AAIS SPECIAL FORM MOBILE-HOMEOWNERS ANALYSIS

(May 2022)

Collapsible Index

Agreement

Definitions

Property Coverages

Principal Property Coverages

Incidental Property Coverages

Perils Insured Against - Coverages A, B, C, And D

Exclusions That Apply to Property Coverages

Liability Coverages

Principal Coverages—Liability and Medical Payments to Others

Incidental Liability Coverages

Exclusions That Apply to Liability Coverages

What You Must Do in Case of Loss or Claim

How Much We Pay for Loss or Occurrence

Payment Of Loss

Policy Conditions

The special form mobile-homeowners policy that applies to mobile-homes is created by modifying the HO 0003 form with endorsement MH 7800, Mobile-homeowners Endorsement. It begins with a table of contents.

This analysis follows the HO 0003 and adds in the wording from the MH 7800 as appropriate. This approach allows the reader to view the Mobile Home coverage as a complete product rather than as one form with an endorsement attached.

AGREEMENT

The policy's opening language states that the policy is subject to all of its terms and will provide property, liability and other insurance coverages that are described in the policy. These coverages are provided for a specific policy period. In return for this protection the named insured must pay a premium as required. Principal coverages apply only if a premium is shown for them on the declarations.

DEFINITIONS

The definitions section appears immediately after the Agreement.

1. You and Your

The person(s) who appear on the declarations as insured(s). The named insured’s spouse is also defined as you, but only if he or she lives in the insured's household.

2. We, Us, and Our

The company providing the homeowner's coverage.

3. Actual Cash Value

The amount it takes to repair or replace property which includes an adjustment for depreciation in the applicable property's value. However, no consideration is made for the reasons that a given property has experienced depreciation.

4. Aircraft

This term is used only in the Liability section and refers to property made or used for flying. If a model aircraft and model hovercraft is not designed or used to carry people or cargo, it is not considered aircraft. Also, a hovercraft is not considered aircraft.

Note: This section should now, also apply to drones (unmanned air vehicles).

5. Bodily injury

Actual or physical harm to a person. Harm includes sickness, disease, or death. Any required care and loss of services also qualifies as bodily injury. Unless a person first experiences physical injury there is no coverage for either injury or death that is related to emotional, mental stress or similar situations.

Example: A ten-year-old boy and his father are visiting an insured’s mobile-home which is extravagantly decorated for the upcoming Halloween holiday. The boy opens a closet in a recreation room, looking for toys he knows are usually stored there. As the door opens, a spring-loaded, zombie mannequin bursts out. The child screams for minutes and is later treated for trauma. The son’s father files suit for reimbursement for the expensive treatment. This does not qualify as bodily injury.

6. Business

A trade, profession or occupation including farming (even when performed only on an occasional basis). This term includes renting property to others. Renting out part of the covered location does not qualify as a business if it is only done occasionally when the purpose is residential AND the rented space is usually occupied by members of the covered household.

If an insured receives money for an activity, it is considered a business. There are exceptions though. If an insured is caring for a relative, it is not a business even if money is exchanged. When an insured cares for a person, other than a relative, and receives an exchange of like services, it is not a business, such as when neighbors exchange taking care of each other’s’ young children on different days so they can get chores and errands done.

Note: The definition refers to compensation rather than monetary payment. That is a very important distinction.

Volunteer activities are also not a business even if the insured receives reimbursement for expenses. However, if compensation is provided, the activity no longer qualifies as an exception and it is treated as a business. Other activities the insured may engage in are not considered business as long as in the 12 months prior to the policy inception the total compensation for the particular activity did not exceed $2,500.

Example: Thieves broke into Jeremy’s home and part of his claim included several hundred dollars’ worth of tools he used to maintain his car and motorcycle. His insurer at first denied that part of his claim due to seeing evidence that he does maintenance and vehicle repairs on the side. The insurer reversed its position when Jeremy produced documentation that he has never received more than $1,700 annually in this modest sideline activity.

7. Declarations

This term refers to any document that is related to the homeowner policy and which may be called Declarations, Supplemental Declarations, or Schedules.

8. Described Location

A mobile home that is used by the named insured for residential purposes provided it is described in the policy (schedule/declarations) and the land where the home sits is either owned or leased by the named insured. The term also refers to related structures (such as garages, sheds, etc.) and grounds, but only when they are located on land owned by the named insured. When such land is leased, other structures are considered part of the described location only when occupied or used by members of the covered household.

Note: This term is found under Mobile-Homeowners Endorsement MH 7800. It replaces the term found under HO 0003.

9. Domestic employee

A person employed or leased under contract by an insured to perform duties that are connected to the use and care of the described location such as a butler, housekeeper or gardener. Included are persons who perform duties of a similar nature elsewhere for an insured provided the duties do not include business related functions.

A person who is furnished to the insured as a temporary substitute or to meet seasonal or short-term needs is not a domestic employee.

Example: Fanny has gotten older and she just isn’t up to taking care of her household chores as well as she used to. For the last 6 months, she has paid a neighbor, Bella, to come every Thursday to do various chores such as laundry, cleaning and waxing floors, dusting and, occasionally cooking. During the time that Bella performs such tasks, she qualifies as Fanny’s domestic employee.

10. Employee

Refers to a party who is employed in the business of an insured. The term includes a person who is hired via a labor leasing arrangement. The duties of such persons must involve an insured’s business and not the residential or personal activities performed by a domestic employee.

11. Fungi

Any fungus, including but not limited to mildew and mold, as well as any substances released or created by such matter qualifies as fungi.

12. Hovercraft

This term is used only in the Liability section and refers to machines (including property called flarecraft) that are capable of traveling over ground or water via the use of a compressed air cushion.

The term does not apply to motor vehicles, aircraft, or watercraft. It also does not refer to models of hovercrafts, aircraft or watercraft that are neither designed nor used for moving people or property.

