b. "Property damage".

13. "Property damage" means physical injury to, destruction of or loss of use of tangible property.

14. "Residence employee" means:

a. An employee of an "insured", or an employee leased to an "insured" by a labor leasing firm, under an agreement between an "insured" and the labor leasing firm, whose duties are related to the maintenance or use of the "residence premises", including household or domestic services; or b. One who performs similar duties elsewhere not related to the "business" of an "insured". A "residence employee" does not include a temporary employee who is furnished to an "insured" to substitute for a permanent "residence employee" on leave or to meet seasonal or short-term workload conditions.

15. "Residence premises" means:

a. The one-family dwelling where you reside; b. The two-, three- or four-family dwelling where you reside in at least one of the family units; or c. That part of any other building where you reside; and which is shown as the "residence premises" in the Declarations. "Residence premises" also includes other structures and grounds at that location.

C. In this Policy, the terms:

1. Roomer; 2. Boarder; 3. Tenant; or 4. Guest; do not include a "home-sharing occupant"

Analysis:

The definition of "motor vehicle" has been revised for clarification, but the meaning is the same. Any land or amphibious vehicle that can be self-propelled is considered a motor vehicle, as is a trailer or semitrailer being towed or hitched for towing to a "motor vehicle".

The definition of "occurrence" is important for the liability section of a policy. It means an accident, including continuous or repeated exposure to the same general harmful conditions that results in "bodily injury" or "physical damage" during the policy period. The insured's son hits a tennis ball against the neighbor's house; over time the ball leaves dents in the neighbor's siding; this is an "occurrence". It's not just one event of the tennis ball hitting the siding that caused the damage, but the repeated contact over time. It makes no sense to try to consider every hit of the tennis ball as a single occurrence, the damage occurred due to repeated exposure over time. As long as the occurrence happened during the policy period, then coverage can be considered.

Next "property damage" is defined, and this is physical injury to, destruction of, or loss of use of tangible property. Loss of use means that the property cannot be used; it may just be made inaccessible without being damaged. For example, if a neighbor can no longer use his shed because the insured's tree grew in front of it, the neighbor has experienced "property damage".

"Employee" was defined earlier, and now "residence employee" is defined as an employee of an "insured", or leased to an "insured" by a labor leasing firm, whose duties are related to the maintenance or use of the "residence premises" or one who performs similar duties elsewhere not related to business activities of an insured. This is an employee whose duties are related to the ownership of the home; the insured might hire a maid or a gardener. If an insured has a vacation home, the insured might hire a maid to freshen it up once a month so it's always ready for the insured.

"Residence premises" is the last defined term. The "residence premises" is the one family home the insured resides in, or the two-, three-, or four- family home where the insured resides in one of the units, or that part of any other building the insured resides in as long as that location is shown as the "residence premises" on the declarations page. This is important—if an insured is living in a location that is not listed on the declarations, then that is not a "residence premises" by definition. As such, coverage will be restricted or nonexistent, depending on the details of the situation.

A new section C has been added under definitions. This section is straightforward and states that the terms roomer, boarder, tenant, or guest do not include a "home-sharing occupant". While not defined in the policy, these terms indicate a different arrangement with the insured than home sharing. A guest will be there on a visiting basis and will not pay the insured to stay there. A roomer, boarder or tenant will pay for long term arrangements, or may have a work/lodging arrangement with the insured. These are all different from a home-sharing situation where the insured is renting out all or part of his premises on a short-term, temporary basis.

Includes copyrighted material of Insurance Services Office, Inc., with its permission.