Homeowners

Overview

This chapter will examine the Homeowners Policy, which provides the same coverage as the stand-alone Comprehensive Personal Liability Policy. Section II is the same in all Homeowners Forms.

Protection is provided for legal claims against the insured or family members from occurrences in and around the premises, personal activities, and pets, both on or away from the premises. Coverage is intended to protect against non- business, non – automobile exposures of the individual or family unit. The largest single exposure a homeowner has is potential liability claims.

Homeowners Policy (HO 01 17)

Louisiana Special Provisions Endorsement This endorsement makes changes to the standard HO policy form.

1. Under Section 1 – Property Coverage, a change to the description and coverage of electric apparatus, which limits coverage to those described in the section
2. Under Section 1 – Property Coverage, Coverage D – Loss of Use, only additional living expenses are available.
3. Under Section 1 – Property Coverage, Additional Coverages for Glass, adds coverage for glass breakage caused by earth movement.
4. Under Section 1 – Conditions, Mortgage Clause provision, the periods for cancellations and non-renewal have change to 10 days of advance notice for cancellation due to nonpayment of premium a (20 days for all other reasons) and 10 days advance notice for nonrenewal.
5. Under Section 2 – Conditions, the limit of liability provision adds a special limit of $10,000 for parental liability imposed by law.
6. Under Section 1 & 2 – Conditions, Concealment and Fraud, changed to read all of Section 1 – Property losses won’t be covered if any of the three actions of concealment or fraud is committed. Under Section 2 – Liability Coverages, only the insured committing the act of concealment or fraud isn’t covered.

Cancellation and Nonrenewal

1. The insurer must give the reason for nonrenewal or cancellation in writing if requested by the insured.
2. The insurer must notify the insured of cancellation 20 days in advance if the policy has been in effect for more than 60 days.
3. The insurer must give the insured 30 days advance notice for nonrenewal of a policy.
4. The nonrenewal provision restricts the reason for nonrenewal if the policy has been in effect for n=more than three years.

Coverage Forms

Definitions

Insured

1. You and residents of your household who are your relatives and other people under the age of 21 in the care of any person in the household.
2. A full time student who was a resident of the household before moving out to attend school, provided student is under 24 years old and is a relative; or 21 and in your care.
3. Anyone legally responsible for animals or watercraft owned by the insured, used in the course of business.
4. With respect to an automobile to which coverage applies, people using the vehicle on “insured location” with insured’s consent.

Insured Locations

1. The residence premises
2. Any other premises used by the insured as a residence that is shown in the declarations.
3. Any premises used by the insured in connection with premises described in 1 or 2.
4. Any premises not owned by the insured where the insured is temporarily residing.
5. Vacant land, other than farmland, owned by or rented to an insured.
6. Land owned or rented by an insured where a residence is being built for the insured.
7. Individual and family cemetery plots or burial vaults of an insured.
8. Any part of premises occasionally rented to an insured for nonbusiness use.

Resident Employee

An employee whose duties are related to the maintenance or use of the residence premises, including household and domestic services.

Residence Premises

One or two family dwelling, where the insured resides, including other structures and grounds at the location. If the dwelling is more than one unit, the insured must reside in one of the units.

Watercraft

A craft designed to be propelled on or in water by wind, engine power, or electric motor.

Motor Vehicle

A self-propelled land or water vehicle; or any trailer or semi trailer which is being carried on, towed by, or hitched for towing by a self propelled land or water vehicle.

Homeowners Policy

Six Requirements to be eligible for Homeowners Insurance

1. Named insured must the owner/occupant of the Home, renter in the residential occupancy, or condominium owner.
2. No more than two families per unit.
3. Not more than two roomer/boarders.
4. Residential use only, except for certain incidental occupancies such as studios, some offices and some professional/private schools.
5. Package policy, covers property and casualty and theft not just personal property coverage, must be bought.
6. Farms and mobile homes may be insured under Homeowners if endorsed.

Definitions

Insured

Anyone living in household that is a relative or under the age of 24 and in the care of the insured or any residents of the household.

A student is considered insured if they are a relative under the age of 24 and enrolled in school full time and lived in the residence before attending school or they are under 21 and in the insured’s care.

Insured location

1. Locations named by the address.
2. Other structures owned by the insured but where the insured is living temporarily.
3. Vacant land other than farmland.
4. Land owned or rented where a dwelling for the insured is being built.
5. Family plots and headstones.

Residence Premises

Where the insured lives. There can be up to a four unit dwelling but the insured has to live in one of the units. It can also include other structures and grounds at the same location.

