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Last Post 08/08/2010 11:07 AM by  Leland
Storm loss Questions
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Leland
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08/06/2010 7:03 PM
Wow, how many times do I have to explain it?

It doesn't matter if the lawn is covered.

That was why I used that example.

In Ray's example the tree itself and the lawn it fell on were not covered. ALE is still triggered.

Let's go over Ray's example:

The tree is not covered.

The lawn is not covered.

The garage is not damaged.

The house is not damaged.

But still, Ray, a VERY experienced adjuster, thinks that ALE is triggered.

Now I spent a lot of time writing that deposition out. I thought it would be the best way to really illustrate how a coverage decision is made.

You have to take it step by step, analyzing each word, carefully reading the policy.

That's how lawyers do it.

Staff supervisors learn to do it the same way- carefully, step by step.

Here's the policy wording again:

If a loss under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expense incurred by you so that your household can maintain its normal standard of living.

Now let's go step by step:

1) wind tearing shingles off a roof is a Section I loss.

2) The debris from the section I loss tears up the lawn.

3) The area of the residence premises where the insured resides (house, lawn,outhouse, etc.) is not fit to live in because the insured is blind and can't get to the toilet safely.

Please don't tell me the insurance doesn't cover blindness.

I said it before, and it's well established in case law: the insurance company takes the insured as he is.

If they don't want to insure blind people, they need to decide that before they write the policy.

The guy is entitled to ALE because his loss fits the term of the policy.

Now if you disagree, here's how you can prove me wrong:

1) show that the loss was not a loss under Section I
2) show that the lawn and/or outhouse is not part of the residence premises
3) show that the lawn and/or outhouse is not part of the residence premises where the insured "resides"
4) Show that the loss does not make the part where the insured resides "unfit" to live in.
5) show that the guy is not really blind
6) show that he actually has an inside bathroom he is keeping secret.

Any one of these 6 would help you write a denial letter.

Saying that the lawn is not covered property is not a proper way to deny the claim.

If you really are set on denying the claim #1 is a good bet. You could argue that the wind tearing off the shingles is one loss, and the damage to the lawn is a separate loss that is not covered because the lawn is not covered. So instead of one loss, you could argue that there are TWO losses; one is a Section I loss. and the other is not. After you decide that, then you could say that the lawn damage is NOT a Section I loss. To protect yourself, you could ask your supervisor to write the denial so you don't get blamed. Also you could find an attorney to tell you that the denial was correct, that way it is very hard to prove you acted in bad faith.

So in my opinion it would be possible to write an intelligent, logical denial letter for either claim scenario.

I wouldn't want to do it but it could be done.

But if you're not careful and you deny it by simply stating that the lawn is not covered I think you might end up like the adjuster in my deposition.

Think about this real carefully:

If a loss under Section I makes that part of the "residence premises" where you reside not fit to live in...

The policy has to talking about damage that could occur to property that is not covered!

We know that a lawn is not covered property.

We know that "residence premises" can include lawns, because it includes grounds.

So if you think this through it means ALE can be triggered by damage that is not covered as long as the proximate cause is a Section I loss.





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swink_d
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08/06/2010 7:30 PM
Mr Policy Holder

when it is storming outside, where do you go?
 
 
and the other Scenario
 
Ms PH who pays for your physical therapy
 
 
 
 
 
 
 
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DelGroves
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08/06/2010 11:45 PM
Interesting discourse. Here's my answer(s) noting that it's difficult to construct a 'what if' scenario and taken into account all the variable. So, some assumptions are necessary. Regardless, a coverage analysis can still be made and which can make allowances for facts to be determined.
 
First to recap some salient facts per the scenario, as given:
  • no damage to covered property
  • wind felled tree onto lawn
  • access blocked 'from wheel chair ramp to the garage'
 
ANALYSIS
 
Cov D - ALE
No coverage trigger: Tree felled by wind but did not strike covered property.
 
Additional Coverages
Coverage provided without regard to any other coverages (including Cov D)
Tree Debris removal - $1,000 total limits (1 or more trees); $500 per tree
 
Loss
$500 max. to remove the one tree **
Not subject to deductible
 
** Section 1 - Property Coverages A. Coverage A - Dwelling, a. the dwelling on the "residence premises" shown in the Declarations, including structures attached to the dwelling; and.....
 
The facts as presented state the garage is detached (therefore there must be clear space (grass lawn) between the dwelling and the garage) and, the felled tree 'blocking access from the wheel chair ramp to the garage'. Though not explicit in the given scenario, will assume the ramp attaches to the dwelling and dumps into the lawn upon which (at some undefined point) the tree has landed.
 