13. Insured

Insured is the person or persons named in the declarations (named insured) and that person’s relatives who live in the household. In addition, there are a number of persons who are insureds based on conditions and circumstances:

· Relatives of the named insured who are under the age of 25, enrolled in school fulltime, are still financially dependent on the named insured and lived in the household prior to moving out to attend school

· Non-relatives of the named insured under the age of 21 who live in the household and are in that person’s care or in the care of a relative of a person who also lives in the household. These non-relatives are also covered while away from the household attending school fulltime provided, they continue to be under the care of the named insured or a relative resident and had lived in the household prior to moving out to attend school.

Example: Melissa’s mobile-home is insured by Acme Fire & Casualty’s mobile-home policy. Melissa’s daughter, Apple, is 23 years old and lives with her. Melissa also takes care of Jeremy, who is 20 and a senior attending college in a neighboring state. Both Apple and Jeremy qualify as insureds.

The definition of Insured is further expanded but only for the Liability section of the policy:

· The named insured’s real estate manager but only within the scope of his or her duties that relate to the described location

· Other parties also qualify as insureds, but on a more limited basis. If a loss situation involves certain, qualified incidents such as an eligible craft or vehicle (such as a golf cart) animal (usually a pet), etc., coverage may extend to persons who, with the insured’s knowledge/permission, have some related responsibility for the loss. Therefore, the policy may grant insured status for such parties to the extent that they are liable for injury or harm involving insured property.

· Persons using or caring for vehicles, watercraft, or animals owned by an insured

The vicarious liability protection that the special form mobile-homeowners policy grants to entities that are in possession of an insured’s crafts, vehicles or animals only applies in instances where the use or possession involves an insured’s permission.

Example: Glenn’s mobile home is on a 3.5-acre lot. Glenn is an avid gardener and he owns a golf cart that he uses to tend to the lot’s many landscaped areas. Jim, the 15-year-old son of Glenn’s neighbor, notices that the golf cart was left outside. Jim jumps into the cart and takes it for a ride. He tries to stop, but he ends up striking a mail carrier in Glenn’s driveway. Jim would not be considered an insured.

Note: Under this definition, any reference to insured includes one or more eligible persons.

14. Insured premises

The described location (as defined above) is an insured premises. In addition, any premises that is listed on the declarations as an insured premises and is used by the named insured, as a residence, is an insured premises.

If a premises is acquired during the policy and is used by the named insured as a residence, it is also an insured premises. Finally, if there are premises that are used by the named insured in connection with any of the above-described insured premises, they are also insured premises.

The next grouping of insured premises applies to insureds, not just the named insured.

Cemetery and burial plots of an insured, without regard to location, are insured premises. An insured’s temporary residence that is within a structure not owned by an insured and premises rented occasionally, for non-business reasons, to an insured are insured premises. Finally, vacant land owned or rented to an insured, including land being developed to be an insured’s residence, is an insured residence. However, vacant land and farmland are not the same. Farmland is not an insured premises.

Note: Premises used by any insured for activity generally considered to be a business does not qualify as an insured premises.

15. Limit

The policy merely defines this as the amount of insurance.

16. Motorized vehicle

Land or amphibious vehicles that are self-propelled are defined as motorized vehicles. Exceptions are hovercrafts, (actual or model) and watercraft (actual or model). In addition, any trailer or semitrailer attached to or carried on a vehicle described earlier is also a motorized vehicle even if it becomes detached.

17. Occurrence

There are three specific requirements for an occurrence. First, there must be an accident. This means that the incident(s) cannot have been planned. There can be repeated accidents and still be the same occurrence. Second, bodily injury or property damage must result from the accident(s). Last, the bodily injury or property damage must happen during the policy period.

18. Pollutant

Any solid, liquid, gaseous, thermal, or radioactive irritant or contaminant, including acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste. Also, electrical, magnetic or electromagnetic particles or fields–visible or invisible - plus sound. Waste includes materials to be recycled, reclaimed, reconditioned as well as disposed of.

Related Court Case: Candle Soot Excluded as Pollutant

19. Property damage

Physical injury or destruction of tangible property; or the loss of use of tangible property, whether or not it is physically damaged.

Related Court Case: Forged Artwork Is Not an Eligible Loss

20. Terms

Refers to any written policy components including exclusions, conditions, defined words, etc.

21. Vermin

Refers to a wide variety of creatures that tend to be ideal candidates as pests that damage property because of their tendency to infiltrate structures as a source for dining or housing. Policy examples include raccoons, possums, skunks, snakes, armadillos, bats, etc.

22. Watercraft

With regard to the special form mobile-homeowners policy’s liability coverage, this term refers to items that are designed for traveling over water, whether powered by engines, motors, or wind. There’s no reference to manually powered, small craft (such as canoes, rafts or rowboats). The term does not apply to motor vehicles, aircraft, or hovercraft. The term also does not apply to models of hovercrafts, aircraft or watercraft that are neither designed nor used for moving people or property.

PROPERTY COVERAGES

PRINCIPAL PROPERTY COVERAGES

1. Coverage A—Residence

a. There is coverage for the mobile home that is situated on the described location. This coverage includes attached additions, including utility tanks.

1) Coverage A’s protection extends to appliances, cabinets, cupboards, dressers, floor coverings (including carpets) and other, similar items. However, in order to qualify, such items must be permanently installed in the mobile home.

Note: This latter requirement may cause some confusion regarding floor coverings.

2) Protection under Coverage A also applies to building materials and supplies that are located on or next to the described premises. However, building materials and supplies are only eligible for coverage when they are to be used in the construction, alteration, or repair of the mobile home or a structure on the described location that is related to the residence.

b. There is no coverage for land, including the land on which covered property is located, except for some limited coverage for liquid fuel remediation provided as Incidental Property Coverage. There is no coverage for underground or surface water. Coverage A also does not apply to damage to grave markers, mausoleums, trees, plants, shrubs, or lawns.

