(May,
2012)
Under
a typical HO policy, persons who qualify as insureds are restricted to those
who live in the described home. Specifically, insureds include the home’s
listed owner and, if applicable, the owner’s spouse (if not already shown as a
named/listed insured), and legal, minor relatives (birth children, adopted
children, foster children, legal wards, etc.). An exception also exists for
persons who, for extended periods, live away from the residence. Insured status
is commonly expanded to include students living away from home (such as college
and/or boarding school students).
Related Article: AAIS
Special Form Homeowners Analysis
The
question of insured status becomes more complicated as the party in question
turns older. Adults may qualify as insureds if they are also primary residents
of the covered premises. However, this residency requirement leaves a coverage
gap for an increasingly common homeowner situation: older or incapacitated
relatives who, while part of the insured’s household, reside in a nursing home
or assisted living facility.
Normally,
adults who live in a different location that does not qualify as a covered
location (such as a second or seasonal home, rental property, etc.) forfeit the
privilege of being treated as an insured. However, many homeowners are
responsible for aged or infirm relatives who, due to their intensive need for
assistance with the routines of daily living, reside in nursing homes and similar
facilities.
AAIS
offers an option for providing such persons with property and liability
protection. Coverage can be secured by attaching the HO 6235–Coverage for
Resident of Assisted Living Facility endorsement. The form provides coverage by
amending a base HO policy’s Agreement, Property Coverages, Liability Coverages,
How Much We Pay for Loss or Occurrence provisions.
The
form’s schedule is used to list the parties who are residents of an assisted
living facility and who are to be treated as insureds. Besides providing their
names, the name and location of the facility, limits for Coverages C and L must
be provided.
Note: Different limits may be selected for each person listed.
Agreement – under this section, the form requires
an indication that the person shown in the endorsement schedule meets all of
the following condition:
·
Is living at a facility listed in the schedule
·
Does not live at the primary residence
·
Is related to an insured through blood, marriage or
adoption.
The
facility listed on the endorsement must provide assistance with the
requirements for daily living which may include, but are not limited to,
therapy, medical treatment, social activities and dining. The named insured
must be responsible for the party(ies) receiving assistance. This part of the
form also obligates the HO insured to act on behalf of the listed parties.
Property Coverages – under this section the form modifies
the base policy by deleting references to building and related structures
coverages. It extends Coverage C to property of the resident named in the form.
The form adds a set of property sublimits (ranging from $100 to $500) for
vulnerable items such as contact lenses, dentures, ambulatory aids (such as
walkers), hearing aids, eyeglasses, medical alert devices and wheelchairs.
The
coverage is designed for on-premises exposures, so the form excludes coverage
for property that is usually at a different location, belongs to an insured,
and property that belongs to the listed facility when that property is being
used (including when rented) by the resident insured. Loss payment for a single
occurrence is subject to the Coverage C limit on the schedule.
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Example: Harold’s father’s ability to fend
for himself has fallen off to the point where he needs help. Harold helps sell
his father’s home and arranges for him to move to “Mellowtowne,” a nursing
and retirement facility. Harold’s father has his own room. Since most of the
room is furnished with items that Harold inherited from his parents, he adds
an HO 6235 form onto his policy. He uses a limit that should handle any loss
of the furniture and other property.
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The
form also provides a modest limit ($500 per month for up to a maximum of 12
months) to cover a resident insured’s additional living expenses when an
insured peril makes the portion of the facility used by that insured
unavailable. There is even coverage if the civil authorities prohibit use of
the facility due to neighboring conditions. The civil authority coverage is $50
per day and limited to two weeks.
Liability Coverages – under this section, the form
provides protection for the resident’s responsibility for causing injury or
loss to other parties. Only Coverage L – Personal Liability is provided.
Coverage M- Medical Payment for Others is specifically deleted.
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Example: Jim Slacker has a special form HO
policy. He has endorsed the HO 6235 form onto his policy in order to cover
his mother, Gerty, who lives at Ornery Homestead Manor, an assisted living
facility. One day Jim is asked to come to Ornery to see the owner. The owner
explains to Jim that Gerty is being sued because, while using her walker, she
accidentally rolled over the foot of another resident, fracturing that
party’s instep. Jim’s modified policy will respond to the claim.
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In
the above example, without the endorsement, Gerty would have no liability
coverage, so the loss would have become an out-of-pocket expense for her and
Jim.
The
liability section also adds its own, additional exclusions. The form will not
respond to losses involving liability that is assumed by the described
facility.
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Example: Ornery
Manor occasionally provides special entertainment for its residents. Every
month they have different bands come for dances/concerts. Ornery uses a band
contract that includes a provision that they will handle any loss to
instruments that may occur while the band is loading in, performing and
loading out and that each person attending a dance or contest is also bound
to this agreement. Such an agreement would not be eligible for coverage under
the endorsement if it did not involve a covered person being directly liable
for damage.
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Further,
the form bars bodily injuries suffered by the named facility’s staff while they
are caring for the listed insured.
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Example: Arkady, an Ornery Manor staffer, is
escorting Gerty, by wheelchair, from her room to the Manor’s community room.
Gerty belongs to the Manor chorus and Arkady is taking her to practice. On
the way, one of the front wheels on the wheelchair hits an object; the chair
stops abruptly and nearly tips over. Arkady is able to control it without
harming Gerty, but one of the metal edges on the chair slashes Arkady’s wrist
and arm. The expenses to treat Arkady’s injury would not be covered by the
endorsement.
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How Much We Pay for Loss or Occurrence – under this
section, the base HO policy’s property deductible is extended to also apply to
the property protection provided by the form. If, by some bizarre circumstance,
the same occurrence results in property damage or loss to property under the HO
and this endorsement (possibly a tornado); the deductible would be applied only
once.
The
limit of Insurance for Coverage L is not based on the number of insureds but
instead is based on number of persons insured since the persons being protected
under this endorsement are never referred to as insureds. No matter how many
persons are covered, how many parties receive injury, number of claims brought
or the number of policies periods involved, the limit for Coverage L in the
schedule of this endorsement is the most available for a single occurrence.
Insurance
Under More Than One Policy - If another source of coverage is available to respond to
a loss, then the form’s protection applies on an excess basis.
