Tailoring to Coverage Needs
Summary: The coverages of the standard homeowners forms (Forms HO 00 02, 03, 04, 05, 06, and 08) are designed to provide the kinds of insurance protection that most homeowners will need. But the needs of individual insureds can diverge, and so endorsements are used to tailor coverage to meet these needs. Additionally, insurers may use endorsements to limit coverage, as when the windstorm or hail exclusion endorsement is attached to coastal homeowners policies.
The endorsements discussed here are those under the jurisdiction of Insurance Services Office (ISO). They do not constitute the extent of tailoring possible with respect to homeowners forms. The introduction in the ISO homeowners manual to the program's general rules state that "in all cases not specifically provided for in this manual," the rules, rates, forms, and endorsements of individual insurers govern each coverage. This makes it possible for insurers to develop special endorsements as the need arises, assuming, or course, that the proposed risk is considered insurable and that an appropriate premium can be obtained.
Comments relating to individual endorsements below are based on form designations and language of the 2011 ISO homeowners program unless otherwise indicated. (The edition date of the 2011 endorsements is generally 05 11; that of the 2000 endorsements is generally 10 00. Some endorsements have later updates, such as 04 16 and 01 14 but these are few. There are some 02 17 changes as well that have been newly added) Differences from the 2000 program in language or coverage provisions are noted, as are differences in the 2017 versions. Endorsements limited to one or two states have not been included.
For a discussion of condominium forms HO 17 31, open perils on coverage C—unit owners, HO 17 32, unit owners coverage A (building), HO 17 33, unit owners rental to others, and HO 17 34, unit owners modified other insurance and service agreement condition, see Homeowners Form HO 00 06—Unit Owners Insurance.
The endorsements are discussed in alphabetical order.
Alphabetical Guide to Endorsements:
Actual cash value loss settlement HO 04 81
This endorsement may be used with forms HO 00 02, HO 00 03, or HO 00 05 if at the policy inception the insured selects less than 80 percent insurance to value. It provides that covered property losses will be settled at actual cash value, but not more than the amount required to repair or replace the damaged or lost property. It was once used primarily with the HO 00 08; that form now has its own loss settlement provisions. See Homeowners Form HO 00 08 for more information.
Available for all homeowners forms except the HO 00 04, this endorsement provides for an actual cash value settlement for roof surfacing damaged by windstorm or hail. The insured assumes a greater share of a covered loss in exchange for a premium credit. The 2011 endorsement contained three sets of loss settlement conditions: one applies to forms HO 00 02, HO 00 03, and HO 00 05; the second applies to form HO 00 06, and the third to HO 00 08. The 2016 form has been modified and only provides two conditions, one for HO 00 06 and HO 00 08. The provisions for the HO 00 06 now specify that it applies to the portion of roof surfacing that the insured is responsible for under a corporation or association agreement if the loss is caused by wind/hail. The provisions for HO 00 08 are modified to include roofs of structures that are not buildings, and roof surfacing on buildings if the roof surfacing damaged by wind hail in the actual cash value settlement. An additional provision is added that these provisions do not apply to structures away from the residence premises if covered by the appropriate endorsement.
An individual or group other than the named insured may have an ownership interest in the dwelling. For example, when two persons buy a two-family dwelling, each intending to inhabit one unit, one insured buys a homeowners policy with building coverage, while the other buys contents and liability coverage under the HO 00 04 form. The HO 00 04 insured can protect his interest in the building and other structures, plus receive section II coverage (but only with respect to the residence premises) by having this endorsement added to the other insured's policy. No additional premium is charged. The endorsement may also be used for a nonoccupant co-owner of the insured dwelling.
The additional insured named in the endorsement will be notified in writing of the insurer's decision to cancel or not renew. However, there is no time limit for notification, such as that given to the named insured and mortgagee.
This endorsement was new in the 2000 homeowners program. The 2000 homeowners forms include a student under age twenty-four away at school within the definition of "insured." This endorsement may be used to broaden that definition by removing the age and full-time student restrictions. The name, address, and school attended should be scheduled on the endorsement.
This endorsement is used if persons or organizations with an interest in the property must be notified in the event that the insurer decides to cancel or nonrenew the policy. In that case, the insurer notifies the specified parties in writing. However, there is no time limit for notification, such as that given to the named insured and mortgagee. Often the additional insured and additional interests endorsements are confused; the first provides limited property and liability coverage, but the second does not.
In the event of a covered loss that exceeds the limit of liability shown on the declarations, the limits of liability on the policy will be amended to equal the current replacement cost of the dwelling. Coverages B, C, and D will be increased by the same percentage applied to coverage A, retroactive to the date of the loss. The insured agrees to maintain insurance at full replacement value, and report any additions or alterations that increase the dwelling's replacement cost by five percent or more.
New in the 2000 edition was the provision that if the dwelling is rebuilt at a new premises, the replacement cost is limited to what it would have cost to rebuild the dwelling on the original premises.
This endorsement provides personal liability and medical payments coverage with respect to the insured's liability arising out of the ownership of a residence regularly rented to others. The mechanism for providing these coverages is a definition on the endorsement naming the listed premises an "insured location."
This endorsement may be attached to an insured's homeowners policy to provide coverage for a person related by blood, marriage, or adoption to an insured. The relative must regularly reside in the facility, but need not have been a member of the insured's household prior to moving to the facility. The insured agrees to act as the covered person's representative in matters pertaining to the insurance. The name of the relative, the name and location of the facility, and the amount of coverages C and E (the only options) are scheduled. As one might expect, the special limits of liability are expanded to include such things as eyeglasses ($100), hearing aids ($250), walking aids ($250), etc.
A limited amount of additional living expense is included: $500 per month for a maximum of twelve months. If an order of civil authority results in a claim for additional living expense, the maximum is $50 per day for a two-week period. The applicable deductible is that on the policy to which this endorsement is attached.
This endorsement covers the insured's interest in additions, alterations, and improvements in a secondary residence rented to the insured. The form appears to refer only to one "other residence." Coverage is provided for direct physical loss caused by a peril insured against. So, for example, if attached to an HO 00 02, named peril coverage applies.
Form HO 00 04 (contents broad form) includes an additional coverage (10.) that protects a tenant's building additions, alterations, fixtures, improvements and installations. The policy's limit of liability for this additional coverage is 10 percent of the coverage C amount. Endorsement HO 04 51 increases the limit of liability for this coverage.
Endorsement HO 24 71 eliminates the homeowners section II exclusion of coverage for liability "arising out of or in connection with a `business'… engaged in by an `insured'." It applies the policy's personal liability and medical payments coverages to the insured's business pursuits as described in the endorsement (essentially sales, clerical, and instructional occupations).
Coverage does not apply with respect to a business owned or financially controlled by the insured, or in which the insured is a partner. (When coverage cannot be endorsed to the homeowners policy, as with home business coverage endorsement HO 07 01, the insured should cover business property and business liability under either a businessowners or commercial policy. For certain types of businesses, the home would also be covered under either a commercial or businessowners policy, and non-business contents would be covered under an HO 00 04 policy.) The endorsement does not offer coverage for liability arising out of professional services (for example, architectural, medical, beauty shop, or barber services), but makes an exception for teaching. An optional coverage is available for bodily injury claims against teachers arising out of corporal punishment. Bodily injury to a fellow employee of the insured that occurs in the course of employment is excluded.
