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The 2011 Iso Homeowners: New And Improved


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Mary LaPorte

The ISO updates to the HO policy took effect on May 1, 2011.

The updates in the Homeowner coverage forms and related endorsements reflect ISO’s responsiveness to the changing needs of policyholders. These clarifications avoid ambiguity. The policy enhancements outweigh the minor reductions in coverage, and provide agents with a stronger contract to address the customer’s exposures more effectively

Many of the changes do not affect coverage, but clarify policy wording. Those include the definition of “insured”, the deductible provision and the “perils insured against” wording. In addition, some recent court decisions influenced changes in the areas of Collapse Coverage and Water Damage. These policy provisions have added wording to communicate the intent of the coverage more clearly and to eliminate any ambiguity. Here are some other changes:

Changes that Reduce Coverage

• Personal Property Located in Self-storage Facilities
There’s a 10% limit for personal property located in a self-storage facility. According to ISO, the increasing use of self-storage facilities during recent years means that losses for property located in them might go undiscovered for extended periods, potentially increasing the severity of the loss. Coverage can be increased by use of the newly introduced HO 06 14, Increased Amount of Insurance for Personal Property Located in a Self-Storage Facility.

Changes that Broaden Coverage

• Theft
ISO has broadened the policy to cover theft of property for a student away at school, as long as the student has been there at any time during the 90 days immediately before the loss. The previous form had allowed only 60 days. ISO recognized that because many students might leave personal property at school when returning home for summer break, the 60 days limitation was inadequate to provide coverage for the full summer period.

• Motor Vehicle Exclusion
ISO responded to agents concerns about the language used in the Homeowners 2000 policy. In both Section I – Property Not Covered and Section II – Liability Exclusions, the coverage did not extend to a motor vehicle unless used solely to service an “insured’s” premises. There were concerns that a motor vehicle (such as a riding lawn mower), otherwise covered would have no coverage if it had been used even once in the past to service a neighbor’s premises. The policy now states that there is coverage for a motor vehicle “used solely to service a residence” (and not the “insured’s” premises only).

• Toy Vehicle Provision
There was concern that the previous policy provided no liability coverage off premises for toy vehicles designed for use by small children. The policy now states that the motor vehicle exclusion does not apply off premises for a vehicle “designed as a toy vehicle for use by children under seven years of age, powered by one or more batteries and not built or modified after manufacture to exceed a speed of five miles per hour on level ground”. So, thankfully, now extends coverage to these toys - unless Dad “soups it up” to go more than five miles per hour!

• Expected or Intended Injury
The exclusion for Expected or Intended injury in the previous policy has an exception which states that the exclusion does not apply to “bodily injury” resulting from the use of reasonable force by an “insured” to protect persons or property. The exception now includes coverage not only for “bodily injury” in such a case, but “property damage” as well.

• Controlled Substance
The liability exclusion for loss resulting from the use, sale, manufacture, delivery, transfer, or possession of a controlled substance had an exception for the legitimate use of prescription drugs by a person following the orders of a licensed “physician”. Recognizing that dentists, nurse practitioners, and other health care professionals also have the legal right to prescribe drugs, ISO changed the wording to “following the lawful orders of a licensed health care professional”.

Good News, Bad News

Some of the policy changes, while reducing coverage in one way, broadened coverage in another. The most significant of these include:

• Electronic Equipment Limits
The Electronic Equipment coverage has been amended in response to agents’ concerns about a possible gap of coverage between the Homeowner’\s policy and the Personal Auto Policy for tapes, CDs, records, etc. that are in or upon an insured’s motor vehicle at the time of a loss.

A $250 sublimit now applies for antennas, tapes, wires, records, disks, or other media that are in or upon a motor vehicle.

The previous form provided a separate $1,500 sublimit for electronic apparatus and accessories used primarily for business while away from the residence premises and not in or upon a motor vehicle. ISO has removed this paragraph and increased the previous $500 off premises business personal property limit to $1,500.

• Vermin
The previous policy excluded coverage for loss caused by birds, vermin, rodents, insects, and animals owned or kept by an “insured”. The word “vermin” has always been subject to multiple interpretations, because it lacks a specific definition. Removing this word broadens of coverage.

At the same time, ISO added an exclusion for infestation, discharge, or release of waste products by animals to allow the Homeowners policy wording to be similar to the exclusion in ISO Commercial Property forms. The policy now excludes damage caused by “Nesting or infestation, or discharge or release of waste products or secretions, by any animals”.

Endorsements Changed, Added or Deleted

In addition to the changes to the Homeowners coverage forms, ISO changed some of the Homeowners endorsements. Here are a few of the highlights:

• HO 04 35 Loss Assessment Coverage
In response to insurers’ concerns that deductibles in the Association’s policy higher than $1,000 are common today, ISO has removed the special limit of $1,000.

• HO 04 43 Replacement Cost Loss settlement For Certain Non-Building Structures On The Residence Premises Endorsement
This optional endorsement will now provide replacement cost for swimming pools, therapeutic baths and hot tubs that are “inground” or “semi-inground,: with walls and floors made of reinforced masonry, cement, metal or fiberglass.

• HO 04 95 Water Back-Up And Sump Discharge Or Overflow
ISO has removed the $5,000 limit, replacing it with a schedule to provide selected limits of $10,000, $15,000, $20,000 or $25,000.

• HO 05 43 Residence Held in Trust
This endorsement is being replaced by HO 06 15 Trust Endorsement, allowing the policy to be issued in the name of the grantor (in most cases, the owner and resident of the home before the trust was established), rather than the name of the trust.

• HO 06 07 Limited Coverage For Theft Of Personal Property Located In A Dwelling Under Construction Endorsement
This new optional endorsement will provide limited coverage for theft of personal property in a dwelling under construction.

• HO 24 13 Incidental Low Power Recreational Motor Vehicle Liability Coverage Endorsement
ISO has reduced the coverage in this endorsement by adding motor scooters to the list of excluded vehicle types.

Mary LaPorte, president of LaPorte Consulting (Martin, MI), offers expertise in agency management, workflow, and Errors and Omissions analysis. You can reach her at (269) 672-7801; e-mail: [email protected]; or visit:

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