The following glossary of coverages describes each type of insurance in general and
does not guarantee coverage under any or each of these forms. For specifics
regarding coverage, please read your policy carefully and call to discuss.
Automobile
Insurance
Homeowners
Insurance
Condo-Owner
Insurance
Inland Marine Insurance
Liability Coverage
The liability coverage
of the personal auto policy provides protection against legal liability arising out of the
ownership or operation of an automobile. The insuring agreement agrees to pay damages for
bodily injury or property damage for which the insured is legally responsible because of
an automobile accident.
The liability limit can
be written as a single limit that applies to both bodily injury and property damage. The
policy can also be written with split limits in which the limits of insurance for bodily
injury and property damage are stated separately.
The insuring agreement
also states that in addition to the payment of damages for which the insured is legally
liable, the insurer also agrees to defend the insured for all legal defense costs. The
defense cost is in addition to the policy limits.
Personal Injury Protection (PIP)
This is an endorsement
that adds no-fault benefits. No-Fault means that in the event of an automobile accident,
each party collects from his or her own insurer regardless of fault. No-fault benefits are
limited to the injured person's actual economic loss, and are paid as specified by the law
of the insured's state. Payment could be made for such losses as loss of earnings
resulting from bodily injury and medical and funeral expenses. Other expenses can also be
considered. The PIP endorsement is only available in certain states with No-Fault Laws.
The endorsement applies only to bodily injury and not to property damage. (The state of
Michigan is the exception to property damage.) No-Fault Laws vary widely from state to
state.
Medical Payments Coverage
The insuring agreement
states that the insurer will pay all reasonable and necessary medical and funeral expenses
incurred by an insured because of bodily injury caused by an accident. Payment can be made
for expenses incurred within three years from the date of the accident. The insured is the
named insured and family members, and any other person injured while occupying a covered
auto. Pedestrians or cyclists are also considered the insured when struck by a vehicle.
These payments are made without regard to fault.
Uninsured/Underinsured Motorist Coverage
Uninsured Motorist Coverage
This insuring agreement
pays for bodily injury to an insured who is injured by an uninsured motorist, a
hit-and-run driver, or a driver whose insurer becomes insolvent. Some states offer
coverage for property damage as part of the uninsured motorist coverage. Usually when
property damage is added a deductible would apply.
Underinsured Motorist Coverage
This coverage can be
added to the policy to supplement the uninsured motorist coverage. The coverage must be
added to all automobiles listed on the policy, and it must be added for the same limit as
the Uninsured Motorist Coverage. Underinsured motorist coverage applies when a negligent
driver has liability limits at the time of an accident, but the liability limits carried
may be insufficient to pay for damages that the negligent driver is responsible for. This
is when the insured's underinsured motorists coverage would apply and payment for the
difference could be made. The two coverages are mutually exclusive and do not overlap or
duplicate each other. An insured can collect under one coverage or the other depending on
the situation, but not under both.
Physical Damage Coverages
Collision Coverage
This coverage provides
protection against the upset of your auto or non-owned auto or a collision with another
vehicle or object. Collision losses are paid regardless of fault.
Specified Cause of Loss Coverage
This coverage provides
protection only for certain losses. The losses are fire, lightning, explosion, theft,
windstorm, hail, earthquake, flood, mischief,
vandalism, and the sinking, burning, collision, or derailment of a conveyance transporting
the insured vehicle.
Comprehensive Coverage
This coverage provides
protection against any loss or damage to a covered auto resulting from loss other than a
collision or upset, or a loss specifically excluded. This coverage also provides for
supplemental payments for transportation expenses in the event of total theft of a covered
auto or a non-owned auto. The auto must be insured for comprehensive or specified cause of
loss coverage. Coverage begins forty-eight hours after a theft of a covered auto. Payments
end when the auto is returned to use or the insurer pays for its loss.
