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MORE?4U Homeowners with Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CRIS, CPIW Vice President of Technical Affairs Massachusetts Association of Insurance Agents Cancelling the HO policy Does the insurance company have to give 20 business days notice for cancellation? 1
Cancelling the HO policy Well the HO carrier might not even have to give 20 days it depends Cancellation provision is found in Section I and II Conditions Provision 1 is national language provisions 2 and 4 of the ISO HO policy are amended by the MA state amendatory endorsements Cancelling the HO policy First 60 days..we can cancel your policy original or renewal for ANY ANY reason 10 days.. Non-payment 5 days.. OTHER than non-payment 2
Cancelling the HO policy AFTER 60 days..we can cancel your policy original or renewal for only CERTAIN reasons ONLY 5 days for any of these reasons 10 days.. Non-payment Cancelling the HO policy What if there is a mortgagee on the policy??? 20 days to mortgagee. technically there COULD be only 5 or 10 days for YOU but generally carriers just use the 20 days for You and Mortgagee 3
Cancelling the HO policy I thought that HO policies ALWAYS cancelled on a P/R basis. I took over a client midterm and their company cancelled the policy on a short rate basis can they do this? Cancelling the HO policy The short answer.. yes This is how ISO filed for cancellation but that does NOT mean that every company has to use this filing. beware 4
Cancelling the HO policy I was wondering if you would be able to give me a definite answer about LPR s. I was taught that when we took over business from another agent, we are to mail an LPR to the agent and they are responsible for cancelling the insurance with the carrier. I am now being told that I send them direct to the company, even if we did not write the coverage before. Is one way the correct way or can it be done either way? I am looking for clarification. Cancelling the HO policy Or. I had talked to you previously regarding some insurance matters and you have always been a great help! Hoping you can help answer a quick question regarding the attached LPR. Who signs the bottom of the LPR -- the prior agent or the new agent taking over the business? Thank you so much for helping clear this up! 5
Cancelling the HO policy See attached instructions for completion of form by ACORD. If the policy that is being cancelled is with a direct writer...then it would be sent to the company. if the policy is through an agent the form should be sent to the agent. TECHNICALLY the agent of record(the one LOSING the client) is responsible for completing the LPR and getting client signature and signing it as that agent is the one with the contract with the company. Cancelling the HO policy As a professional courtesy...the agent taking the client completes as much of the LPR as possible... typing in old agent information, policy information and obtaining client signature...since you have them with you at time. You send this with a "dear john" letter to the agent stating you're the new agent, blah, blah, blah. 6
Cancelling the HO policy You want to do as much to keep the "old agent" from talking to to YOUR client as you can :)... but technically the old agent needs to make sure the LPR is obtained and the old agent signs it and sends it to the company. Cancelling the HO polic ACORD LPR 7
Cancelling the HO policy The producers signature necessary on the LPR is the producer/agent representing the policy being cancelled Trailers and the HO policy I have a client that keeps a camp trailer (no engine) at a campground year round. I have asked the HO company to add the site as a secondary residence occupied by the insured. Do you think the HO liability would only apply to the grounds around the Trailer? or would the HO respond to a loss that happened in/on the trailer? Page 13 of 18 in the HO-3 4/91 seems to indicate that a "trailer not towed by or carried on a motorized land conveyance" would NOT be excluded? 8
Trailers and the HO policy It depends... is it an "insured location"...the second part makes it problematic (in all ISO HO editions) Trailers and the HO policy It depends... is it an "insured location"...the second part makes it problematic (in all ISO HO editions) I would rather extend coverage. It is no longer an "auto" so the MAP won't cover damage to it..can you get liability through where ever you have physical damage coverage? 9
Trailers and the HO policy I wouldn t count on the non-attached trailer coverage under the HO when it is used as a residence premises Especially if one rents/leases a campsite for more than recreational use Premises maintenance vehicles and the HO policy Do you have any tech Talks about equipment such as a bobcat that homeowner has on their premises for home use? If the bobcat is used at the neighbor's house, does liability extend? Does liability extend to letting neighbor use it on neighbor's property. Insured wants to clear land he purchased next to his lot and also help a neighbor. Lot he purchased is in (his) LLC name. 10
Premises maintenance vehicles and the HO policy Liability coverage depends on HO policy edition..can only speak to ISO.. HO-91 if used to service the insured's residence ever then worldwide liability and contents as long as not being used for BUSINESS at time of loss Premises maintenance vehicles and the HO policy HO-91 Contents as long as used at one time to service insured s residence then covered anywhere 11
