lecture ten ： homeowners insurance. learning objectives identify the major homeowners policies for...

Lecture Ten ：

Homeowners Insurance

Learning Objectives

Identify the major homeowners policies for homeowners, condominium owners, and renters.Explain the major provisions in Section1 of the homeowners 3 policy.Given a specific property loss situation Explain the insured’s duties after a loss occurs.

Main Contents

Homeowners 2000 Program

Analysis of homeowners 3 policy

Section 1 coverage

Discuss the homeowner property insurance in Chinese market

1.What’s homeowners insurance ？ 2. How many types of homeowners policies? The designed groups of people of each form and the coverages

What’s Homeowners Insurance

• A homeowners policy on a private dwelling is designed for the owner-occupants of a family dwelling used exclusively for private residential purposes

• Homeowners 2

• Homeowners 3

• Homeowners 4

• Homeowners 5

• Homeowners 6

• Homeowners 8

Overview of homeowners policies

The insured subject The covered perilsExclusionsthe insurance amount

Comparing various homeowners

The insured subject: the dwelling, other structures, and personal property

The covered perils: listed perils

Exclusions: out of the listed

The insurance amount: losses+ living expenses and/or fair rental value

HO-2 (broad form)

The insured subject: the dwelling, other structures

The covered perils: risk of direct physical loss

Exclusions: losses specifically excluded

The insurance amount: full replacement costs

HO-3 (special form)

The insured subject: the tenant’s personal property , and personal liability insurance

The covered perils: the tenant’s property against loss, also personal liability insurance, additions or alterations to the building

HO-4 (Contents broad form)

The insured subject: the dwelling, other structures, and personal property, personal liability

The covered perils: open perils coverage (all risk coverage” )

Exclusions: losses specifically excluded

The insurance amount: direct physical losses, liability

HO-5 (comprehensive form)

The insured subject: condominium units and cooperative apartments. The covered perils: named perils listed in HO2.Exclusions: losses specifically excluded

The insurance amount: direct physical losses of the building and other property, and minimum of $5000 of appliances, carpets, etc.

HO-6 (unit-owners form)

The insured subject: older homes The covered perils: named perils listed in HO2.

The insurance amount: repair cost, and limited coverage of theft of personal property (a maximum of $1000 per occurrence)

HO-8 (modified coverage form)

Comparison of Homeowners Coverages(see exhibit 1&2)

coverage Ho-2(Broad form) Ho-3(special form

Ho-4 (contents broad form)

•Dwelling

•Other structures

•Personal property

•Loss of use

Minimum varies by company

10% of A

50% of A

30% of A

10% of A

50% of A

30% of A

Not applicable

Not applicable

Amount varies

30% of C

Covered perils Fire or lightning

Windstorm or hail

Explosion

Riot of civil commotion

Aircraft

Vehicles

Smoke

Theft

Falling objectives

So on and so that

Dwelling and other structures are covered against risk of direct physical loss to property.

All losses are specifically excluded.

Personal property is covered

Same perils as Ho-2 for personal property

Comparison of Homeowners Coverages

coverage Ho-5(comprehensive form)

Ho-6(unit owners form

Ho-8 (modified coverage form)

•Dwelling

•Other structures

•Personal property

•Loss of use

Minimum varies by company

10% of A

50% of A

30% of A

10% of A

50% of A

30% of A

Not applicable

Not applicable

Amount varies

30% of C

Covered perils Dwelling and other structures are covered against risk of direct physical loss to property.

All losses are specifically excluded.

Personal property is covered

Same perils as Ho-2 for personal property

Fire or lightning

Windstorm or hail

Explosion

Riot of civil commotion

Aircraft

Vehicles

Smoke

Theft

Falling objectives

So on and so that

Analysis of Homeowners 3 Policy(Special Form)

The insured

Coverage

Perils insurance against

Exclusions


The insured: • named insured and spouse• family members• other persons under age 21• full-time student away from home• Related persons in section 2

– Any person legally responsible for covered animals or watercraft

– With respect to a motor vehicle to which the insurance applies, employees of the insured while working for the insured.