Endorsements
Extended Transportation Expense Coverage
(Rental Reimbursement)
This coverage applies
when a covered auto or non-owned auto is withdrawn from use more than twenty-four hours
due to a loss, other then theft. The insuring agreement agrees to pay up to the stated
amount for expenses incurred in renting a vehicle. The coverage usually carries a per day
limit and a maximum amount limit.
Towing and Labor Coverage
This coverage pays for
towing and labor cost each time a covered auto or non-owned auto is disabled, up to the
stated amount.
The homeowners policy
provides protection against the financial consequences of personal losses. A homeowners
policy is a combination of property and liability coverages. The homeowners policy is
tailored to meet the needs of a homeowner. The following is a basic outline of the
homeowners (HO-3) policy and the endorsements most widely used on the HO-3 policy.
The HO-3 policy provides
coverages for one or two family dwellings that are owner occupied. The HO-3 policy
provides coverage against risks of direct physical loss to real property, except for those
causes of loss that are specifically excluded. Personal property is covered against direct
physical loss caused by a specified peril. In addition to the coverages stated under
Section I, several additional coverages are included. Some of the coverages included are;
debris removal, fire department charges, reasonable repairs charges, property removal
charges, and coverage for trees, shrubs and plants. Coverage is also included for loss
involving credit cards, forgery, and counterfeit money. These additional coverages are
included to provide protection for the insured following a covered property loss. Each
additional coverage has limitations and is subject to certain conditions.
Dwelling
This amount of insurance
applies to the dwelling and attached structures. The limit of insurance for the dwelling
is based on the value of the home and what it would cost to replace the home.
Other Structures
This coverage limit
applies to detached structures such as a garage or storage shed. The limit of coverage is
set at 10% of the dwelling. The insured can purchase a higher limit.
Personal Property
Coverage C provides
worldwide coverage for personal property of the insured. Special limits apply to some
types of property, and some property is excluded from coverage. The overall limit for
coverage C is 50% of the dwelling limit. Coverage C can be modified in several ways with
endorsements.
Loss of Use
This coverage applies in
the event of a loss under Coverage A. If the insured was to temporarily lose use of the
dwelling this coverage would apply. Payment would be made for expenses incurred to live
elsewhere following a loss that makes the home unsuitable for living. Another method used
to determine payment for loss of use is fair rental value, which is the amount of rent
that could reasonably be charged for the premises, less any expenses that do not continue
while the premises are unsuitable for living.
Personal Liability
Section II of the
homeowners policy provides liability coverage for personal loss exposures. The insuring
agreement under Coverage E provides liability coverage if a claim is made or suit is
brought against an insured because of bodily injury or property damage. Coverage is
provided for the residence premise as well as any other premises used by the insured, as a
residence, permanently or temporarily. Liability coverage is provided for the named
insured and members of the named insured's household who are relatives. Personal liability
has a basic limit of $100,000 per occurrence, which the insured may increase for an
additional premium. In addition to the basic limit, Coverage E also provides additional
coverages for expenses such as defense cost, expenses incurred providing first aid to
others, damage to property of others and loss assessment charges. The additional coverages
provided under Section E are subject to limitations and certain conditions.
Medical Payments
This coverage will pay
the necessary medical expenses for bodily injury of others. Coverage applies to accidents
that occur on the insured premises or any location when caused by action of the insured.
The coverage has a basic limit of $1,000 per person. The insured may select higher limits.
Endorsements
Inflation Guard Endorsement
When this endorsement
is added to the policy, it increases the limit of coverage for A, B, C, and D. The insured
selects the percentage of increase for the year and the limits are automatically increased
at certain dates throughout the year.
Earthquake Coverage Endorsement
Earthquake coverage is
excluded under Section I of a homeowners policy. Adding this endorsement removes the
exclusion and adds earthquake coverage which is subject to a deductible for each coverage
under Section I.
Increase Other Structures Limit
This endorsement
increases the limit under coverage B, Other Structures.
