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

This article discusses Section I Perils Insured Against. Since the goal of the condo policy is in large part to provide coverage for personal property, coverage is on a named perils basis. Replacement cost coverage can be provided by the Personal Property Replacement Cost Loss Settlement endorsement form HO 04 90. There are a total of sixteen named perils in the condominium policy.

SECTION I – PERILS INSURED AGAINST We insure for direct physical loss to the property described in Coverages A and C caused by any of the following perils unless the loss is excluded in Section I Exclusions.

1. Fire Or Lightning 2. Windstorm Or Hail This peril includes loss to watercraft of all types and their trailers, furnishings, equipment, and outboard engines or motors, only while inside a fully enclosed building. This peril does not include loss to the inside of a building or the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening. 3. Explosion 4. Riot Or Civil Commotion 5. Aircraft This peril includes self-propelled missiles and spacecraft. 6. Vehicles This peril does not include loss to a fence, driveway or walk caused by a vehicle owned or operated by a resident of the "residence premises". 7. Smoke This peril means sudden and accidental damage from smoke, including the emission or puffback of smoke, soot, fumes or vapors from a boiler, furnace or related equipment. This peril does not include loss caused by smoke from agricultural smudging or industrial operations.

Analysis

Many of the first perils listed are straightforward. Fire or lightning, explosion, riot or civil commotion are all listed with no explanatory language, exceptions or exclusions. These perils can be taken at face value.

Windstorm or hail includes loss to watercraft, including related trailers, furnishings, equipment, and motors but only while inside a fully enclosed building. Since such property is recreational outdoor property, exposure to wind or hail and resultant damage is simply an expected hazard of owning such property. An insured can either have the property covered on a schedule or specialty policy, or store it when not in use.

Property that is inside a building is not covered from damage by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building, caused an opening in a roof or wall that let in the weather elements. Then coverage would be provided. Note that the wind or hail must cause an opening – if an insured leaves a window open and a storm comes up and blows rain inside damaging the contents, then there is no coverage.

The peril of Aircraft includes a clarification that it includes self-propelled missiles and spacecraft. These items, should they cause damage to an insured's property, would fall under the peril of Aircraft.

Vehicles are a broad peril with few restrictions. It does not have any restrictions as to the type of vehicles that are considered perils – so if a motorcycle damages the premises there would be coverage. The only restriction is for loss to a fence, driveway, or walk caused by a vehicle owned or operated by a resident of the "residence premises". If the insured answers the phone while pulling into his driveway and he runs into the fence and the side of the garage, there is no coverage for the fence, but there would be coverage for the damage to the garage.

The peril of smoke provides some clarification. Coverage for smoke is provided when the loss is the result of sudden and accidental damage from smoke including puffbacks, soot, fumes or vapor from a boiler, furnace or related equipment. It is not uncommon for puffbacks to occur when certain systems are first turned on in the fall. What is not included as covered smoke damage is agricultural smudging or industrial operations. If the insured lives near an orchard and the farmer has to smudge the trees to prevent freezing and smoke from that smudging damages the residence, there is no coverage.

8. Vandalism Or Malicious Mischief This peril does not include loss to property which pertains to the "residence premises", and any ensuing loss caused by any intentional and wrongful act committed in the course of the vandalism or malicious mischief, if:

a. The loss arises out of or results from "home-sharing host activities"; or b. The building containing the "residence premises" has been vacant for more than 60 consecutive days immediately before the loss. A building being constructed, remodeled, renovated or repaired is not considered vacant.

9. Theft

a. This peril includes attempted theft and loss of property from a known place when it is likely that the property has been stolen. b. This peril does not include loss caused by theft:

(1) Committed by an "insured"; (2) In or to a "residence premises" under construction, or of materials and supplies for use in the construction until the "residence premises" is finished and occupied; (3) From that part of a "residence premises" rented by an "insured" to someone other than another "insured"; (4) That occurs away from the "residence premises" or the location of the "residence premises" of:

(a) Trailers, semitrailers and campers; (b) Watercraft of all types, and their furnishings, equipment and outboard engines or motors; or (c) Property while at any other residence owned by, rented to, or occupied by an "insured", except while an "insured" is temporarily living there. Property of an "insured" who is a student is covered while at the residence the student occupies to attend school as long as the student has been there at any time during the 90 days immediately before the loss; or

(5) If such loss arises out of or results from "home-sharing host activities".