When the insured is on the teaching staff of a school or college, an exclusion applies to liability claims arising out of the maintenance, use, loading, unloading, or entrustment by the insured of draft or saddle animals (or vehicles used with them); aircraft; hovercraft; motor vehicles or motorized land conveyances; or watercraft, if owned or operated, hired by or for the insured or the insured's employer, or used for instructional purposes.
There are approximately 4.5 million people bitten by dogs each year in the United States. While over half of the bites occur in the home, non-residents do get bitten. Some carriers have lists of dangerous dogs that they will not write. States have long fought over breed legislation, whether or not is was reasonable to ban certain breeds for propensity towards dangerous behavior or whether responsibility fell to owners who did not train their pets properly. Some states require registration of dogs that have bitten others or been aggressive towards people or other pets, and maintain a dangerous dog registry of sorts. This exclusion allows a carrier to place coverage on the dwelling but exclude liability coverage for a particular dog, such as one put on the state's dangerous dog list. The name and a description of the dog is required on the schedule. Liability and medical payments to others for personal injury and damages that arise out of direct physical contact with the scheduled dog is excluded.
Windstorms and hail can cause damage to roofs, siding, and windows that is strictly cosmetic: it does not affect the functioning of the material, just changes its appearance for the worse. Carriers have at times balked at paying for cosmetic damage since no real harm has been done other than appearance. This exclusion has been developed so that an insured who is not as concerned about appearances, especially to something like the roof that is not always noticed, can receive a reduction in premium in exchange for cosmetic losses being excluded.
The homeowners forms provide blanket coverage for other structures located on the residence premises in the amount of 10 percent of the coverage A limit. Endorsement HO 04 91 may be used to extend this blanket coverage to structures that the insured owns and uses in connection with the residence premises but which are located elsewhere. Coverage is provided within the policy's coverage B limit. Before the introduction of this endorsement, insureds were limited to the more expensive method of covering such property under a fire policy. The following types of other structures are excluded from coverage under the endorsement: (1) structures either used as or capable of being used as dwellings; (2) structures used to conduct a business or to store business property; or (3) structures rented to someone who is not a "tenant" of the dwelling (so that rental to a roomer, boarder, or a tenant of a multi-family home would not disqualify the structure from coverage under the endorsement). The 2017 edition changes this to also eliminate coverage if the Broadened Home-sharing Host Activities Coverage either is or is not added to the policy. If the endorsement is not added, then the exclusions remain the same. If the home-sharing endorsement is added, then an exception is made for structures used primarily for home-sharing host activities. Home-sharing occupants are also excepted from the exclusion of property rented or held for rental to anyone other than a tenant of the dwelling; this exception now includes home-sharing occupant as part of that exception. The endorsement deletes replacement cost coverage for these other structures and substitutes loss settlement on an actual cash value basis. If specific, rather than blanket coverage is more appropriate, insureds can add coverage for other structures under endorsement HO 04 92 specific structures away from the residence premises (see later in this discussion).
Coverage C (personal property) imposes special sublimits with respect to certain categories of property. This endorsement may be added to increase these limits for some of these categories—money, precious metals, and coins (to $1,000); securities, accounts, deeds, evidences of debt, letters of credit, and other valuable papers (to $2,500); jewelry, watches, and furs (to $5,000; $1,000 per article limit); silverware, goldware, and pewterware (to $10,000); and firearms (to $6,500). The special limits are increased for the last three categories with respect to theft, since the special limit for such items applies only to theft losses. When coverage C (personal property) is written on an open perils basis, the special theft limits for the last three categories apply to misplacement or losing as well as to theft. For this reason, a separate endorsement (HO 04 66, see below) is used to increase these limits when open perils coverage applies to personal property.
The 1991 homeowners program introduced special limits ($1,000) that apply to electronic equipment that is adaptable so that it may either run off a car's electrical system or off with other power sources. The current edition of endorsement HO 04 65 may also be used to increase the 2011 homeowners forms $1,500 special limits (to $5,000). The limit for electronic apparatus and accessories that is used primarily for business while away from the residence premises has been removed. For more information on these special limits, see ISO Homeowners Section I.
Use of this endorsement does not increase the total limit of liability available under coverage C. It merely increases the sublimits that apply to the specified categories of property.
This endorsement, attached to homeowners policies covering personal property on an open perils basis, serves a purpose equivalent to that served by endorsement HO 04 65 with respect to the other forms; that is, it increases the special sublimits for money, precious metals, and coins; securities, accounts, deeds, and other valuable papers; jewelry, watches, and furs; silverware, goldware, and pewterware; and firearms. The increased limits for the jewelry, silverware, and firearms categories in the endorsement apply specifically with respect to misplacement or losing as well as for theft, and thus correspond to the perils associated with these limits in these policies. The limit for electronic apparatus and accessories that is used primarily for business while away from the residence premises has been removed. This applies to forms HO 00 05, Ho 00 04 with Ho 05 24 attached and HO 00 06 with HO 17 31 attached.
One of the additional coverages (6.) in the homeowners forms pays for loss resulting from the unauthorized use of an insured's credit card or bank transfer card, from check forgery, or from the acceptance of counterfeit money. The policy's $500 limit for this coverage may be increased through the use of this endorsement. In accordance with the wording of the homeowners 2011 forms, note the inclusion of "access device," which recognizes that modern technology allows access to funds by means other than a card.
When a homeowners policy is written for a term of three years, the premium may be paid in annual installments by attaching this endorsement and indicating the choice of installment payments in the policy declarations. The amount of each annual installment is the annual premium in effect at the time the payment is due.
There is no coverage for loss resulting from "earth movement" except when endorsed. An insured may add earthquake as an insured peril for coverages A (dwelling), B (other structures), and C (contents) by adding this endorsement.
The endorsement defines as a "single earthquake" all earthquake shocks occurring within a seventy-two-hour period. The peril of earthquake is defined to include land shock waves or tremors accompanying a volcanic eruption.
In the endorsement used with the 1991 edition (04 91), the base deductible is 5 percent of the limit that applies to all section I coverages (but not less than $250). The 2011 form increases that deductible to no less than $500. The deductible may be increased for a premium credit. No other deductible applies to earthquake loss. The 06 94 edition of the endorsement eliminated the application of the deductible to coverage D and the additional coverages, which was the case of the earlier edition, and clarified the intent of the application of the deductible to the limit of insurance, not to the amount of the loss.
In the current edition, the percentage deductible is converted into a dollar deductible by multiplying either the coverage A or coverage C limit of liability, whichever is greater, by the deductible percentage. Again, $500 is the minimum.
Like other forms of earthquake insurance, the endorsement excludes flood and tidal wave, even when caused by or contributed to by an earthquake. The 2011 specifically adds waves and tsunami to the flood exclusion. Masonry veneer coverage is optional; if excluded, the deductible applies to the applicable limit minus the value of this veneer. Stucco is not included within the meaning of masonry veneer.
Coverage under the endorsement is provided within the applicable limits of liability and does not include the cost of filling land.
This endorsement was new in the homeowners 2000 program. It cannot be used with the HO 00 05, or HO 00 04 or HO 00 06 with open perils coverage attached. It removes the exclusion of coverage for theft from the part of a "residence premises" rented to other than an insured. The change in the 2017 form excludes coverage if the property is rented to "home-sharing occupants". The coverage does not apply if the part of the "residence premises" is regularly rented, nor does it apply at any time to money, bank cards and the like, securities, or jewelry, precious or semi-precious stones, watches, or furs.
