Summary: The Mutual Service Office, Inc. (MSO), provides custom rates, statistical services, custom forms, and manuals for mutual insurers. The MHO6 homeowners coverage form is paired with the MPL01 common provisions form in order to provide complete coverage for an insured residence. The MHO6 is similar to the MHO4 and provides the covered perils, special limits, supplemental coverage limits, and additional policy provisions for personal property coverage only. This is a basic unit owners form, and includes coverage for additions and alterations that an insured may make to the property. There is little difference between this form and the MHO4. The MPL01 is the form that provides the common policy provisions including exclusions for the homeowners program. When combined with a declarations page these forms create an entire policy.

Topics covered:

Covered causes of loss

Coverage C special limits

Supplemental coverage limits

Additional policy provisions

Optional endorsements

Covered Causes of Loss

Subject to all applicable provisions of this policy, property covered under Coverage C is insured for fortuitous direct physical loss, as follows:

That results from the following described causes of loss:

• Fire (hostile fire) or Lightning.

• Bursting of Fixtures: sudden accidental bulging, burning, cracking, or tearing apart of air conditioning or heating equipment, or home water heating appliances.

• Electricity: sudden accidental damage from an electrical current.

• Explosion.

• Falling Objects: damage to other property caused by falling objects.

• Freezing: freezing of air conditioning, heating, or plumbing equipment, or home appliances.

• Riot or Civil Commotion.

• Smoke: sudden accidental damage from smoke.

• Theft: theft or attempted theft, including disappearance of property from a known place if it is probable that the property was stolen.

• Vandalism: malicious damage to property.

• Vehicles or Aircraft.

• Water Damage: accidental discharge or overflow of water or steam – other than that caused by freezing – from within air conditioning, heating, or plumbing equipment, or home appliances on the residence premises.

• Weight of Ice, Sleet, or Snow: damage to other property within a building caused by the weight of ice, sleet, or snow.

• Wind or Hail.

Analysis

The covered causes of loss section is unique in that it simply lists the covered perils; exclusions to said perils are found in the MPL01 common provisions form. The covered causes of loss are identical to those in the MHO4 except for glass breakage; that peril is not listed in the MHO6. The information is recapped here. The fire or lightning peril specifies that the fire must be a hostile fire. A hostile fire is a fire that has escaped from its intended physical location, or was not started intentionally.

Bursting of fixtures is the next peril; accidental bulging, burning, cracking, or tearing apart of air conditioning or heating equipment, or home water heating appliances is covered. This is straightforward; if the hot water heater ruptures or cracks, there is coverage for that damage.

The electricity peril covers loss that is caused by sudden accidental damage from an electrical current; however electrical current is not defined. When you refer to the MPL01 form, the exclusion states that damage caused by artificially generated electrical currents that damages transistors, computers, or similar items or components is excluded. This includes increases or decreases in currents caused by brownouts, power surges, or spikes. Therefore, what is covered is naturally generated current, or artificially generated current as long as it does not damage certain items. A lightning strike to the patio furniture is covered. If a wall socket shorts the resultant fire to the sofa is covered too; it is an artificially generated current, but if the short damages transistors, computers, or other electrical components that damage is not covered.

Explosion is left undefined and unrestricted, so anything that can be construed as an explosion is covered. Merriam Webster online defines explosion as “a large-scare, rapid, or spectacular expansion or bursting out or forth”. A gunshot can be considered an explosion since the bullet bursts forth from the barrel. If an insured is cleaning his gun and accidentally shoots the television, coverage is available.

Falling objects is the next peril and simply states that damage to other property caused by falling objects is covered. However, in reviewing MPL01, there is an exclusion for damage caused by a falling object unless the object first penetrates the roof or exterior wall structure. Therefore the bust of Uncle George falling off the mantel and damaging a table is not covered, however if a meteor breaks through the roof and damages the table, there is coverage.

