AAIS AMENDMENT OF POLICY TERMS
ENDORSEMENTS
(May 2024)
AAIS introduced the following Amendment of Policy Terms
Endorsements effective 01 15 and their use is considered mandatory.
·
HO 1301–Amendment of Policy Terms – Form HO 0001
·
HO 1302–Amendment of Policy Terms – Form HO 0002
·
HO 1303–Amendment of Policy Terms – Form HO 0003
·
HO 1304–Amendment of Policy Terms – Form HO 0004
·
HO 1305–Amendment of Policy Terms – Form HO 0005
·
HO 1306–Amendment of Policy Terms – Form HO 0006
·
HO 1308–Amendment of Policy Terms – Form HO 0008
The changes are significant and should be carefully reviewed
because they modify major parts of the coverage form to which they are
attached. Because the changes are similar in all forms, this article will first
review the HO 1303 endorsement which modifies the HO 0003. The differences with
the other endorsements will be discussed at the end of this article.
The changes made in this endorsement track with the flow of
the coverage form. Only the changed areas are discussed because all other terms
and conditions in the coverage are unchanged.
Three Property related items are changed:
INCIDENTAL PROPERTY
COVERAGES
1. Collapse
The Collapse incidental Property Coverage
is deleted and replaced in its entirety.
The changes are as follows:
a. The
opening paragraph a. is changed to insert the word “abrupt” before the term
collapse. This makes it clear that only abrupt collapse is being covered.
b. The
prior covered cause of collapse item a. 1) was a peril insured against in
Coverage C. This has been eliminated. This means that under this incidental
coverage there is no coverage for collapse caused by a Coverage C peril. This
wording has been moved to the Collapse or Impairment Exclusion as an exception.
c. The
new item a. 1) is glass breakage or safety glazing material but only when it is
part of a building. So, if glass that is part of a building breaks and causes a
collapse – there is coverage.
d. Items
a. 2), a. 3) and a. 6) are changed by the addition of the phrase “of a building
or a part of a building.” Previously only the peril was shown but not what
property that peril would have damaged which left it open to broad
interpretation. It is now much more specific.
e. Item
a. 6) is expanded to apply to renovation in addition to repair and
construction.
f. Item
b. is changed to insert the word “abrupt” before the term collapse. This is
consistent with the opening paragraph change.
g. Item
b. is broken into two parts. The new item c. is only the second part of item b.
in the prior edition with no change in wording.
h. The
reference to Coverage C perils at the end of prior item b. is eliminated.
i. Prior
item c that referred to the Coverage C. peril of Weight of Ice and Snow is moved
to Collapse or Impairment Exclusion as part of the exception.
j. Item
e. has a slight rewording with no change in intent.
2. Debris Removal
Only paragraph a. is changed. The prior
paragraph a. provided debris removal coverage for losses caused by Perils
Insured Against. The amendment adds protection against losses caused by
Collapse Incidental Property Coverage.
PERILS INSURED AGAINST – COVERAGES A, B, C,
AND D
1. Coverage A – Residence and Coverage B –
Related Private Structures
a. The
opening sentence is changed by the removal of two words. Instead of being
covered “for risk of direct physical loss,” the property is covered for “direct
physical loss.”
b. Two
exclusions that apply to Coverage A and Coverage B are changed.
1)
Water, Humidity, Moisture or Vapor is changed to
add the wording “and such loss is not otherwise excluded by this policy.” This
prevents a conflict between this exclusion and the Water exclusion. Within this
exclusion wording is added to the Water exclusion stating that the surface
water and water below the surface part of that exclusion do not apply when
certain continuous or repeated discharge from plumbing systems events occur
provided no insured was aware or could have been aware.
2)
Collapse or Impairment is changed to mesh more
closely with the rewritten Incidental Property Coverage Collapse. The lead
sentence is very important because it is more open-ended by stating that the
insurance company does not pay for loss involving collapse. It then lists what
is included as collapse but states that collapse is not limited to only that which
is listed. The items highlighted in Collapse Incidental Wording are eliminated
but are found here with very little change.