Premises maintenance vehicles and the HO policy HO-91 Liability as long as used at one time to service insured s residence then covered anywhere Premises maintenance vehicles and the HO policy HO-2000 Contents ONLY covered if used SOLEY to service THE insured s residence no coverage if do anything else 12
Premises maintenance vehicles and the HO policy HO-2000 Liability ONLY covered if used SOLEY to service THE insured s residence no coverage if do anything else Premises maintenance vehicles and the HO policy HO-2111 Contents ONLY covered if used SOLEY to service A residence can do something on another residence but not on something that is NOT a residence 13
Premises maintenance vehicles and the HO policy HO-2111 Liability ONLY covered if used SOLEY to service A residence can do something on another residence but not on something that is NOT a residence Premises maintenance vehicles and the HO policy But going back to YOUR question Lot he purchased is in (his) LLC name. There is NOT residence LLC is NOT a person so if the HO-2000 or HO-2011 got a problem. If HE has a HO-91 in HIS personal name and uses it at HIS personal residence then he can use it at LLC premises 14
Premises maintenance vehicles and the HO policy Insured asked me if their John Deer Tractor lawn mower (no registration) is on their trailer being driven to a repair shop or the mother s to cut her grass and for some reason gets in an accident and the trailer/tractor are burnt up. Is there coverage for the tractor under the homeowner s policy still. I know there is no coverage for it while in use cutting the mother s grass but what about while being transported on the trailer? Premises maintenance vehicles and the HO policy Again, answer depends on ISO edition If being transported to be maintained all HO editions would cover If being transported to cut Mom s grass HO-91 and HO- 2011 could cover but HO-2000 could argue oops you were not SOLELY maintaining an INSURED S residence! 15
Golfcart in campground My insured owns a golfcart and is bringing it to the campground this summer. The campground will only let it on premises if the individual shows a certificate of insurance. Does the HO policy provide liability insurance for an owned golfcart ON a campground? Golfcart in campground Coverage for liability might depend on the edition of the ISO HO policy ISO HO-91 covers an OWNED golfcart on an insured location 16
Golfcart in campground HO-91 excludes all motorized land conveyances EXCEPT: Vehicles designed for OFF road use and NOT subject to motor vehicle registration on 1) insured location 2) golfing on golf course Golfcart in campground HO-91 insured location definition. Doesn t seem to include. Campground Where you are temporarily residing is the campsite. Not the campground 17
Golfcart in campground HO-2000/HO-2011 covers an owned golfcart on CERTAIN insured locations AND in a private residential community as well as a golfing facility Golfcart in campground HO-2000/2011 On CERTAIN insured locations provides more coverage for Owned golfcart ANYWHERE on golfing facility where have permission to use 18
Golfcart in campground HO-2000/HO-2011 Can use on a, b, d, e, h Oops this won t work for campground Golfcart in campground HO-2000/2011 Can use anywhere golfing facility allows And Private residential community such as HO or condo association NOT campground 19
Golfcart in campground But ASK your underwriter and/or claims person If you get a positive answer Reinforce it with email and state attaching to file Golfcart in campground And personally if you do NOT get a positive answer from company I would NOT issue certificate of insurance I d get a specialty policy 20
vacancy I'm confused about when a piece of land is considered vacant... does a permanently affixed fence on the land mean that it's not vacant land after all, 4 or is it still considered vacant because there's no building on the land? vacancy I was always under the impression that if any "man-made" structure was on the land, that it would not be considered vacant and liability would not extend to cover it. Thanks for clarifying! 21
vacancy I "assume" you are thinking about the "insured location" definition... what is vacant...the proper answer is..."how lucky do YOU feel today". In MA, Gomez v. Citation...underground bunker...land not vacant. I prefer to be "safe"...and say nothing manmade. I need to ask clients. vacancy If there is a piece of land and a fence on it...will company let me extend liability by showing it on the dec page...or put it in writing/email...that they won't consider it vacant. No nothing...works best...and then discussion with company after that! 22
vacancy A client called to advise she is moving out of her home. She has a reverse mortgage that pays her a monthly income and wanted to know what type of insurance she needs when she leaves & the property is no longer occupied. She also mentioned that at some point, ownership of the property will transfer to Freedom Mortgage. Do you know how these things work. vacancy From what I have read, I thought the minute you die or permanently leave your home, ownership transfers to the mortgage company. Can you shed any light on this topic. THANKS 23