The limit for unattached structures on the residence premise would be
increased, and the increase would be in addition to the limit already provided.
Increase Special Limits
Certain types of
personal property under Coverage C have special limits of liability. Adding this
endorsement increases the limit for those particular types of property.
Scheduled Personal Property
The scheduled personal
property endorsement is used to provide coverage for risk of direct loss for such items as
jewelry, furs, cameras, musical instruments, silverware, golfer's equipment, fine arts,
postage stamps and rare coins. Scheduled property can be insured for any amount the
insured requires.
Personal Property Replacement Cost
Property loss
settlements under the homeowners policy are made on an actual cash value basis. When the
replacement cost endorsement is added, the loss settlement payment would be sufficient to
replace the item for the cost at the time of loss without deductions for depreciation.
The H0-6 policy is a special
form of homeowners insurance that was designed to meet the unique insurance requirements
of owners of condominium units and cooperative apartments. An insured can only qualify for
an H0-6 policy by being an owner occupant of a residential condominium unit or a
cooperative apartment. The insured premises is defined as the unit where the insured
resides, an H0-6 policy can not be used to insure a unit owned by the insured but rented
or leased to others. The condominium unit is defined as the space between the walls,
ceiling and floor. Sometimes unit owners are responsible for parts of the unit beyond the
walls, ceiling and floor. Condominium unit owners also have an undivided interest with
other unit owners in common areas of property. Common areas of property could include the
land, stairways, halls, parking and storage areas, and the heating and cooling system. The
unit owner's responsibilities are usually outlined in the condominium agreement and
bylaws. The major loss exposures for unit owners are loss to real property, loss to
personal property, and legal liability. The following is a basic outline of the H0-6
policy and the endorsements most widely used on the H0-6 policy.
Dwelling
This coverage applies to the
insured's real property, which is the unit. Coverage is provided on a named perils basis
and is separated into four categories.
The first category includes
alterations, appliances, fixtures, and improvements that are part of the building and
contained within the residence premises such as built-in appliances and cabinets,
electrical fixtures, and similar items of this nature.
The second category relates to
items of real property that pertain exclusively to the residence premises, such as
exterior glass or trees and shrubs that may be located on a patio that is part of the
residence premises.
The third category includes
property that is the responsibility of the unit owner to insure under an agreement of a
corporation or association of property owners. Insurance for this category of property
provides coverage for any portion of the common areas of the building that the association
agreement states is the insurance responsibility of the unit owner.
The final category of property
relates to structures owned solely by the insured at the location of the residence
premises but are not a part of the residence premises. This category could include a
private garage that was not attached to the residence premises but located elsewhere in
the condominium complex.
The basic limit of liability
under coverage A is $1,000, which can be increased if necessary. If the association or
cooperative insurance policy is written on a bare walls basis, then the unit owner would
have to provide coverage for the entire interior of the unit. It is important for the unit
owner to review the condominium or cooperative association's coverage to determine if the
basic limit for Coverage A of the H0-6 policy is adequate.
Personal Property
This coverage limit applies to
the personal property of the unit owner. The limit of insurance is selected by the unit
owner. The unit owner's personal property may include such items as furniture, clothing,
television and stereo equipment, books, records compact discs and tapes. It could also
include any items not considered part of the building structure. Items such as carpeting,
if placed over finished flooring, would be considered personal property, but carpeting
placed wall to wall over a rough subfloor or concrete slab is usually considered part of
the building.
Loss of Use
This coverage is provided if a
loss is caused by an insured peril to covered property or to the building containing the
property, if it makes the residence premises unfit to live in. The limit of insurance is
40 percent of Coverage C limit.
Personal Liability
This provides coverage if a
claim is made or suit is brought against the insured because of bodily injury or property
damage caused by a covered occurrence. Personal liability has a basic limit of $100,000
per occurrence, which can be increased for an additional premium.