The facts as presented do not answer the coverage question: 'blocks a ramp...designed to assist a handicapped person to enter or exit the dwelling building'.
 
The facts as given state the tree did not damage covered (real) property thus the ramp itself has not been damaged. Since the ramp is presumed to attach only to the dwelling, is the insured prevented from exiting the end of the ramp into the lawn? If not then Additional Coverage is not triggered. If the ramp attaches only to the garage then there is no Additional Coverage for 'enter or exit' of any structure other than the dwelling building (which does not include detached structures (such as the garage).
 
EPILOGUE
 
The coverage analysis would differ greatly had the tree felled by wind struck covered property (for example, a handicap ramp attached to the dwelling).
 
 
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swink_d
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08/07/2010 12:45 AM
Why do say no deductible applies to the tree? 
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DelGroves
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08/07/2010 7:41 AM
I should have been more thorough in my post to include my reasoning why the deductible is not applicable. Thanks.

DEDUCTIBLE

Unless otherwise noted in this policy, the following deductible provision applies:

Subject to the policy limits that apply, we will pay only that part of the total of all loss payable under Section I that exceeds the deductible amount shown in the Declarations.

In my opinion, the deductible would apply to E. Additional Coverages, 1. a. (as) This expense is included in the limit of liability that applies to the damaged property.

But the deductible would not apply to E. Additional Coverages, 1. b. (because) This coverage is additional insurance. (and therefore not subject to the limit of liability that applies to the damaged property).
 
I suppose in a real vs. hypothetical situation, it might be necessary to submit a coverage question to counsel re: does 'policy limits' in the Deductible definition include the '$1,000 limit' and the '$500 of this limit' in E. Additional Coverages, 1.b. ? My assumption is that, at the very least, their response would be that this issue is an ambiguity and should be resolved in the insureds' favor.
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Leland
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08/07/2010 10:23 AM
Show me where in the policy it says ALE is only triggered when covered property is damaged.

It's not there.

Several of you guys are making that up because that's how you have been taught.

Your making an assumption.

Please read the ALE carefully.

It says residence premises.

Residence premises includes grounds.

Grounds are not covered property.

BUT DAMAGE FROM A SECTION 1 LOSS (INCLUDING DAMAGE TO GROUNDS) CAN TRIGGER ALE.

IN OTHER WORDS YOU CAN HAVE DAMAGE TO PROPERTY THAT IS NOT COVERED AND STILL GET ALE SOMETIMES!

Read the policy.

Stop throwing around terms that you heard from other adjusters, stop making assumptions, stop just repeating how you always did it before.

IF THE COMPANY WANTED ALE TO ONLY APPLY AFTER THERE IS DAMAGE TO COVERED PROPERTY ONLY THEY WOULD HAVE WRITTEN IT THAT WAY.


THEY WROTE SOMETHING QUITE DIFFERENT.

THIS IS THE POLICY LANGUAGE RIGHT HERE:

If a loss under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expense incurred by you so that your household can maintain its normal standard of living.

NOW I WILL RE WRITE THE POLICY TO CONFORM TO WHAT YOU GUYS KEEP SAYING:

HERE IS THE NEW FANTASY MADE UP WORDING:

If a COVERED LOSS TO THE DWELLING OR SOME OTHER BUILDING THAT YOU NEED FOR LIVING BECOMES UNFIT TO LIVE IN, we cover any necessary increase in living expense incurred by you so that your household can maintain its normal standard of living.

NOW, TO MAKE IT REALLY CLEAR,

THE NEW FANTASY MADE UP WORDING DOES NOT EXIST- IT IS MADE UP.

WE NEED TO USE THE ACTUAL WORDS IN THE POLICY.







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swink_d
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08/07/2010 11:30 AM
Posted By D Groves on 07 Aug 2010 07:41 AM
I should have been more thorough in my post to include my reasoning why the deductible is not applicable. Thanks.

DEDUCTIBLE

Unless otherwise noted in this policy, the following deductible provision applies:

Subject to the policy limits that apply, we will pay only that part of the total of all loss payable under Section I that exceeds the deductible amount shown in the Declarations.

In my opinion, the deductible would apply to E. Additional Coverages, 1. a. (as) This expense is included in the limit of liability that applies to the damaged property.

But the deductible would not apply to E. Additional Coverages, 1. b. (because) This coverage is additional insurance. (and therefore not subject to the limit of liability that applies to the damaged property).
 
I suppose in a real vs. hypothetical situation, it might be necessary to submit a coverage question to counsel re: does 'policy limits' in the Deductible definition include the '$1,000 limit' and the '$500 of this limit' in E. Additional Coverages, 1.b. ? My assumption is that, at the very least, their response would be that this issue is an ambiguity and should be resolved in the insureds' favor.