10. Falling Objects This peril does not include loss to the inside of a building or property contained in the building unless the roof or an outside wall of the building is first damaged by a falling object. Damage to the falling object itself is not included. 11. Weight Of Ice, Snow Or Sleet This peril means weight of ice, snow or sleet which causes damage to a building or property contained in a building. This peril does not include loss to an awning, fence, patio, pavement, swimming pool, foundation, retaining wall, bulkhead, pier, wharf or dock. 12. Accidental Discharge Or Overflow Of Water Or Steam

a. This peril means accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance. We also pay to tear out and replace any part of a building or other structure owned solely by you which is covered under Coverage A and at the location of the "residence premises", but only when necessary to repair the system or appliance from which the water or steam escaped. However, such tear out and replacement coverage only applies to other structures if the water or steam causes actual damage to a building owned solely by you at the location of the "residence premises". b. This peril does not include loss:

(1) To or within the "residence premises", if the building containing the "residence premises" has been vacant for more than 60 consecutive days immediately before the loss. A building being constructed, remodeled, renovated or repaired is not considered vacant; (2) To the system or appliance from which the water or steam escaped; (3) Caused by or resulting from freezing except as provided in Peril Insured Against (4) To or within the "residence premises" caused by accidental discharge or overflow which occurs away from the building where the "residence premises" is located; or (5) Caused by mold, fungus or wet rot unless hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure.

c. In this peril, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment. d. Section I – Exclusion 3. Water, Paragraphs a. and c. that apply to surface water and water below the surface of the ground do not apply to loss by water covered under this peril.

Analysis

Coverage is provided for vandalism or malicious mischief to the property with some specifications. Any intentional acts committed in the course of vandalism or malicious mischief is excluded if the loss arises out of any "home-sharing host activities" or if the property containing the "residence premises" has been vacant for more than sixty days directly before the loss.

The exclusion for damage that arises out of "home-sharing host activities" is new in the 2022 form revision. "Home-sharing host activities" is a new term that was addressed in the definitions section, and is renting out the property via online-enabled applications or networks. Any rental of property increases its exposure to hazards such as vandalism, so vandalism arising out of such rentals is excluded. The wording surrounding vacancy has been updated to highlight that a building being constructed, remodeled, renovated or repaired is not considered vacant. What exactly makes a property vacant is often confusing, and there is a difference between a vacant property and one that is unoccupied. A vacant property does not have enough furnishings to make it habitable. An unoccupied property does not have residents living in it, but will have all necessary furnishings to make it habitable when they finally come home.

Theft is also covered and includes attempted theft and loss of property from known place where it is likely that the property has been stolen. If an insured leaves his bike on the patio during the summer and comes home one day to find it missing, it is likely that the bike has been stolen. It didn't run away, the insured likely didn't just misplace it and put it in another room.

There are some exclusions, however. If the loss is caused by an "insured", there is no coverage. Likewise if the premises is under construction the theft of materials and supplies being used in that construction are not covered until the construction has been finished and occupied. Materials that aren't in an enclosed premises are at an increased risk of theft.

Property that is stolen from part of a "residence premises" that is rented to someone other than an "insured" is not covered. Again, opening one's home to renters increases the risk of theft of any sort of property, so it is excluded.

The next exclusion is for theft of certain types of property when it is away from the "residence premises". This excluded property is trailers, semi trailers, campers, all types of watercraft including furnishings, equipment and outboard engines and motors, or property at any other residence owned by, rented to, occupied by an "insured" unless the "insured" is temporarily living there. For example, if an insured owns a summer home and leaves property there that is stolen while he is at his winter home, the theft of property from the summer home won't be covered.

Property of an "insured" who is a student away from home is covered as long as the student has been at the property 90 days immediately before the loss. If the student leaves his apartment to go home for the winter January break and property is stolen at the end of January, that loss would be covered as long as the student had been there within 90 days before the loss.

Newly added is an exclusion for loss arising out of "home-sharing host activities". As we've already seen renting out the premises makes a property more susceptible to certain perils such as theft, and with home-sharing people are in and out of the property on a short-term basis. Any loss that arises out of "home-sharing host activities" is therefore excluded.

Falling objects are covered with one specification. Property inside a building is not covered unless the roof or an outside wall is first damaged by a falling object. What this means is that if a meteor comes through the roof and damages the television and coffee table, that property is covered. If a large vase falls off the bookcase and damages the television that damage would not be covered because there was no damage from the outside of the building. If a tree comes through the roof or some other large object crashes through the roof or wall, damage from that object is covered. Also, damage to the falling object itself is not covered.