An insured whose principal business or principal occupation is not farming may be insured for liability arising out of farming by attaching endorsement HO 24 73 to the homeowners policy. The farm (or farms) must be away from the residence premises. All farm premises that are to be covered are scheduled; such premises may be owned, rented to others, or rented and operated by the insured. Any other businesses conducted on an insured farming location must be noted on the schedule. The definition of "farming" for coverage purposes includes the operation of roadside stands if used principally for the sale of the insured's farm products. The 2017 form included "home-sharing host activities" as a "business".
Coverage E (personal liability) pays for bodily injury or property damage caused by a covered occurrence. Standard defense coverage is also provided.
Coverage F (medical payments) applies to: (1) persons on the insured location with the insured's permission; or (2) persons off of the insured location—if bodily injury arises out of a condition on the premises or ways immediately adjoining; is caused by the insured's activities; is caused by residence or farm employees in the course of their employment; or is caused by animals owned by, or in the care of, the insured.
Standard homeowners section II exclusions apply to these coverages. Changes made in the 2000 homeowners section II provisions have also been made in the current version of this endorsement. (See Homeowners Section II Exclusions, for a discussion of homeowners section II exclusions.) Again, home-sharing activities are included in the definition of business and as such an exception is made to the exclusions under coverages E and F when the home-sharing host activities endorsement is added to the 2017 form. The endorsement defines a business as business activities other than farming. Generally, provisions that in the homeowners forms exclude coverage as to "residence employees" also apply to "insured farm employees" in the endorsement.
A new exception to the motor vehicle liability exclusion appeared in the 2011 form. This exception applies to vehicles owned by an insured that is off the "insured location" and that is designed as a toy vehicle for use by children under seven years of age. The vehicle must be powered by one or more batteries and not be built or modified to exceed five miles per hour on level ground. This provides coverage for powered toy vehicles for children.
Several exclusions that are not found in the homeowners policies apply to personal liability coverage under the endorsement. These exclude coverage for: (1) bodily injury to farm employees who are not "insured farm employees" that arises out of employment for the insured; (2) property damage relating to products manufactured, sold, handled, or distributed by an insured, or work performed by or for an insured; (3) bodily injury or property damage resulting from pollution unless the pollution is sudden and accidental; or (4) property damage from any substance released or discharged from any aircraft (pesticides, for example). The exclusion of property damage relating to the insured's products does not affect coverage for bodily injury, if, for example, a customer of the insured's roadside stand falls ill from eating the produce.
However, coverage for property damage suffered by someone who purchases used farming equipment from the insured is excluded.
On the other hand, there is coverage not found in the unendorsed homeowners. For example, endorsement HO 24 73 gives coverage for the insured's liability arising out of a warranty by stating that the exclusion of coverage for liability under any contract or agreement "does not apply to a warranty of goods or products."
Medical payments coverage does not apply to bodily injury to any farm employee or to other persons while they are performing farm work on the insured location. The 2017 form adds that medical payments coverage does not apply to "home-sharing occupants". However, coverage does apply if the person is injured while engaged in "a neighborly exchange of assistance" for which the insured is not obligated to pay money. If the insured pays money out of a sense of gratitude, rather than by agreement, the exclusion does not apply.
Formerly, first-party coverage for "livestock collision" could be purchased under the endorsement. Now, this coverage is available as a separate endorsement, HO 04 52. See the description later in this section.
The endorsement provides for the insurer's right to inspect and audit the farming property and operations during the policy term or within three years of termination.
This endorsement is attached when the insured has a contract with a privately owned fire department. It stipulates that the maintaining the contract is a condition of the policy.
This endorsement may be used when broader coverages are desired than those provided by the HO 00 08, but the insured or insurer does not wish to insure to full replacement cost. This might be the case with an older, ornate home that incorporates stone-, wood-, or plasterwork not readily available.
Replacement cost may so far outstrip market value that to insure based on replacement would do a disservice to the insured, since it is unlikely that the home could be replaced exactly as it stands. Therefore, use of this endorsement provides the insured with the broad range of coverages available in the ISO program, yet allows a more realistic amount of insurance to be selected.
The coverage A limit of liability is chosen based on "functional replacement cost," that is, the amount it would cost to repair or replace using materials that are functionally equivalent to obsolete, antique, or custom methods and materials. For example, plaster walls would be replaced with dry wall, pocket doors with plain doors. The loss settlement provisions substitute "functional replacement cost" anywhere "full replacement cost" appears.
Modified functional replacement cost loss settlement endorsement, HO 05 31, is virtually identical except that if the necessary amount actually spent to repair or replace is less than the actual cash value of the part of the damaged building then the loss is settled on an actual cash value basis.
Before the 2000 homeowners program when it was renumbered, this was HO 05 90. It provides both business property and liability coverage for a variety of home businesses. The business must be owned by the named insured, or by a partnership, joint venture, or organization comprised solely of the named insured and resident relatives. Coverage is provided for business property, property of others in the insured's care because of the business, and business property leased by the insured so long as there is a contractual responsibility to insure it. There is coverage for accounts receivable and valuable papers and records. The special limits of liability coverage for property away from the residence and used in business has been changed to not apply to antennas, tapes, wires, records, disks or other media that are used with electronic equipment that transmits or receives audio, visual, or data signals in or upon a motor vehicle.
Time element coverages include business income, extended business income, extra expense, and loss of business income because of the action of civil authority (subject to a seventy-two-hour time deductible).
Liability coverage is on an aggregate basis, and includes coverage for premises operations, advertising injury, and personal injury. Coverage for the products/completed operations hazard is limited to the amount shown for coverage E; all other business liability is limited to twice the combined limits of coverages E and F.
The exclusion of liability arising out of or in connection with a "business" (2.a.) has been changed so that the exclusion does not apply to "your product" or "your work"—both defined terms. There is, however, no coverage for professional services, many of which are listed in the endorsement.
Property and liability coverage for a home day care business is available to a homeowner under endorsement HO 04 97. (Not all insurers will write coverage. Check with the company.) If the business is conducted in another structure, a limit of liability for that structure is scheduled on the endorsement. The endorsement protects personal property of the described business under the total coverage C limit.
As to the section II personal liability and medical payments coverage, bodily injury or property damage arising from the following are excluded: ownership, maintenance, use, loading, unloading, negligent supervision, or entrustment by the insured to others of draft or saddle animals, or vehicles used with them, aircraft, hovercraft, 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. Excluded also is injury to any employee of an insured (other than a residence employee), arising out of the day care operation. All other section II exclusions apply.
The endorsement also imposes a policy year 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 per accident sublimit for day care related medical payments equal to the coverage F limit. The sublimit applies within the aggregate limit of liability. Limits described on the endorsement apply even if they are not those contained in the policy or declarations. The severability of insurance clause specifies that coverage applies separately to insureds except with respect to the aggregate limit, so the aggregate limit remains unaffected by the number of insureds.
Introduced in 2003, this endorsement provides reimbursement of expenses incurred as a result of identity theft or fraud. Covered expenses, up to the $15,000 limit, include reasonable attorney fees to defend suits brought by merchants, financial institutions, or collection agencies, costs incurred to re-apply for any loans rejected solely because of incorrect credit information, lost income for time taken to meet with law enforcement officials or complete affidavits (maximum $200 per day; $5,000 total), and charges for long distance calls to report or discuss an actual identity fraud.
