Back to: TelaClaims Adjuster I – Insurance Basics for Adjusting a Claim

Section 1

Coverage A- Dwelling

The policy covers:

Dwelling on the residence premises shown in the declaration, including structures attached to the dwelling.
Material and supplies located on or next to the residence premises used to construct, alter, or repair the dwelling or other structures on the residence premises. For example, the pile of sand in the insured’s backyard to make a concrete mix for wall repair. The policy does not cover:
The land on which the dwelling is located.
Theft in, too, or from a dwelling under construction, including materials used in construction.
Vandalism and malicious mischief including ensuing loss, if the dwelling was vacant for more than 60 consecutive days immediately before the loss.

When a limit of liability is chosen for Coverage A- Dwelling, the other three property Coverages (B, C, and D) are automatically issued at limits equaling a specific percentage of the Coverage A limit of liability. If these limits are inadequate, the insured may purchase higher limits.

In most cases, the insurer requires the named insured to purchase insurance in an amount that is no less than 80% of the dwelling’s replacement value. If at the time of a loss, the amount of insurance on the dwelling is less than 80% of the dwelling’s replacement value, a penalty will be applied to partial losses. If 80% Replacement cost is not carried, ACV will apply.

Coverage B – Other Structures

Covers damage to other structures or buildings, such as a detached garage, work shed, swimming pool, or fencing. Covers damage to, or loss of personal property. Personal property includes household contents and other personal belongings used, owned or worn by you and your family.

No coverage is provided under Coverage B for 4 types of property:

Land, including land on which the other structures are located.
Other structures rented or held for rental to anyone who isn’t a tenant of the dwelling unless the other structure is used solely as a private garage.
Other structures from which any “business” is conducted.
Other structures used to store business property that is owned by someone other than an insured or a tenant of the dwelling.

This insurance limit is 10% of the Coverage A limit of liability, does not reduce the Coverage A limit of liability and may be increased by endorsement.

Coverage C – Personal Property

The policy covers personal property owned or used by an insured while it’s anywhere in the world. After a loss, and at the named insured’s request, it covers property owned by others while it’s on the residence premises occupied by an insured or property owned by a guest or residence employee while located in any residence occupied by an insured.

Coverage for the property at another residence is limited. If personal property is usually located at an insured’s residence other than the residence premises, coverage is limited to 10% of Coverage C or $1,000, whichever is greater. For example, property usually located in a student’s dormitory or at the insured’s summer home. This limit doesn’t apply to the property being moved because it’s being repaired or rebuilt, located in a newly acquired principle residence during the first 30 days after being moved, or the residence premises is not fit to live in or store property in.

Property not covered under Coverage C includes:

Property specifically described and insured elsewhere, such as on another policy or by endorsement to the homeowner’s policy
Animals, birds, or fish
Motor vehicles, including equipment, parts, and electronic equipment and accessories that can only be operated by the motor vehicle. An exception exists (meaning coverage is provided) for motor vehicles not required to be registered for use on public roads, used solely to service an insured’s residence, or designed to assist the handicapped
Aircraft, including its parts, except model or hobby aircraft, is covered if it’s not used or designed to carry people or cargo
Hovercraft, including its parts
Property of roomers, borders, and other tenants—except those related to an insured
Property in an apartment regularly rented, or held for rental, to others by an insured—except for property covered under the additional coverage, Landlord’s Furnishings
Property rented or held for rental to others off the residence premises
Business data, credit cards, and electronic fund transfer cards—including data stored in books of account, on paper records, or on computers
Water or steam

This insurance limit is 50% of the Coverage A limit of liability, does not reduce the Coverage A limit of liability and may be increased by endorsement.

Coverage D – Loss of Use

Three types of coverage are provided under Coverage D and all are for indirect, or consequential, loss. The limit of insurance appearing on the declarations for Coverage D is the total limit payable for all three types of coverage provided. For example, a wildfire burns near the insured’s home. If direct damage from the wildfire occurs to the residence premises, Additional Living Expense and Fair Rental Value coverages are triggered. If direct damage from wildfire occurs to the named insured’s neighbors, and a civil authority evacuates the named insured, Civil Authority Prohibits Use coverage is triggered.

