Homeowners Policy Section ll

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Homeowner Section II

  • Additional Coverage (E & F)
  • Exclusions
  • Conditions
  • Endorsements
The language contained in Section II-Liability Coverages is identical in each of the homeowner’s forms. It provides the same coverages contained in a standalone Comprehensive Personal Liability (CPL) policy. Section II coverage is not subject to a deductible.

Liability Coverage

Coverage E – Personal Liability
Insurance is provided for claims made and suits brought against an insured because of bodily injury or property damage caused by an occurrence for which the insurance applies.
  • The policy pays up to the limit of liability for the damages for which an insured is legally liable, including prejudgment interest awarded against an insured.
  • The policy provides a defense, at the insurer’s expense, even if the suit is groundless, false, or fraudulent. The insurer may investigate and settle any claim or suit it decides is appropriate. The duty to defend ends when the policy limits have been exhausted by payment of a judgment or settlement. Payments for defense costs are made in addition to the limit of liability appearing on the declarations.
    Coverage F – Medical Payments to Others
    The policy will pay the necessary medical expenses that are incurred or medically ascertained within three years from the date of an accident causing bodily injury. Legal liability, negligence, and fault do not trigger this coverage. Medical payments to others is a goodwill coverage and designed to discourage the submission of liability claims.
    Medical expenses are the reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral services. Coverage does not apply to the insured or regular residents of the insured’s household (except residence employees). However, coverage does apply to:
    • A person on the insured location with the permission of an insured.
    • A person off the insured location if the bodily injury:
    • Arises out of a condition of the insured location or the immediate surroundings.
    • Is caused by the activities of an insured.
    • Is caused by a residence employee in the course of employment by the insured.

Is caused by an animal owned by or in the care of an insured.

Section II – Additional Coverages

The following coverages are provided and payments are made in addition to the limit of liability appearing on the declarations.
Claim Expenses (Supplementary Payments)
Includes the insurer’s expenses for defending a claim, along with reasonable expenses incurred by an insured at the insurer’s request. Also covered as claim expenses are premiums on bonds required in a suit defended by the insurer, the insured’s actual loss of earnings up to $250 a day for assistance in the investigation or defense of a claim or suit, and post-judgment interest.
First Aid Expenses
Includes expenses incurred by an insured for rendering first aid to others who sustain bodily injury covered under the policy. No coverage is provided for first aid to an insured.
Damage to Property of Others
Pays up to $1,000, at replacement cost, for property damage to property of others caused by an insured. Payment is made regardless of negligence.  For example, damage caused by an insured to a borrowed lawn mower. Coverage does not apply to property damage:
  • Covered under Section I of the policy.
  • Caused intentionally by an insured who is 13 years of age or older.
  • To any property owned by an insured.
  • To property owned by or rented to a tenant of an insured or a resident of the named insured’s household.
  • Arising out of a business engaged in by an insured; acts or omissions in connection with premises owned, rented, or controlled by an insured that is not the insured location; the ownership, maintenance, occupancy, operation, use, loading or unloading of aircraft, hovercraft, watercraft, or motor vehicles.
Loss Assessment
Provides up to $1,000 of coverage for the insured’s share of loss assessments charged by a corporation or association of property owners, during the policy period. The loss assessment must be the result of bodily injury or property damage not otherwise excluded by the policy or liability for an elected director, officer, or trustee who serves on the board of the association or corporation without being compensated.

Section II – Exclusions

The Section II exclusions fall into 4 distinct categories:
1.    Exclusions that apply to Section II – Coverages E and F and the Additional Coverages
2.    Exclusions that only apply to Coverage E – Personal Liability and Coverage F – Medical Payments to Others
3.    Exclusions that only apply to Coverage E – Personal Liability
4.    Exclusions that apply only to Coverage F – Medical Payments to Others

 

Exclusions Applying to Section II in its Entirety
1. Motor Vehicle Liability – The Motor Vehicle Liability exclusion applies to all coverages in Section II. No coverage is provided for “motor vehicle” liability if, at the time of an occurrence, the “motor vehicle” involved in the loss was registered for use on public roads or wasn’t registered but was required to be registered. In addition, no coverage is provided for vehicles that are being operated in or practicing for racing, rented to others, used to carry people or cargo for a fee, or used for any business purpose. Exceptions to the exclusion, meaning coverage is given back, exist for the following:
  • Vehicles in dead storage on an insured location, meaning they are physically unable to be driven because their batteries have been removed and they’re up on blocks.
  • Vehicles used solely to service an insured’s residence.
  • Vehicles designed to assist the handicapped, so long as the vehicle is being used to assist a handicapped person, or it is parked on an insured location.
  • A motorized golf cart used on a golfing facility for purposes approved by the facility or within a private residential community and used as approved by the community.
  • Vehicles designed for recreational use off public roads IF they are not owned by an insured OR are owned by an insured and used on an insured location.

