Saturday, October 29, 2011

Home Business Insurance Coverage Endorsement - Named Perils Policies

Home Business Insurance Coverage Endorsement

Named Perils Policies
Most all-risk homeowners policies are just sort of all-risk, because their coverage for contents/personal property is named perils coverage. There are exceptions, however. The personal property/contents coverage of some carriers' policies is all-risk coverage. This is an example of how an insurer may seek to compete with other insurers, including direct writers, by offering broader coverages at a comparable price.

It is differences like this that make comparison-shopping between homeowners policies of various companies difficult unless you have taken the time and trouble to have educated yourself. For example, if a direct writer's policy's contents coverage is named perils coverage, that insurer's agent, who only represents a single insurance company, would be unlikely to point out the differences between the coverage of the policies offered by the company he or she represents and one offered by a company whose homeowners policies include all-risk coverage on contents. Unless you know the difference and can assess that difference in terms of a potential noncovered loss exposure, you cannot make an informed decision.

Whether you have a named perils or all-risk homeowners policy, you are protecting your dwelling, other structures, and personal property from the following covered named perils. 

1. Fire and lightning

2. Windstorm or hail 

There are some important limitations to this covered peril. Coverage exists for the interior of buildings or the contents within a building caused by rain, snow, sleet, sand, or dust, unless the direct force of wind or hail first damages the building, causing an opening in the roof or wall through which entry of the rain, snow, sleet, sand, or dust enters. This restriction has tended to preclude coverage for rain, snow, sleet, sand, or dust damage that is the result of poor maintenance or that is caused by leaving doors or windows open. Home Business Insurance Coverage Endorsement

3. Explosion

4. Riot or civil commotion 

5. Aircraft (including self-propelled missiles and spacecraft)

This is actually a more common cause of loss than you might imagine. Think of how many news reports you have seen in your lifetime about a private airplane that has crashed and damaged or destroyed one or more homes. 

6. Vehicles 

There is an exception to this peril. No coverage exists to fences, driveways, or walkways caused by a vehicle that is owned or operated by a resident of the residence premises. Note that this exception applies only to these three limited categories of property. If you or another resident of your household has an accident and causes vehicle damage to your dwelling or garage, that damage will be covered. 

7. Smoke 

Here again, there is some qualifying and limiting language. Smoke means the sudden and accidental damage from smoke, including the emission or puff back of smoke, soot, flames, or vapors from a boiler, furnace, or related equipment, but does not include loss caused by smoke from agricultural smudging or industrial operations. 

If you experience a fire loss, or if a neighbor experiences a fire loss and you suffer resulting smoke damage to your house or contents, that smoke damage will be covered. 

8. Vandalism and malicious mischief

These two terms are essentially duplicative. Under the law of most states, if a word or phrase used in an insurance policy is not specifically defined, its meaning is determined by reference to dictionaries of ordinary usage. Therefore, if you see a word or a phrase in a policy and the policy does not define that word, check the dictionary. Home Business Insurance Coverage Endorsement

The vandalism and malicious mischief coverage does not apply if the dwelling has been vacant for more than sixty consecutive days immediately before the date of loss. This vacant property limitation does not apply to dwellings that are in the course of construction.

9. Theft 

The theft coverage is subject to several qualifications. First, the peril of theft includes attempted theft. This recognizes that an unsuccessful attempt to steal an item of property nonetheless can result in damage to or destruction of property. For example, you scare off a burglar who is trying to steal your television and the burglar drops the television, destroying it.

Theft also includes loss of property from a known place when it is likely that the property has been stolen. In other words, no one witnessed the disappearance of an item of property, but theft is the most likely explanation. For example, you discover that your lawnmower is missing from your unlocked garden/tool shed where you normally keep it between uses.

However, the peril of theft does not include loss caused by theft: 

  • committed by an insured;
  • in or to a dwelling under construction or of materials or supplies used in construction until after the construction is complete and the dwelling is occupied; or,
  • from that part of residence premises that is rented by an insured to a person who does not qualify as an insured. (This is yet another provision that reinforces the notion that a tenant's personal property is not something that the named insured under a homeowners policy has an additional interest in. It also reinforces that if you have a tenant, the tenant must procure his or her own insurance for his or her personal processions in order to protect them from the risk of loss.)
We'll continue to talk about other covered named perils in the next post. At mean time, if you are interested to learn more about secrets of insurance, you can get Home Business Insurance Coverage Endorsement right away!

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