If the policys intent was to NOT have the deductible applied , they  would have written (Otherwise noted)
 

"This coverage is additional insurance. No deductible applies to this coverage."

 
Like it is written ( Otherwise noted) in sections E.4. and  E.6.
 
 
 
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Leland
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08/07/2010 12:08 PM
I agree the deductible applies.

The policy says:

Subject to the policy limits that apply, we will pay only that part of the total of all loss payable under Section I that exceeds the deductible amount shown in the Declarations.

The grammar is awkward but here is what they are getting at- they DID NOT want to say this:

we will pay only that part of the total of all loss payable under Section I that exceeds the deductible amount shown in the Declarations.

Because if they said it that way, an insured could argue there is no policy limit.

so they stuck these words in front:

Subject to the policy limits that apply

They are not trying to say that the deductible apply only to lines of coverage that have specific limits.

I could be wrong. I know there are some lines of coverage that are often expressly* exempt from application of the deductible. One is example is Fire Department Service charge, another is sandbagging on a flood policy.

But I'm pretty sure I'm right- the deductible applies to any part of the loss unless it is specifically exempt or it gets absorbed in the "excess' portion of the loss.


(* spelled out in writing)

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Leland
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08/07/2010 12:14 PM
So if you apply the deductible and pay the ALE this is the Statement of Loss:

STATEMENT OF LOSS

Item: Debris Removal (Covg E)
removal of tree blocking handicapped access per Acme Tree Service $1175.00
at policy limit per tree 500.00

Item: Additional Living Expense (Covg D)
increase in physical therapy of $200.00 at 3 days 600.00
total of debris removal and Additional Living Expense 1775.00
total of debris removal at policy limit and Additional Living Expense 1100.00
Total deductible at 1% of $120,000 Covg A limit 1200.00
portion of deductible absorbed under debris removal 675.00
remainder of deductible not absorbed under debris removal 525.00

net claim (1100.00 less 525.00) 575.00


If you decide not to pay ALE the net claim is ZERO because the tree removal is less than the deductible.

In my opinion the only two payments that could be made are $575 with ALE and $0.00 without.
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DelGroves
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08/07/2010 1:07 PM
You obviously are passionate. Reasonable minds can disagree.

As I understood the scenario, the form in question is the HO 00 03 10 00 (1999).

Under Cov D, the policy states:

If a loss covered under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living...

The definition of "Residence premises" includes grounds. But, land is excluded under Section I - Cov A & B and therefore loss to that portion of "residence premises" which is land (grounds) cannot sustain a 'loss covered under Section I'. As grounds are an excluded portion of the 'residence premises' then damage to it does not trigger ALE. Though a moot point to the scenario being discussed, trees felled by wind which do not strike covered property is not a covered peril.

I understand your distinction that available coverage anywhere else in Section involving 'that part of the "residence premises" could trigger ALE. However, for the reason stated above, any such loss involving grounds (land) would not because such damage is excluded (not available).

The Additional Coverage is a separate issue which is not dependent upon the trigger of ALE. As stated in my original analysis, there ares insufficient facts provided as to where the ramp attaches but in evidence is that the tree did not strike the ramp; rather it fell onto the grass (lawn/grounds/land). Further, the applicable section of Additional Coverage is specific as to the coverage trigger: the tree must "blocks a ramp...designed to assist a handicap person to enter or exit the dwelling'. As I previously noted, the coverage issue in question is if the blockage involves enter/exit the dwelling only; not other structures nor any other portion of the 'residence premises'.

The other point of coverage is the application of the Deductible to the relevant section of Additional Coverage. Again, reasonable minds can disagree and I suspect we are not the first. I imagine this issue has been addressed by PLRB and/or FC&S, if not the courts. I, too, would like clarification so that I do not misapply coverage. But, to say that there is no ambiguity in insurance policies is counter to the realities which exist, have existed and will continue so long as there are contracts.
 
P.S. - if you decide to apply ALE coverage please consider the Other Insurance clause when determining the loss payable.

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claims_ray
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08/07/2010 1:12 PM
I agree with you DelGroves and that was my point in my posting of the Section 1 Property Covered section although it mostly fell on deaf ears.
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Kemahsabe
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08/07/2010 6:25 PM
Leland,

Good posts - very well done. I appreciate your efforts. You must be a heckuva typist!

No question in my mind that ALE is triggered by a Section I, Add'l Coverages loss, and that a $575 check to the insured would be appropriate.