Additional Living Expense
- If a property loss covered by Section I of the policy makes the residence premises unfit to live in, the policy pays for any necessary increase in living expenses incurred by the named insured to maintain the household’s normal standard of living. Payment is made for the shortest time necessary to repair or replace the damage. If the insured must relocate permanently, payment will be made for the shortest time it takes the insured to settle at the new location.
Fair Rental Value
- If a property loss covered by Section I of the policy makes that part of the residence premises rented to others unfit to live in, the policy pays for the fair rental value of such premises – less any continuing expenses – while it’s unfit to live in. Payment is for the shortest time required to repair or replace the rented portion of the premises.
Civil Authority Prohibits Use
- If a civil authority prohibits the named insured from using the residence premises as a result of direct damage to neighboring premises by a peril insured against under the homeowner’s policy, the policy pays losses under Additional Living Expense and/or Fair Rental Value for no more than two weeks.

Loss and expenses due to the cancellation of a lease or agreement are NOT covered.

Limits of Coverage – The automatic limits of insurance for Coverage D vary by the homeowner’s form of coverage:

30% of Coverage A for forms HO–2, HO–3, and HO–5
30% of Coverage C for form HO–4
50% of Coverage C for form HO–6
10% of Coverage A for form HO–8n

Section I – Additional Coverages

Both sections of the homeowner’s policy provide additional coverages. Under Section I Additional Coverages, a percentage of the applicable Coverage A, B, C, or D limit of liability applies in certain circumstances; in other cases, additional limits of insurance apply.

Debris Removal

The policy will pay the named insured’s reasonable expenses for the removal of debris of covered property if a covered loss occurs.
Payment is included in the limit of insurance for covered property that is damaged. If debris removal expenses and expenses for damaged property exceed the applicable limit of insurance, this coverage will provide additional insurance equal to 5% of the limit available for such expense. For example, the insured’s shed burnt to the ground. The Coverage B limit of liability is $10,000. This coverage will pay a total of $10,000 plus $500 ($10,000 times 5 %) for the replacement value of the shed plus debris removal expenses.
A limit of $1,000 applies for reasonable expenses to remove from the residence premises debris of the insured’s trees felled by windstorm, hail, or the weight of ice, snow, or sleet.

Reasonable Repairs

When the insured’s property has been damaged by a covered peril, this coverage pays the reasonable costs incurred by the named insured to take necessary measures to protect covered property damaged by a covered peril against further damage. For example, a tree falls on the dwelling’s roof. The insured’s expenses to place a tarp over the hole in the roof would be covered. This coverage does not increase the limit of insurance that applies to the covered property.

Trees, Shrubs, and Plants

Coverage is provided for trees, shrubs, plants, or lawns on the residence premises for the following perils: fire or lightning, explosion, riot or civil commotion, aircraft, vehicles not owned or operated by a resident of the residence premises, vandalism or malicious mischief, and theft. Coverage is NOT provided for any other peril, including windstorm or hail.
The limit of insurance is up to 5% of the Coverage A limit of liability and applies to all trees, shrubs, plants, or lawns. The most paid for loss to any one tree, shrub, or plant is $500. This limit is additional insurance.
No coverage is provided for property grown for “business” purposes.

Fire Department Service Charge

This coverage pays up to $500 for the named insured’s contractual liability to pay fire department charges incurred by a fire department that is called to save or protect covered property by a peril insured against. Covered charges must be incurred by a fire department other than that of the jurisdiction in which the covered property is located. For example, a neighboring fire department is called to assist the fire department of the jurisdiction in which the insured property is located. This coverage is additional insurance, and the policy deductible does not apply.

Property Removed

Coverage is provided for loss to covered property by any cause while being removed from premises endangered by a peril insured against. Coverage applies for no more than 30 days while removed. For example, if a wildfire threatens the insured’s home and property is removed, loss to the removed property that is caused by flood or earthquake would be covered during the first 30 days the property is removed. However, if flood threatened the insured’s home, coverage wouldn’t apply because the endangering peril is not a peril insured against.

Credit Cards, Electronic Fund Transfer Card, Forgery, and Counterfeit Money

Coverage up to $500 is provided for the insured’s legal responsibility because of theft or unauthorized use of credit cards, electronic fund transfer cards or access devices issued to an insured. The loss to an insured caused by forgery, alteration of a check or negotiable instrument, or counterfeit money is also covered. Exclusions exist for use of a covered card or device by a resident of the named insured’s household, by a person entrusted with a card or access device, the insured’s failure to comply with credit card requirements, business use of a card, or the insured’s dishonesty. This coverage also includes defense.

Loss Assessment

Coverage up to $1,000 is provided for the named insured’s share of loss assessment charged during the policy period by a corporation or association of property owners. The assessment must be made because of direct loss to property owned collectively by all members AND that was caused by a Peril Insured Against under this policy. This coverage is additional insurance.

Collapse

Coverage is provided for the abrupt falling down or caving in of a building, or a portion of a building if the building cannot be occupied for its intended purpose after the collapse.