Weight of ice, snow or sleet that causes damage to a building or property in a building is covered. With this peril there is no clause that a hole must first be made in an exterior wall or roof for coverage to apply. Not included is damage to awnings, fences, patios, pavements, swimming pools, foundations, retaining walls, bulkheads, piers, wharves or docks. These structures are outside and particularly vulnerable to such loss.

The accidental discharge or overflow of water or steam provides coverage when water or steam discharges or overflows from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance. At first glance, this seems straightforward but in practice the undefined terms such as discharge, overflow, and plumbing can become problematic. For a further discussion of these terms and issues see Holding Water – Definitions Needed to Understand Water Losses. It is important to determine the difference between backup, overflow and discharge. Coverage is also provided for the tear out and replacement of part of a building or structure if that tear out is necessary to repair the system from which the water escaped. Note that the tear out must be for part of a building or structure owned solely by the insured and coverage under Coverage A at the "residence premises". The escaped water or steam must have damaged covered property in order for the tear out and replacement to be covered.

As always, there are some specific exclusions attached to this peril. The first is if the "residence premises" has been vacant for more than 60 consecutive days immediately before the loss. A building being remodeled, renovated or repaired is not considered vacant. A vacant property is different from one that is simply furnished but unoccupied – for further discussion see Policy Definitions of Vacancy and Occupancy.

Also excluded is loss to the actual system or appliance that caused the loss – the resultant water damage is what is covered, not the broken pipe or appliance itself. Freezing is excluded other than what is covered under the freezing peril to be discussed further on. An accidental discharge or overflow that occurs away from the building where the premises is located but that causes damage to the "residence premises" is excluded. For example, the hot water heater in the building next door ruptures and the water floods the insured's condo – that would not be covered since it is away from the building where the "residence premises" is located.

Damage from mold, fungus or wet rot is excluded unless it is hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure. When mold is hidden behind walls or ceilings an insured can't be expected to know it is there.

The policy further explains that for the peril of accidental discharge or overflow of water or steam, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment. While plumbing is not actually defined, these exclusions help identify where coverage applies.

Lastly, the form states that under the Section I exclusion for water, paragraphs a. and c. that apply to surface water and water below the surface of the ground, that these clauses do not apply to loss by water covered by this peril. Surface water and water below the surface of the ground are completely different from the accidental discharge of water from the plumbing system or household appliance.

13. Sudden And Accidental Tearing Apart, Cracking, Burning Or Bulging This peril means sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning or automatic fire protective sprinkler system, or an appliance for heating water. This peril does not include loss caused by or resulting from freezing except as provided in Peril Insured Against 14. Freezing below. 14. Freezing

a. This peril means freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance, but only if you have used reasonable care to:

(1) Maintain heat in the building; or (2) Shut off the water supply and drain all systems and appliances of water. However, if the building is protected by an automatic fire protective sprinkler system, you must use reasonable care to continue the water supply and maintain heat in the "residence premises" for coverage to apply.

b. In this peril, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.

15. Sudden And Accidental Damage From Artificially Generated Electrical Current This peril does not include loss to tubes, transistors, electronic components or circuitry that is a part of appliances, fixtures, computers, home entertainment units or other types of electronic apparatus. 16. Volcanic Eruption This peril does not include loss caused by earthquake, land shock waves or tremors.

Analysis

Following the Accidental Water or Steam peril is the Sudden and Accidental Tear Apart, Cracking, Burning or Bulging peril. This means the sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, air conditioning or automatic sprinkler system or hot water heater. The peril is specific to this type of equipment only. Not covered is loss caused by or resulting from freezing unless it is specified in the separate freezing peril.

Freezing applies to the freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance. Two conditions apply; if the conditions have not been met, there will be no coverage. The insured is required to either maintain heat in the building or shut off the water supply and drain the water from all systems and appliances. There is an exception for draining the lines of water, and that is if a sprinkler system is present. If the premises has a sprinkler system, then the water should be left on with the heat maintained to prevent the pipes from freezing. If the insured fails to maintain heat in a building and leaves the water on in an area prone to freezing temperatures, frozen pipes are likely and would not be covered.

The next peril provides limited coverage for damage from artificially generated electrical current. Naturally generated current is lightning, while artificially generated current is man made such as the electricity coming through the outlets. Coverage is for sudden and accidental damage caused by artificially generated electricity. However, the peril does not provide coverage to what an insured would expect, which is the tubes, transistors, electronic components or circuits that are likely to be damaged by a power surge. Those parts of property are not covered. What is covered is the housings, knows, and other non-electrical components.

The last peril is volcanic eruption. It is straightforward and states that it does not include any loss caused by corresponding earthquakes, land shock waves or tremors.

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