Property and Liability Insurance:
Personal Property and Liability insurance policies cover persons, not property or operations. While individuals may refer to having “insured my house”, this is not correct because the payment is due upon and measured by the Economic Loss suffered by the Person.
If the policy insured property, then it would follow the property as it changed hands from time to time. The insurance policy deems to “make whole”. The “insured” must have suffered economically from the loss or the occurrence. The policy, following the principle of indemnity, should not allow the client to profit from its response to a claim.
Homeowners Insurance is a package policy designed to protect against economic loss to residences and household personal property and legal liabilities for injuries and damage arising from residences and personal activities.
There are six different Homeowner Policy Forms most frequently used:
- HO-2 Broad Form- limited- names perils covered- for owner occupants
- HO-3 Special Form -broadest offers most coverage – for owner occupants
- HO-4 Contents Broad Form – for apartment dwellers and renters
- HO-6 Unit-Owners Form- Condominium unit owners – owner occ. or rented.
- HO-8 Modified Coverage Form – limited coverages – owner occupants
Each form has two main divisions: Section I- Property and Section II – Liability
The main differences are found in Section I: Perils and Coverage type for Property.
Coverage A – covers the “Dwelling” and Structures Attached to it.
Under the HO-6, Coverage A covers Building Additions and Alterations for which the unit-owner has insurance responsibility.
Coverage B- covers Other Structures at the residence premises not attached to the dwelling, such as detached garage, guest house, fences, pool or storage buildings. Coverage B does not appear in forms HO- 4 or HO-6.
Coverage C- covers Personal Property that is owned or used by the insured. It is optional for coverage to extend to property of a guest in residence occupied by insured. Coverage C Exclusions- Separately insured articles, animals, birds, fish, motorized vehicles- except those used to service residence or assist handicapped, tape decks, CB radios and similar equipment operated by the power from motorized vehicle while the equipment is in the vehicle, aircraft and parts- except hobby and model aircrafts, property of roomers or tenants, property in an apartment regularly rented or available for rental, property rented or held for rental to others away from residence, business data – paper or electronic media.
Coverage D – Loss of Use – covers increases over normal living costs if damages from a covered peril makes the residence unfit for occupancy. The policies will set additional limits within the package plans. Each company will offer underwriting standards as to minimum coverages, as well as coverages determined by percentages.