vacancy Sorry... she needs a lawyer to tell her when her interest ends... but when she moves out she no longer qualifies for an HO policy... In the IIABA where you reside article - where bad things happen and aren't covered when named insured not live in house vacancy I think surplus lines... vacant home policy...if it IS her responsibility. I'd let the mortgagee deal with it... but then the banking industry is not my favorite 24
vacancy We are trying to see how to adequately protect our agency from a issue with Vacancy Clause on a homeowner's policy. Example: We have a client who has purchased a new home, they have moved into the new home & have their old home up for sale. We explained the vacancy clause to them but they say the husband is going to stay in a house without any furniture in it. vacancy Is there any kind of sign off or forms that we should have the client sign to protect us in this kind of issue? We want to make sure we are protecting our E & O., 25
vacancy Vacancy is a problem for fire/lightning in MA, and glass breakage, freezing pipes and vandalism in all states. I do NOT believe the man is sleeping on a HARD FLOOD without anything else in the house.. And some companies are stating doesn t belong on HO if YOU don t LIVE there NO Coverage A, B, D, E period I would contact my carrier.. An elderly widow had some health problems and went to a nursing home with every intention of returning to her home when her health improved. Her home was looked after by her nonresident children and they cut the grass, shoveled the snow, etc. 26
Her home address was still her legal address, her voting address was still her home address, and legally her home address was still the address of the home she was temporarily not residing in. After several months, there was a fire which was a total loss. Her home was destroyed. She has carried an HO-5 homeowners policy with the same agent and carrier for many years. Her insurance carrier paid the contents loss but denied the dwelling claim because they insisted that the home she owned and was temporarily away from was not her residence premises. 27
I think this is crazy and would liken this situation to one where a person called into the military is gone from their primary residence for a short time. The real issue then is: when an elderly person is temporarily away from their home with every intention of returning, how can the carrier deny the property claim by stating that the home which was insured and at which the loss occurred was not the insured s residence premises? In this policy, "you" and "your" refer to the "named insured" shown in the Declarations and the spouse if a resident of the same household. "We", "us" and "our" refer to the Company providing this insurance. You is the named insured person(s) on dec page HO-2000 all forms (HO-91 similar) 28
11. "Residence premises" means: a. The one family dwelling where you reside; b. The two, three or four family dwelling where you reside in at least one of the family units; or c. That part of any other building where you reside; and which is shown as the "residence premises" in the Declarations. "Residence premises" also includes other structures and grounds at that location. HO-2000 HO-2, 3, 4, 5 (HO-91 similar) 11. "Residence premises" means the unit where you reside shown as the "residence premises" in the Declarations. HO-2000 HO-6 (HO-91 same different #) 29
This definition creates a problem where YOU reside if YOU don t live there. Then we don t have a residence premises is what some companies are saying and some courts agreeing to IIABA white paper states: One school of thought, supported by a body of case law, is that the where you reside stipulation means that, if you no longer resides in the dwelling, it isn t a residence premises, and thus there is no Coverage A, B or D since each hinge on the existence of a residence premises. 30
What does reside mean? Webster defines reside to mean to dwell permanently or continuously, and defines residence to mean the place where one actually lives as distinguished from one s domicile or a place of temporary sojourn. The American Heritage dictionary defines reside to mean to live in a place permanently or for an extended period. What does reside mean? Black s Law defines reside to mean live, dwell, abide, sojourn, stay, remain, lodge. To settle oneself or a thing in a place to be stationed, to remain or stay, to dwell permanently or continuously, to have a settled abode for a time, to have one s residence or domicile; specifically to be present in residence, to have an abiding place. 31
What does residence mean? Black s Law defines residence to include a: Place where one actually lives or has his home; a person s dwelling place or place of habitation; an abode; house where one s home is; a dwelling house. Personal presence at some place of abode with no present intention of definite and early removal and with purpose to remain for undetermined period, not infrequently, but not necessarily combined with design to stay permanently. IIABA white paper states: In fact, one argument says that since the Coverage C limit is a percentage of the Coverage A limit and Coverage A no longer exists, then the Coverage C limit vanishes. WOW nasty!!!! We choose to disregard this viewpoint since a specific limit is typically shown on the Declarations page and Coverage C applies on a worldwide basis without restriction to a residence premises. 32
