Chapter 4 – Property Insurance

The Homeowners Policy

Fire Insurance – Original Coverage
Fire, lightning, limited explosion, damage caused by smoke & water

(Fire) Extended Coverage (EC) - Endorsement

Windstorm
Hail
Explosion
Civil Commotion
Riot
Aircraft damage
Vehicle damage
Smoke damage

Rules To Remember:
Friendly fire is NOT covered
The original fire insurance policy covered: fire, lightning, limited explosion and resultant
damage caused by smoke and water.
Every claim is subject to deductible.
All policies come with Liability Insurance.

General Property Coverage Exclusions for All 3 Forms:

- Generally not insurable property due to magnitude or sheer size of risk
- Losses not accidental or extraneous (nature of what’s insured may break itself or deteriorate)
- Losses wholly or partly under control of the insured (Marring, scratching, carelessness)
- Wear and tear
- Excluded to be an endorsement or EC peril so that the base premium would not sky rocket
 Homeowners - Basic Form
(Named Perils)
General Rules
-Used for secondary
locations/dwellings (seasonal,
rentals)
-If renovations begin, basic form
transfers to Builders Risk
Insurance
-How Coverage Applies:
-Direct Loss or damage from
Named Perils ONLY
Property Coverage:
4 Types:
A) Dwelling Building
B) Detached Private Structures
C) Personal Property
D) Additional Living Expense
The Named Perils:
Reminder Rule: These perils must
give direct loss or damage for
coverage to apply!
-Fire or lightning
-Explosion
-Smoke released suddenly from
malfunctioning hearting or
cooking appliance (but not from a
fireplace)
-Falling Object
-Impact by aircraft
-Riot
-Vandalism or Malicious Acts to a
building that is normally occupied
(there is a clause to notify
authorities for such losses to
combat fraud)
-Water damage arising from
sudden and accidental escape of
water from an indoor plumbing,
heating, sprinkler, or air
conditioning system, and indoor
Homeowners – Broad Form Homeowners Comp. Form
(All Risks)
2 Sections:
-Property Coverages
-Liability Coverages
Property Coverage:
4 Types:
A) Dwelling Building
B) Detached Private Structures
C) Personal Property
D) Additional Living Expense
A) Dwelling Building Coverage
The Dwelling Itself
- Awnings, breezeways, garages,
carports, permanently installed
outdoor equipment, construction
material, supplies that form dwelling
(EC)
-Building fixtures, and fittings
temporarily removed from premises
for repair or storage
-Outdoor trees, shrubs, plants
Note: These do NOT increase the
premium
B) Detached Private Structures
Coverage
Garage (if detached only)
C) Personal Property Coverage
On premises property is covered.
Rule: For off premises property
-Only property temporarily removed,
not stored or located elsewhere, is
covered.
or outdoor “domestic appliance”
on the premises, or a watermain
and from water that enters the
dwelling through an opening
created suddenly and accidentally
by an insured peril.
-Windstorm or hail
-Glass breakage in windows and
doors of a building that is
normally occupied
-Transport of personal property
while it is temporarily away from
the home, including fixtures and
fittings being repaired or in
seasonal storage
-Theft (Larceny, pilfering, holdup,
robbery, and pickpocketing)
-Electric current damage to
electrical appliances.
Rule: Students personal property
-Insured under the policy, but
temporarily away at school is
included. If property is significant
amount, may require separate policies
as an (EC)
Rule: Special Limits
-Jewelry, furs, stamps, coins, etc.. Each
will have dollar amount special limits
that won’t go over regardless of actual
worth due. This is because they are
portable and attractive to thieves.
Rule: Watercraft (Special Limit +
Specified Peril, Theft, or Attempted
Theft)
-Has a special limit and is further
limited by Specified Peril, theft, or
attempted theft.
-Specialized Boat & Marine policy for
additional premium can restore this.
Rule: Special Limits of Coverage for
Certain Property Applied Only in
Certain Situations
-Homeowners Policies usually contain
subsection that describes special
limits applied to certain types of
property in certain situations.
-The subsection is a list of perils and a
list of property types and coverage
limits for each type.
-If a listed type of property suffers loss
or damage caused by one of these
listed perils, the claim will be paid in
full.
-If the loss/damage is NOT a result of
one of these listed perils, claim will be
paid up to the special limit of
insurance.