The deductible has been raised to $500 from $250. The insured must send receipts, bills, and the like, documenting the claim to the insurer within sixty days of the insurer's requesting these.
If an insured engages in farming on the residence premises, the policy may be endorsed to provide coverage for liability and medical payments with respect to that activity. The general rules specify that the endorsement may be added only if the farming activity is incidental to use of the property for dwelling purposes, and the insured does not depend on farming as a primary source of income. The endorsement may not be added if the premises is used for racing.
Coverage for incidental farming activities at specified locations away from the residence premises, including boarding and grazing the insured's animals, and using land for gardening may be included. Coverage is much less extensive than that provided under farmers personal liability HO 24 73, although the HO 24 73 does not allow farming on the residence premises.
With a few exceptions, section II exclusion A.2 precludes liability coverage relating to motor vehicles and motorized land conveyances, including negligent supervision and vicarious parental liability. See Homeowners Section II Exclusions for more information. Endorsement HO 24 13 broadens liability coverage in connection with certain types of motorized land conveyances. The vehicle must have a maximum attainable speed of no more than fifteen miles per hour (which eliminates the endorsement's use for most snowmobiles), must not be subject to motor vehicle registration, may not be rented to others or used for other business purposes (including carrying paying passengers), and may not be operated in a prearranged competition.
Mopeds, motorized bicycles, and motorized scooters are specifically excluded andw the homeowners forms broadened the liability coverage for golf carts. These vehicles may be covered under the miscellaneous type vehicle endorsement to the personal auto policy—endorsement PP 03 23 01 05. With respect to vehicles that meet the rather narrow definition of "incidental low power land conveyances" (miniature automobiles intended to be driven by children, for example), coverage applies to liability arising out of ownership, maintenance, use, loading or unloading, negligent supervision or entrustment, and to vicarious parental liability, whether or not statutorily imposed, for the actions of a minor child. Since the unendorsed homeowners policy includes liability coverage for motorized land conveyances designed for recreational use off of public roads that are not subject to motor vehicle registration—but only while they are on an insured location—this endorsement is useful chiefly in broadening coverage to include coverage away from an insured location.
The special limits applicable to business property insured under the homeowners form ($2,500 on-premises, $500 off-premises) may be increased by means of this endorsement. Increases in these special limits do not increase the coverage C limit. The on-premises limit may be increased, in increments of $2,500, up to $10,000. The 2011 form off-premises limit automatically increases to an amount that is sixty percent of the total on-premises limit; the 2000 form increased the limit only to twenty percent of the total. The endorsement cannot be used to increase coverage above the $2,500 special limit for several categories of property: business property in storage or held as a sample; business property for sale or delivery after sale; or to business property pertaining to a business actually conducted on the residence premises. The exposure of business property that is part of a business actually conducted on the residence premises may be covered by endorsement HO 04 42, permitted incidental occupancies, or in HO 07 01 home business insurance coverage.
This endorsement provides for automatic increases in the limits of liability for all section I property coverages in order to avoid underinsurance due to inflation. The specified percentage increase applies on a pro rata basis during the policy period.
This endorsement was introduced in 2000. Coverage may be increased beyond the $2,500 additional coverage (10.) for landlord's furnishings in the homeowners forms. Coverage may be increased in increments of $500 up to $10,000. Remember that the additional coverage is for rental apartments on the "residence premises" as defined, so the endorsement could be used, for example, where an insured owns a four-unit building and resides in one of the units, but owns furnishings in the other apartments. If there is a total loss, however, the insured's coverage C limit of liability is the most that will be paid. The coverage C perils, except for theft, apply.
Remember that a structure separate from the insured dwelling rented to anyone not a tenant of the dwelling is not covered unless used solely as a private garage. This endorsement cannot be used, therefore, to cover an insured's property in that situation; other coverage, such as a dwelling fire policy, should be arranged.
These endorsements were introduced in 2002 as a response to insurers wishing to limit their exposure to wet rot and mold. The endorsements add a definition of fungi: "any type or form of fungus, including mold or mildew, and any mycotoxins, spores, scents or by-products produced or released by fungi." They then go on to amend the additional coverages by adding a new coverage for loss caused by fungi, which is limited to the amount indicated in the schedule for section I. Included in this amount is the cost to remove the fungi or wet rot, the cost to tear out and replace any part of the building as needed to gain access to the fungi or wet rot, and the cost to test the air to confirm that fungi are present. Coverage under this endorsement only applies when the fungi or wet rot results from a covered cause of loss.
Section II liability for property damage or bodily injury resulting from an "occurrence" involving fungi, bacteria, or wet or dry rot is also scheduled on the endorsement. Liability is a sublimit within the total coverage E limit of liability, and is on an aggregate basis.
Formerly a part of the farmers personal liability endorsement as an optional coverage, coverage for livestock collision may now be purchased separately. The insurer pays up to the limit shown on the endorsement declarations for death to certain types of animals if caused by collision or overturn of the vehicle in which they are being transported. There is also coverage if the livestock runs into, or is struck by, a vehicle while on a public road.
Coverage is excluded if a vehicle owned by or operated by an insured or an insured's employee causes the loss. Coverage applies to cattle, sheep, swine, goats, horses, mules, or donkeys owned by an insured. The limit per animal is $400; horses, mules, or cattle under one year old at the time of loss are counted as half a head.
Loss assessment coverage is provided under all homeowners forms as sections I and II additional coverages. Coverage is provided for loss assessments charged by a property owners' association against the insured in connection with a direct loss to the residence premises or liability relating to the residence premises. The amount of coverage is limited to $1,000 per property or liability loss. Endorsement HO 04 35 may be used to increase the amount of each of these coverages—either section I or section II, or both I and II—up to the limit specified in the endorsement. The endorsement does not cover loss assessments arising from earthquakes, or land shock waves or tremors pertaining to a volcanic eruption. Loss assessment coverage charged as a result of those perils is available under endorsement HO 04 36 (see later in this article). When an assessment is imposed to collect the amount of the deductible in the condominium association's own policy, the endorsement specifies that a $1,000 limit is the maximum amount of coverage that applies.
Loss assessments on scheduled additional locations may also be covered by this endorsement, for an amount of coverage specified on the endorsement. No more than two other locations may be scheduled.
Loss assessment coverage may be added to all forms by use of this endorsement. Coverage, for an amount specified in the endorsement, applies to loss assessments charged by a property owners' association during the policy period for loss to collectively owned property if loss is caused by earthquake or land shock waves related to a volcanic eruption. Coverage is subject to a deductible that is a specified percent of the limit stated in the endorsement, but not less than $500 for any one assessment. The dollar amount of the deductible is determined by multiplying the limit of liability by the deductible percentage amount. As is the case with many forms applicable to earthquake damage, there is no coverage for flood or tidal wave, even when attributable to earthquake.
Homeowners section I coverages may be divided between two or more insurers if all agree to such an arrangement. This is usually done only in the case of unusually large risks. The HO 04 78 endorsement is attached to the policy of each company participating in the shared coverage. It specifies the percentage of the total amount of insurance that the insurer will pay (subject to the limit shown in the declarations), the total limits of liability, and the name of the insurer providing section II coverage (since only one insurer may provide section II protection). The endorsement may be used only if the same form, deductibles, and property endorsements apply to all participating policies. The sole exception to this last rule is scheduled personal property coverage that may or may not be subject to division as the participating insurers choose. In fulfilling the replacement cost condition under forms HO 00 02, HO 00 03, and HO 00 05, the total amount of insurance from all carriers must be 80 percent or more of the building's full replacement cost immediately before the loss.