Important: Some limited coverage is available for such property under Incidental Property Coverages.

c. The limit that appears on the declarations for Coverage A represents the maximum amount of coverage that will be paid for a given, eligible loss.

2. Coverage B—Related Private Structures

a. There is coverage for related private structures on the described premises that are not attached to the residence protected under Coverage A. If structures are connected to the residence only by a fence, a utility line, or a similar connection, they are not considered attached.

Note: The distinction regarding how a structure is connected to a residence results in whether such property is protected under Coverage B or Coverage A.

b. There is coverage for fences, driveways, sidewalks, and other permanently installed outdoor fixtures.

c. There is no coverage for land, including the land on which covered property is located except for some limited coverage for liquid fuel remediation provided as Incidental Property Coverage. There is no coverage for underground or surface water. Coverage B also does not apply to damage to grave markers, mausoleums, trees, plants, shrubs, or lawns.

Important: Limited coverage is available for such property under Incidental Property Coverages.

There is no coverage for structures used for business purposes. However, this limitation does not apply to structures used in any of the following manners:

· Rented to a tenant of the Coverage A residence and not used for business

· Used solely for private garage purposes

· Used to store vehicle or equipment owned by either the insured or a tenant and that equipment (as well as a maximum of five gallons of fuel supply) are used for grounds maintenance such as mowing equipment, snow plowing equipment, etc.

Example: Violet has a huge utility shed on her property. It was installed by the mobile home’s previous owner. The president of her neighborhood association makes a deal with her. Instead of Violet paying the required dues, she permits them to store the association’s jointly owned snowplow attachments, snow blowers and salt in the shed. Since the contents are related to residence maintenance, the shed still qualifies for full coverage.

· Used to store business property that is owned by an insured or tenant, as long as the property does not qualify as a motorized vehicle

d. The limit that appears on the declarations for Coverage B represents the maximum amount of coverage that will be paid for a given, eligible loss.

3. Coverage C—Personal Property

a. The AAIS Special Form Mobile-Homeowners policy protects the following:

· Personal property that belongs to or property that, while not owned by an insured, is in the insured’s possession.

Example: Flora decides to, finally, learn how to play a piano. A friend becomes her teacher, providing her weekly lessons and also lets her keep a spare electronic keyboard, stand and folding bench to use for practicing and during lessons. This musical property would be eligible personal property under Flora’s policy.

· (Optionally) personal property that belongs to guests, domestic workers, or other persons, but only when the property is in the same residence as an insured.

Clarification: Coverage for damage to personal property owned by a domestic employee or a guest may be covered at the option of the insured. Why is an insured given the option to allow coverage? One situation that comes to mind is the availability of other insurance and the seriousness of a given loss. If there were a very large loss, the insured may wish to have all available coverage for his or her own property. If there were no option, the loss to a guest or domestic employee could be reimbursed and leave a shortfall in coverage for an insured. Of course, the insured would likely consider whether the guest or employee had their own coverage available before exercising this option.

b. Limitation on Property at Residential Premises Other Than the Described Location

Under Coverage C, a maximum of 10% of the policy’s Coverage C limit subject to a minimum of $1,000 is available for losses involving an insured’s property that is typically located at a residence that is NOT described on the policy (therefore is not at a described location).

Note: There are exceptions. This limitation doesn’t apply to property that is being moved to a newly acquired, primary residence. Neither does it apply to property that is moved to another location (either another residence or into storage) because the described location is, temporarily, unfit for use (usually due to repairs, renovation, etc.). The full Coverage C limit applies for 30 days from the date the named insured begins to move. After that, coverage for personal property in a newly acquired principal place of residence is limited to 10% of the Coverage C limit (subject to a $1,000 minimum).

c. Limitations on Certain Property

Certain types of property are subject to sub-limits. The special limits that apply do not increase the Coverage C limit. The indicated limit is the total amount available per occurrence for loss involving all items in that class.

1) $250 limitation

· Money

· Bank notes

· Bullion

· Gold other than gold ware and gold-plated items

· Silver other than silverware and silver-plated items

· Platinum other than platinum ware and platinum-plated items

· Stored value cards (including magnetic strip scrip and gift cards)

· Numismatic property (coins, currency, medals and similar property)

Example: Jenny is distraught after a holiday party she held at her home. While cleaning up the day after the party (which most of her neighbors attended), she sees that a locked cabinet was broken into and an heirloom set of silver coins were stolen. The value of the stolen set is nearly $3,000. Because of the limitation, Jenny is paid only $250.

2) $1,500 limitation

· Securities

· Stamps

· Letters of credit

· Notes other than bank notes

· Personal records

· Tickets

· Accounts

· Deeds

· Evidence of debt

· Passports

· Manuscripts

Note: This special limit applies regardless of the medium on which these items exist and includes the cost of research or other expenses necessary to reproduce, replace, or restore the item.

3) $1,500 limitation

· Electronic devices

· Accessories including films, tapes, wires, discs, records, or other media for use with such devices

· Antennas

Note: This limitation on electronic devices and accessories applies while the devices are in or on a motorized vehicle or watercraft but only if they can operate from the vehicle or watercraft’s electrical system and also from another source of power.

4) $1,500 limitation

· Electronic devices

· Accessories including films, tapes, wires, discs, records, or other media for use with such devices

· Antennas

Note: This limitation on electronic devices, accessories and antennas applies only if the items:

1. Are used away from the premises.

2. Are used mainly for business purposes; and

3. Are not in or on a motorized vehicle or watercraft if the devices can operate from the vehicle or watercraft’s electrical system and also from another source of power.