Medical Payments
This coverage will pay the
necessary medical expenses that are incurred or medically ascertained within three years
from the date of an accident causing bodily injury to someone other than an insured.
Coverage applies to accidents that occur on the insured premises, or any location, when
caused by action of the insured.
Endorsements
Unit Owners: Special Coverages (A)
This endorsement can be used
to change Coverage A of the HO-6 to provide coverage for risk of direct loss. When this
endorsement is used, all direct loss to real property, which is the unit, is covered
unless specifically excluded.
Unit Owners: Rental to Others
This endorsement provides
property and liability coverage for the unit owner while the residence premises is
regularly rented or held for rental to others. Theft coverage is provided for personal
property at a rented condominium, however, high value items are not covered. Coverage for
medical payments are also included.
Loss Assessment Coverage
This endorsement increases the
limit of liability for the loss assessment coverage provided in the policy.
Loss Assessment Coverage for Earthquake
This endorsement provides
coverage for loss assessment made against the unit owner by a corporation or association
of property owners due to the peril of earthquake.
Unit Owners: Special Coverage (C)
The H0-6 provides coverage on
a named-peril basis, when this endorsement is added, Coverage C is changed to provide
coverage for all direct loss to personal property unless specifically excluded.
An inland marine policy
provides coverage for property transported from one place to another, goods in transit,
bridges, tunnels, television broadcasting towers and other means of transportation and
communication. Inland marine insurance also includes various floater policies that provide
coverage for personal property. An inland marine floater policy is used to provide
coverage that floats or moves along with the covered property as it changes locations.
There are no standard inland marine floater policies, however, most floater policies share
the following four characteristics: (1) The coverage can be tailored in order to insure a
specific type of property for the insured. (2) The insured can select the appropriate
policy limit for the property. (3) Floaters are typically written on an all risk basis
which means all direct physical losses to property are covered, except for specially
excluded losses. (4) Most floaters cover the property anywhere in the world, however, fine
arts are usually covered only in the United States. The following is a brief explanation
of the inland marine personal articles floater.
An inland marine personal
articles floater is used to insure valuable personal property that often requires broader
coverage than that provided by an insured's homeowner policy, due to the various
exclusions and limitations on homeowners coverages.
The personal articles floater
can be used to insure the following nine optional classes of personal property.
Jewelry
Most personal jewelry can be
included on a floater, however, jewelry is given more consideration than other personal
items so should be carefully selected before scheduling.
Furs
Fur coats, personal fur items
consisting mostly of fur, garments trimmed with fur and even imitation fur can be included
on a floater. Each item must be separately listed with a specific amount of insurance.
Fine Arts
Fine arts can include private
collections of paintings, antique furniture, rare books, glasses, ornament knickknacks,
and manuscripts. Each item must also be listed in the schedule with a specific amount of
insurance. Fine arts are insured on a valued basis which means if a loss occurs, payment
would be made for the amount of insurance stated in the schedule for that particular item
.
Cameras
Most photographic equipment can
be included in this class of property. Each
item must be described on a schedule with an amount of insurance. Items usually included
are, motion picture recording equipment, projection machines, films, binoculars, and
telescopes. Smaller miscellaneous items can sometimes be insured for a total value without
scheduling each item.
Musical Instruments
Most personal musical
instruments, which includes sound and amplifying equipment, can be listed on a floater.
Each item should be listed on a schedule with the requested amount of insurance coverage.
Silverware
Silverware and gold ware can be
insured under the personal articles floater. Each item must be listed on a schedule with
the amount of insurance.
Stamps and Coin Collections
Valuable stamps and coin
collections can be insured under the personal articles floater on either a scheduled basis
or on a blanket basis. When the blanket basis is used the amount of insurance would apply
to the entire collection.
Golfers Equipment
Most golf equipment can be
included on a floater including the insureds golf clothes. All golfing equipment must be
on a schedule with the requested amount of insurance stated.
