Property not Covered

Perils Insured Against

Deductible and Exclusions

Loss Conditions

Other Conditions

Introduction

ISO regularly conducts research to determine what insurance products the industry needs and what products need to be updated or changed. ISO surveyed millennials, those people aged 18-39, to learn about their understanding of personal insurance as well as find out about their needs and usage of such products. The result of this research is the development of the Your Belongings Form PM 00 43 that provides coverage for belongings anywhere in the world. Millennials are more mobile than past generations and may not have a static residence; they may live with relatives for a while but then relocate to another residence, without necessarily having a lease or some form of property ownership.

An aggregate limit of liability must be shown in the endorsement schedule. The base deductible for this coverage is $100 with optional deductibles of $250 and $500; no minimum premium applies to the endorsement. The form contains a schedule for the aggregate limit of liability and the deductible.

Eligible property is unscheduled property owned by the named insured, and spouse if the spouse is a resident of the same household.

Property Covered

A.  Property Covered

  1.  Property Owned By An Insured

We cover direct loss to personal property owned by you while it is anywhere in the world. 

2. Special Limits Of Liability

The limit for the following property is 20% of the Aggregate Limit Of Liability shown in the Schedule:

a. Jewelry, watches, furs, precious and semiprecious stones;

b. Firearms and related equipment;

c. Property used primarily for "business" purposes;

d. Watercraft of all types, including their trailers, furnishings, equipment and outboard engines or motors; or

e. Antiques, fine arts, paintings and similar articles of rarity or antiquity.

Analysis

The form provides coverage for property owned by the insured that has suffered a direct loss while it is anywhere in the world. This provides a significant amount of leeway; the insured may move from one friend's house to another on a somewhat regular basis, yet this form allows the insured to carry his insurance with him wherever he goes.

As with most property policies, a special limit of coverage applies to certain types of property. Such property is limited to twenty percent of the aggregate limit shown in the schedule. That property is jewelry, watches, furs, precious and semiprecious stones; firearms and related equipment; property used primarily for “business," watercraft of all types, and this includes their trailers, furnishings, outboard engines or motors, or antiques, fine arts paintings, and similar items of rarity or antiquity.

For example, if the coverage amount is $50,000, then the limit for the insured's jewelry is $10,000. This limit is for all of the personal property listed under the special limit; if the insured has a loss to both jewelry, firearms, and furs, the total available for the loss is $10,000, not $10,000 for the jewelry, another $10,000 for the firearms, and another $10,000 for the furs. The HO 00 03 provides a different limit for each category of property. This special limit may not be increased. If the insured desires higher limits, then the property should be insured under the Personal Articles or class-specific form.

Property Not Covered

B.  Property Not Covered

We do not cover:

  1.  Articles separately described and specifically insured, regardless of the limit for which they are insured, in this or other insurance.

  2.  Animals, birds or fish.

  3.  Any motor vehicle, including equipment, parts and property that is permanently installed in any motor vehicle.

This exclusion (B.3.) does not apply to portable electronic equipment that is designed so that it may be operated from a power source other than a motor vehicle's electrical system.

  4.  Any aircraft, meaning any contrivance used or designed for flight, including any parts whether or not attached to the aircraft.

This exclusion (B.4.) does not apply to model or hobby aircraft not used or designed to carry people or cargo.

  5.  Any hovercraft or hovercraft parts. Hovercraft means a self-propelled motorized ground effect vehicle and includes, but is not limited to, flarecraft and air cushion vehicles.

  6.  "Business" data, including such data stored in:

        a.  Books of account, drawings or other paper records; or

        b.  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.

  7.  Water or steam.

  8.  Currency, deeds, securities, passports, transportation tickets or other tickets.

  9.  Contraband or property in the course of illegal transportation or trade.

Analysis

The Property Not Covered section identifies property that is not covered by this endorsement. Much is similar to the property not covered on the homeowners or tenants policies. First, anything separately described and specifically insured is not covered, as this would be duplicate coverage. This applies regardless of the limit on the other coverage.

As always, animals, birds or fish are not covered, nor are motor vehicles, including equipment, parts and property permanently installed on the motor vehicle. Motor vehicles and their equipment belong on a personal auto policy. However, an exception exists for portable electronic equipment that may be operated not only from the motor vehicle but from another power source as well.

Likewise, aircraft and their parts are excluded, except for hobby or model aircraft not used or designed to carry people or cargo. This does not address the issue of drones, nor is there an endorsement under the inland marine program that addresses them. The HO 34 02 revises the definition of aircraft under the homeowners policy to mean any vehicle used or designed for flight, including but not limited to unmanned aircraft, whether or not model or hobby. This removes coverage from the homeowners policy if the insured accidently causes harm to another when operating his drone, or unmanned aircraft. Hovercraft and their parts are excluded as well, and includes air cushion vehicles and flarecraft. Since this endorsement does not mention unmanned aircraft or drones, then there is coverage for physical damage to the unmanned aircraft or drone itself.