5) $1,500 limitation

This limitation applies to watercraft, including their trailers, furnishings, equipment, engines or motors and semi-trailers. This limitation does not apply to hovercraft. It also does not apply to model watercraft as long as the models are not designed to carry cargo or people.

6) $1,500 limitation

Trailers and semi-trailers not mentioned above are subject to this limitation.

7) WHEN the loss is due to THEFT

· $2,500 for loss to:

o Jewelry

o Watches

o Precious and semiprecious stones

o Gems

o Furs

· $2,500 for loss to:

o Silverware

o Gold ware

o Pewter ware

o Items plated with gold or silver

· $2,500 for loss to guns (and related equipment)

Example: A thief breaks into the Farlands’ mobile home and steals some personal property. The policy has a Coverage C insurance limit of $35,000. Their claim to their insurance company includes the following losses:
Pearl necklace and earrings	$3,200
Watches	$1,100
Five pistols	$3,800
Silver wedding cup	$850
Total	$8,950
The policy’s theft limitation applies to all of this property, so the total loss would not be recoverable. Jewelry and watches are both subject to the same limit, so only $2,500 of the $4,300 loss is covered. The pistols are subject to the gun limit, so only $2,500 is available for that portion of the loss. The wedding cup is also subject to a special limit, but since its value is less than the special limit, the total $850 is covered. The total recoverable amount, due to the applicable special limits, is $5,850.

Personal Articles Floater

Fine Arts Insurance

Stamp and Coin Insurance

8) Since the Special Form Mobile-Homeowners policy is designed to cover personal, rather than business losses, the policy restricts the amount of coverage available to protect business property to the following:

· $2,500 on property while on the insured premises

· $500 on property while away from the insured premises.

However, this special limit does not apply to items described in the electronic devices limitations.

Note: These special limits include the cost of research or other expenses necessary to reproduce, replace, or restore business data.

d. Personal Property Not Covered

There is no coverage in this policy for any of the following:

1) Property covered by separate (including scheduled) insurance

The bar to coverage is not affected by the amount of any separate source of coverage. If other coverage exists, that coverage supplants any obligation for property coverage under the policy.

Therefore, if the other source of coverage is inadequate to handle a given loss, the exclusion STILL applies.

2) Animals, birds, fish, or insects

Example: Julie agrees to take care of her boss’s dog while her boss is on an extended business trip. The expensive, pedigree dog is among the various items stolen during a break-in at Julie’s mobile-home. The loss of the dog is not covered.

3) Motorized vehicles, including their parts, equipment, and accessories except for the items subject to the $1,500 limitation explained earlier. Electronic devices, accessories, or antennas that can be operated only from the electrical system of a motorized vehicle, including films, tapes, wires, discs, records, or other media for use with such devices while in or on a motorized vehicle are also barred from coverage.

Example: Bernie is upset when he comes home from a weekend getaway and finds that a fire destroyed his mobile home. He is even more upset when his insurer tells him that the nearly $5,000 in motorcycle parts that were lost are not eligible for coverage.

Note: There is coverage for motorized vehicles that don’t require registration if they are designed and used to assist the handicapped (motorized wheelchair) or used only to service the insured premises or premises of another (riding lawn mower). These vehicles are covered unless used for business purposes.

4) Aircraft is not a defined term so it includes any type of device that is supposed to fly. Parts and equipment are also not covered even if not attached to the aircraft. There is coverage for model aircraft provided it is not designed or used to carry people or cargo.

5) Hovercraft (Note: The hovercraft defined in the Definitions section is limited to liability coverage only, so this is not a defined term in this section.) In this section, hovercraft refers to machines (including property called flarecraft) that are capable of traveling over the ground or water via the use of a compressed air cushion. Parts and equipment are also not covered, even if not attached to the hovercraft. There is coverage for model hovercraft provided it is not designed or used to carry people or cargo.

6) Property of roomers, boarders or tenants is not covered but the property of an insured’s relative who is considered a boarder or roomer is covered.

7) Property that an insured makes available for rent to other persons is not a class of covered property, but there are exceptions. If the property is in a space that is part of the described location occupied solely the named insured’s household that is only occasionally rented out and then only for residential purposes, there is coverage. If it is located in part of the described location that is occupied by the named insured’s household but also rented to one or two boarders, there is coverage. Finally, if the property is in an apartment at the described location that is rented out by an insured (doesn’t have to the named insured) there is coverage. However, any coverage for the rental property is subject to the Incidental Property Coverage.

8) Loss involving credit cards, debit cards, and fund transfer cards (such as ATM cards) except as provided under Incidental Property Coverages

Example: Paula’s mobile home was burglarized. While her insurer tells her that most of her loss is covered, they will not pay for nearly $2,000 in gift cards. Kelly was the volunteer coordinator for her church’s silent auction and the cards were kept at her home for use in auction packages.

9) Property such as grave markers and mausoleums. However, modest coverage is available under Incidental Property Coverage

10) Land, including the land on which covered property is located except for some limited coverage for liquid fuel remediation provided as Incidental Property Coverage

11) Underground or surface water

12) Trees, plants, shrubs, or lawns

Note: Limited coverage is available under Incidental Property Coverage.

Except for what is stated regarding special limits and exclusions, the Coverage C limit that appears in the policy represents the maximum that will be available for a given loss involving eligible property.

4. Coverage D—Additional Living Costs and Loss of Rent

a. The insurance company is obligated to reimburse increased living costs that are paid by an insured household to maintain its normal standard of living. This situation has to be triggered by the described location becoming unlivable (or, in some instances, inaccessible) because of a covered source of loss (such as fire, windstorm, etc.). The increased costs will be paid for the time reasonably required making the described location fit for use or until the household is permanently relocated, whichever occurs earliest. This period of time is not limited by the policy period.