Coverage• coverage A: Dwelling • coverage B: Other structures • coverage C: Personal property • coverage D: Loss of use • Additional coverages


• Coverage A: Dwelling – cover the dwelling on the residence premises as

well as any structure attached to the dwelling– specifically excludes land


• Coverage B: other structures – insures other structures on the residence

premises that are separated from the dwelling by clear space, including a detached garage, tool shed, or horse stable

– Exclusions: a rented private garage, a business structure, structures used to store business property (examples)


• Coverage C: personal property – Insures: personal property, also includes borrowed

property, and the personal property of a guest or resident employee while the property is in an residence occupied by an insured.

– There are some special limits of the liability (see Exhibit 3)

– Exclusions: Certain types of property are excluded under Coverage C. (examples)

Special limits of liability (see exhibit 3)

Type of property Amount 1.money, bank notes, bullion, gold, silver, platinum, coins, medals, stored valued cards, and smart cards

2. securities, valuable papers, manuscripts, personal records, passports, tickets, and stamps

3.Watercraft of all types

4. Trailers not used with watercraft of all types

5. Theft of jewelry, watches, furs, and precious stones

6. Property on the residence premises used primarily for business purposes

7. Electronic apparatus, while or upon a motor vehicle, but only if the apparatus is equipped to be operated by power from the motor vehicle’s electrical system.

$200

$1500

$1500

$1500

$1500

$2500

$1500


• Coverage D: loss of use – Insures: provides protection when the

residence premises cannot be used because of a covered loss. Three benefits are provided: additional living expense, fair rental value, and prohibited use. (examples)


• Additional Coverage :– In addition to basic Coverages A, B, C, and D, the HO-

3 policy provides several additional coverages Including: additional living expenses, living expenses, fair rental value, and prohibited use)

– Debris Removal – Reasonable Repairs – Tree, Shrubs, and Other Plants– Fire Department Service Charge – Property Removal


– Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money

– Loss Assessment

– Collapse

– Glass or Safety Glazing Material

– Landlord’s Furnishings

– Ordinance or Law

– Grave Markers

– Deductible (examples)


Perils insurance against • Dwelling and Other Structures• Personal Property


• Dwelling and Other Structures:– The dwelling and other structures are insured against “risk of

direct physical loss to property.”– Excluded Losses :– Collapse. Freezing.

Fences, pavement, patio, and similar structures. Dwelling under construction. Vandalism and malicious mischief Mold, fungus, or dry rot.

Other exclusions. (examples)


• Personal Property:Personal property is covered on a named-perils

basis. The policy pays for a direct physical loss to personal property from the perils discussed in the following :• Fire or Lightning • Windstorm or Hail • Explosion

• Riot or Civil Commotion Aircraft , etc. (examples)


Exclusions:In addition to the specific exclusions previously discussed, several general

exclusions appear in the policy. Including:• Ordinance or Law• Earth Movement• Water Damage• Power Failure• Neglect• War• Nuclear Hazard • Intentional Loss• Governmental Action • Weather Conditions• Acts or Decisions • Faulty, Inadequate, or Defective Planning and Design


Section 1: Conditions:Section I in the homeowners policy contains

numerous conditions. The most important are discussed here.• Insurable Interest and Limit of Liability• Loss Settlement• Loss to a Pair or Set• Appraisal Clause • Other Insurance and Service Agreement


• Insurable Interest and Limit of Liability:If more than one person has an insurable interest in the

property, the insurer’s liability for any one loss is limited to each insured’s insurable interest at the time of loss but not to exceed the maximum amount of insurance.

--Duties After a Loss: Give prompt notice Protect the property Prepare an inventory of damaged personal property exhibit the damaged property File a proof of loss within 60 days

The Texas Mol d Tax: $150 per Year and Ri si ng Average Costof Mol d Cl ai ms on a per Pol i cy Basi s

$17. 09

$46. 95

$62. 41

$100. 07

$153. 20 $147. 68

$0. 00

$20. 00

$40. 00

$60. 00

$80. 00

$100. 00

$120. 00

$140. 00

$160. 00

$180. 00

2000(Q1) 2000(Q2) 2000(Q3) 2000(Q4) 2001(Q1) 2001(Q2)


• Loss Settlement:This section of the homeowners policy deals with

the payment of losses. You should know how losses are paid under a homeowners policy.


