1. 7 - 1Copyright 2008, The National Underwriter Company Personal Property Insurance  The homeowners policy  Covers the residence, property contained within and liability for property damage and bodily injury  Forms to cover dwelling and personal property  HO-2, HO-3 and HO-5  HO-4 – primarily for personal property  HO-6 – for condominiums  Owner occupants of one to four family dwellings (residential purposes)  Life estate arrangement  Property held in trust Chapter 7 Risk Management For Financial Planners

2. 7 - 2Copyright 2008, The National Underwriter Company  The homeowners policy (cont'd)  Seasonal or secondary residences  Dwelling with incidental business occupancy  Premises must be occupied primarily as a dwelling  No other businesses may be conducted on the premises Chapter 7 Risk Management For Financial Planners Personal Property Insurance

3. 7 - 3Copyright 2008, The National Underwriter Company  Who is an insured  “You” or “your” refers to the named insured  Includes insured’s spouse (if residing at the residence)  Includes partner of civil union if required by law  Relatives by blood, marriage and adoption  Wards or foster children  Not “significant others”  Endorsements may be possible from some companies Chapter 7 Risk Management For Financial Planners Personal Property Insurance

4. 7 - 4Copyright 2008, The National Underwriter Company  Homeowners section I coverage  Coverage A – Dwelling  Includes structures attached the dwelling (deck, carport)  Coverage B – Other structures  Located on premises, not connected to dwelling (shed, driveway)  Coverage C – Personal property  Anywhere in the world to property owned or used by an insured  Could apply to property of others while located at the insured dwelling  Coverage D – Loss of use  Additional living expenses  Fair rental value  Prohibited use  Civil authority prevents access Chapter 7 Risk Management For Financial Planners Personal Property Insurance

5. 7 - 5Copyright 2008, The National Underwriter Company  Homeowners section I coverage (cont'd)  Additional coverages  debris removal, credit card, forgery, and counterfeit money.  Limited to low dollar amounts.  List of property for which limited or no coverage is provided  Theft of jewelry, watches, and furs  No coverage for motorized vehicles  Rider lawnmower is covered Chapter 7 Risk Management For Financial Planners Personal Property Insurance

6. 7 - 6Copyright 2008, The National Underwriter Company  Named and special perils coverage  Coverage for a loss caused by a named peril  Fire  Lightning  Explosion, etc.  Forms HO-2, HO-4, HO-6 cover property on this basis  Disadvantage – Insured must be able to point to the peril that caused the loss  Other option – special perils coverage  Advantage – After insured declares loss  Insurer must discover whether an exclusion applies  HO-3 and HO-5 cover property on this basis Chapter 7 Risk Management For Financial Planners Personal Property Insurance

7. 7 - 7Copyright 2008, The National Underwriter Company  Exclusions  Losses caused by flood, war, earthquake  Flood insurance can be purchased separately  Intentionally caused loss  Failing to protect property at the time of the loss  Some excluded losses that result in an ensuing loss that is in fact covered – are covered Chapter 7 Risk Management For Financial Planners Personal Property Insurance

8. 7 - 8Copyright 2008, The National Underwriter Company  Loss settlement provisions  HO-2, HO-3, and HO-5 – written on a replacement cost basis  Insurer will not pay more than the least of  Limit as shown on the declarations page  Replacement cost  Amount necessary to repair or replace the building  Endorsement – guaranteed replacement  Provided insured maintain full insurance to value  Insured notifies insurer about additions or remodeling  Contents losses  Settled on an actual cash value basis  replacement cost less depreciation  Replacement cost coverage can be purchased Chapter 7 Risk Management For Financial Planners Personal Property Insurance

9. 7 - 9Copyright 2008, The National Underwriter Company  Homeowners section II coverages  Coverage E – Personal liability coverage  Protects against liability for negligently caused bodily injury or property damage  Coverage F – Medical payments coverage  Additional coverages  Claims expenses  First aid expenses  Damage to property of others  Loss assessment  Injury or damage must be caused by an “occurrence”  An accident which results in bodily injury or property damage Chapter 7 Risk Management For Financial Planners Personal Property Insurance

10. 7 - 10Copyright 2008, The National Underwriter Company  Homeowners section II coverages (cont'd)  Bodily injury  Bodily harm, sickness or disease, including required care, loss of services and death that results  Property damage  Physical injury to, destruction of, or loss of use of tangible property  Coverage F medical payments  Accidents to persons other than an insured  On the insured location with permission  Pay for necessary medical expenses incurred or medically ascertained within a three year period Chapter 7 Risk Management For Financial Planners Personal Property Insurance

11. 7 - 11Copyright 2008, The National Underwriter Company  Homeowners section II coverages (cont'd)  Medical expenses  reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices and funeral services  Exclusions  Business engaged by the insured  Ownership, maintenance or use of motor vehicles or entrustment of a motor vehicle or vicarious liability for the actions of a child or minor using a motor vehicle  Bodily injury or property damage that is expected or intended by the insured Chapter 7 Risk Management For Financial Planners Personal Property Insurance

12. 7 - 12Copyright 2008, The National Underwriter Company  Homeowners section II coverages (cont'd)  Miscellaneous property coverages  Example – jewelry, fine arts collection  Coverage is on a special perils basis  loss is covered unless specifically excluded  Owners of rental property and seasonal or secondary residences merit special insurance coverage  Some homeowners policies extend coverage to secondary or seasonal homes  Rental property should be insured separately on a Dwelling Fire Policy Chapter 7 Risk Management For Financial Planners Personal Property Insurance