Although this endorsement appears to indicate a reduction in coverage, it simply clarifies the intent of the homeowners policy to: (1) exclude home day care with respect to section II personal liability and medical payments and section I coverage B (other structures used in business); and (2) apply the coverage C business property limitations to day care operations (i.e., $2,500 for business property on premises and $500 for business property away from the premises).
The home day care exclusion amends the definition of "business" found in the 2000 edition forms. Now, regularly providing day care to other than "insureds" as a trade, occupation, or profession, or, if not the given insured's trade, occupation, or profession, then receiving compensation (other than the mutual exchange of services) in excess of $2,000 for such services and any other activity in the 12 months before the beginning of the policy period, will be considered a "business." The exclusion would not apply, for example, to an insured who regularly watches a friend's child without receiving compensation (as when the friend is having financial problems). Insureds who wish to purchase coverage for a home day care business may do so by adding HO 04 97, described above.
The previous endorsement did not allow for any monetary compensation. The current form reflects the difference made in the 2000 forms—activities for which an insured receives no more than $2,000 in the 12 months preceding the policy period are not considered a "business."
Note that this endorsement is mandatory in all states.
With the special provisions filed beginning in 1994, ordinance or law coverage was added as an additional coverage for all but form HO 00 08. This coverage responds to loss resulting from the operation of laws regulating the construction, repair, or demolition of a structure following a covered loss. Coverage may be increased in 25 percent increments up to 100 percent, with additional amounts available depending upon the insurer.
The endorsement does not respond to costs to comply with any ordinance or law regulating or enforcing clean up or removal of pollutants.
This endorsement was new in the 2000 program, and reflects the variations of today's living arrangements. No changes were made in the 2011 edition, but a change has been added in the 2017 edition. "Home-sharing occupants" are included among those who cannot be listed as an other member of the household. A person who would normally not have "insured" status by virtue of being unrelated by marriage, blood, or adoption, may be given that status when listed on the endorsement. The named insured agrees to represent the person so named in all matters pertaining to the insurance, pay any additional required premium, and notify the insurer of any change in residence or status. The person so named then has personal property coverage, additional living expense, and liability coverage. A person under age twenty-one, in the legal custody of and living with the person named in the endorsement, also has coverage.
Homeowners coverage B provides a blanket amount of insurance on "other structures" (structures on the residence premises that are not the described dwelling). For situations where that amount provides insufficient coverage, individual structures may be scheduled on this endorsement with a designated amount of insurance applying to each. Use of the endorsement does not increase the coverage B amount of the policy; instead, the endorsement makes available an additional amount of coverage for each described structure. For example, if the coverage B amount is $5,000, and $10,000 is needed for adequate coverage on a particular structure, the HO 04 48 is used to write the additional $5,000 insurance on that building. If two or more eligible structures are on the premises, thought should be given to the risk of their simultaneous destruction when considering the adequacy of coverage B.
This endorsement was new in the 2000 program. It provides open perils coverage for owned golf carts, but allows the insured to select or decline coverage for collision. ("Collision" means the physical contact of the golf cart with another object, or the upset of the golf cart without contact with another object.) Accessories and equipment are also covered if, at the time of the loss, the accessories and equipment are at an insured's residence or in or upon a golf cart off the insured's residence. The limit for this property is 10 percent of the highest limit of liability shown in the schedule for any one cart.
Certain restrictions apply, among them: the cart must have been designed to carry no more than four persons, and not built or modified to exceed twenty-five miles per hour on level ground. As might be expected, there is no coverage for electrical or mechanical breakdown, overheating, freezing, and similar "wear and tear" perils. Damage to tires or wheels caused by contact with the ground is excluded. There is no coverage for the cart if, at the time of loss, it is being rented to others, raced, used to carry persons or cargo for a charge, or for any business purpose other than while on a golfing facility. A $500 deductible applies separately to each scheduled cart, and separately to equipment and accessories if not in or upon a golf cart at the time of loss.
Liability coverage for use of an owned snowmobile away from an "insured location" as defined in the policy may be purchased. The endorsement used with the 1991 forms appears considerably different from that used with the 2000 forms; this is because much of the exclusionary language of the earlier endorsement has been incorporated into the 2000 and 2011 homeowners forms (section II "Motor Vehicle Liability"). For example, the 1991 endorsement states that the coverage does not apply to any snowmobile subject to motor vehicle registration. The 2000 endorsement refers to exclusion A.1., which states that there is no coverage if the "motor vehicle" is required by law or a governmental agency to be registered for use on public roads or property. It is important, therefore, to read both the policy itself and the endorsement.
The endorsement also expands the definition of "insured" so that any person or organization legally responsible for the snowmobile is covered.
Many homeowners exclusions apply to business activities of an insured. This endorsement deletes these exclusions as they pertain to a business conducted on the residence premises. Because coverage B of the homeowners form does not apply to any structures used for business purposes, the endorsement provides for scheduling a specified amount of coverage for an "other structure" on the residence premises that is used in a business. The homeowners forms limit the amount of coverage for on-premises property used primarily for business to $2,500. This endorsement increases coverage for on-premises business "furnishings, supplies, and equipment" to the coverage C limit.
A question that sometimes arises in connection with this endorsement is the type of property that is covered as "supplies." Office supplies, such as paper clips, pads of paper, etc., are covered, but so is the stock of goods held for sale. The definition of "supplies" found in Webster's Collegiate Dictionary (Tenth Edition) includes "provisions, stores," and "the quantities of goods or services offered for sale at a particular time or at one price." For this reason, it is important to consider the value of such supplies when setting the amount of coverage C.
The section II exclusion for liability and medical payments coverages in connection with business pursuits of an insured is likewise modified so that section II coverage applies to the "necessary and incidental use of the premises" for the business described on the endorsement. The liability coverage provided under the endorsement does not include coverage for bodily injury to any employee of the insured, except residence employees in the course of their employment. The endorsement used with the 1991 forms included the wording that bodily injury to a pupil arising out of corporal punishment administered by or at the direction of the insured is not covered (since private schools and other instructional businesses may be covered by this endorsement). But the 2000 and 2011 homeowners forms exclude coverage for sexual molestation, corporal punishment or physical or mental abuse, so there is no need to repeat the exclusion. As noted in the owned snowmobile endorsement description, above, endorsements used with the 2000 and 2011 forms must be carefully read along with the homeowners forms themselves, since much of the language that previously appeared in the endorsements has been moved to the homeowners forms.
Because the ISO rules manual does not state the types of incidental businesses that are acceptable, insurers have the right to make their own determinations. Few insurers, for example, will wish to insure a fireworks operation carried out in a shed on the residence premises. Remember as well that "incidental" means that the business should be subordinate to the use of the dwelling as a residence.
This endorsement may be used to cover the premises liability exposures of a homeowners insured engaged in the business described on the endorsement that is conducted at a residence other than the insured residence premises. The liability coverage provided by the endorsement does not apply to bodily injury to an employee of the insured, except for residence employees in the course of their employment.
This endorsement differs significantly from permitted incidental occupancies (residence premises) HO 04 42 in that liability coverage only is provided. There is no coverage for property used in business other than the $500 for property used primarily in business that is away from the residence premises.