There are many homeowners who rent out part of their residence to others. The next feature of Coverage D, Loss of Rent, is to help persons whose rental income is affected by a covered cause of loss.

b. The insurance company will pay for the rent or for the fair rental value that is lost when part of the described location, which generates rental income, can’t be used because of a covered loss. Expenses that do not continue (such as utilities) are deducted from the rental value in determining the loss payment. As it is with Additional Living Costs, the lost rent will be paid for the time reasonably required to make the rented part of the described location fit for use. This period of time is not limited by the policy period.

c. The policy also pays for increased living expenses and lost rental income for up to two weeks if a civil authority prohibits access to the described location because it is endangered by a loss to a neighboring premises. The damage to the neighboring property must be caused by a source of loss that is covered by the Special Form Mobile-Homeowners policy.

d. There is no coverage under Part D if an insured loses rent because a lease or an agreement has been canceled.

e. Also, the insurance limit that is shown for Coverage D is the maximum amount that may be recovered under all sections of this coverage.

INCIDENTAL PROPERTY COVERAGES

The Special Form Mobile-Homeowners policy includes a number of coverages that are in addition to the protection described under Coverages A, B, C and D. They are called incidental coverages since they do not involve major sources of loss as is the case with primary coverages. Further, the amount of insurance indicated for these incidental coverages is in addition to the limits of insurance shown for Coverages A, B, C and D.

1. Association Deductible

The policy provides up to $1,500 per occurrence (unless increased on the declarations) for an insured’s share of a deductible made by a residential association of homeowners, condominium owners, or similar groups. Coverage applies only when all of the following apply:

· The deductible is charged against the named insured because of ownership or tenancy of the described location during the policy period.

· The deductible results from direct loss to the property that would be considered covered property under this policy, if owned by the named insured; is covered property under the named insured’s association insurance; and

· The loss involves direct damage due to a peril covered under this policy (earthquake and tremors before, during and after a volcanic eruption are specifically NOT covered)

Example: Larry belongs to an association of mobile homeowners. Three weeks ago, one of his neighbor’s mobile home was destroyed in a fire. Larry receives a notice for a $430 assessment because of fire damage that occurred to a jointly owned storage building that was next to the mobile home that burned down. Larry’s policy will reimburse Larry for the expense.

Finally, the Policy Period condition does not apply to this coverage.

2. Collapse

There is coverage for direct physical loss to covered property involving the collapse of a building or a part of a building only if caused by one or more of the following:

· Any of the perils described under Coverage C (Under this coverage, these perils apply to both covered buildings and personal property.)

· Hidden insect or vermin damage or hidden decay*

· Weight of contents or people (also animals) *

· Weight of rain pending on a roof*

· Failure of defective materials/methods during a construction or repair job*

Note: Collapse damage caused by the items with an * above that involve the following property is not covered unless the damage is the direct result of the collapse of a building. None of the following property is categorized as building property even if they are attached to a building:

Awnings	Docks	Foundations	Retaining walls
Bulkheads	Drains	Patios	Swimming pools
Cesspools, or septic tanks	Fences	Paved areas	Underground pipes
Decks	Flues	Piers	Wharves

In other words, the damage has to be due to a building, affected by one of the asterisked items, collapsing on top of the listed property.

Collapse must be due to any of following as long as it is abrupt:

· Caving in

· Falling in

· Falling down

· Giving way

of the building (not the structures listed above) or a part of the building. The building must become uninhabitable or unusable because of the collapse. A building is not considered to have collapsed in the following situations:

· No collapse has occurred but the building (or even part of the building) looks like it could collapse because it is showing signs of collapsing such as bulging, leaning, settling and similar conditions.

· The building or any part of the building is considered in danger of collapsing

· Part of the building that has broken or separated away from a part of the building but has not yet collapsed.

Important: Nothing stated above limits coverage under a direct loss covered by a Coverage C peril. The Weight of Ice, Snow or Sleet peril is expanded to include damage to buildings. Two exclusions do not apply to the Collapse Coverage - Bacteria, Fungi, Wet Rot, Dry Rot, and Errors, Omissions and Defects.

This coverage provides additional coverage but not additional limits.

PERILS INSURED AGAINST - COVERAGES A, B, C, AND D

This section discusses the perils eligible for protection under this policy’s property coverage sections:

1. Coverage A—Residence and Coverage B—Related Private Structures

Unless a source of loss is specifically barred under these two coverage parts’ exclusion sections, all described building property (and property related to it) is protected against damage, loss or destruction.

a. Exclusions Applying to Coverages A and B

1) Losses that are excluded under the Exclusions That Apply to Property Coverages Section

2) Freezing, Discharge, Leakage, or Overflow

Loss caused by freezing is excluded. In addition, any water damage from any plumbing, heating, air conditioning, or automatic fire protective sprinkling system; water heater; or domestic appliance resulting from such freezing is also excluded.

An exception is made for an insured that takes care to maintain heat in the building or shuts off the water supply and completely empties liquids from such system, heater, or appliance. Of course, freezing and any related damages are very unlikely to occur if either precaution is taken. If the insured has an automatic fire protective device, turning off the water is not encouraged, so an exception is made for coverage if the insured maintains heat and continues the water supply.

The exclusion and exception do not apply to damage involving sump pump systems or drains and gutter systems.

3) Freezing, Thawing, Pressure, or Weight of Ice or Water

There is no coverage for damage caused by freezing, thawing, pressure, or weight of ice or water - wind driven or not - to the following structures:

· Swimming pools, fences, patios, paved areas

· Bulkheads, footings, foundations, walls and similar items that support a building or structure

· Retaining walls or bulkheads that don’t support a building or structure

· Wharves, docks, or piers

This exclusion applies even if damage by the elements is assisted by force of wind.

