Fire Insurance


There are 2 basic ways a property is rated:
1) Class Rates – these are used when the insured property is one of a numerous, normal, non-hazardous class. No inspection is necessary for these risks.

2) Specific or Schedule Rates – these properties are rated on an individual basis, subject to an appropriate rate schedule.

Standard Fire Policy - S. F. P.

–    S.F.P. is the oldest fire insurance form.
–    Becomes effective at noon standard time and expires at noon standard time.
–    Can be written to cover buildings and/or contents for direct loss from fire, lightning, and removal damage
–    This coverage is for a direct loss from any peril while removed from a premises endangered by a covered peril. Coverage is for 5 days after removal. 
–    The following is included in the peril of fire:
  • Water, chemical & other damage caused by an attempt to extinguish the fire.
  • Smoke damage is covered from hostile fires only.

Replacement Cost Endorsement

–    This endorsement waives depreciation.
–    The requirements are that at time of loss, the insured must be carrying insurance equaling at least 80% of the full replacement value.
–    In order to collect on a replacement cost basis, the property must be restored.
–    If the property is not restored, recovery is on a A.C.V. basis only.

General Exclusions

1)      War
2)      Theft Losses
3)      Neglect of Property After Loss
4)      Destruction of Property by Order of Civil Authorities Unless the Destruction Was Made Necessary to Prevent the Spread of Fire

Coverage Suspensions Under S.F.P.

1)      Any unreported increase in hazard w/in the insured’s knowledge or control.
2)      Any unpermitted vacancy or unoccupancy beyond 60 consecutive days.
* A suspended policy pays no losses to the insured, however, a mortgagee will collect if one is listed in the policy and the insured reimburses the insurance company.

Coverage Restrictions Under S.F.P.

–     The insured may cancel at any time on a short-rate basis after surrendering the original policy or by the use of a lost policy release form.
–     The company may cancel on a pro-rata basis after giving the insured 5 days written notice and 10 days notice to a mortgagee if one appears in the policy.

Mortgagee Interest in the S.F.P.

1)      The right to file a proof of loss if the insured fails to do so.
2)      Pay any premium if the insured fails to do so.
3)      Sue 3rd parties in their own name.

Insured's Requirements at the Time of Loss

1)      Give immediate notice to the company.
2)      Protect property from further damage.
3)      Separate damaged from undamaged property.
4)      Prepare an inventory of the destroyed, damaged and undamaged property, listing in detail quantities, cost and amount claimed.

Homeowner's Policy

Homeowner's Policy

A HO policy is a package policy consisting of fire, contents, theft, and liability. The following HO forms are available: HO-2, HO-3, HO-4, HO-5, HO-6, HO-8.
Who is eligible for a HO policy?
1)      The owner occupant of a 1 to 4 family private dwelling.
2)      Tenant in a private dwelling or apartment house.
3)      The owner occupant of a condo or co-op.
HO-2 – Broad Form
This insured the dwelling, other structures and personal property for the perils of fire, lightning, E.C. Perils, VMM, the broad perils BIG AFFECT and also includes theft.
HO-3 – Special Form
This insures the dwelling and other structures on an all-risk basis, however, personal property, Coverage C, is only covered on a broad form basis.
HO-5 – Comprehensive Form
This insures the dwelling, other structures and personal property on an all-risk basis.
HO-8 – Modified Form
This insures the dwelling, other structures and personal property for the perils of fire, lightning, E.C. Perils, VMM, theft and glass breakage.
HO-4 – Tenants or Contents Broad Form
This is designed for the tenants of a rented premise. The HO-4 provides for 10% of Coverage C to cover improvements and betterments.
HO-6 – Unit Owner’s Broad Form
Designed for the condo and co-op. This covers personal property on a broad form basis and also provides a limited amount of Coverage A, dwelling, for additions and alterations. The minimum Coverage A is $1000.

Section 2 of Homeowners – All HO forms have identical Section 2.

Coverage E – Personal Liability – Any claim or suit brought against an insured for damages resulting from B.I. and/or P.D. caused by a covered occurrence, the company will pay up to the limit of liability shown in the declarations for any one occurrence. Minimum is $100K.
Coverage F – Medical Payments to Others
The company will pay the necessary medical expenses incurred w/in 3 years of an accident causing B.I. up to the limit of liability shown in the declarations for Coverage F. 
This coverage is a “no-fault” coverage.
Minimum is $1000.
Coverage F is not additional insurance, it is included w/in the Coverage E limit.