Homeowners liability coverage does not apply to what is termed "personal injury"; that is, injuries arising out of libel, slander, malicious prosecution, invasion of privacy, wrongful eviction, or wrongful entry. These injuries do not involve the "bodily harm, sickness or disease" required by the policy's definition of "bodily injury." In the endorsement used with the 1991 homeowners, the personal injury endorsement modifies the "bodily injury" definition to include such injury. The endorsement used with the 2000 forms added a new definition of "personal injury" altogether, and added provisions, exclusions, and conditions not found in the earlier edition. "Personal injury" in the 2000 edition expanded "libel" and "slander" to include oral or written publication of material. The 2011 edition expands this to oral or written publication in any manner, and includes the definition of "fungi" which is any type of fungus including mold, mildew, any mycotoxins, spores, scents or by-products produced or released by fungi. Not included in this definition are fungi that are contained in a good or product meant for consumption.
In some ways the endorsement's coverage is broadened (the 2000 endorsement contains an additional coverage for loss assessment, charged against the insured as a member of a property owners association, for loss arising out of personal injury); in other ways it is decreased. For example, the 2000 edition expands the term "invasion of privacy" to "oral or written publication of material that violates a person's right of privacy." This does not take into account other aspects "invasion of privacy" may take, such as videotaping someone surreptitiously. Also, an exclusion in the 2000 edition precludes coverage for "personal injury caused by… an insured with the knowledge that the act would violate the rights of another and would inflict personal injury." Given that it is difficult to be unintentionally malicious (malicious prosecution), it is hard to see where coverage exists.
While the endorsement used with the 1991 forms protects the insured for liability arising from covered "occurrences," the 2000 endorsement refers to "offenses," and specifies that to be covered the offense must take place during the policy period. The 2000 endorsement adds exclusions not found in the earlier endorsement. For example, the form excludes coverage for any pollution-related costs, reflecting some courts' ability to find coverage for pollution under personal injury—invasion of privacy. The 2011 edition includes an exclusion for the actual, alleged or threatened inhalation, ingestion, or contact with, exposure to, existence or presence of fungi, wet or dry rot or bacteria. Testing for fungi is also excluded.
The endorsement's coverage for personal injury does not apply to: (1) contractual liability, unless it is an indemnity obligation assumed under written contract and relating to the ownership, maintenance, or use of the insured premises; (2) injury caused by conscious violation of criminal law (by or with the insured's knowledge or consent); (3) injury resulting from an offense related to the injured person's employment by an insured; (4) injury related to a business engaged in by an insured; (5) civic or public activities for which an insured is paid; or (6) liability arising out of disputes between insureds.
Under the homeowners forms, the full amount of coverage C applies to the insured's personal property at any location except for property usually located at an insured's residence other than the "residence premises." Coverage on the latter is limited to the greater of $1,000 or 10 percent of the coverage C amount. (In form HO 00 08, this sublimit applies to all property that is not actually on the residence premises). Endorsement HO 04 50 provides for an increased amount of coverage at one or two other residences. The amount of coverage is specified for each location. The 2011 edition of the form does not apply to property that has been moved from the residence because it is being repaired, renovated, rebuilt or it is not fit to live in or store property in. Likewise, if the property is in a newly acquired principle residence the limit does not apply as long as it is within 30 days from the start of the move.
Note that the homeowners forms exclude theft coverage at the other residence unless the insured is "temporarily living there," and endorsement HO 04 50 does not delete this exclusion. For substantial values at another residence that an insured rents, it may be preferable to provide section I coverage under form HO 00 04 (contents broad form). Form HO 00 04 contains the standard exclusion of coverage for theft while the unit is rented to others, but this exposure may be covered by extended theft coverage for residence premises occasionally rented to others (HO 05 41) if the rental is on an occasional basis. If the insured owns the second residence, the insured would be best served by a separate homeowners policy or a dwellings form endorsed for theft.
This endorsement is used to provide homeowners replacement cost coverage (otherwise available only for buildings) for personal property, awnings, carpeting, household appliances, and outdoor equipment (including antennas). Certain items of property that are separately described and specifically insured in the policy also receive replacement cost treatment under the endorsement. Items in this second category are limited to: jewelry; furs and fur-trimmed or fur garments; cameras, projection machines, films, and related equipment; musical equipment and related items; silverware, silver-plated ware, goldware, gold-plated ware, platinum and platinum plated ware, and pewterware (but not pens, pencils, flasks, smoking implements, or jewelry); golf clubs, golf clothing, and golf equipment. However, reflecting the 2000 or 2011 scheduled personal property endorsement HO 04 60, that allows an insured to choose agreed value coverage, these items do not have replacement cost coverage if agreed value applies.
Recovery for all property insured under the endorsement is limited to the smallest of five amounts: (1) replacement cost at the time of loss; (2) the full repair cost; (3) the coverage C limit, if applicable; (4) any applicable special limits; or (5) the limit that applies to any item separately described and specifically insured in the policy. Four categories of property are not eligible for replacement cost coverage: (1) antiques, fine arts, and similar property; (2) memorabilia, souvenirs, collector's items, and the like; (3) property not kept in good or workable condition; and (4) obsolete articles that are stored or not being used. The first two categories represent types of property for which an accurate replacement value cannot be determined. (Fine arts and antiques are often scheduled for agreed value coverage under a fine arts floater. If allowed to remain under the homeowners policy's actual cash value provisions, such property is covered for its market value.) The last two categories comprise property for which replacement cost recovery would violate the indemnity principle and perhaps invite a moral hazard on the part of the insured.
For losses with a replacement value of more than $500, actual repair or replacement must be made before the replacement cost provisions apply. An actual cash value claim can be made at the time of loss and amended to replacement cost within 180 days. The 2000 and 2011 edition clarifies that an insured need only notify the insurer of the intent to seek replacement cost; the 1991 edition was misleading in that some thought that the property had to be replaced within 180 days because the language stated that the insured had to make a claim for the difference. But "making a claim for" replacement and actually "replacing" are two separate things.
The insured can receive a premium credit for installing an insurer-approved alarm system or automatic sprinkler system. The endorsement is written acknowledgment by the insurer that such a system is in place. It also creates an obligation on the insured's part to maintain the system in working order, and to let the insurer know "promptly" if any changes are made to the system or it is removed.
This endorsement may be attached to all forms but the HO 00 04 and HO 00 06; in those instances, endorsements HO 05 73 or HO 05 74 are attached. Endorsement HO 05 75 provides rating information. These endorsements are similar to those discussed next (Property Remediation for Escaped Liquid Fuel and Limited Lead and Escaped Liquid Fuel Liability Coverages) except that this group of endorsements does not provide any liability coverage for lead; they respond only to liquid fuel.
There are four endorsements in this series. HO 05 80, HO 05 81, HO 05 82; HO 05 83 gives rating information for property remediation for escaped liquid fuel and limited lead and escaped liquid fuel liability. Since the variations in the endorsements reflect the differences in the underlying homeowners forms (for example, in the HO 05 82 "unit" is used in the "residence premises" definition), the following discussion is of a general nature.