Freezing is another peril that has exclusions in the MPL01 form. The freezing of air conditioning, heating, plumbing equipment or home appliances is covered. There is an exclusion in MPL01 for such damage if the property is unoccupied, vacant, or under construction. The standard exception applies if the insured has maintained adequate heat in the building or such appliances or equipment has been drained and the water supply turned off.

Riot and civil commotion are standard perils and like the explosion peril, are undefined and extremely broad. Merriam Webster online defines riot as “a public violence, tumult or disorder, or a tumultuous disturbance of the public peace by three or more persons assembled together and acting with a common intent”. Commotion is defined as “a condition of civil unrest or insurrection”. The Occupy Wall Street supporters caused a civil commotion.

Smoke is another peril that is left undefined; sudden and accidental damage from smoke is covered. The exclusion in MPL01 applies to smoke from agricultural or industrial activities. Therefore all other forms of smoke are covered.

Theft, another standard peril, includes the disappearance of property from a known place if it is probable that the property was stolen. This allows the insured to file a claim without necessarily having to file a police report. If an insured rides his bike to the park to meet friends and forgets to lock his bike to the bike rack, and upon returning finds the bike missing, it is likely that the bike was stolen. The bike is therefore covered. Excluded in form MPL01 is theft committed by an insured, tenants, employees, or any other residents of the household. The form is not going to pay for the insured stealing from himself. Likewise the theft of furs, jewelry, money, securities, or silverware from any part of the premises that is rented is excluded. Valuables should be locked up since some tenants may not be able to resist temptation. When a dwelling is under construction building materials are excluded since they can be readily stolen from a worksite. If property is stolen from another residence that the insured owns, rents, or occupies, theft is excluded unless the insured is temporarily residing at the premises. If the insured inhabits the beach house only on occasion, it becomes attractive to thieves once they have discovered that the insured is not present. Also excluded while away from the residence premises is the theft of campers, trailers, or watercraft, including accessories and equipment. These items are portable and easily stolen.

The policy states that vandalism is malicious damage to property; excluded on the MPL01 is vandalism if the residence premises has been vacant for 30 consecutive days or more, or the vandalism is caused by an insured, tenants, or other residents of the household. Note that the vacancy must be continuous for 30 days; if the insured stays in the house with some furnishings for just one weekend that resets the 30-day requirement. Vacancy is often confused with the concept of unoccupancy. When a property is unoccupied, furniture, clothes, and other essentials for living may be in the house, but the insured is not currently living there. This is different than vacancy; when a property is vacant, there is nothing in the house; no furniture, clothes, dishes, or supplies. No one lives there, and the property is empty.

Vehicles and aircraft are covered perils and this is very broad. There are no exclusions or limiting factors; if an insured loads a dresser on to a truck, and in transporting the dresser to the refinishers the dresser falls out of the truck, the damage to the dresser is covered since a vehicle caused the damage.

Other than that caused by freezing, the accidental discharge or overflow of water or steam from within air conditioning, heating, plumbing equipment or home appliances on the residence premises is covered. Exclusions listed in MPL01 are for water or sewage that backs up through sewers or drains, overflow of sumps, or the discharge of sewers or water mains off the residence premises. Also excluded is underground, subsurface or surface water that exerts pressure on or flows, seeps, or leaks through walls, doors, driveways, windows, foundations, floors, pools, or other openings. Plumbing equipment is that which brings potable water into the home and drains carry used water away from the home into the sewer system. However, if an ensuing loss is caused by fire, explosion, glass breakage, or theft, that loss is covered.

The next peril is damage to other property within a building caused by the weight of ice, snow, or sleet. If snow accumulation causes the roof to collapse and damage the insured's bedroom suite, the damage is covered.

Wind or hail is the last named peril and like other perils, is not defined. The MPL01 contains an exclusion for damage to campers, trailers or watercraft, including equipment, motors, or parts caused by wind or hail when the items are not in a fully enclosed building. Anything left outdoors is subject to the weather; it is the insured's responsibility to protect his property.

Coverage C Special Limits