4) Theft

This cause of loss is excluded, even damage caused by theft attempts, when it involves a dwelling under construction, or the loss of materials or supplies for use in construction of the dwelling. Coverage applies once the dwelling is occupied. According to policy wording, theft coverage exists when the dwelling is occupied for its intended use. However, this appears to be subject to interpretation. The inference is that coverage is provided when a dwelling is occupied as a residence, so the wording should be changed to be explicit.

Related Court Case: Conversion and Embezzlement Exclusion Held Not Applicable to Theft by Roommate – illustrates that, what is meant by theft, can be up for debate.

5) Vandalism or Malicious Mischief

There is no coverage for loss caused by or resulting from (including deliberate acts related to the commission of) vandalism or malicious mischief if the residence is vacant for more than 60 days in a row just before the loss. A residence being built is not considered to be vacant.

6) Water, Humidity, Moisture, or Vapor

There is no coverage for loss caused by repeated or continuous seepage or leakage of water or from humidity, moisture or vapor that occurs over a period of time – weeks, months or even years. A long-developing loss may possibly be covered if it turns out that no one could have either known or expected the loss circumstances. In other words, if a rare or unusual situation creates a loss, it is possible that it may qualify for coverage. As part of this exception, a portion of a water damage exclusion found elsewhere in the policy is voided (but just for sake of this exception).

The policy’s separate water exclusion does NOT apply to such instances IF the source of loss is a domestic appliance or the insured home’s air conditioning, plumbing, and heating, sprinkling systems or water heater at the described location. However, the coverage only applies if the insured either did not or could not have been reasonably expected to know about the damage. Eligible loss sources do NOT include plumbing, sump equipment or similar equipment used for handling the removal of subsurface water or regular drainage water.

7) Collapse or Impairment

This exclusion specifically bars coverage for either collapse or property impairment. The latter term refers to a variety of situations indicating a lack of proper, structural support. Damage to buildings on a described location that showed signs of sagging, bowing, bending, etc., would not qualify for protection. The only available coverage is restricted to what is provided under Incidental Property Coverages.

Related Court Case: Porch Damage Due to Defect Not Collapse

8) Settling, Cracking, Shrinking, Bulging, or Expanding

There is no coverage for loss caused by the settling, cracking, shrinking, bulging, or expanding of structural property. The policy specifically references a variety of building components including walls, ceiling, floors, and foundations. The bar to coverage also extends to paved areas, patios, bulkheads, footings and roofs.

9) Birds, Vermin, Rodents, Insects or Animals

There is no coverage for loss caused by animals owned or kept by an insured. Further, this exclusion extends to damage caused by birds, vermin, rodents, or insects.

Example: Julie loves her dog, Pepper, even though it took her almost half a year to housebreak and train the dog. She sends her insurer an itemized bill for $670. That was how much it cost her to repair the doors, baseboards and walls damaged by Pepper’s scratching and chewing. Her agent calls her and tells her that all of the damage caused by her beloved pet is ineligible for coverage.

10) Smoke

Coverage is excluded for damage due to smoke from agricultural smudging or industrial operations.

11) Pollutants

There is no coverage for loss caused by any conceivable incident involving pollution unless the damage is a direct cause of a source of loss described under Coverage C.

12) Wear and Tear

No protection exists for loss involving property that is inevitable, due to the mere use and longevity of such property. Therefore, natural deterioration, marring, breakdown, flaws (inherent vices), corrosion, root pressure and other sources of loss are ineligible for coverage.

Example: After years of problems with a door that had to have a corner planed down every few months and which let in drafts, Mitch handles the problem. He hires a carpenter to inspect the matter and the carpenter suggests that the door’s frame be torn out and rebuilt. After the work is done, Mitch’s new door fits perfectly and is draft-free. He asks his insurance agent how to file a claim for the work. His agent tells Mitch that the problem was due to routine, long-term house settling…. the repairs are ineligible for coverage.

Collision, Upset, Sinking or Stranding

a) No coverage is provided for damage or loss to a mobile home that is due to its colliding with a vehicle designed for transporting a mobile home. The exclusion extends to damage created by contact with equipment that is attached to any transport vehicle. The exclusion applies when a mobile home is being towed or while being either hitched or unhitched.

b) Coverage is barred for collision accidents that occur when a mobile home is in motion

c) No coverage exists for any mobile home that overturns while in motion

d) Loss to a mobile home being moved that is caused by the sinking or stranding of any watercraft upon which it is loaded is ineligible for coverage

b. Exceptions to Exclusions That Apply to Coverage A and Coverage B

The policy will pay for certain ensuing losses that stem from items a.2). through –a.12) situations excluded above, except when the source of ensuing loss is, itself, specifically excluded.

An additional exception applies to loss involving discharge and overflow. Under Coverages A and/or B, if property is damaged by overflowing water or steam caused by excluded perils of settling, cracking, shrinking, bulging, or expanding, birds, vermin, rodents, insects or animals, smoke, pollutants and/or wear and tear, it is covered, but only in certain situations. If the discharge comes from a water/vapor source from either of the following there is coverage:

· Located off-premises

· Located on premises, such as a plumbing system, regular home appliance, water heater or sprinkler system

However, there is no coverage available for damage to the actual device.

The exception does not apply to damage involving either a described location’s sump pump or gutter systems.

Note: Some ambiguity may exist. The MH 7800 Mobile-Homeowners endorsement modifies this section by adding the “Collision, Upset, Sinking or Stranding” Peril. However, the above exceptions section only references items a. 2) through a.12)

2. Coverage C—Personal Property

There is coverage for losses to property identified as eligible under Coverage C when the damage or destruction is due to any of the sources of loss described in the section of the policy.

Note: Careful reference should be made to the Exclusions That Apply to Property Coverages Section since that section might specifically bar coverage.