Business

A trade profession or occupation. It can be a part time job or a full time job.  Exceptions: Any activity where you do not receive more than $2000 per year.

• Volunteer activities
• Home day care for no compensation or daycare for a relative

Resident Employee

Duties are related to maintaining or the use of the residence or performs similar duties elsewhere.

Example: Nanny, housekeeper, butler, gardener, etc.

Coverage Forms

HO-2(Broad Form)

Perils Insured Against

1. Fire or Light
2. Smoke
3. Windstorm or hail
4. Vandalism and malicious mischief
5. Explosion
6. Theft (except homes under construction)
7. Aircraft
8. Vehicles
9. Volcanic eruption
10. Riot or civil commotion
11. Fall objects
12. Weight of ice, snow or sleet
13. Accidental discharge or overflow of water or steam from within plumbing related system
14. Sudden and accidental rupture of a heat, air conditioning, fire protective sprinkler, or hot water system
15. Freezing of plumbing or related systems
16. Sudden and accidental damage from artificially generated electrical current excluding tubes transistors and similar electronic components.

HO-3 (Special Form)

Open Perils Dwelling Coverage – provides protection against risks of direct physical loss not excluded in the policy.

Coverages A&B – open perils coverage for Coverage A&B. Everything is covered except:

1. Freezing, if vacant unless heat is maintained in the building or water is turned off
2. Freezing, thawing, weight of water to: fences, pavement, patios, swimming pools, foundations, piers, wharfs or docks
3. Theft to dwelling under construction
4. V&MM if vacant for more than 60 consecutive days
5. Wear, tear deterioration
6. Inherent vice, mechanical breakdown
7. Smog, rust, mold or rut
8. Smoke, industrial, or agricultural smudging
9. Pollutants
10. Settling or cracking
11. Birds, vermin or rodents
12. Domestic animals

HO-4 (Tenants Form) – personal property and liability.

Covers personal property of people who rent/lease apartments, condominiums or dwellings.
Insures against same perils as Coverage C in HO-2 and HO -3. Named Perils Coverage.

HO-5 (Open Perils Form)

Similar to the HO-3 except it includes open perils on the contents.
Dwelling and contents (Coverage A, B & C) are insured for the same perils. This policy is often referred to as the super deluxe.

HO-6 (Condominium Form)

condominium form is similar to an HO-4 except insured is owner, occupant.
Insures personal property against the same perils as Coverage C in HO-2 and HO-3 broad form perils.
Has $1000 for building items or other structures.
Insures against Basic perils in Section 1 and applies stricter conditions on determining loss valuation, either ACV or market value.

HO-8 (Modified Coverage Form)

Insures against Basic perils (not in the HO-2) in section 1 and applies stricter conditions in determining loss valuation, either ACV or market value.
Insures older homes whose replacement costs may exceed their market value.

Coverage C – Personal property

Personal property against the same perils as does HO-2.

Coverage E – Personal Liability If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which coverage applies, policy will :

1. Pay up to the limit of liability for the damages for which an insured becomes legally liable, including prejudgment interest awarded against an insured.
2. Provide a defense, at the insurer’s expense even if the suit has no grounds, not true, or fraudulent. The insurer may investigate and settle any claim or suit that the insurer decides is appropriate.

Coverage E Coverage doesn’t apply to:

1. Liability for loss assessments charged against an insured as a member of an association, corporation, or community of property owners, or under any contract or agreement.
2. Damage to property owned by an insured.
3. Damage to property rented to, occupied or used by, or in the care of the insured. This exclusion doesn’t apply to damage caused by fire, smoke or explosion.
4. Bodily injury to any person eligible to receive any benefits if:
   1. Voluntarily provided
   2. Required to be provided by an insured under a Worker’s Compensation law, Non-Occupational Disability law, or Occupational Disease law.
5. Bodily injury or property damage for which an insured under this policy either:
   1. Is also an insured under a Nuclear Energy Liability Policy.
   2. Would be an insured under that policy but for the exhaustion of its limit of liability.
6. Bodily injury to an insured.

Coverage F – Medical Payments to Others Policy will pay necessary medical expenses that are incurred within three years from the date of an accident causing bodily injury. Medical expenses means reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, nursing, prosthetic devices, and funeral expenses. Does not apply to an insured or regular resident of the insured’s house. (except resident employees)

Does provide coverage to:

1. A person on the insured location with permission of the insured.
2. A person off the insured location if the bodily injury:
   1. Arises out of a condition on the insured location or the ways immediately adjoining.
   2. Is caused by the activities of an insured.
   3. Is caused by a resident employee in the course of employment of the insured.
   4. Is caused by an animal owned by or in the care of an insured.