EXCLUSIONS THAT APPLY
TO PROPERTY COVERAGES
The change in this section is the total replacement of the
Earth Movement exclusion. The major reason for this change is earthquakes
resulting from manmade causes. This exclusion is much more restrictive. The
changes are as follows:
a. The
opening paragraph states changes resulting from or “caused by human or animal
forces or an act of nature” to “results from a natural cause, a manmade cause,
or a combination.”
b. A section is added to explain exactly what is
meant by manmade causes. Seven items consisting of multiple causes are listed
but it is important to realize that these are all intended to be examples of
manmade causes so that the term is not limited to only those causes listed. The
listing includes mining, blasting, construction, hydrofracking, storage of
substances, including wastewater, below surface and many more. This all-inclusive
listing should be carefully reviewed with any insured so they can understand
what is excluded.
c. The
explanation of earth movement is significantly expanded.
1)
The earthquake item is expanded with earth
tremors, earth temblor and aftershocks. Added wording is stated that how these
are manifested is irrelevant.
2)
Soil liquefaction is added regardless of how
caused
3)
The landslide item is expanded to include the
movement of matter being carried by mudslide, mudflow, or mudslide.
4)
The subsidence item is changed to eliminate
erosion.
5)
The any other earth movement is expanded to include
movement when caused by six different actions. Movement caused by erosion or
water below the earth’s surface is also earth movement.
d. For
the first time a definition of earth is provided. Earth is ground, soil,
sediments, substrates, and strata but as in so many other statements, is not
limited to only these.
e. A
new item is added to explain that when earth movement is due to manmade cause
or a combination of natural and manmade causes the exclusion continues to apply
regardless of errors or omission of other parties, regardless of where the
cause originated and regardless of an insured’s activities.
Three
Liability related items are changed and one is added:
1. Coverage
L’s opening sentence is changed to say “those” sums instead of “all” sums.
2. Incidental
Liability Coverages Claims and Defense Costs are changed to not pay for
attorney fees or attorney fees that are taxed against an insured.
3. Exclusions
That Apply to Liability Coverages exclusion i. is replaced. This is the
intentional acts exclusion and the changes appear to address the many issues
that have arisen regarding innocent insureds. Basically, this exclusion makes
it clear that no insured is covered for intended or criminal actions committed by
them or by any other insured. The following changes are significant:
a. The
opening sentence begins with the following added language: “any liability of
anyone who is an insured under this policy.” This makes it very clear that the
actions described in this endorsement are excluded if those actions are
committed by an insured.
b. The
prior paragraph referred to the described activities as being committed by “an
insured.” That has been changed in this endorsement to “any insured.”
c. A
new paragraph is added to explain that coverage is eliminated for anyone
considered an insured because of acts described in the exclusion. This
exclusion applies regardless of any legal arguments or claims for relief
advance in the courts.
4. Exclusions
That Apply to Liability Coverages gets a new exclusion. Coverage L and Coverage
M are not available when bodily injury or property damage comes from electronic
aggression. Examples of electronic aggression are harassment and bullying but
the term is not limited to those. This aggression is not covered when committed
in any type of electronic forum or other means such as texting or emailing but
not limited to those.
HO 1301–Amendment of
Policy Terms – Form HO 0001
All changes are identical except for the Incidental Property
Coverages and Perils Insured Against – Coverages A, B, C, and D because none of
the items described as changed are part of the HO 0001.
HO 1302–Amendment of
Policy Terms – Form HO 0002
All changes are identical except for the Perils Insured
Against – Coverages A, B, C, and D because neither of the items described as
changed are part of the HO 0002.
HO 1304–Amendment of
Policy Terms – Form HO 0004
All changes are identical except for the Perils Insured
Against – Coverages A, B, C, and D because neither of the items described as
changed are part of the HO 0004.
HO 1305–Amendment of
Policy Terms – Form HO 0005
All changes are identical except for the Perils Insured
Against – Coverages A, B, C, and D where references are added for Coverage C.
HO 1306–Amendment of
Policy Terms – Form HO 0006
All changes are identical except for the Perils Insured
Against – Coverages A, B, C, and D because neither of the items described as
changed are part of the HO 0006.
HO 1308–Amendment of
Policy Terms – Form HO 0008
All changes are identical except for the Incidental Property
Coverages and Perils Insured Against – Coverages A, B, C, and D because none of
the items described as changed are part of the HO 0008.