Bảo hiểm - Chapter 21: Homeowners insurance, section II

Homeowners Insurance, Section IIChapter 21AgendaPersonal liability insuranceSection II CoveragesSection II ExclusionsSection II Additional CoveragesEndorsements to a Homeowners PolicyCost of Homeowners InsurancePersonal liability insurancePersonal liability insurance protects the named insured and family members against legal liability arising out of their personal actsThe insurer pays amount for which the insured is found legally liable, up to the policy limitsThe insurer also pays defense costsThe coverage is found in Section II of the Homeowners policySection II CoveragesCoverage E protects the insured when a claim or suit for damages is brought because of bodily injury or property damage allegedly caused by an insured’s negligenceThe coverage is broad and based on legal liabilityThe policy contains a per-occurrence limitAn occurrence is defined as an accident which results in bodily injury or property damage during the policy periodThe insurer provides a legal defense, even if the suit is frivolous or fraudulentSection II CoveragesCoverage F is a mini-accident policyMedical payments to others pays the reasonable medical expenses of another person who is accidentally injured while on an insured location, or by the activities of an insured, resident employee, or animal owned by or in the care of an insured The insured is not required to be legally liableCoverage does not apply to the insured or regular residents of the household, other than a residence employeeCoverage applies even if the injury occurs away from an insured locationSection II ExclusionsSome exclusions apply to both Coverage E and Coverage F:Expected or intentional injuryBusiness activities, with some exceptionsProfessional servicesLiability arising out of the use of:A motor vehicle, with some exceptionsAn aircraftA hovercraft Certain watercraft, for certain reasonsExhibit 21.1 Watercraft Exposures Covered by Section II of the HO-3 PolicySection II ExclusionsSome exclusions that apply to both Coverage E and Coverage F (continued):Uninsured locationsWar or other hostile military actsCommunicable diseasesSexual molestation, corporal punishment, or physical or mental abuseControlled substances Section II ExclusionsSeveral exclusions apply only to Coverage E:Contractual liabilityProperty owned by the insuredProperty in the care of the insured, with some exceptionsWorkers compensationLiability for a nuclear incidentBodily injury to an insuredSeveral exclusions apply only to Coverage F:Injury to a resident employee off an insured locationWorkers compensationInjuries that result from nuclear energyPersons regularly residing on the insured locationSection II Additional CoveragesThe homeowners policy automatically includes several additional coverages:Claims expenses (e.g., court costs, attorney fees) are covered in addition to the policy limits for liability damages The insurer pays any first-aid expenses incurred for bodily injury covered under the policyIncludes cost of an ambulanceDamage to property of others pays up to $1000 per occurrence for property damage caused by an insuredThe purpose of the coverage is to preserve personal friendshipsThe coverage contains a number of exclusionsCertain loss assessments are covered up to $1000Endorsements to the Homeowners PolicyProperty owners with special needs can purchase a variety of endorsements:An inflation-guard endorsement provides for an annual pro rata increase in the limits of insurance in the Section I coveragesAn earthquake coverage endorsement covers earthquakes, landslides, volcanic eruption, and earth movementThe scheduled personal property endorsement (with agreed value loss settlement) provides additional coverage for nine classes of property (jewelry, furs, cameras, musical instruments, silverware, golfer’s equipment, fine arts, postage stamps, and rare and current coins) and the insurer agrees to pay the stated amount for a scheduled item if a total loss occursEndorsements to the Homeowners PolicyWhen a personal property replacement cost loss settlement endorsement is added to the policy, claims are paid on the basis of replacement cost with no deduction for depreciationA personal injury endorsement is used to extend liability coverage to legal liability arising out of personal injury, e.g., false arrest, slanderAn identification theft endorsement reimburses crime victims for the cost of restoring their identity and cleaning up their credit reportA home business insurance coverage endorsement covers both business property and legal liability arising out of a home-based businessExhibit 21.2 Coverages Provided by the Home Business Coverage EndorsementCost of Homeowners InsuranceMajor rating and underwriting factors include:Type of construction Location of homeFire-protection classdepends on the quality of the public fire department, accessibility to the fire department, water supply, and fire hydrantsConstruction costsType of policy Deductible amountInsurance scoreA credit-based score that is highly predictive of future claim costsCost of Homeowners InsuranceInsurers also use reports that reveal the prior claim history of a homeA Comprehensive Loss Underwriting Exchange (CLUE) report shows up to five years of information on property claims, including the date of loss, type of loss, and amounts paidThe use of CLUE reports is controversialExhibit 21.3 Tips for Buying a Homeowners PolicyExhibit 21.4 Examples of Wide Variation in Annual Homeowners PremiumsExhibit 21.4 Examples of Wide Variation in Annual Homeowners Premiums