Personal Lines Endorsements Coverage Guide, 2nd Edition

By Christine G. Barlow

Personal Lines Endorsements Coverage Guide presents and analyzes the endorsements in detail, providing explanations as to how they should be used and the coverage they provide. This practical resource stands out as the ultimate desk reference for understanding endorsements, when they should be added, and what coverage they provide. You get instant access to:

• In-depth explanations of common and not-so-common endorsements for home, dwelling and auto policies
• Full explanations of all endorsements, including available limits
• At-a-glance charts showing state-specific variances to the many auto endorsements

Save Time and Worry—One Resource Guides You Fully Through Personal Lines Endorsements

Providing a thorough discussion of ISO endorsements by policy and endorsement type, Personal Lines Endorsements Coverage Guide is organized with chapters broken out by category to make referencing particular needs easy.

New in the 2nd Edition:

The homeowners program is being updated effective 3/22; the main policies have been updated as have many of the endorsements. New endorsements have also been added to the program. These revisions are discussed for the more popular endorsements. The new endorsements are explained. Endorsements discussed include the homeowners, auto and dwelling programs.

New endorsements for the following coverages: Limited Cannabis Property Coverage, Cannabis Liability Coverage, Broadened Water Back-up and Sump Discharge or Overflow Coverage, Non-owned Motorized Bicycle and Motorized Scooter Liability Exclusion, Specified Other Structure exclusion, Limited theft coverage A and B Dwelling Under Construction, Coverage B Other Structures Away from Premises Replacement Cost, Specific Structures Away from Premises Replacement Cost, Other Insured Locations, Personal Injury Aggregate Limit, Personal Injury Coverage.

• Language: English
• Publisher: The National Underwriter Company
• Release date: Feb 11, 2022
• ISBN: 9781954096400

Book preview

Other Insureds

When an individual buys an insurance policy, he becomes an insured; a named insured since he is the purchaser of the policy and others in the household may be insureds as well. Named insureds have particular duties that insureds do not; however, it is not always that easy. Significant others, friends, or relatives staying on a semi-long term basis while in a transitional period, or those with financial interest in the property may all need coverage as well. This chapter looks at who is an insured and how to handle others who need coverage that is not automatically supplied by the policy.

The first thing any policy does is identify the parties involved. You and your in the homeowners, dwelling, and auto policies are all identified as the named insured shown in the declarations and spouse if the spouse is a resident of the household. While the named insured first appears in quotes as if it is a defined term, in reality none of the forms actually define named insured beyond the fact that it is the person named in the declarations. The homeowners and dwelling definitions of insured include resident relatives, those under 21 in the care of the insured or a resident relative, related students away at school full-time who are under 24, or students under 21 and in the care of the insured or a resident relative. In the liability section, regarding animals or watercraft, anyone legally responsible for animals or watercraft owned by an insured are considered insureds as well (i.e, a neighbor borrowing a boat or a teenage neighbor walking the dog are considered insureds by the policy in event of a loss). Businesses having custody of watercraft or animals are not considered insureds, as they should have their own business policies to provide coverage for their liability exposures.

The auto policy is laid out differently and defines insured in each section of the policy. In the definitions section spouses are insureds as long as they are a resident of the household. If the spouse leaves, the spouse is covered only for the earlier of 90 days following the change of residency, the effective date of a new policy for the leaving spouse, or the end of the policy term. Family members are defined as those related by blood, marriage, or adoption who are a resident of the household, including wards or foster children.

In the liability section of the auto policy, insureds include the insured or any family member for the ownership, maintenance, or use of an auto or trailer, as well as any person using your covered auto, which gives coverage to anyone using the vehicle with a reasonable belief that they can use it. Regarding the covered auto, any person or organization is covered, but only with respect to legal responsibilities for acts or omissions of those covered in the liability section. For example, if the insured uses his vehicle to take something to a client for his company and has an accident along the way, if the company becomes liable for the loss there is coverage under the personal auto policy. Coverage is also granted to an organization or person for autos other than the insured auto if the person or organization becomes liable for acts of the insured or family members. If the insured drives a coworker’s vehicle to a client’s office and has an accident along the way and the company becomes liable, the insured’s policy would provide coverage for the company.