Direct physical loss from collapse must be caused by a Coverage C named peril, hidden decay, hidden insect or vermin damage, the weight of contents, equipment, animals, people, the weight of rain collecting on a roof, or the use of defective materials or construction methods.
The policy does not cover the collapse of awnings, fences, patios, swimming pools, underground pipes, cesspools, etc. unless damage is the direct result of the collapse.
This coverage does not increase the limit of insurance that applies to the damaged property.

Glass or Safety Glazing Material

Coverage is provided for:

The breakage of glass or safety glazing material that is part of a covered building, storm door, or storm window, including loss caused by earth movement.
The direct physical loss to covered property caused solely by the pieces, fragments, or splinters of broken glass or safety glazing material.

NO coverage is provided for loss occurring on the residence premises if the dwelling was vacant for more than 60 consecutive days before the loss, except coverage, is provided for loss caused by the earthquake. This coverage does not increase the limit of insurance that applies to the damaged property.

Landlord’s Furnishings

Up to $2,500 coverage is provided for appliances, carpeting, and household furnishings owned by the named insured and located in each apartment on the residence premises that is rented to others. Coverage is provided for the 15 named perils (the Coverage C perils, with the exception of theft). This coverage does not increase the limit of insurance applying to the damaged property.

Ordinance or Law

The insured may use up to 10% of the Coverage A limit of insurance for increased costs the insured incurs due to the enforcement of any ordinance or law that requires or regulates:

Construction, demolition, remodeling, renovation, or repair of that part of a covered building damaged by an insured peril.
The demolition or reconstruction of the undamaged part of a covered building, when that building must be totally demolished because of damage by an insured peril to another part of that covered building.
The remodeling, removal, or replacement of the portion of the undamaged part of a covered building to complete the remodeling, repair, or replacement to that part of the covered building damaged by an insured peril.

This coverage is additional insurance.

Grave Markers

The policy will pay up to $5,000 for grave markers, on or away from the residence premises, for loss caused by a peril insured under Coverage C. This coverage does not increase the limits of insurance that apply to the damaged, covered property.

Section I – Exclusions

The policy does not provide for loss caused directly or indirectly by any of the following perils, even if they are caused concurrently or over a widespread area.

Ordinance or Law

Losses resulting from the enforcement of an ordinance or law regulating the construction, repair, remodeling, renovation or demolition of a building are excluded except what is provided in the additional coverage, Ordinance or Law.

Earth Movement

Losses resulting from the earthquake, including land shock waves or tremors before and after volcanic eruptions, landslides, mudslides, mudflow, subsidence, or sinkhole, and any earth sinking, rising or shifting. Direct loss by fire or explosion that ensues is covered. This exclusion doesn’t apply to loss by theft.

Water Damage

Water damage means flood, surface water, tidal water, overflow of a body of water, water or water-borne material that backs up through sewers or drains or that overflows from a sump pump, and water that exerts pressure on or seeps or leaks through a building, foundation, swimming pool, or other structure. Direct loss by fire, explosion, or theft resulting from water damage is covered. Water damage is excluded whether caused by human, animal, or natural forces.

Power Failure

If the failure of power or utility services takes place off the residence premises, this exclusion applies. However, if the failure of power or utility services takes place on the residence premises and is caused by a Peril Insured Against, it doesn’t apply.

Neglect

There is no coverage for losses if the insured fails to use all reasonable means to save and preserve covered property at and after the time of a loss.

War

War includes the following, including any consequences of undeclared war, civil war, insurrection, rebellion or revolution, warlike act by a military force or personnel, destruction, seizure or use for a military purpose. Discharge of a nuclear weapon is deemed warlike even if it occurs accidentally.

Nuclear Hazard

Damage is excluded by any nuclear reaction, radiation or radioactive contamination, or a consequence of any of these.

Intentional Loss

No coverage applies to any loss that arises out of any act insured commits or conspires to commit with the intent to cause loss. In the event of intentional loss, no insured is entitled to coverage, including innocent insureds (those who did not cause the loss but are covered on the same policy as the person who caused the loss).

Governmental Action

The destruction, confiscation, or seizure of covered property by order of any governmental or public authority is excluded. The exclusion doesn’t apply to such acts taken at the time of a fire to prevent its spread if the fire loss would be covered under the policy.

Section I – Selected Property Endorsements

Mobile Home Insurance

Depending upon the insurer, insurance for mobile homes may be insured on a homeowners policy by adding a Mobile Home endorsement. If the insurer doesn’t allow the addition of such an endorsement to its homeowner’s policy, a separate Mobile Homeowners policy must be written.