2.  Aircraft Liability – No coverage is provided for “aircraft liability” as defined in the policy.

3.  Hovercraft Liability – No coverage is provided for “hovercraft liability” as defined in the policy.
Exclusions Applying to Coverages E and F
  • Expected or intended injury is excluded and applies even if the insured intended a different outcome. For example, the insured intended to hit Bob but hit Joan instead. An exception exists for the use of reasonable force to protect persons or property. Previous editions of the homeowner’s policy only gave back coverage for the protection of persons.
  • Coverage is excluded for bodily injury or property damage arising out of, or in connection with, a business conducted from an insured location OR engaged in by an insured, regardless of where the occurrence takes place. The exclusion applies if the insured owns a business or is employed by a business; no distinction is made between the two.
  • Coverage is excluded for bodily injury or property damage arising out of the rendering of or failure to render professional services.
  • No coverage is provided for bodily injury or property damage arising out of premises owned, rented by, or rented to others by an insured if the premises isn’t an “insured location.”
  • No coverage is provided for bodily injury or property damage arising from any type of war, warlike act, or destruction, seizure, or use for a military purpose—including the accidental discharge of a nuclear weapon.
  • Bodily injury or property damage arising out of the transmission of a communicable disease by an insured is excluded.
  • Bodily injury and property damage arising out of sexual molestation, corporal punishment, or physical or mental abuse is excluded.
  • Bodily injury or property damage arising out of the use, sale, manufacture, delivery, transfer, or possession of a controlled substance is excluded. An exception to the exclusion exists for the legitimate use of prescription drugs by a person following the orders of a licensed physician.
  • Coverages E and F don’t apply to bodily injury sustained while using a watercraft that is:
    • An inboard motorboat owned by an insured, except while in storage
    • An inboard motorboat with more than 50 horsepower, rented by an insured
    • An outboard motorboat with more than 25 horsepower, owned by an insured
    • Sailing vessels 26 feet or more in length, owned or rented by an insured
Exclusions Only Applying to Coverage E – Personal Liability
  • For any loss assessment, except as provided under the Additional Coverage, Loss Assessment.
  • Under any contract entered into by an insured. Exceptions exist if the contract is a written contract that relates directly to the ownership, maintenance, or use of an insured location or the liability of others is assumed by the named insured prior to an occurrence.
  • Property damage to property owned by an insured.
  • Property damage to property rented to, occupied by, used by, or in the care of an insured. This is the care, custody, or control exclusion and an exception exists for property damage caused by the perils of fire, smoke, or explosion. Keep in mind that the Additional Coverage, Damage to Property of Others, provides $1,000 of coverage, on a replacement cost basis, to minimize this exclusion.
  • Bodily injury to anyone eligible to receive benefits from any workers’ compensation, occupational disease law, or non-occupational disability law.
  • Bodily injury or property damage for which an insured is covered under any nuclear energy liability policy.
  • Bodily injury to the named insured or any insured.
Exclusions Only Applying to Coverage F – Medical Payments to Others
Coverage does not apply to bodily injury:
  • To a residence employee if the bodily injury occurs off an insured location AND NOT in the course of the residence employee’s employment by the insured.
  • To any person who is eligible to receive benefits voluntarily provided or required by law under any workers’ compensation, occupational disease law, or non-occupational disability law.
  • From any nuclear reaction, nuclear radiation, or radioactive contamination – regardless of how caused.
  • To any person other than a residence employee of an insured who regularly resides on any part of the insured location. This includes roommates and tenants as well as any insured.

Section II – Conditions

Limit of Liability
A per occurrence limit applies to losses covered under Coverage E – Personal Liability and a per person limit apply to losses covered under Coverage F – Medical Payments to Others.
Severability of Insurance
Insurance applies separately to each insured; however, this condition doesn’t increase the limit of liability per any one occurrence.
Duties After Occurrence
The named insured or another insured is responsible for performing the following duties. The insurance company has no duty to provide coverage if the named insured’s failure to comply with the following duties is prejudicial to the insurance company.
  • Give the following information in a written notice to the insurer or its agent as soon as is practical:
    • The policy number
    • The identity of the named insured
    • Reasonably available information about the time, place, and circumstances of the occurrence
    • Names and addresses of any claimants and witnesses
  • Cooperate with the insurer in the investigation, settlement, or defense of any claims
  • Promptly forward any notice, demand, summons, or another process to the insurer
  • At the insurer’s request, aid the insurer in making a settlement, pursuing subrogation attempts, taking the case to court, and procuring evidence
  • With respect to Damage to Property of Others, submit to the insurer, within 60 days after a loss, a sworn statement of loss and show the damaged property
  • No insured shall, except at his/her own expense, voluntarily make payment, assume the obligation, or incur expense other than for first aid at the time of bodily injury
Duties of an Injured Person – Coverage F – Medical Payments to Others
This condition applies to third-party claimants who are pursuing coverage under the policy. The injured person, or someone acting on his or her behalf, must:
  • Give the insurer written a proof of the claim as soon as practical – and under oath if required.
  • Authorize the insurer to obtain copies of medical records and reports.
  • Submit to a physical exam by a doctor of the insurer’s choice when and as often as the insurer reasonably requires.
Payment of Claim – Coverage F – Medical Payments to Others
This condition states that payment under Coverage F is not an admission of liability.
Legal Action Against Insurer
All parties must comply with policy provisions before any suit may be brought against the insurer. Also, no one has the right to enjoin the insurance company as a party to any action against an insured.
The Bankruptcy of an Insured
Bankruptcy or insolvency of an insured does not relieve the insurer of its obligations under the policy.
Other Insurance
Insurance is excess over any other collectible insurance, except insurance written specifically as excess insurance over this policy.
Policy Period
The policy only applies to bodily injury or property damage that occurs during the policy period.
Concealment or Fraud
The policy does not provide coverage to an insured who, whether before or after a loss, has intentionally concealed or misrepresented any material fact or circumstance, engaged in fraudulent conduct, or made false statements relating to this insurance.