Under medical payments coverage, which provides coverage for injury to the insured, insured is defined as the insured or any family member while occupying, or as a pedestrian when struck by a motor vehicle or trailer designed for use on public roads. Other people while occupying the covered auto are considered insureds as well (e.g., the insured is taking some friends to a movie when they have an accident; the friends’ injuries are covered by the insured’s policy).

The uninsured motorists coverage is similar to the medical payments coverage for insureds, but adds one element. A person may be entitled to recover because of injury to which this coverage applies to the insured or a family member. This is where the popular loss of consortium comes in (e.g., if the injured party is unable to perform normal household duties and a maid or childcare is needed, the noninjured spouse is entitled to receive such assistance).

We have now defined insureds for home, auto, and dwelling policies. Note that all of the definitions include spouses, resident relatives, children of certain ages, and those under a certain age in care of a relative. But these are by far not the only people who may be present in, and in need of coverage from, an auto, dwelling, or home policy. Mortgagees and lienholders have an interest in the property, other individuals or family members not resident in the home may have an interest, and there are resident nonrelatives that are considered family by all but policy language. So how do we provide coverage? Endorsements are the answer.

Additional Insured Residence Premises HO 04 41

This form is designed for those who are not residents of the property, but have a financial interest in the property. If parents financially assist a child to purchase a home and want to be sure their interest is protected in event of a loss, they want to be listed on the policy. This form allows them to do so. The person or organization needs to be scheduled, as well as the nature of the interest; this could be the amount of the down payment, for example, or the amount of the mortgage on the dwelling.

Coverage A dwellings, coverage B other structures, coverage E personal liability, and coverage F medical payments are provided to the listed insureds. Coverages A and B are provided to the extent of the other party’s interest in the property. Coverages E and F apply only with respect to bodily injury or property damage arising out of the ownership, maintenance, or use of the residence premises. This provides coverage in case the part-owner is drawn into any sort of claim or suit for damages arising from the use of the property. Excluded is injury to any employee, including residence employees or temporary employees substituting for a permanent employee if injuries occur in the line of duty. Anyone listed in this endorsement will be notified if the carrier decides to cancel or nonrenew the policy. A minor editorial change has been made to this and other forms with the 2022 updates. The sentence Entries may be left blank if shown elsewhere in this policy for this coverage has been removed. It has been replaced with the sentence Information required to complete this Schedule, if not shown above, will be shown in the Declarations. The change clarifies that if the schedule is not completed, the information will be found in the declarations page. Many other endorsements received this editorial change. As there is no change in coverage, we will not highlight this going forward in other endorsements.

Additional Interests Residence Premises HO 04 10

This form is similar to the Additional Insured endorsement in that people or organizations with an interest in the property may be added by using this form. This is in addition to any mortgagee shown in the declarations or elsewhere on the policy. However, those so added receive no coverage. They are simply notified if the carrier cancels or nonrenews the policy. This endorsement is frequently confused with the Additional Insured endorsement, but the difference is significant. The Additional Insured endorsement protects those scheduled from financial loss due to damage to the property or liability claims made against those on the schedule. This form only notifies those so scheduled if the policy is cancelled. No coverage is granted.

A change has been made in the 2022 form adding a section on cancellation and nonrenewal notification. The form now clearly states that if the carrier decides to cancel or non-renew the policy; those listed in the schedule will be notified in writing of said cancellation or nonrenewal.

Additional Insured – Student Living Away From the Residence Premises HO 05 27

While full-time students living away from home at school are covered under the home and dwelling policies, there are limitations to those coverages. The home and dwelling policies require that students be full-time and under 24 years of age in order to have coverage, or be under 21 years of age and in the care of a resident relative. This endorsement removes the full-time and 24 year age requirement so that other types of students may be covered as well. The student can be part-time and any age if they are a relative, or if they are under the care of a resident relative they must still be under 21, but can be a part-time student. The name of the student, the address, and the name of the school must be included in the schedule. If the student moves to a different location the endorsement will need to be updated, because coverage is only provided as long at the student resides at the scheduled address. Property and liability coverages both apply to the student.