Medical Payments coverages are not subject to a deductible. Coverage F Coverage doesn’t apply to bodily injury to:

1. A residence employee if it occurs off the insured location and doesn’t arise out of or in the course of employment by an insured.
2. Any person eligible to receive any benefits either:
   1. Voluntarily provided.
   2. Required to be provided under any Workers’ Compensation law, Non-Occupational Disability law or Occupational Disease law.
3. Any person, if caused by nuclear reaction, radiation, or contamination
4. Any person, other than a residence employee of an insured, regularly residing on any part of the insured location.

Exclusions

Coverage E and Coverage F The policy excludes payment for bodily injury or property damage:

1. Arising from the operation, maintenance, or use of a motorized vehicle, registered or required to be registered for use on public roads or property, except those designated as covered vehicles. Covered vehicles are defined as follows:
   1. Vehicles is in storage on an insured location
   2. Vehicles used solely to service an insured’s residence
   3. Handicapped vehicles
   4. Motorized golf carts, while being used to play golf or while parked or stored within the legal boundaries of a golfing facility
   5. Vehicles, designed for recreational use off public roads, not owed by the insured, or owned by the insured provided the occurrence takes place on an insured location
2. Arising from the ownership, maintenance, or use of:
   1. Inboard motorboats owned by an insured, except while in storage
   2. Inboard motorboats, having more than 50 horsepower, rented by an insured.
   3. Outboard motorboats having more than 25 horsepower if the motor is owed by an insured.
   4. Sailboats 26 feet or more in length owed or rented by the insured.
3. Arising from the operation, maintenance, or use of an aircraft.
4. That is expected or intended by the insured.
5. Arising from business pursuits of an insured.
6. A rising from the rendering of, or failure to render, professional services.
7. Arising out of premises, other than an insured location, that is:
   1. Owned by the insured.
   2. Rented to an insured.
   3. Rented to others by an insured.
8. Caused by war or insurrection.
9. Arising from the transmission of a communicable disease by an insured.
10. Arising out of sexual molestation, corporal punishment, or physical or mental abuse by an insured.
11. Arising out of the use, sale, manufacture, delivery, or possession of a controlled substance.

Liability Coverages

Additional Coverages

The Policy covers the following in addition to the limits of liability.

1. Claim Expenses – Includes the insurer’s expenses of defending a claim; reasonable expenses incurred by a insured at the insurer’s request, including the insured’s actual loss of earnings up to $250 a day for assistance in the investigation or defense of a claim; premiums on bonds required in a suit; and interest on the judgment, which accrues after entry of the judgment, and before the insurer pays.
2. First Aid Expenses – Includes first aid to others, incurred by an insured, for bodily injury that is covered under the policy. This does not cover first aid to an insured.
3. Damage to Property of Others – Pays the replacement cost, up to a $1000 per occurrence, for property damage caused by an insured to the property of others. Coverage doesn’t apply to:
   1. Any property that is covered under Section I.
   2. Damage caused intentionally by an insured who is 13 years of age or older.
   3. Damage to any property owned by an insured
   4. Damage to property owned by or rented to a tenant
   5. Damage arising out of business pursuits engaged in by an insured.
4. Loss Assessment – Pays up to $1000 for an insured’s share of a loss assessment charged by a property owner’s association against the insured in connection with bodily injury or property damage not excluded under Section II, or liability for an elected director, officer, or trustee, who receives no income.

Conditions

Limit of Liability: A per occurrence limit applies to losses covered under Coverage E. Coverage ends when the amount of damage for the occurrence equals the limit of liability. A per person limit applies to losses covered under Coverage F.

Severability of Insurance Insurance under the policy applies separately to each insured. This condition doesn’t increase the insurer’s limit of liability per one occurrence.

Duties after Occurrence

An insured shall:

1. Give written notice to the insurer as soon as is practical.
2. Cooperate with the insurer in the investigation, settlement, or defense of any claims or suit.
3. Forward notice, demand, summons, or other process to insurer.
4. Help the insurer in making a settlement, pursuing subrogation attempts, taking the case to court, and obtaining evidence.
5. Concerning Damage to Property of Others, submit to insurer, within 60 days after a loss, a sworn statement of loss and show the damaged property, if it is an insured’s control.
6. Not, except at their own cost, voluntarily make payment, or assume obligation or aid to others, at the time of bodily injury.

Duties of an Injured Person (Coverage F) Medical Payments to Others

This condition applies to third party claimants who are pursuing medical payments coverage under the policy. The injured person must:

1. Give the insurer written proof of the claim as soon as practical.
2. Authorize the insurer to obtain medical records.
3. Submit to a physical exam by a physician of the insurer’s choice when and as often as the insurer requires.