Property Coverage – Exclusions
Rule: Although these are
excluded, they can be obtained
through other policies or EC.
-Buildings for business
-Property on exhibit
-Illegally acquired
-Evidence of debt/title
-Data (which is not tangible so are
not property)
Loss or Damage – Exclusions
-Damage from freezing of indoor
plumbing
-Flooding or damage caused by
floodwater due to an overflow
from a body of water (but many
insurers offer optional flood
insurance.)
-Damage from freezing outside
the home, melting, or moving
snow or ice or heaving frost
(additional insurance purchasable
for ice damming on the roof)
-Certain types of theft, including
theft by:
-tenants or from parts of the
dwelling rented to tenants
-from secondary locations if
insureds are not residing there
-property/building materials from
properties under construction
-of animals
-Loss from agreed change in
ownership of property (even if
that change is brought about by
trickery or fraud)
D) Additional Living Expenses
Alternative accommodations
Rental income if renting home (Fair
rental value)
Specified Perils – 2 Purposes
1) To limit coverage on certain perils /
types of property to those explicitly
stated in the policy.
2) To provide full coverage on certain
types of property, where they are
otherwise subject to a special limit of
coverage, with these kinds of property
explicitly listed in the policy.
The Specified Perils:
-Fire
-Lightning
-Explosion
-Smoke (caused by sudden, unusual,
and faulty operation of a heating or
cooking device)
-Falling object that strikes the exterior
of a building, including damage to
items inside the building
-Impact by aircraft or land vehicle
-Riot
-Vandalism or malicious acts (excludes
theft or attempted theft)
-Water damage that is sudden
-Windstorm or hail
-Damage to insured property, while in
transits, including damage resulting
from collision or upset of the
transporting vehicle, but excludes
property in a vacation or home trailer
owned by the insured.
- …many more, which are pretty
much the comprehensive
exclusions
Property Coverage – Exclusions
Rule: Although these are excluded,
they can be obtained through other
policies or EC.

-Buildings for business

-Property on exhibit
-Illegally acquired
-Evidence of debt/title
-Sporting Equipment with wear and
tear
-Property lawfully seized
-Outdoor radio / tv antennae
-Animals, birds, or fish (unless loss is
caused by specified peril other than
aircraft or land vehicle)
Loss or Damage – Exclusions
-Scratching, abrasion, chipping,
breakage (unless covered by specified
peril)
-Wear and tear
-Faulty material or workmanship
-Settling
-Data or Data problem
-Vacant Buildings
-Radioactive contamination
-War Risk
-Intentional or criminal acts
-Property being worked on, where the
damage results from the process or
work (but resulting damage to other
property is still covered)
-Water damage (except as otherwise
specified in the policy)
-Pests
Smudging and industrial smoke
-Earth Movement
-Theft by tenant
-Vandalism to dwelling under
construction
-Theft from dwelling under
construction
-Natural events
-Leakage of fuel oil from residential oil
tanks
-Theft by trickery or fraud
-Terrorism

Note: Sudden Water Damage

Coverage
-Water Damage that is “Sudden” is a
specified peril.

4 Types of “Sudden” Water Damage:

1) Escape from watermain
2) Escape from plumbing, heating,
sprinkler, or air conditioning system or
from domestic water container
located inside the dwelling
3) Escape from domestic water
container located outside the dwelling
(but not by freezing))
4) Entrance of water suddenly through
an opening by an insured peril other
than water damage.

Note: Water damage done by freezing

during the usual heating season are
excluded from coverage (unless
precautions are taken which are set
out in the policy.)

These are the precautions to take if

household members are gone for a
number of consecutive days:

1) Competent person enters the

dwelling to check that the heating
system is operating correctly.
2) Monitor Alarm for change in temp
3) Turn off water supply and all pipes
and domestic water containers have
been drained.