Selected Homeowner Section II Endorsements

Home Day Care Endorsement
The endorsement extends Section I and II coverages to the home daycare “business” described in the schedule provided it is conducted by an insured on the residence premises. The endorsement typically imposes a policy year aggregate limit for the sum of personal liability and medical payments to others losses. The limit corresponds to the Coverage E limit shown in the Declarations, with a per person per accident sub-limit for daycare-related medical expenses equal to Coverage F.
The endorsement does not cover injury to any employee arising out of the “business,” as described.
Personal Injury Endorsement
The endorsement adds liability coverage for “personal injury,” which is defined to include the following offenses:
  • False arrest, detention, or imprisonment.
  • Malicious prosecution.
  • The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling, or premises that a person occupies, committed by or on behalf of its owner, landlord, or lessor.
  • Oral or written publication of material that violates a person’s right of privacy, slanders or libels a person or organization, or disparages a person’s or organization’s goods, products, or services.
Insurance provided by the endorsement does not apply to “personal injury” that is:
  • Caused by or at the direction of an insured with the knowledge the act would violate another’s rights and inflict personal injury.
  • Arising out of oral or written publication of material:
    • With the knowledge of its falsity.
    • That took place before the inception date of the policy.
  • Arising out of a criminal act committed by, or at the direction of, an insured.
  • Arising out of contractual liability assumed by an insured other than an indemnity agreement that relates directly to the ownership, maintenance, or use of the premises.
  • An offense related directly or indirectly to the employment of an injured party by an insured.
  • Arising out of or in connection with a business conducted from an insured location or engaged in by an insured.
  • Arising out of civic or public activities performed by an insured for pay.
  • Sustained by the named insured or an insured.
  • Actual, alleged, or threatened:
    • Discharge, dispersal, seepage, migration, etc., of pollution.
    • Ingestion of, inhalation of, contact with, exposure to, the existence of, or presence of any “fungi,” wet or dry rot, or bacteria.
Home Business Endorsement
The endorsement provides for both business property and liability coverages for a variety of home businesses. The business must be owned by the named insured, or by a partnership, joint venture, or an organization comprised solely of the named insured and resident relatives.
It also includes coverage for premises operations, advertising injury, and personal injury. However, there is no coverage for professional services.
Watercraft Liability Endorsement
The endorsement amends the liability exclusion pertaining to certain types of watercraft liability. The exclusion is deleted and replaced with a revised exclusion, which states that Coverage E and F don’t apply to “watercraft liability” if the involved watercraft is being:
  • Operated in or practicing for any prearranged or organized race, speed contest, or competition. Sailing vessels and predicted log cruises are not excluded
  • Rented to others
  • Used to carry people or cargo for a charge
  • Used for any “business” purpose
If the watercraft is a sailing vessel or one powered by an inboard or inboard-outdrive engine or motor, Coverages E and F don’t apply to bodily injury sustained by an employee in the course of employment.  Such exclusion applies if the employee’s principal duties are in connection with the maintenance, operation, or use of a watercraft designated in the endorsement.
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement
The endorsement covers the insured’s liability exposure in the event that a third party claims illness as a result of exposure to mold and the insured is deemed liable for the illness. The basic liability limit is currently $50,000 on an annual aggregate basis during the policy period for all fungi, wet or dry rot, or bacteria related damages. Insurers can also offer a higher optional liability coverage limit of $100,000.
Permitted Incidental Occupancies Endorsement
The endorsement modifies the Section II exclusions of liability and medical payments in connection with business pursuits of the insured to allow the necessary and incidental use of the premises for the business described on the endorsement. The premises must be occupied principally as the insured’s residence; the business must be conducted by an insured, and there can be no other business conducted on the premises.
The endorsement is commonly used for a studio, office, or private school type of occupancy. It does not cover bodily injury to any employee of the insured, except residence employees in the course of their employment.
Business Pursuits Endorsement
The endorsement extends liability coverage for the insured’s involvement in a business that the insured does not own, have financial control over, or have a partnership interest in. The pursuit must be named in the endorsement and is commonly added for those in the teaching, sales, and clerical professions.