Section 1

Coverage C – Personal Property
This covers personal property owned or used by an insured worldwide for the entire amount applying to Coverage C.
The only exception to the worldwide limit is property usually kept at a secondary residence premises of the insured where coverage is limited to 10% of the Coverage C amount.
Limitations on Certain Classes of Personal Property –
1)      $200 on money, bullion and coins.
2)      $1500 on securities, accounts, manuscripts and stamps.
3)      $1500 on watercraft and trailers.
4)      $1500 for loss by theft of jewelry and furs.
5)      $2500 for loss by theft of firearms.
6)      $2500 for loss by theft of silverware, gold-ware and pewter-ware.
7)      5% of the dwelling amount for trees, plants, shrubs and lawns but not more than $500/item.
a.       For the HO-4 and HO-6, the coverage is 10% of “C” but still not more than $500/item.
b.      For the HO-8, the per item limit is only $250.
8)      $2500 for property on resident’s premises used for business purposes. $500 for off-premise.
9)      Gravemarkers are covered up to $5000. Cemetary plots are considered to be insured locations.
Recovered Property –
The insured has the option to retain recovered property or let it become property of the insurer.
Should the insured choose to retain recovered property, they need only payback the amount received for settlement.
All salvage and recovery losses are theft of the insurer.
Mandatory Coverage of Section 2 –
1)      All additional residence premises
2)      All residence employees not required to be covered under worker’s compensation.
3)      Incidental office occupancies on residence premises.
Dwelling Property Program –
This program is designed to cover 1 to 4 family private dwelling.
It would also cover a 1 family w/up to 5 rooms or boarders.
There are 3 forms available:
1)      DP 1 (Basic Form)
2)      DP 2 (Broad Form)
3)      DP 3 (Special Form)
The following insuring agreements are included in a standard DP form:
1)      Coverage A – Dwelling – This covers the residential building, any structures attached to it, as well as materials and supplies at or next to the premises which is used for construction, alteration or repair of any structure at the location.
2)      Coverage B – Other Structures – Other Structures not attached to the main structure and are at least separated by a clear space. Coverage is 10% of Coverage A.
3)      Coverage C – Personal Property – This is optional coverage. If purchased, this would cover personal property owned or used by the insured. The coverage amount purchased is an on premises limit but the policy would provide for a worldwide limit of 10%.
4)      Coverage D – Fair Rental Value – This provides compensation to the insured if the premises are unusable as a result of a covered loss or if use of the premises is restricted by the act of a civil authority. Coverage is 10% of Coverage A. *Civil authority losses are limited to 2 weeks in time.
5)      Coverage E – Additional Living Expenses – This is optional coverage and is only available on a DP 2 and 3. Provides compensation to the insured for the increased living expenses when they are forced to live elsewhere under the same provision as Coverage D.
DP 1 – Basic Form
             This insures the dwelling and other structures for the perils of fire, lightning, and internal explosion.
Endorsements – For additional premium, the insured may add the following coverages:
1)   Extended coverage endorsement – E.C. Perils
     –     Windstorm
     –     Civil Commotion
     –    Smoke – this broadens smoke coverage to include fires excluding fireplaces, industrial operations, and agricultural smudging.
     –    Hail
     –    Aircraft
     –    Vehicles
     –    Volcano
     –    Explosions – excludes steam boiler explosions
     –    Riot
2)    Vandalism
        Malicious Mischief
–        This endorsement specifically excludes glass breakage
DP 2 – Broad Form
             This insures the dwelling and other structures for the same perils as a DP 1 and automatically includes E.C. Perils, VMM and Broad Form Perils:
             Burglary Damage
             Ice, Sleet & Snow
             Accidental Discharge – covers leakage, overflow & a.d. from plumbing & heating systems
             Falling Objects
             Freezing Pipes
             Electrical – covers damage to electrical appliances except tubes and transistors
             Collapse –
             Tearing Asunder – steam boiler explosions
For collapse, this covers a collapse caused by any of the following:
1)      a peril in the policy
2)      weight of rain on the roof
3)      weight of contents, equipment, animals and people
4)      hidden decay
5)      hidden insects and vermin
6)      defective building materials or methods of construction
*In a broad form policy or better, the following coverages are expanded:
–        smoke includes fireplaces
–        vehicles includes vehicles owned or operated by the insured or tenant
DP 3 – Special Form
             This insures the dwelling and other structures on an all risk basis.          
             If personal property, Coverage C, has been purchased, that coverage is only on a broad form basis.
             All risk coverage means coverage against loss caused by any accidental external circumstance subject to specific exclusions.
Additional Coverage in Dwelling Program –
1)      Debris Removal – this states that the company will pay the cost of cleaning up the property after a loss, subject to a policy limit. These expenses are included w/in the limit of coverage for that loss.
2)      Fire Dept. Service Charge – the limit of cover is $500.
3)      Trees, Plants, Shrubs & Lawns – Under DP 1, no coverage.           Under DP 2 and 3, coverage is provided on a named peril basis but excludes loss caused by wind, hail, weight of ice, sleet and snow and vehicle of insured or tenant. Coverage is in the amount of 5% of the dwelling amount as an aggregate total, but not more than $500 per item. 
Loss Settlement in Dwelling Program – Under DP 1, losses are on a A.C.V. basis only. Under DP 2 and 3, buildings under Coverage A and B are at replacement cost w/out deduction for depreciation, provided the insured is carrying the sufficient amount of insurance. Personal Property Coverage C, will be on a A.C.V. basis only.
General Exclusions for DP 1, 2 and 3 –
1)      Cost of repair, construction, or demolition regulated by any ordinance or law.
2)      Earth movements unless a fire ensues.
3)      Water damage, meaning flood and the backup of sewers or drains.
4)      Neglect of property after a loss.
5)      War
6)      Nuclear
Property Not Covered Under DP 1, 2 & 3 –
1)      Accounts, bills, deeds, evidences of debt, money, securities, bullion and manuscripts.
2)      Animals, birds and fishes.
3)      Aircraft and motor vehicles.
4)      Boats, other than rowboats and canoes. Rowboats and canoes can be covered on-premises only.
* A DP 1 is designed for older dwellings, not considered eligible for replacement cost coverage.
Functional replacement cost endorsement – this is for the replacement w/similar materials but of today’s standards
* Cancellations are as follows:
             15 days for non-payment
             30 days for any other reason
             non-renewal cancellations are @ least 45 days but not more than 60
* The term all-risk has been replaced today by risk of direct physical loss or open perils.