Coverage dependent on residence premises If there is no residence premises Coverages A, B and D no longer apply!!! Coverage dependent on residence premises If there is no residence premises Coverages A, B and D no longer apply!!! 33
If you don t live there and the issue of residence premises is invoked Do you think there should be Coverage E What about when house is being sold and realtor and prospective buyers are there? If you don t live there and the issue of residence premises is invoked Coverage E? 34
If you don t live there and the issue of residence premises is invoked Coverage E? Does the concept of "vacancy" apply - does it even need to be considered Often we THINK the issue is vacancy. but vacancy is the LEAST of your worries!!! Vacancy can be no nothing lacks intention to return lacks amenities minimally necessary for human habitation 35
If the home is considered vacant ASSUMING the issue of residence premises is not invoked the client has a problem with Glass breakage (30 or 60 days depending on ISO HO edition) Perils of Fire/lightning in MA and RI VMM Freezing of pipes In nursing home case I m sure house is furnished but is there REALLY an intention to return. named insured no longer resides there In relocation how long before furnishings moved and vacant too Plus if you KNOW this about the risk shouldn t you be talking to the insurance company 36
Relocation and the homeowner We just learned this morning that one of our homeowner insureds was transferred suddenly several months ago. He literally got the word on a Friday to start work the next Monday morning at the company s office 500 miles away. Relocation and the homeowner He s been living at an extended stay hotel while a realtor has been trying to sell his house but with the current market that could take a long time. He finally thought to call us and ask about his insurance. We think he needs to move his coverage from an HO policy to a dwelling form. What do you think? 37
Relocation and the homeowner IN both situations if YOU are NOT going to live there YOU probably need to change the policy how soon will depend on 1) How strictly company interprets residence premises 2) What/who is still at/in your house Relocation and the homeowner This is an increase in hazard for the insurance company and in MA can be a valid reason for MID-TERM cancellation 38
Relocation and the homeowner We have a fiduciary responsibility to the insurance company who we represent to bring this to their attention We also owe a professional responsibility to the client for the same bringing it to company s attention MIGHT buy us some time or not Foreclosures We have a client that has an HO-3. She has moved out of the house and into another apartment and did not purchase an HO-4. The HO-3 is still in force and the home is in the process of foreclosing. 39
Foreclosures When moving out of the dwelling insured under the HO-3, she put some of her items in storage. My question is how would the policy respond if she had a personal property loss at either her new apartment or a personal property loss at the storage location? Foreclosures Looks like a potential problem to me she really needs an HO-4 for contents and liability And is there REALLY any coverage on the dwelling under the HO-3 per the residence premises issue that is something to discuss with the company plus they might want to get off the risk and foreclosure would allow them to cancel mid-term 40
Foreclosures Says the IIABA white paper: This is another example of how obscure this issue is to most agents. In this question, the focus was on Coverage C for personal property, not Coverage A on the dwelling. Foreclosure and repossession are one thing, but a total uncovered loss is another and would obviously create a far worse financial obligation for the mortgagor. Foreclosures Says the IIABA white paper: according to one school of thought (apparently held by multiple adjusters) and several court decisions, if someone moves out of their home while a foreclosure progresses, coverage ceases at the point they move out with the conscious intent not to return. 41
Foreclosures Says the IIABA white paper: Keep in mind too that non-residency does not necessarily mean vacancy. It is conceivable that a dwelling could be fully furnished yet no one resides there. If that logic is accepted, then coverage could vanish long before the moving van shows up. Foreclosures S0 will the fact that the named insured doesn t live there affect the mortgagee s coverage????? K. Mortgage Clause 1. If a mortgagee is named in this policy, any loss payable under Coverage A or B will be paid to the mortgagee and you, as interests appear... 2. If we deny your claim, that denial will not apply to a valid claim of the mortgagee, if the mortgagee: 42
Foreclosures The mortgagee has no greater rights under the policy than the insured, absent fraud by the insured that otherwise voids the policy or neglect by the insured, e.g., in filing proof of loss. Mortgagee ONLY gets coverage where the policy would normally apply Foreclosures But again Foreclosure is a MAJOR exposure Why make the company have to fight with the issue of residence premises. once you know the issue let them know and then they can issue legal notice of cancellation and hopefully not have to pay ANY claims. 43