Under ISO (Insurance Services Office) rules, an owner-occupied mobile home may be covered under an HO–2 or HO–3 by endorsement. The endorsement amends the definition of Coverage A (Dwelling) to include a mobile home. Tenants of a mobile home may ensure their personal property under an HO–4 if the insurer’s underwriting guidelines permit.

Other Structures on the Residence Premises – Increased Limits

If the Coverage B limit of insurance is inadequate to ensure all other structures on the residence premises (10% of Coverage A), this endorsement allows the insured to purchase increased limits for other structures listed in the endorsement. The increased limits generate an additional premium charge.

Water Back Up and Sump Discharge or Overflow

This endorsement allows the insured to buy back some coverage that is excluded under the Water Damage exclusion. It provides up to $5,000 of coverage for direct physical loss to property insured under Section I (Coverages A, B, and C) caused by water or waterborne material that:

Backs up through sewers or drains, or
Overflows from a sump, sump pump, or related equipment.

Coverage is provided even if the sump overflow is caused by equipment breakdown. A special deductible of $250 applies and replaces any other deductible that may otherwise apply. Coverage doesn’t apply if the damage is caused by the negligence of an insured.

Personal Property Replacement Cost Endorsement

This endorsement changes the valuation method for most property insured under Coverage C from actual cash value (ACV) to replacement cost. It also applies to awnings, outdoor antennas and equipment, carpeting, and household appliances.

If the following classes of property are separately described and specifically insured in this policy and NOT subject to agreed value loss settlement, the endorsement also applies to jewelry, furs and fur garments, cameras and related equipment, musical instruments and related equipment, silverware, goldware, pewterware, and golfer’s equipment. Other classes of property separately described and specifically insured are NOT subject to this endorsement.

Property NOT eligible for coverage under this endorsement – and that is subject to actual cash value loss settlement includes antiques, fine arts, paintings and similar articles of rarity or antiquity that cannot be replaced, memorabilia, souvenirs, collectors’ items, articles whose ages and histories contribute to their value, articles not maintained in good or workable condition, and articles that are outdated or obsolete and are stored or not being used.

This endorsement only changes loss valuation – it doesn’t change other policy provisions, including perils insured against or exclusions.

Scheduled Personal Property Endorsement

This endorsement is used to increase limits of liability for certain categories of personal property and to broaden the perils insured against that apply to that property. Coverage is provided on an open-perils basis and contains very few exclusions; including wear and tear, insects or vermin, war, and nuclear hazard.

Some additional exclusions and restrictions apply to fine arts, postage stamps, coins, and the breakage of art glass windows, glassware, statuary, marble, bric-a-brac, porcelains, and similar fragile articles. This endorsement is also referred to as a Personal Article Floater.

Newly acquired property of a class already insured on the endorsement is automatically covered. The insurer must be notified within 30 days (90 days for fine arts) if a new property is acquired. Scheduled property is insured worldwide and the Section I deductible does not apply to this endorsement.

Earthquake Endorsement

Coverage for a loss caused by the earthquake, including land shock waves or tremors before, during, or after a volcanic eruption, is provided to property insured under Coverage A (Dwelling), B (Other Structures), and C (Personal Property). A single earthquake is defined as 1 or more earthquake shocks that occur within a 72-hour period.

The coverage does not cover loss resulting from the flood of any nature, or the cost of filling the land.

A deductible that is a percentage of Coverage A (Dwelling) or Coverage C (Personal Property), whichever is greater, is included.

Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement

This endorsement provides a basic property limit option of $10,000 on an annual aggregate basis during the policy period for:

Loss caused by fungi, wet or dry rot, or bacteria.
Cost of:
- Testing the air or property to confirm the existence of fungi, wet or dry rot, or bacteria.
- Removal of fungi, wet or dry rot, or bacteria.
- Tearing out and replacing any part of the building or other covered property to gain access to fungi, wet or dry fungus, or bacteria.

Insurers also can offer higher optional coverage limits of $25,000 and $50,000.

Permitted Incidental Occupancies Endorsement

With respect to Section I, Coverage B (Other Structures), this endorsement covers a structure of the residence premises, specifically described, for direct physical loss by an insured peril for a specified limit of insurance when used to conduct a business.

The endorsement also allows the Coverage C (Personal Property) special limit of $2,500 to apply to the described business.

Identity Theft Expense

This endorsement will pay up to $15,000 for expenses resulting from an instance of identity fraud discovered during the policy period.

The endorsement does not cover losses arising out of business activity. It carries a $500 deductible and the insured must notify the insurer within 60 days of the loss.