The current homeowners forms afford liability coverage up to the policy limits for third party liability resulting from the effects of pollutants. These endorsements limit an insurer's liability for injury or property damage resulting from escaped liquid fuel and lead poisoning or contamination. They provide limited remediation coverage ($10,000 aggregate; the limit may be increased) for an insured's real or personal property, including land. (Under the HO 00 02, HO 00 03, and HO 00 05 coverages A and B, damage to the dwelling or other structures only resulting from pollution caused by one of the coverage C named perils is covered.) Rental property consisting of a one- to four-family unit may be included. The deductible applying to the peril of fire also applies to the property remediation. Additional living expense necessitated by the escape of liquid fuel is included in the limit of liability.
Liability in the aggregate amount of up to $50,000 (which may be increased) is provided for property damage or bodily injury resulting from lead absorption, ingestion, or contamination, or from an occurrence involving the escape of liquid fuel from a fuel system. Defense coverage is included in the aggregate limit. There is no medical payments coverage under this endorsement.
There were changes in the 2000 edition endorsements; some of these are editorial, but some are worth noting. In the earlier edition, it was intended that fuel tanks permanently affixed to motor vehicles or watercraft be included within the total storage capacity limit. Since most insureds did not think to do this, the statement that a "fuel system" does not include these tanks has been added. Likewise, the additional coverage for expenses incurred by the insured referred to "reasonable" expenses. Rather than have disagreement as to what was "reasonable," the adjective has simply been deleted, so that "expense" for temporary mitigation measures, or to stop or clean up the pollutants is now covered. Also, if a loss is covered by a government fund as well as by the endorsement, the insurer will pay on a proportional basis. In the 2011 forms the deductible clause has been removed.
Many homeowners insurers in recent years have introduced coverage that is similar to the ISO endorsement for loss to refrigerated property. Endorsement HO 04 98 provides $500 coverage (with a $100 deductible) for property in freezers and refrigerators for loss caused by: (1) interruption of electrical service to the refrigerator or freezer caused by damage to the generating or transmitting equipment (whether on- or off-premises), or (2) the unit's mechanical failure. Protection is included within the coverage C limit.
The endorsement states that the power failure exclusion does not apply to the coverage.
This endorsement was new in the 2000 homeowners program. The unendorsed homeowners forms provide that loss to coverage B structures that are not buildings be adjusted on an actual cash value basis. Attaching this endorsement allows certain structures on the residence premises to be adjusted on a replacement cost basis. These structures include: reinforced-masonry walls; metal or fiberglass fences; fences made of plastic/resin materials; patios or walks not made of wood; and driveways. The 2011 edition adds inground or semi-inground swimming pools, therapeutic baths or hot tubs with walls and floors made of reinforced masonry, cement, metal or fiberglass to the structures that can be adjusted on a replacement cost basis. Accessories or equipment are not included. If the cost to repair or replace exceeds $2,500, settlement is on an ACV basis until repair or replacement is complete. The insured may elect an ACV basis, and then make claim for any additional payment if the insurer is notified of this intent within 180 days after the date of loss.
Reflecting a growing trend in ways of holding property, endorsement HO 05 43 residence held in trust allows a trust to be shown as named insured along with the trustee on the homeowners declarations so long as one of these regularly resides in the residence: the trustee named insured, the grantor, or the beneficiary. For example, if a bank is named trustee of a piece of rental property inhabited by tenants who are neither grantors nor beneficiaries of the trust, the endorsement may not be used.
If the trustee does not reside on the residence premises, but the grantor and beneficiary do, they must be named in the endorsement to have "insured" status for contents, additional living expense, and liability. With respect to section I property coverages, the trust has coverage A dwelling, coverage B other structures, and coverage D loss of use fair rental value. A trustee not residing on the residence premises has coverage E personal liability and coverage F medical payments to others only for bodily injury or property damage arising out of the ownership, maintenance, or use of the residence premises. Also, if the trustee does not reside on the residence premises, there is no coverage for any resident relative of the trustee's household.
Personal articles insurance may be written in conjunction with a homeowners policy by using endorsement HO 04 61. This makes it convenient for a homeowners insured who wishes to broaden the scope of coverage on personal property by writing the coverage on an open perils basis, or who has value in excess of the limits specified in the homeowners form for certain categories of property—jewelry, furs, silverware, postage stamps, and coins. Additionally, an insured may have a fine arts collection in excess of the coverage C limit of liability, and if a total loss to the residence premises occurred, there would not be enough coverage for both personal belongings and the collection—an unpleasant prospect.
It is important to remember the coverage C exclusion for "articles separately described and specifically insured in this or any other insurance" when deciding on amounts of insurance to be inserted in the endorsement. The coverage C amount will not contribute in case of loss to any property specifically insured in the endorsement, so it is important that each item is scheduled for an adequate amount of coverage.
The full effect of the "other insurance" provision can be avoided if an insured chooses not to schedule blanket items (such as "silverware") in the endorsement, but instead lists only the more valuable items specifically, for example, "four piece service for eight of ABC brand silverware, `XYZ' pattern." Other silverware items in the household thus escape the "other insurance" provision and continue to have the protection of coverage C, subject to any deductible.
Despite its appearance as a mere endorsement attached to the homeowners policy, the personal articles floater remains a separate contract. For provisions of the endorsement and how it interacts with the requirements of the personal inland marine program, see Personal Articles Form. Also, see Scheduling Personal Property for the Homeowners Insured.
The 2000 program offered a new version of this endorsement: scheduled personal property endorsement (with agreed value loss settlement) HO 04 60. Endorsement HO 04 61 offers agreed value loss settlement only for fine arts; the HO 04 60 offers agreed value loss settlement for all articles scheduled. For example, an insured may have scheduled under an HO 04 61 a $75,000 grand piano that is damaged in a tornado. If the insurer elects the repair option, the insured could wind up with a shoddily-repaired instrument. But with the agreed value option, the insured is simply paid for the loss.
An important change in the HO 04 61, and incorporated into the new HO 04 60, is that the territorial restriction for fine arts to within the United States and Canada has been removed. The endorsement now provides worldwide coverage for all scheduled property. The 2011 form has not been changed.
This endorsement has been attached to policies when the homeowners insured has one of the following indicated on the declarations—home day care, permitted incidental occupancy, farmers personal liability, or business pursuits. The provisions of the endorsement apply only to the described business, and state that there is limited coverage for bodily injury or property damage arising out of a computer failure. "Computer failure" is defined as the failure or deficiency of a computer, including hardware, software, operating systems or chips, because it cannot recognize or process the year 2000 and beyond.
Insurers have attached this endorsement to policies to limit the perceived exposure to Y2K problems. It applies when one of the following is indicated on the declarations—home day care, permitted incidental occupancy, farming, or business pursuits. If home day care or a permitted incidental occupancy is shown, then a section I property loss caused directly or indirectly by Y2K computer-related failure is excluded. However, if loss caused by a covered perils results, that loss is covered. Bodily injury or property damage arising from Y2K computer-related failure is excluded for home day care, permitted incidental occupancy, farmers personal liability, and business pursuits, with certain exceptions.
Depending upon the intent of the insurer, both the HO 04 13 and the HO 04 15 could be attached to a policy. In that event, then loss to property covered under the home day care or permitted incidental occupancy is excluded, but there is bodily injury or property damage coverage.
This endorsement provides coverage for direct physical loss to insured property caused by "sudden settlement or collapse of the earth supporting such property and only when such settlement or collapse results from subterranean voids created by the action of water on limestone or similar rock formations." In conjunction with this coverage agreement, the endorsement removes sinkhole collapse from the earth movement exclusion.