Payment of Claim (Coverage F) Medical Payments to Others

This condition states that payment by the insurer under Coverage F is not an admission of liability by the insured or the insurer.

• Suit Against Insurer:  The insured must comply with policy provisions before any suit may be brought by the insured against the insurer.
• Bankruptcy of an Insured: Bankruptcy of an insured doesn’t relieve the insurer of its obligations under the policy.
• Other Insurance: Insurance is excess over any other collectible insurance, except insurance written specifically as excess insurance over this policy.
• Policy Period:  The policy applies only to bodily injury or property damage which occurs during the policy period.
• Concealment or Fraud:  The insurer won’t provide coverage to an insured who, whether before or after a loss.

Selected Liability Endorsements

Business Pursuits Endorsement

1. The endorsement extends liability coverage for the insured’s involvement in a business that the insured doesn’t own, have financial control over, or have a partnership interest in.
2. The pursuit must be named in the endorsement, and is commonly added for those in the teaching, sales, and clerical professions.

Home Day Care Endorsement

1. The endorsement extends Section II coverages to the insured’s home day care business.
2. The endorsement typically imposes a policy aggregate limit for liability and medical payments combined. The limit corresponds to the Coverage E limit shown in the Declarations, with a further per person accident sub limit for day care related medical payments equal to Coverage F.
3. Bodily injury and property damage arising from the maintenance, use, loading, unloading, or entrusting by the insured to others of the following are excluded:
   1. Draft or saddle animals or vehicles used with them.
   2. Aircraft, all motorized land conveyances, or watercraft, whether owned, operated, or hired by or for the insured or employee, or used by the insured for instruction in their use.
4. The endorsement doesn’t cover injury to any employee, other than a residence employee, arising out of the day care operation.

Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement

1. The endorsement covers the insured’s liability exposure in the event that a third party claims illness as a result of exposure to mold and the insured is deemed liable for the illness.
2. The basic liability limit is currently $50,000 on an annual aggregate basis during the policy period for all fungi, wet or dry rot, or bacteria related damages. Insurers can also offer a higher optional liability coverage limit of $100,000.

Permitted Incidental Occupancies Endorsement

1. The endorsement modifies the Section II exclusions of liability and medical payments in connection with business pursuits of the insured to allow the necessary and incidental use of the premises for the business described on the endorsement.
2. The premises must be occupied principally as the insured’s residence, the business must be conducted by an insured, and there can be no other business conducted on the premises. The endorsement is commonly used for an office, studio, or private school type of occupancy.
3. The endorsement doesn’t cover bodily injury to any employee of the insured, except residence employees in the course of their employment.

Personal Injury Endorsement

1. The endorsement defines and adds personal injury to the policy. Personal injury includes:
   1. False arrest, detention, or imprisonment
   2. Malicious prosecution
   3. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling, or premises that a person occupies, committed by or on behalf of its owner, landlord.
   4. Oral or written publication of material that violates a person’s right of privacy, slanders or libels a person or organization, or disparages a person’s organization’s goods, products, or services.
2. Personal injury doesn’t apply:
3. 1. Injury resulting from an offense related to the injured person’s employment by the insured.
   2. Injury caused by a conscious violation of criminal law.
   3. Liability arising out of disputes between insured.
   4. Civic or public activities for which the insured is paid.
   5. Injury related to a business engaged in by the insured.
   6. Contractual liability unless it is an indemnity obligation assumed under written contract and relates to the ownership, maintenance, or use of the insured premises.

Watercraft Liability Endorsement

1. The endorsement amends the liability exclusions of the Homeowners Forms so that bodily injury or property damage arising out of the ownership, maintenance, use, loading, or unloading of the watercraft described on the endorsement is covered.
2. Many types of watercraft are unacceptable, such as watercraft rented to others, jet boats, etc.

Home Business Endorsement

1. The endorsement provides for both business property and liability coverages for a variety of home businesses.
2. The business must be owned by the insured, or by a partnership, joint venture, or organization comprised solely of the named insured and resident relatives.
3. Liability coverage includes coverage for premises operations, advertising injury, and personal injury.
4. There is no coverage for professional services.

Workers’ Compensation Residence Employee Endorsement

1. The endorsement allows the owner of a private residence who hires a domestic worker as a residence employee to be covered for Workers’ Compensation, as opposed to purchasing an entirely separate Workers’ Compensation policy.
2. In some states, such endorsements must be included on a Homeowners Policy.

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