Other Members of Your Household/Additional Insured – Household Resident HO 04 58

This is a particularly important endorsement. With more people cohabitating, many do not realize that although the insured considers them household members, the insurance policy does not consider them insureds. This endorsement corrects that situation and provides coverage for the person’s personal property and liability exposures. The person to be insured needs to be listed on the endorsement by name. Those listed on the endorsement cannot be insureds, guests, residence employees, tenants, roomers, boarders, or home-sharing occupants. Home-sharing occupants were added to the list in 2017. Insureds and residence employees are categories in and of themselves, and already have coverage provisions. Tenants, roomers, or boarders are not considered family; they are paying to rent space or receive room and board in exchange for certain services and need their own tenant’s policies to provide coverage for their property and liability exposures. Home-sharing occupants likewise are on the premises for a short period of time and are paying for the privilege. Guests are a unique category. They generally do not reside at the dwelling for more than a short period of time (e.g., visiting family or friends on vacation, or family helping out a family member with a medical emergency). Guests are at the premises for a short period of time. This endorsement is for those who are regular residents of the household on an ongoing basis but who do not fit the policy definition of insured.

The endorsement states clearly that the carrier is relying on information provided by the insured regarding the residency of the individual in question. The insured agrees to notify the carrier in writing, within 30 days, if the scheduled person changes residency or status as a household member. If a couple marries or the scheduled person moves out, then this endorsement is no longer needed.

While the listed person becomes for all intents and purposes an insured, the named insured is solely responsible for paying the premium and is the representative of the scheduled person, acting in all matters regarding coverage for that person.

Personal property of the scheduled person is covered as it is for any insured. Coverage C limits are not increased by the addition of this scheduled person to the policy. The insured should review coverage to ensure that the limits of coverage C are still appropriate now that the belongings of another person have been added. The new resident may have expensive cameras, computers, furniture, or other property that would make increasing the coverage C limit a necessity. All other policy provisions apply to the scheduled person except for coverages A and B, and Fair Rental Value. These coverages apply to the building itself that the scheduled person has no interest in. The form has been renamed in the 2022 update to Additional Insured – Household Resident.

Additional Insured DP 04 41

This is the additional insured form that attaches to the dwelling fire policies. Since dwelling policies do not provide liability coverage, it is shorter than the homeowners form. The scheduled person is provided coverage under coverages A and B, and receives written notification if the carrier decides to cancel or nonrenew the policy.

Additional Insured DL 24 10

Liability coverage for additional insureds with an interest on a dwelling is provided in this form. Personal liability and medical payments to others coverage is provided, and coverage does not apply to injury to residence employees or temporary employees filling in for residence employees. As with the additional insured property form for dwellings, if the carrier decides to cancel or nonrenew the policy the additional insured will be notified in writing.

Additional Insured – Lessor PP 03 19

Automobile policies also have issues with other insureds. Lessors are different than lienholders. With a lease the lessor always retains ownership of the vehicle, but with a lien, the insured eventually pays off the lien and takes ownership of the vehicle. This form adds liability and no-fault coverages for the lessor listed in the endorsement by making the lessor an additional insured. As such, the lessor is covered for damages that the lessor becomes legally responsible for due to acts or omissions of the insured, family members, or any other person other than the lessor or its employees using the leased auto. A lessor should have a separate policy for its own exposures due to actions of its employees or agents.

Leased autos are defined in the endorsement. Your leased auto is the auto shown in the declarations for which the insured has a continuous lease for at least six months, under which the insured agrees to provide primary coverage for the lessor and any replacement or substitute vehicle furnished by the lessor. If the vehicle has mechanical issues and the lessor replaces it with a different vehicle, that replacement vehicle is covered.

As with any additional insured endorsement, should the carrier nonrenew or cancel the policy the lessor is notified in writing. The lessor is not responsible for any premiums, nor does the designation of a lessor increase limits. If the lessor requires higher limits than the insured already has, the insured needs to increase those limits separately. This form was updated in 2018 when the auto program was updated. The format of the form was updated, but no coverage changes were made.