The eligible perils are:

a. Fire or Lightning

b. Windstorm or Hail

Note: There is no coverage for loss in either of the following:

· When damage to the interior or to the interior’s contents caused by dust, rain, sand, sleet, snow, or water, driven by wind or not, that enter through an opening in the structure not made by the direct force of wind or hail

· Damage to watercraft or their trailers, furnishings, equipment, or engines or motors, unless inside a fully enclosed building.

Naturally, an insurer wants its insureds to use common sense and protect their property. If the first stipulation didn’t exist, then coverage would be available for losses, which could be prevented by closing doors, windows and by moving personal property indoors.

Related Article: Windstorm or Hail—A Discussion

c. Explosion

Related Article: Explosion—A Discussion

d. Riot or Civil Commotion

Example: As a homeowner near her city’s arts district, Marla loves the youthful excitement and bohemian atmosphere of her neighborhood. She was less thrilled when, after being told that a very popular regional band’s concert was sold out, hundreds of enraged fans rioted. Her home’s add-on front porch was destroyed and many of her windows were broken. This damage would qualify for coverage.

Related Article: Riot or Civil Commotion—A Discussion

e. Aircraft

f. Vehicles

Example: Amy is thrilled that she made it home safely during the season’s first episode of freezing rain…until she sees what is waiting for her. A large SUV failed to negotiate a turn and slid into the front of Amy’s mobile home, caving in an entire wall. This loss is eligible for coverage.

g. Sudden and Accidental Damage from Smoke

There is coverage when boiler, furnace or related equipment release fumes, smoke, and soot or vapor causing sudden and accidental damage. However, there is no coverage for loss caused by smoke from agricultural smudging or industrial operations. Both of these sources of loss result from a home’s proximity to an operation or practice that is longer term and intentional in nature. Agricultural smudging is the practice of creating an oily smoke to cover fruit and fruit trees in order to protect them from frost.

h. Volcanic Eruption

This does not include any loss caused by earthquake or other shock waves or tremors.

i. Vandalism or Malicious Mischief

j. Theft

This peril expands the term to include attempted theft and loss of property from a known place so that it is likely that theft occurred.

Note: There is no coverage for any of the following:

· Theft in or to a residence while it is being built. This includes the theft of materials or supplies that are intended to be used in the construction of the residence. This exception applies until the residence is occupied for its intended use.

· Theft by an insured

· Loss of a precious or semiprecious stone from its setting

· Loss as a result of the theft of a credit or debit card or other electronic transfer or access devices, except as provided under Incidental Property Coverages

· Theft from a part of the described location while it is rented to others who are not considered insureds

· Theft of trailers, semitrailers, campers, camper bodies, watercraft or their furnishings, equipment, or engines or motors when not at the described location

· Theft of property that occurs away from the described location insured premises while on the part of residential premises which an insured owns, rents, or occupies, except for the time while an insured temporarily resides there. There is coverage for the property of an insured who is a full-time student, while the property is in the living quarters occupied by the student at school. However, the exception does not apply if, before the loss, the student has been away for 60 or more days from that location.

k. Falling Objects

Note: There is no coverage for loss to property inside a structure, unless the falling object has first damaged an outside wall or the roof of the structure by impact; nor is there coverage for the object which falls.

l. Weight of Ice, Snow, or Sleet

Example: Shelby is enjoying a quiet night at home, reading. Her night is interrupted by occasional groaning sounds from the front of her home. She finally gets up to investigate as the groaning sound is accompanied by cracking sounds…. then a huge crash. The weight of snow that piled up on her porch’s flat roof caused it to collapse. The damage to the furniture and other contents on the porch is covered. Her patio table that is not inside a building is not covered when the weight of the snow and ice cause it to collapse.

This is coverage for property located within a building damaged because of the weight of ice, snow or sleet.

m. Sudden and Accidental Tearing Apart, Cracking, Burning, or Bulging

This coverage refers to accidental, violent loss to a heating, air conditioning, or automatic fire protective sprinkling system or water heater. This cause of loss does not respond to damage involving freezing.

n. Accidental Discharge or Overflow of Liquids or Steam

This protection is quite limited since it only responds to discharge and overflow from a plumbing, heating, air conditioning, or automatic fire protective sprinkling system; water heater; or domestic appliance.

Losses involving sumps, sump pump, roof drains, gutters and related equipment are not covered. Further, the following situations are also excluded:

· Caused by continuous or repeated seepage, leakage or condensation over weeks, months or even years. There is coverage if an insured could not have reasonably suspected the situation to exist.

· Caused by freezing

· Damage to both the system and the particular appliance from which the water or steam escaped

· Caused by accidental discharge or overflow that originates away from insured premises.

o. Freezing

This involves situations of damage from frozen house utility systems or regular appliances. If a fire-fighting system is installed in an insured home, damage caused by a frozen sprinkler system is included. Coverage is excluded for any loss on the insured premises unless an insured arranges for any of the following:

· Maintain heat in the building

· Shut off the liquid supply and drain the system, heater, or domestic appliance (when no water-driven anti-fire system exists)

· Maintain the water supply (when a water-driven anti-fire system DOES exist)

Parts of the policy’s subsurface and surface water exclusion do not apply to this particular coverage.

p. Sudden and Accidental Damage from Artificially Generated Electrical Currents

This peril is restricted by eliminating coverage for loss to tubes, transistors, and similar electronic features that are components of appliances, computers, home entertainment centers and similar items.

Note: This could create a significant coverage gap for newer or retrofitted homes with increasingly complex, integrated electronics, such as Smart homes, especially since circuitry within the apparatus is not covered.

q. Sinkhole Collapse

In this policy, this term means direct physical loss caused by sudden settlement or collapse of earth that forms the support for covered property. The earth settlement or collapse must be due to subterranean voids created by the action of water on a limestone or similar rock formation. This source of loss is distinct from an event called Mine Subsidence when earth settlement or collapse occurs due to active or abandoned mines.