This endorsement covers computers and computer equipment against additional covered causes of loss. "Computer equipment" is defined as: (1) electronic data processing hardware, CRT screens, disk drives, printers and modems, and other "related peripheral equipment;" and (2) disks, tapes, wires, records, or other software media that are used with the equipment described in (1). Subject to certain exclusions, coverage is modified to cover such property on an open perils basis.
Many of the endorsement's exclusions parallel those applicable to open perils coverage for personal property in form HO 00 05, such as wear and tear, smoke from agricultural operations, or refinishing, renovating or repairing. The form used with the 2000 edition differs from that used with the 1991 homeowners in that the revised definition of "computer equipment" means hardware, software, operating systems or networks, and other electronic parts, equipment of systems solely designed for use with or connected to the computer. The 2011 edition adds an exclusion for nesting or infestation, or discharge or release of waste products or secretions by any animals.
Note that the homeowners forms exclude coverage for "business data" stored on software media but do not apply such an exclusion to personal records. An insured who loses personal records and has to spend time recreating them may recover for the time spent, although the amount of recovery will probably be minimal. Endorsement HO 04 14, which applies only to "equipment" and not to records or data, does not increase the coverage available under the form for personal data.
Significant modifications have been made to this endorsement relative to the Broadened Home-sharing Host Activities coverage. If that endorsement is not added to the policy, then this special computer coverage does not apply as usual with the addition that theft arising out of "home-sharing host activities" is not covered. If the Broadened Home-sharing Host Activities coverage is added, then the change that is made is that theft of property when a home-sharing host arrangement is taking place that stolen property is covered by the carrier, and the exclusion is removed.
The standard loss adjustment for buildings is on a replacement cost basis when the amount of insurance on the damaged building at the time of loss is at least 80 percent of the building's full replacement cost. (A notable exception is form HO 00 08, which provides for loss adjustment on either a repair cost or actual cash value basis). Endorsement HO 04 56 is used to reduce the percentage of insurance to value that is required before losses will be adjusted on a replacement cost basis. Manual rules allow a reduction to 50 percent, 60 percent, or 70 percent of the property's replacement cost. This may be necessary when replacement of a dwelling would cost far more than its market value and the insurer, to avoid the moral hazard, is unwilling to write a policy for the full 80 percent of replacement value.
The 2000 edition reflected the revisions made in the 2000 program (such as the inclusion of grave markers) and adds a new provision: if the dwelling is rebuilt at a new premises, the replacement cost is limited to the cost that would have been incurred if the insured had built at the original premises. Because of the rearrangement of the deductible provisions in the 2011 forms, the application of deductible is removed from the settlement when the amount of insurance is less than the percentage of full replacement of the building.
This optional endorsement was new in the 2000 program. It provided open perils coverage (with certain exclusions) for the personal property for a tenant insured, and changed the special limits of liability for jewelry, watches and furs, firearms, and silverware, goldware, etc., by adding "misplacing or losing" to the loss by theft coverage. Usual exclusions for open perils coverage apply, such as wear and tear, refinishing, or breakage of fragile items. A change to note in the open perils endorsements, such as the HO 05 24 and the HO 17 31 (used with the HO 00 06) is that coverage for breakage resulting from earth movement has been removed in the 2000 editions. The 2011 edition adds an exclusion for nesting, infestation, or discharge or release of any waste products or secretions by any animals.
The endorsement may not be attached if the residence premises is rented or sublet.
This endorsement is similar to coverage B—other structures away from the residence premises (HO 04 91) in that the other structures must be used in connection with the "residence premises," and not used as a dwelling, or for business (either to conduct or to store business property), or rented. The difference is that, under this form, coverage may be scheduled for each specific structure, which serves the purpose of not diluting the coverage B limit of liability. The scheduled limit is the total amount the insured will recover for loss or damage; recovery is on an actual cash value basis. The coverage afforded by the HO 04 91, on the other hand, does not increase the coverage B limit of liability.
As with a number of other endorsements, the 2017 changes center around the Broadened Home-sharing Host Activities endorsements. If that endorsement is not part of the policy then the exclusions are the same. If the endorsement is part of the policy, then coverage does apply if the other structure is rented or held for rental to a home-sharing occupant.
When the insured purchases this coverage, either 25 percent or 50 percent of the declared coverage A limit is available to apply to a coverage A loss which exceeds the limit of liability shown in the declarations. Unlike the HO 04 11, the policy is not endorsed retroactively, and coverages B, C, and D are not affected. The insured agrees to insure the dwelling for full replacement cost, and notify the insurance company of any additions or alterations increasing the dwelling's value by 5 percent or more.
Added in the 2000 edition is the provision that, if the dwelling is rebuilt at a new premises, replacement cost is limited to what it would have cost to rebuild the dwelling on the original premises.
This endorsement adds coverage for scheduled structures on the residence premises that are rented for residential purposes. The endorsement states that the business exclusion does not apply to this usage.
This endorsement provides broadened theft coverage for special limits of liability for loss by theft to jewelry, watches, furs, gemstones, firearms, silver and silverware, gold and goldware, platinum ware and pewter ware including flatware, hollowware, tea sets, trays and trophies made of or including gold, silver or pewter. The 2011 edition expanded the time that property of a student is covered at a residence away from home to provide coverage if the student has been there within ninety days prior to the loss. The earlier form restricted the time limit to sixty days. The 2017 edition excludes coverage for theft if the loss arises out of home-sharing host activities unless the Broadened Home-sharing Host Activities endorsement has been added to the policy.
The 2011 edition has removed the $5,000 limit for direct physical loss, not caused by the insured's negligence, to property covered under section I and allows an amount to be scheduled. The loss may be from water or water-borne material that backs up through sewers or drains, or overflows or is discharged from a sump, sump pump, or related equipment. The special deductible has been removed from this form. The water damage exclusion is simply removed from the endorsement and is not replaced by other restrictions such as damage from water-borne material backing up through sewers, overflows from a pump, water or material seeping through a building, sidewalk, driveway or foundation.
This exclusion is used to remove the homeowners section II exclusions pertaining to the ownership, maintenance, or use of certain watercraft. The endorsement provides liability and medical payments coverage, otherwise excluded, with respect to scheduled and described watercraft powered by one or more outboard engines or motors of more than 25 total horsepower; any inboard or inboard-outdrive powered watercraft; and sailing vessels, with or without auxiliary power, of 26 or more feet in length.
Coverage under the endorsement does not apply to job-connected bodily injury to an insured's employee whose principal duties involve the maintenance or use of watercraft, nor is there coverage while the watercraft is used to carry paying passengers or while it is rented to others. The current edition of the endorsement also excludes coverage for liability arising out of the operation of watercraft in a prearranged or organized race, speed contest, or similar competition, unless the competition is for sailing vessels (with or without auxiliary power) or is a predicted log cruise.
Coverage for the perils of windstorm or hail may be excluded by means of endorsement HO 04 94. Insureds who choose to exclude coverage for these perils receive a premium credit. The endorsement does not eliminate coverage for loss by fire or explosion that results from windstorm or hail damage. Loss of use coverage (coverage D) is not reached by the exclusion.
Other endorsements pertaining to this peril are Windstorm or Hail Percentage Deductible HO 03 12, which schedules a separate deductible only for loss caused by windstorm or hail, and Windstorm or Hail Protective Devices HO 04 21, which gives a credit if certain protective devices, such as storm shutters, are in place.
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