To address the comment that IA's don't have authority, the large carrier that I work for requires that whenever possible we are to inspect the loss, write up an estimate and cut a check for the insured on the first and only site visit. If we can't do it we have to explain why. I have enough authority to close 95% of the claims I see. The insureds love it and are really impressed to get a printed check on the spot. And this carrier is not the only one that does it.
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Leland
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08/07/2010 7:19 PM
I appreciate the idea that since land is excluded under one of the Section I paragraphs, that a reasonable person might consider the loss to not qualify as a Section I loss.

But the way I see it, for Ray's example, the loss is a debris removal loss specifically described under SECTION I - PROPERTY COVERAGES.

Under the scenario I described, wind damaged roofing tearing up the lawn- that would be a loss under SECTION I - PERILS INSURED AGAINST

And yes, there is an exclusion for land.

That means the policy won't pay for fixing the land, or the grass growing on it.

But Ray's example is a specifically covered loss regardless if there was some land damage that is not covered. How could anyone say Ray's loss is not a "Section I" loss??

My example is a little less clearcut.

The damage to the roof is clearly section I. But the damage to the lawn maybe not because of the exclusion.

Please read this again:

If a loss under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expense incurred by you so that your household can maintain its normal standard of living.

BY POLICY DEFINITION "RESIDENCE PREMISES" INCLUDES LAND!!!!

SO THE POLICY CLEARLY HAS THE POSSIBILTY THAT DAMAGE TO EXCLUDED LAND COULD CAUSE A SITUATION WHERE THE INSURED CAN'T LIVE AT THE RESIDENCE PREMISES AND DESERVES ALE!

THE DAMAGE TO THE LAND IS NOT COVERED BUT THE ALE IS!

Now ask yourself this- is it an accident that the company included land that is excluded in one part of the policy and included it the definition of another part?

Why would the company EVER bother to include land in the definition of "residence premises"???

The answer is fairly simple:

There's a bunch of stuff that's not covered: the pet cat, the goldfish, grandma's roses.

There's a bunch of stuff that is covered: The house, the garage, the fence.

There's money for the poor insured to temporarily move out or cover extra food costs.

AND, HERE'S THE EXTRA PART:

THERE IS MONEY TO HELP THE INSURED MOVE OUT TEMPORARILY WHEN THE PLACE IS TRASHED BY A HURRICANE EVEN IF IT IS NOT EXACTLY TRASHED BY SPECIFIC DAMAGE TO THE HOUSE AND THE GARAGE.

That is the only logical explanation of why the insurance company included "land" in the definition of "residence premises" but also excluded coverage for damage to land.

Here's another scenario:

Let's say a car hits a fire hydrant owned by the insured. The water sprays for hours, turning the whole yard into mud 1' thick.

Insurance company would pay for the hydrant, deny the damage to the lawn, and pay ALE for the week it takes to let it dry out so the insured can walk to their house.

Seems reasonable to me.

Show me exactly where in the policy it says ALE is only payable if the unfit condition of the house is one and the same with the damage that is covered. It doesn't say that.





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Leland
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08/07/2010 7:22 PM
Anyway I apologize if I was rude in any of my previous posts.

I hope we all make a lot of money in this business and I wish everyone the best.
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Ray Hall
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08/07/2010 7:36 PM
The correct answer is the debris limit for one tree 500.00 the ALE is (4)  or (3) I would still recommend 4 @200.00 is a total of $1300. No deductible is applied to this loss as the covered loss (block wheel chair ramp) is additional insurance that does not have a deductible. Please do not try to climb these steep flag poll coverage questions I sometime post... be sure. Lets all just try to get along and let sbeau, Tom T, medulus, Chuck D be the binding arbitrator. pick only one.
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DelGroves
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08/07/2010 8:24 PM
I agree to disagree with you on those issues which I discussed. l will end my input on this evolving thread by stating my opinion about what may be an answer to your question: [paraphrased] "Why is land included in the description of residence premises?" For underwriting and rating purposes: to delineate the risk being insured.
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claims_ray
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08/07/2010 8:37 PM
I would also say the the grounds/ land/ lawn would be included for Liability protection within the policy in case of accidents that may occur.
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Leland
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08/08/2010 12:23 AM
At the risk of wearing this topic out I have done some checking and I notice that different versions of the HO3 and similar polices have different wording regarding ALE.

This version in Ray's scenario says "Section I losses" but other policies refer to "covered losses" and another one says " Losses insured".

