Author: David Thompson

In most major insurance filings there are policy changes that broaden coverage, some that restrict coverage, and some that claim to make "no change" in coverage. In this article, we'll take a look at the "best" changes (from a policyholder's perspective) in the new ISO HO2000 program. In another column, I'll examine the "worst" changes.

For the following analysis, you may want to compare these forms:

1.  Personal property used for business. The HO-91 program limited coverage for “personal property used at any time or in any manner for any business purpose.” The HO2000 program rewords the limitation to apply to personal property “used primarily for business purposes.” Therefore, the limitation would no longer apply for an insured who, for example, owns a personal computer and only occasionally uses it for business purposes.

2.  Golf cart liability. The HO-91 program provided liability for an owned golf cart on an “insured location” and while “on a golf course playing golf.” The HO2000 program adds coverage for several situations. Coverage applies if:

• The golf cart is inside a golfing facility AND it's either parked or stored there or being used to:
  
  a.  Play the game of golf.
  b.  Used for other leisure activity permitted by the golfing facility.
  c.  Travel to or from an area where motor vehicles or golf carts are parked or stored.
  d.  Cross public roads at designated points to access other parts of the golfing facility.

• The golf cart is inside a “private residential community” (not defined in the policy) if the roads are subject to the authority of the community and if the community has designated such roads for use by golf carts. The community must contain the insured’s residence. It’s common for insureds to live inside a planned community that allows the use of golf carts on their roads and permits residents to use a golf cart to go, for example, to the community clubhouse for recreational activities. Such golf cart use will be covered

3.  Business liability. Section II coverage now applies when an insured under the age of 21 years is engaged in a part time or occasional self employed business with no employees. Typical exposures covered would be a child of the insured who baby sits or cuts grass with a push mower for compensation. Interestingly, there is no limit on the earnings allowed for coverage to apply.

4. Other structures – business use. The HO-91 program excluded coverage for any other structure “used in whole or in part for business.” The HO2000 program rewords the exclusion to provide coverage for another structure used to store business property owned solely by the insured. (The business property cannot include gaseous or liquid fuels, except for fuel in a permanently installed fuel tank on a vehicle or craft.) For example, an insured stores yard tools in their detached garage and they use the tools in their landscaping business. HO2000 provides coverage for the detached garage, while HO-91 would not. The HO 04 42 endorsement is available to cover an “other structure” used in business if coverage is not afforded in the unendorsed policy.

5. Special limits of liability for Coverage C. Limits have been increased as follows:

•  Securities, etc. - from $1,000 to $1,500
•  Watercraft, etc. - from $1,000 to $1,500
•  Trailers, etc. - from $1,000 to $1,500
•  Theft of jewelry, etc. - from $1,000 to $1,500
•  Business property away from premises - from $250 to $500
•  Theft of firearms (and related equipment) - from $2,000 to $2,500
•  Electronic apparatus (in a motor vehicle) - from $1,000 to $1,500
•  Electronic apparatus (not in a motor vehicle,
   off premises, and used for business) - from $1,000 to $1,500

6. Coverage D limits are increased. The limits of Coverage D are increased as follows:

•  HO-2 & HO-3 - from 20% to 30% of Coverage A*
•  HO-5 - 30% of Coverage A (new form)*
•  HO-4 - from 20% to 30% of Coverage C*
•  HO-6 - from 40% to 50% of Coverage C*
•  HO-8 - 10% of Coverage A (no change)

   * May be increased by endorsement

7. Debris removal – trees. HO2000 increases the $500 limit for trees felled by wind or hail that have damaged a covered structure to a $1,000 limit. However, a limit of $500 for any one tree applies. Additionally, debris removal coverage will apply if the tree blocks vehicular access to a driveway into the residence premises or blocks access to a ramp or other fixture used to assist a handicapped person entering or leaving the dwelling.

8. Personal injury liability. This endorsement now includes $1,000 of loss assessment coverage for a personal injury type loss assessment. Insureds who live in a homeowners association are candidates for this endorsement even more so than in the past.

9. Damage to property of others. The $500 limit in Section II for “damage to property of others” has increased to $1,000.

10. Vandalism exclusion. The permitted vacancy time period has been increased from 30 to 60 days. However, see the coverage reduction information in the companion "Worst" article (see link below).

Bonus Good Thing: The theft exclusion for an insured being away from school more than 45 days has been broadened...they can now be away 60 days!

CLICK HERE for the Top 10 "Worst" HO2000 Changes

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