Liability Coverage Under Dwelling Program— Similar to Homeowners
Summary: Under the dwelling program, personal liability coverage is available using personal liability supplement DL 24 01 12 02. This supplement may be combined with a personal liability schedule (DL 24 03 12 02) and added to the dwelling property forms to form a dwelling package policy or, with the addition of a set of conditions found on DL 24 02 12 02 and a company declarations page, the supplement may also be used on a monoline basis. Personal liability supplement DL 24 01provides liability coverage that is very similar to the coverage found in the liability section of the homeowners forms.
Comments in this discussion refer to the 2002 edition dwellings forms; since the 2002 personal liability form is virtually identical to the homeowners 2000 section II, see “Homeowners Personal Liability Insurance”, see “Homeowners Section II Exclusions”, see “Personal Liability—Additional Coverages”,and see “ISO Homeowners Section II Conditions”,for a more in-depth discussion.
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The 2002 personal liability supplement includes definitions for aircraft liability, hovercraft liability, motor vehicle liability, and watercraft liability. Each type of craft is defined; the aircraft definition excludes model or hobby aircraft, since these cannot be used for transporting people or property. The definitions are the same as those appearing in the ISO HO 00 03 05 11 (See “ISO Homeowners Definitions“).
Personal liability coverage—providing bodily injury and property damage coverage—is designated coverage L on the personal liability supplement; medical payments to others coverage is referred to as coverage M (on the homeowners forms these coverages are E and F, respectively). Minimum limits of liability required on the personal liability supplement and the homeowners forms do not differ. The minimum coverage L limit is $100,000 per occurrence; the minimum coverage M limit is $1,000 for each person. These limits may be increased for an additional premium.
The insurer promises to pay damages for which an insured is legally liable, so long as there are no exclusions and the limits are sufficient. The insurer also promises to defend a suit at its own expense. The 2002 wording “Our duty to settle or defend ends when our limit of liability for the “occurrence” has been exhausted by payment of a judgment or settlement” makes it clear that the insurer owes a duty to defend until settlement is reached or a judgment rendered.
Motor vehicle liability (as defined) and watercraft liability (as defined), are excluded with exceptions as indicated. An exception exists for a motor vehicle if it is being used solely to service an “insured's” residence. This causes confusion since there are many cases where an insured wants to take his mower or other yard vehicle over to a neighbor or relative's to help them with their yard work. That type of use is excluded since the vehicle is not being used on the “insured's” residence. The 2011 homeowner's form has changed that language and now provides coverage if the “insured” is helping out a neighbor off premises. The 2002 form's exclusion for bodily injury or property damage which is expected or intended contains an exception for bodily injury resulting from reasonable force to protect persons or property. The 2002 form mirrors the homeowners 2000 form, and not the 2011 changes. Therefore, there is no exception for motorized toys designed to be used by children under the age of seven, powered by one or more batteries and not built or modified to exceed five miles per hour on level ground.
The additional coverages for claim expenses, first aid expenses, and damage to property of others are identical on the personal liability supplement and the homeowners forms. Coverage for loss assessment—the fourth additional coverage on homeowners policies—must be added by endorsement (DL 24 14 12 02) to the personal liability supplement; it is not an automatic coverage.
There is no difference between the liability conditions on the homeowners forms and the personal liability supplement, except in their arrangement. As mentioned earlier, an additional set of five conditions on endorsement DL 24 02must be added when a monoline personal liability policy is written. The additional conditions are: liberalization; waiver or change of policy provisions; assignment; death; and cancellation.
Depending upon the state, endorsement DL 01 XX (where the XXs represent each state's individual identification number) must be attached. This endorsement amends the cancellation provisions in the DL 24 01 to conform with state requirements.
As is the case with homeowners liability coverage, coverage may be amended for the dwelling insured. Discussed here are some of the more common endorsements. Loss assessment liability may be added by attaching endorsement DL 24 14 as noted earlier. No more than two locations can be written in addition to the initial residence premises. Assisted living care liability may be added to cover a person regularly residing in an assisted living care facility, so long as the person is related to an insured by blood, marriage, or adoption and is not residing in the insured's household. Assisted living care coverage endorsement DP 04 59 12 02 (which also provides property coverage) is attached.
The new rules allow a student residing away at school to be endorsed onto the policy as an additional insured. The definition of an insured in the 2002 forms includes a full-time student under age twenty-four who was a resident relative in the named insured's household before leaving to attend school. By attaching endorsement DL 24 27 12 02, a student older than age twenty-four, or attending school part-time, is covered as an additional insured.
The rules allow for premises liability arising out of certain incidental occupancies, such as a home office or studio. Endorsement DL 24 09 12 02 is attached. The endorsement does not respond to bodily injury to an employee.