"Business data" is not covered, and this includes books of accounts, drawings, paper records, or computers and related equipment. What is covered is the cost of blank recording or storage media and prerecorded programs available for purchase. An insured may be using Quickbooks to track expenses and income for his business; the cost to replace Quickbooks is covered. If the insured has electronic files stored on a separate hard drive, the cost of that hard drive is covered, but not the cost to recreate the data stored on that hard drive.

Water or steam are not covered. If the insured leaves the tub running any increase in the cost of the water bill would not be covered.

Currency, deeds, securities, passports, transportation or other tickets are not covered, nor is contraband or property in the course of illegal trade. If the insured is transporting illegal drugs or other property and the property is confiscated or lost, there is no coverage since this is illegal activity.

Perils Insured Against

C. Perils Insured Against

We insure against risk of direct physical loss to covered property. However, we do not insure:

1. Breakage of eyeglasses, glassware, marble and bric-a-brac, statues, porcelain and similar fragile articles unless caused by:

a. Fire, lightning, windstorm, earthquake;

b. Explosion, collapse of the building, accident to conveyances; or

c. Rioters, strikers, theft, attempted theft, vandalism or malicious mischief.

2. Loss caused by:

a. Wear and tear, deterioration, latent defect, inherent vice or any quality in property that causes it to damage or destroy itself;

b. Insects or vermin;

c. Any work on covered property other than jewelry, watches and furs;

d. Marring or scratching;

e. Artificially generated electrical current that causes mechanical or structural breakdown of, or damage or failure to, electrical apparatus.

Loss caused by fire is covered;

f. Dampness or extreme changes of temperature. Loss caused by rain, snow, sleet, hail or bursting of pipes or apparatus is covered;

g. Animals owned or kept by an "insured";

h. Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body. However, any ensuing loss not excluded is covered; or

i. Misplacement or mysterious unexplainable disappearance.

Analysis

Unlike most personal property coverage, this is an open perils form. Certain fragile types of property are not covered for breakage except from a more limited list of named perils. These items are eyeglasses, glassware, marble and bric-a-brac, statues, porcelain and similar fragile articles. The limited perils are fire, lightning, windstorm, earthquake, explosion, collapse of the building, accident to conveyances, rioters, strikers, theft, attempted theft, vandalism or malicious mischief. These perils are self-explanatory except for accident to conveyances. If the insured is transporting glassware or statues in a vehicle and that vehicle is in an accident that breaks the glassware or statues, that damage is covered. It can be any sort of conveyance; the intent is to provide coverage for items while being transported.

Other perils that are not covered are standard and include wear and tear, deterioration, latent defect, inherent vice, insects or vermin, work on property other than jewelry, watches and furs, marring or scratching, artificially generated electrical current except for resultant fire, and dampness or temperature extremes. If the dwelling becomes exceptionally humid and the humidity damages the property, there is no coverage. Same with extreme cold, extreme cold that damages property is not covered unless the cause is related to snow, sleet or bursting pipes. Loss caused by rain, snow, sleet, hail, bursting pipes or apparatus is covered.

Damage caused by animals the insured owns or keeps is not covered; pets should be trained not to damage furniture, and if the insured is too lazy to train the pet, that is not a fortuitous loss. Acts or decisions of any person, group, organization or governmental body are not covered, although ensuing losses are unless otherwise excluded. Misplacement or mysterious disappearance is not covered. It is possible that the insured just lost the property, and losing one's belongings is not insurable. Some things, such as jewelry, may be scheduled to be covered for mysterious disappearance on a scheduled form.

Deductible & Exclusions

D. Deductible

We will pay only that part of the total of all loss payable under this policy that exceeds the deductible amount shown in the Schedule or in the Declarations.

E. Exclusions

The following exclusion is added to this form and in Common Policy Provisions Form PM 00 01:

Water Damage

Water damage means:

1. Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind;

2. Water or waterborne material which backs up through sewers or drains or which overflows or is discharged from a sump;

3. Water or waterborne material below the surface of the ground. This includes water which exerts pressure on, or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure structures;

caused by or resulting from human or animal forces or any act of nature.

This exclusion also applies if weather conditions contribute in any way with water damage to produce the loss.

Loss caused by fire, explosion or theft resulting from water damage described above is covered.

Analysis

The deductible language is standard and states that a deductible applies. Since this is an endorsement, only one additional exclusion is added to those already outlined in the Common Policy Provisions form PM 00 01. Water is the additional exclusion and the standard water exclusion language is used. This language includes loss by flood, surface water, waves, tidal water, overflow of a body of water, spray from any of these, as well as water or waterborne material that backs up through sewers or drains or is discharged from a sump. Likewise, water below the surface of the ground, including water that exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure is excluded regardless of cause, whether it is by human, animal, or natural forces. If weather conditions contribute to the loss caused by water to produce the loss, that is also excluded. Ensuing loss by fire, explosion or theft from water damage is covered.