Flood Insurance

Flood Insurance

National Flood Insurance Program – This program was established by the National Flood Insurance Act of 1968. It is administered by the FEMA. Coverage is available is for buildings and also for contents against loss by flood. 

– “Flood” means general and temporary condition of inundations of normally dry land areas from:
1)      the overflow of inland or tidal waters
2)      unusual or rapid accumulation or runoff of surface waters
3)      mudslides caused by the accumulation of water on or under the ground
– The standard deductible is $750.
– In order to be eligible to participate in the flood program, a community must:
1)      adopt land use and controls measures
2)      make and application to FEMA
– There is a 30 day wait for the binding of coverage except for new purchase or refinance.

Umbrella Coverage

Personal Umbrella Insurance provides additional liability coverage above the limits of your homeowners and auto insurance policies. In addition, it provides coverage that may be excluded by other liability policies.
Commercial Umbrella Insrance provides additional liability coverage including, general liability, auto and employer’s liability. In addition, it provides coverage that may be excluded by other liability policies.
» When do you need Umbrella Insurance?
In the event of a major catastrophe for which you are liable, a jury could order you to pay the plaintiff a settlement reaching into the millions of dollars. The effects of such a lawsuit could wipe out all your possessions and future earnings or your corporate assets. An umbrella insurance policy is designed to protect your current assets and future earnings.

Auto Insurance

Auto Insurance

A standard auto insurance policy is made up of the following coverages:
»      Bodily injury liability provides protection if you harm or kill someone while driving. It also provides for a legal defense if a lawsuit is filed against you. Keep in mind, bodily injury liability covers injury to people, not your vehicle.
 »      Medical payments, no-fault or personal injury protection coverage pays the medical expenses of the injured driver and passengers in your car. There may also be coverage if you are hit by a car.
»      Uninsured motorists coverage pays for your injuries caused by an uninsured driver.
»      Comprehensive physical damage coverage pays for losses resulting from damage to your car if it is damaged by flood, fire or animals. This coverage also provides supplemental payments for transportation expenses in the event your insured vehicle is stolen.
»      Collision coverage provides protection in the event your car is involved in a collision with another vehicle or object. Collision losses are paid regardless of fault. To keep your premiums low, it is recommended you take the highest deductible amount you can afford to pay (out of pocket).
»       Property damage liability protects you if your car damages someone else’s property. It also provides you with legal defense if another party files a lawsuit against you.  
»      Rental car reimbursement pays car rental expenses while your car is being repaired because of an accident.