Author: Chris Boggs

Insurance Services Office (ISO), based on a 2016 survey of millennials, recently introduced the PM 00 43 – Your Belongings Form to allow insureds without a perceived need for a homeowners' policy to extend coverage to their personal property anywhere in the world. The form indicates a March 2019 effective date.

One reason ISO gives for the introduction of this form is the difference in living arrangements found among millennials. ISO's research suggests that more millennials are living at home and making use of ridesharing and home sharing options. This shift in living and transportation arrangements led ISO to create this form.

The introduction of this endorsement follows ISO's 9/1/18 introduction of the PP 33 42 – Personal Property Coverage for the Personal Auto Policy (PAP). This PAP endorsement resulted from the same survey that led to the new PM 00 43. In fact, both forms share some of the same limitations and issues discussed in this article.

PM 00 43 Overview

Valuation: The Your Belongings Form is an Actual Cash Value (ACV) form; however, the insured has the option to cover property on a Replacement Cost (RC) basis. Some property is not eligible for RC such as:

• Antiques, fine arts, etc.;
• Memorabilia, souvenirs, collectors items, etc.;
• Articles not maintained in good condition; and
• Outdated and obsolete items stored and not being used.

Cause of Loss: This form is written on a “direct loss" basis. Old terminology is direct physical loss, special form, open peril, or, if you want to get really old, “all risk," basis. Only the excluded causes of loss are listed.

Covered Property and Coverage Territory: The form states that personal property owned by the insured is covered anywhere in the world. However, the form lists nine items not covered by the policy, these include:

1. Property separately described AND specifically insured elsewhere;
2. Animals, birds or fish;
3. Motor vehicles;
4. Aircraft (model and hobby aircraft that does not carry persons or property not excluded – appears drones may be covered);
5. Hovercraft or parts;
6. Business data;
7. Water or steam;
8. Currency, deeds, securities, passports, transportation tickets and other tickets; and
9. Contraband.

Limitations of the PM 00 43

Like the PAP endorsement introduced by ISO effective 9/1/18, the Your Belongings Form has one major limitation – no liability coverage. Neither the PP 33 42 nor the Your Belongings Form offers liability protection. At least the PP 33 42 is attached to a PAP so the insured has protection against auto-related liability claims. The PM 00 43 doesn't extend ANY liability protection because it is attached to a non-liability inland marine form at the outset.

If the insured lives in his car or “couch hops," his greatest exposure isn't his stuff, it is his liability exposure.

From an underwriting perspective, what insurance carrier wants to extend coverage to someone who doesn't have a permanent residence? This does not appear to be a coverage any carrier would be running to write. But what about that millennial that lives with his/her parents? Interesting question.

Living With Parents

Review ISO's HO-3 policy specific to personal property; following is the specific coverage grant:

C. Coverage C – Personal Property

 1. Covered Property

We cover personal property owned or used by an "insured" while it is anywhere in the world. 

Notice whose personal property, “…owned or used by an 'insured'…." Who qualifies as “an insured"?

5. "Insured" means:

 a. You and residents of your household who are:

 (1) Your relatives;

If a child is living with his/her parents, they are an insured and their “stuff" is covered…anywhere in the world. The only age limitations relate to someone who is not a relative and a child who is away at college. There is no age limitation on a resident relative. Further, if the adult child is paying rent, that does not change the fact he or she is a relative; this is not a limitation of the HO form.

So, a child who has established residency with his parents does not need this coverage. And the best part is, they also have liability protection when living with the parents.

Not Living With Parents

If the child is not living with his/her parents, only a couple options appear reasonable:

• Living in a rented space (apartment, over a garage, spare room, etc.); or
• “Couch hopping"

Adults, which these millennials are, living in a rented space need to purchase a homeowners' policy in the form of the HO-4 to protect them. The HO-4 covers their personal property anywhere in the world and gives them the needed liability coverage. There is little need for a property-only form.

Misguided adults who are “couch-hopping" are not good underwriting risks. Most underwriters want a permanent address, and since these folks don't have one, these seem to be less-than-desirable risks.

The Need for the Personal Belongings Form

Given the fact that a child becomes a resident relative when living with his/her parents doesn't need this coverage, this does not appear to be a necessary form. Further, if the person is renting space, the risk is better and more appropriately served using an HO-04, again possibly making this form unnecessary. Lastly, a “couch-hopping" individual is a bad risk, it is doubtful that many underwriters will want this risk making it unlikely this form will be used in such a situation.

Overall, this does not seem to be a necessary form. But even if it does become useful, make sure the insured understands the form's major limitation – no liability protection.

Last Updated: November 26, 2018

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