Chapter 21 - Homeowners Insurance, Section II Flashcards Preview

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Flashcards in Chapter 21 - Homeowners Insurance, Section II Deck (39)
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Define Claim Expenses

The court costs, attorney fees, and other legal expenses incurred in providing a legal defense. Additional coverage can be added to cover these.
-Also can cover up to $250 per day in actual loss of earnings.


Define Contractual Liability

Legal liability of another party that the business firm agrees to assume by a written or oral contract.


Define Damages to Property of Others. What is the purpose?

-Provision in Section II of a homeowners policy that pays up to $1000 per occurrence on behalf of an insured who damages someone's property. Payment is made without regard to legal liability.
-to preserve personal friendships and keep peace in neighborhoods.


Define Earthquake Endorsement

A coverage addition that covers direct physical loss to property covered under Section I and caused by an earthquake.

Covers earthquakes, landslides, volcanic eruption, and earth movement


Define First-Aid Expenses

Expenses incurred by the insured for costs incurred related to bodily injury taken as a first step.


Define Home Business Insurance Coverage Endorsement

Covers both business property and legal liability arising out of a home-based business.


Define Identify Theft Endorsement

An endorsement to a homeowners policy that reimburses crime victims for the cost of restoring their identity and cleaning up their credit reports.

! This covers only expenses incurred and not any dollar amount that the thief actually may steal.


Define Inflation Guard Endorsement

Endorsement added at the insured's request to a homeowners policy to increase periodically the face amount of insurance on the dwelling and other policy coverages by a specified percentage.

Provides for an annual pro rata increase in the limits of insurance in the Section I coverages


Define Insurance Score

A credit-based score based on an individual's credit record and other factors that is highly predictive of future claim costs; insureds with low insurance score generally file more homeowners and auto insurance claims than insureds with good credit and higher insurance scores.


Define Loss History Report

A report that reveals the prior claim history of a home.


Define Medical Payments to Others

Pays for medical expenses of others under a homeowners policy in the event that a person (not an insured) is accidentally injured on the premises, or by the activities of an insured, resident employee, or animal owned by or in the care of an insured.
-The policy states the situations under which coverage applies.


Define Occurence

An accident, including continuous or repeated exposure to substantially the same general, harmful conditions, which results in bodily injury or property damage during the policy period.


Define Personal Injury

Injury for which legal liability arises (such as for false arrest, detention or imprisonment, malicious prosecution, libel, slander, defamation of character, violation of the right of privacy, and unlawful entry or eviction) and which may be covered by an endorsement to the homeowners policy. Also included in the coverage by a personal umbrella policy.


Define Personal Liability

The liability from a claim or suit for damages that is brought because of bodily injury or property damage allegedly caused by the insured's negligence.


Define Personal Property Replacement Cost Loss Settlement Endorsement

An addition that pays claims on the basis of replacement cost with no deduction for depreciation.
-If the cost to repair or replace exceeds $500, the property must actually be repaired or replaced to receive replacement cost. Otherwise only the actual cash value is used.


Define Personal Umbrella Policy

Provides an additional amount of liability insurance after the underlying coverage is exhausted.


Define 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 occurs


Define Watercraft Endorsement

Covers watercraft that are otherwise excluded by the homeowners policy. It provides liability and medical payments coverage on any inboard or inboard-outdrive powered watercraft, sailing vessels 26 feet or more in length, and watercraft powered by one or more outboard motors exceeding 25 total horsepower.


What does personal liability insurance protect against?

The named insurer and family members against legal liability arising out of their personal acts. Not negligence.


What does the insurer pay in personal liability insurance? 2 Where is the coverage found?

-The insurer pays amount for which the insured is found legally liable, up to the policy limits
-The insurer also pays defense costs

-The coverage is found in Section II of the Homeowners policy


What two liability coverages are provided to homeowners under Section II?

Coverage E: Personal liability, Minimum $100,000 per occurrence
Coverage F: Medical Payments to others, $1000 per person


Under Section II, What is Coverage E? What are the three characteristics?

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 negligence
-The coverage is broad and based on legal liability
-The policy contains a per-occurrence limit
-The insurer provides a legal defense, even if the suit is frivolous or fraudulent


Under Section II, What is Coverage F? What are the four characteristics?

A Mini-Accident policy

-Medical 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 liable
-Coverage does not apply to the insured or regular residents of the household, other than a residence employee
-Coverage applies even if the injury occurs away from an insured location


What are the exclusions that apply to both Coverage E and Coverage F? 10

-Liability arising out of the use of a motor vehicle, with some exceptions
-Liability arising out of the use of an aircraft, hovercraft, or certain watercraft
-Expected or intentional injury
-Business activities, with some exceptions
-Professional services
-Liability arising out of the use of an uninsured location
-War or other hostile military acts
-Liability arising out of the transmission of a communicable disease
-Bodily injury or property damage arising out of sexual molestation, corporal punishment, or physical or mental abuse
-Liability arising out of the use, sale, manufacture, delivery, transfer, or possession of controlled substances


How much and for how long will insurers pay under Coverage F?

They will pay for necessary medical expenses incurred or medically ascertained with three year from the date of the accident.


Under medical payments to others, what are the insured locations? 8

- Residence premises show in the declarations
-Any other residence acquired during the policy period
-Rented garage or storage unit
-Nonowned premises where an insured is temporarily residing, such as a motel room
-Vacant land other than farmland
-Land owned or rented to an insured on which a residence is being built for an insured
-Cemetery plots or burial plots
-Parts of a premises occasionally rented to an insured for nonbusiness purposes, such as a hall rented for a wedding reception


What exclusions apply only to Coverage E? 6

-Contractual liability
-Property owned by the insured
-Property in the care of the insured, with some exceptions
-Workers compensation
-Liability for a nuclear incident
-Bodily injury to an insured


What exclusions apply only to Coverage F? 4

-Injury to a resident employee off an insured location
-Workers compensation
-Injuries that result from nuclear energy
-Persons regularly residing on the insured location


What are coverages are automatically included under Section II in a homeowners policy? 4

-Claims expenses
-First-aid expenses
-Damage to property of others - Up to $1k per occurrence for property damage caused by an insured.
-Certain loss assessments are covered up to $1,000


What is the condition under Section II regarding Limit of Liability? 2

-The insurer’s total liability under Coverage E for all damages arising from one occurrence will not be more than the limit shown in the declarations.
-The insurer’s total liability for medical expenses for bodily injury to one person resulting from an accident will not exceed the Coverage F limit shown in the declarations