• Loss Settlement: personal propertydwelling and other structuresExtended and guaranteed replacement cost


Personal property:• Covered losses to personal property are paid on

the basis of actual cash value at the time of loss but not to exceed the amount necessary to repair or replace the property.

• Personal property can be insured for replacement cost by adding a replacement cost endorsement to the policy.


Dwelling and other structures:

the losses are paid on the basis of replacement cost with no deduction for depreciation.

If the amount of insurance carried is equal to at least 80% of the replacement cost of the damaged building at the time of loss, full replacement cost is paid with no deduction up to the limit of the policy.


If the insurance carried is less than 80% of the replacement cost, the insured receives the larger of the following two amounts:

(1) Actual cash value of that part of the building damaged or :

(2) Amount of insurance carried ×Loss 80%×Replacement cost


Extended and guaranteed replacement cost:

Some insurers make available an extended replacement cost endorsement, which pays an extra 20% or more above the policy limits, depending on the insurer.


• Loss to a Pair or Set:In the event of loss to a pair or set, the insurer can

elect either to repair or replace any part of the pair or set or to pay the difference between the actual cash value of the property before and after the loss.


• Appraisal Clause:The appraisal clause is used when the insured and

insurer agree that the loss is covered, but the amount of the loss is in dispute.


• Other Insurance and Service Agreement:If other insurance covers a Section I loss, the insurer

will pay only the proportion of the loss that its limit of liability bears to the total amount of insurance covering the loss. (examples )

Section 1 and 2 Conditions

• Section I and ConditionsⅡThe homeowners policy contains several common conditions

that apply to both Sections I and . They are summarized Ⅱas follows:

– Liberalization Clause

– Waiver or Change of Policy Provisions

– Cancellation

– Nonrenewal of the Policy

– Assignment of the Policy

– Subrogation

– Death of Named Insured or Spouse

Case Discussion

• 农村家庭财产保险纠纷案

Summary

1. The homeowners policy can be used to cover the dwelling, other structures, personal property, additional living expenses, and personal liability claims.

2. Section 1 provides coverage on the dwelling, other structures, personal property, loss-of-use benefits, and additional coverage. Section 2 provides personal liability insurance to the insured and also covers the medical expenses of others.

3. HO-2 policy is broad form covering the dwelling and other structures, and personal property.

4. HO-3 is special form covers the dwelling and other structures against risk of direct physical loss to the described property.

5. HO-4 is contests broad form designed for renters.6. HO-5 is comprehensive form insuring the dwelling, other structures, and

personal property against the risk of direct physical loss to property.7. HO-6 is unit-owners form designed for condominium owners.

1. Identify the basic types of homeowner policies and indicate the groups for which each form is designed.2. Explain the special limits of liability that apply to certain types of property. Why are these limits used?3. List the various exclusions that are found in Section I of the Homeowners 3 policy.4. What duties are imposed on the insured after a property loss occurs?5. Describe the replacement cost provisions of the homeowners policy and five an example.6. Explain how the homeowners policy responds to a covered loss if the loss is also covered by a home warranty or service agreement.7. Explain the extended replacement cost endorsement. What is a guaranteed replacement cost policy?8. Explain briefly how the mortgage clause protects the insurable interest of the mortgagee.

Review Questions

Search for Information资料查询：目前我国保险市场上居民财产保险单的承保风险责任、除外责任及保险金额。

现实问题思考：结合美国房屋所有者保险，为我国居民住宅保险发展给出建议

Preview

•Automobile Insurance•Readings : Text Automobile Insurance (P177-194; 203-219)

lecture ten ： homeowners insurance. learning objectives identify the major homeowners policies for...

Documents