Loss Conditions

F. Loss Conditions

With respect to the coverage provided in this Form PM 00 43, Paragraphs D.1. Loss Settlement and D.2. Loss Clause in Common Policy Provisions Form PM 00 01 are replaced by the following:

Loss Settlement

a. Subject to the special limits of liability listed above in Paragraph A.2. Special Limits Of Liability, the Aggregate Limit Of Liability shown in the Schedule is the most we will pay for direct loss to covered property during the policy period shown in the Declarations.

b. At the time of the loss, covered property losses are settled at actual cash value but not more than the amount required to repair or replace or, if applicable, the special limit of liability in Paragraph A.2. above, whichever is less.

c. If shown in the Schedule that covered property losses are settled at replacement cost, the following applies to covered property:

(1) We will pay no more than the least of the following amounts:

(a) Replacement cost at the time of loss without deduction for depreciation;

(b) The full cost of repair at the time of loss;

(c) The Aggregate Limit Of Liability shown in the Schedule; or

(d) Any applicable special limits of liability stated in this form.

(2) If the cost to repair or replace the property described in Paragraph c.(1) above is more than $500, we will pay no more than the actual cash value for the loss until the actual repair or replacement is complete.

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

(4) Property listed below is not eligible for replacement cost loss settlement. Any loss will be settled at actual cash value at the time of the 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) Articles not maintained in good or workable condition.

(d) Articles that are outdated or obsolete and are stored or not being used.

d. 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;

(2) Pay the difference between actual cash value of the property before and after the loss; or

(3) Pay for the value of the part lost or damaged.

Analysis

Similar to the exclusions section, the loss conditions make modifications to the loss conditions in the Common Policy Provisions form. Other than the limits outlined in the special limits of liability for certain types of property, the aggregate shown in the schedule is the most that will be paid for direct loss to covered property. For example, the insured's scheduled aggregate limit is $60,000. The insured has a number of antiques. The insured has a substantial loss, causing significant damage; the antiques sustain $20,000 of damage. The antiques are subject to the special limit of 20% of the aggregate limit; this is $12,000, so the insured is paid $12,000 for the $20,000 loss of antiques.

Losses are settled at actual cash value, but no more than the amount required to repair or replace, or the special limit if applicable, whichever is less. The above-mentioned insured's sofa burns. The actual cash value of the sofa is $1,000, but it can be repaired for $600.00; the insurer will repair the sofa for $600 since it is less than both the aggregate limit and the actual cash value of the sofa.

An option for replacement cost exists. If the insured has opted for replacement cost, then no more than the least of the replacement cost at the time of loss, the full cost of repair, the aggregate limit shown in the schedule, or the applicable special limits is paid out. If the insured sustains a loss of $10,000 but the insurer can repair the property for $5,000, then the insurer will make repairs since it is less than the aggregate or replacement cost. When replacement cost is on the policy and the cost to repair or replace is above $500, the insurer will pay actual cash value until the insured actually repairs or replaces the property. The insured also has the option to make a claim on an actual cash value basis and later request replacement cost as long as the intent to repair or replace the property is made known to the insurer within 180 days of the loss.

Certain property is not eligible for replacement cost. Property that is particularly unique, hard to value due to age, artistry, history, or sentiment, or is obsolete or not being used is covered at actual cash value. These items are antiques, fine arts, paintings and similar articles that cannot be replaced, memorabilia, souvenirs, collectors' items and similar articles, articles not maintained in good or working condition, or articles that are obsolete or not being used.

The standard pair or set language applies. At the option of the insurer, the insurer may pay to repair or restore the pair to its preloss value, pay the difference between actual cash value before and after the loss, or pay for the value of the damaged part.

Other Conditions

G. Other Conditions

The following is added to Paragraph E.2. Insurable Interest And Limit Of Liability in Common Policy Provisions Form PM 00 01:

However, our total liability in any one policy period for all losses to covered property during the policy period will not be more than the Aggregate Limit Of Liability shown in the Schedule. This is the most we will pay regardless of the number of claims made.

Paragraph E.5. Other Insurance And Service Agreement in Common Policy Provisions Form PM 00 01 is replaced by the following:

a. Other Insurance

If a loss covered by this policy is also covered by other insurance, we will pay only the proportion of the loss that the limit of liability which applies under this policy bears to the total amount of insurance covering the loss.

b. Service Agreement

If a loss covered by this policy is also covered by a service agreement, this insurance is excess over any amounts payable under any such insurance or agreement.

Service agreement means a service plan, property restoration plan or other similar service warranty agreement, even if it is characterized as insurance.

Analysis

The Other Conditions clause modifies the insurable interest and limits section of the Common Policy Provisions form. It states that the total liability for all losses for one policy period is the aggregate limit shown in the Schedule. Look at the insured who has a limit of $60,000. If he has multiple losses so that the total of all losses is $85,000, he will only receive $60,000 for all the losses in that one policy period. It doesn't matter if the losses are from the same or different perils, only the aggregate limit will be paid over one policy period.

Familiar language is in the Other Insurance and Service Agreement provisions. If other insurance applies to property covered under this policy, this insurer pays only a proportion of the loss. The proportion is that which this policy bears to the total amount of coverage available between the policies. Likewise, if there is a service agreement, this policy is excess over the coverage provided by that service agreement. A service agreement is a service plan, property restoration plan or other service warranty agreement, even if it is characterized as insurance.

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