Assisted Living Care Coverage HO 04 59

As of 2019, there were more than 54 million people 65 years or older in the United States, and projections are that by 2060 there will be 95 million people 65 or older, accounting for 23 percent of the population. Many of these individuals can no longer maintain themselves in their own homes and need assistance with daily living tasks. Assisted living facilities provide support for such individuals and allow the individuals to bring some belongings with them. Insurance is of course needed. The individual, the facility, and coverage limits are all scheduled.

This form attaches to the homeowners policy of a relative who represents the individual scheduled on the form. The insured must represent the scheduled person and act for them in all matters regarding the endorsement. The scheduled individual must be related to the insured by blood, marriage, or adoption and not regularly live in the dwelling. The scheduled individual does not need to be elderly; while that is the majority of people in assisted living situations, it is not the entire population, and if younger people are in assisted living facilities they can be covered by this endorsement as well. This is for situations where an individual has permanently moved into a facility, not a situation where grandma is in a facility temporarily to recover from a broken hip or some other temporary medical need. For example, Grandpa Tim has become a widower and can no longer manage on his own. His son lives nearby but cannot care of Tim on an ongoing basis. Tim moves into Golden Years Assisted Living and takes his television, dresser, and a few other items with him to the home. This endorsement would be added to the son’s homeowners policy.

Assisted living facility is not defined by the endorsement. However, it does state that the facility provides services such as dining, therapy, medical supervision, housekeeping, and social activities. This encompasses a broad range of facilities, from true assisted living facilities that provide minimum assistance to residents to nursing homes that provide professional skilled nursing care. The manual makes it clear that hospice, rehabilitation or prison facilities are not considered assisted living facilities.

Coverage from this endorsement is excess over any other applicable coverage that applies to the same loss. Coverage is for personal property owned by the scheduled person for the coverage C named perils. The limit of liability is what is shown on the schedule. Certain items have particular limits; these are items that are generally easily lost and expensive to replace. The limits are as follows:

$250 for each hearing aid or other similar audio enhancement device.

$100 for each pair of eyeglasses.

$100 for all contact lenses.

$500 for all false teeth or dentures.

$500 for each medi-alert device.

$250 for all walking aids and devices such as walkers or canes.

$500 for each wheelchair.

Property that is not covered is property that is regularly located away from the facility (e.g., a resident’s favorite picture that spends most of the time at the insured’s residence). Also not covered is property owned by the insured, and property owned by the facility but rented to or used by the scheduled person. Property of the insured will be covered under the insured’s homeowners form; property of the facilities will be covered by the coverage in place for the facility.

Additional living expense coverage is provided for a maximum of $500 a month for no more than 12 consecutive months. The coverage applies when the facility is unfit to live in or has had to suspend operations. Note that the maximum limit applies regardless of how many family members are at the same unit at the same facility. If the grandparents share a room or small condo, then the maximum is still $500 a month for 12 months. Coverage for the prohibition of use of the facility by a civil authority due to damage to neighboring premises is provided for two weeks for a maximum of $50 per day. However, if any loss results in the cancellation of a lease or agreement, there is no coverage for such loss.

Liability coverage is also provided for the scheduled individual, although coverage F, medical payments does not apply. Any accident that happens on the facility is going to be the responsibility of the facility itself, since the scheduled individual is simply a resident and not an owner or responsible for any maintenance of the premises. Liability coverage does not apply to any liability assumed by the facility before an occurrence or to any injury to a facility professional or support staff while caring for the scheduled individual. Any such injury should be covered under the facility’s workers compensation policy.

Assisted Living Care Coverage DP 04 59

The dwelling endorsement for assisted living care coverage is virtually identical to the homeowners endorsement. Since liability coverage is not automatically provided in the dwelling property forms, liability coverage is omitted from this endorsement.

Trust Coverage HO 06 15

Many people will put a home in the name of a trust for estate planning purposes, or put it in the will to become a trust upon the death of the insured. A trust, however, is not an individual; according to Merriam Webster online it is an arrangement where someone’s property or money is legally held by someone else or an organization for