Here's a different wording:

Additional Living Expense. When a Loss Insured causes the residence premises to become uninhabitable, we will cover the necessary increase in cost you incur to maintain your standard of living for up to 24 months.” “Losses Insured” included “Coverage A—Building Property.” Coverage A provided: “We cover: [¶] 1. alterations, appliances, fixtures and improvements which are part of the building contained within your unit; [¶] 2. items of real property which pertain exclusively to your unit; or [¶] 3. property which is your insurance responsibility under the governing rules of the condominium. …” (Italics omitted.) In “Section I—Losses Insured,” the policy stated: “We insure for accidental direct physical loss to the property described in Coverage A
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Leland
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08/08/2010 12:27 AM
And here is another version on a policy from the company that starts with A

Additional Living Expense
a) We will pay the reasonable increase in
living expenses necessary to maintain
your normal standard of living when a
direct physical loss we cover under
Coverage A Dwelling Protection,
Coverage B Other Structures
Protection or Coverage C Personal
Property Protection makes your
residence premises uninhabitable.

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Leland
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08/08/2010 11:07 AM
Not every carrier uses the standard ISO form

But the form does change due to court cases.

The ISO organization increases or decreases coverage based on their research of what makes sense due to lifestyle changes and court rulings.

It is possible that the "residence premises" wording on Ray's HO3 was changed from other versions precisely to cover situations like I described that weren't covered before.

I'm not saying that's for sure, but it is possible. I'm going to try and ask them because there probably is a reason why the wording is different. The wording dosn't just change on a whim, it is very carefully thought out, probably by a committee.

The wording changes in order to give or take away coverage as the ISO sees fit. ISO works with the insurance companies to change the forms. Some insurance companies prefer their own versions.


See this article below which mentions tree removal changes to a an even newer ISO version:

ISO's NEW HOMEOWNERS 2000 INSURANCE PROGRAM OVERHAULS
COVERAGES TO REFLECT COURT DECISIONS AND LIFESTYLE CHANGES

NEW YORK, May 17, 2000 — Insurance Services Office, Inc. (ISO) has unveiled a new homeowners insurance program, Homeowners 2000 (HO 2000), that updates coverages, adds a number of new optional endorsements, and introduces new rules to reflect the changes in coverages and endorsements.

Reflecting the times, HO 2000 policy enhancements include coverage ofgolf carts used in residential communities, personal effects and personal liability exposures of persons living in assisted-care facilities, and live-in companions of the named insured. ISO's overhaul of the homeowners policy forms reflects court precedents established since 1991 — the last time the ISO homeowners program underwent such sweeping review.

In all, ISO's HO 2000 Program incorporates more than 40 changes to the homeowners insurance policy forms, creates a new policy form — HO-5 — and 20 new optional endorsements. In addition, the ISO program introduces 18 new rules to complement new endorsements and changes 29 current rules.

"We came up with the new program after an extensive review of court rulings and lifestyle changes among an expanding and aging population," said Michael Fusco, ISO's executive vice president — insurance services. "With input from insurers and producers, we have expanded coverages for property, raised limits in some categories, revised coverages in a handful of instances, elaborated upon the intent of some of our existing policy language, and developed new optional endorsements," Fusco added.

"ISO considers the policy-form changes to be revenue-neutral for insurers, as loss costs for coverages that are broadened will be offset by curtailed coverages in other categories," Fusco noted.

Expanded property coverages include structures on residential premises used for storing business property of an insured or the insured's tenant.

The program raises coverage limits for additional living expenses for the insured homeowner who has to live elsewhere temporarily because the home has sustained a covered loss, and for specific categories of personal property, including securities, passports, personal records, watercraft, and electronic apparatus and accessories inside or upon motor vehicles; and theft of jewelry and firearms.

Additional coverages include higher limits for removal of fallen trees that damage covered property, or block and prevent the use of a driveway, or block and prevent the use of a handicapped access to the dwelling, as well as losses from electronic fund-transfer cards, and vandalism against grave markers.

The HO 2000 policy form also revises the coverage limit for money, which has been expanded to include scrip, stored-value cards, and smart cards. The new policy form provides that college students, attending school full-time and living away from home, are insured under the homeowners policy. The new policy form covers a full-time student who is under the age of 24 and is a relative of the insured homeowner.

Reflecting lifestyle changes, ISO's HO 2000 Program provides liability coverage for motorized golf carts when the insured owner uses the vehicle at a golfing facility or within the boundaries of a private residential community. Optional endorsements in the HO 2000 Program also cover the personal property and personal liability exposures of relatives of an insured residing in an assisted-living care facility, and of otherwise non-insured members of the household, such as the live-in companion of the named insured.

ISO has started filing the new Homeowners 2000 Program with state insurance regulators for implementation beginning in December 2000.
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