Important: There is no coverage for the cost of filling sinkholes.

EXCLUSIONS THAT APPLY TO PROPERTY COVERAGES

1. This section of the Special Form Mobile-Homeowners policy lists the sources of property loss that ARE NOT covered by the policy. The policy language specifically addresses instances of anti-concurrent causation by stating that if any of the following perils cause loss or damage directly or even indirectly, there is no coverage. The loss or damage continues to be excluded even if other events aggravate or contribute to the loss before, after or during the excluded peril. In addition, the exclusions apply no matter the size of the area suffering damage.

a. Ordinance or Law

There is no coverage for any loss or increased cost caused by the enforcement of a code, ordinance, or law that regulates the use, construction, repair, or demolition of property or the removal of its debris, except as provided under Incidental Property Coverages. This exclusion extends to any loss in value of any damaged property that results from the enforcement of a code, ordinance, or law.

This exclusion has another important limitation. No coverage is provided for damages or expenses that are related to legal requirements involving the existence or impact of pollutants.

b. Civil Authority

If the civil authorities confiscate, destroy or seize property that is covered under Coverages A, B or C, there is no coverage. (There is coverage under Coverage D.) However, if the civil authority is destroying the property as a way to create a fire stop, the loss is covered, provided the fire would have been covered by the policy.

c. Nuclear Hazard

If nuclear reaction, radiation or radioactive contamination causes a loss, such loss is not covered no matter how the nuclear reaction, radiation or radioactive contamination is caused and whether it occurs in a controlled or uncontrolled circumstance. Any loss that is a consequence of the above is also not covered. Fire, explosion and smoke often are part of a nuclear incident, but even if these perils are covered under the policy, when they occur as part of a nuclear reaction, radiation or radioactive contamination loss, they are not covered.

There is one exception. If there is a direct loss by fire that is a result of the nuclear reaction, radiation or radioactive contamination, it is covered.

d. War and Military Action

War is an absolute exclusion, including undeclared wars and civil wars. Warlike action taken by a military force is not covered even if the action is one of defense by a governmental authority and not offense. There is also no coverage if a loss is caused by internal domestic disputes such as insurrection, rebellion, revolution, and usurped power including the action the government takes to curtail the event. The discharging of a nuclear weapon, intentional or accidental, is defined as a warlike action.

e. Neglect

Insurance policies are contracts, which obligate an insurance company to help a customer whose property is damaged or destroyed under described conditions. Insurance contracts are meant to respond to accidental loss so, inherent in the agreement, is the assumption that the insured will act to preserve or protect their property. In case an insured doesn’t act in this manner, the insurer is relieved of any obligation to pay for any damages caused by the insured’s failure. Of course, an insured is not required to go through heroic efforts to save property.

f. Earth Movement

The policy excludes losses due to earth movement no matter how the earth movement is caused – animal, human or act of nature. There are five distinct items included in the definition of earth movement.

· Earthquakes

· Volcanic eruption shock waves or tremors no matter when they occur

· Mudslide or mudflow and landslide

Example: Patty’s insured home is in a low-lying neighborhood located near a large stream. Days of rain engorge the stream and it overflows its banks, sending a stream of mud onto the neighborhood. Soon the home is surrounded by a several inch-thick pool of mud that buckles and shifts the home off its foundation. The damage is not covered by her policy.

· Erosion and subsidence

· Other – including but not limited to the earth sinking or rising, expanding or contracting and even just plain shifting.

There are three exceptions. Sinkhole, as described in the Incidental Property Coverages, direct fire or explosion loss that result from any type of earth movement, and theft, if theft is covered elsewhere in the policy.

g. Water

This exclusion consists of eight parts that attempt to clearly communicate the scope of the exclusion.

1) There is no coverage for damage that results from the following:

flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of a body of water, or spray (which occurs from any of the sources mentioned above), driven by wind or not. Further, this exclusion also applies to water surge caused by storm, tides or a tide created by a storm (storm tide).

While these additions may appear to be mere semantics, recent, high-profile claim awards hinged upon such parsing and shifting of language and the change is meant to specifically address this reality.

2) There is no coverage if a loss is caused when either of the following occurs:

a) Water backs up through sewers or drains

b) Water overflows (or is in anyway discharged) from within a sump pump, sump pump well, or other type of system designed to remove subsurface water that is drained from the foundation area.

Note: The reference to discharged water is intended to defeat attempts to gain coverage from, essentially, technicalities.

Related Article: AAIS Homeowners Optional Coverage Endorsements – includes info on endorsement HO 2708–Water Back Up and Sump Discharge or Overflow

3) If water below the surface of the ground causes the loss there is no coverage. This term includes (but is NOT restricted just to) water that exerts pressure on, or seeps or leaks through or into a building, sidewalk, driveway, foundation, swimming pool, or other structure. It also applies to such water that flows through or into such areas/structure.

4) When a loss is caused by matter that is either contained in and/or has been transported by sources described in paragraphs 1), 2), and 3) above there is no coverage. The matter is not defined but examples could be sewage, waste or any other type of debris.

5) The losses caused by items 1) through 4) regardless are not covered regardless whether the item is either of the following:

a) An act of nature

· b) Involves water and/or matter that comes from (overtops, escapes from, released from or otherwise is discharged) a containment or control system (such as dikes, dams, levees, floodgates and similar devices).

6) While the above (and similar) events are excluded, an exception is made for direct loss to covered property caused by a subsequent fire or explosion

7) Another exception is granted for theft that is related to such occurrences mentioned above (as long as the applicable policy provides theft protection elsewhere in the policy).

Example: A storm causes a stream to overflow and flood Jordan’s home. Before the flood waters made it to his mobile home, he had moved some belongings and went to stay at a friend’s home. After the waters receded a couple of days later, he returns, but he discovers that someone else made it into his home first. Thieves broke in and stole electronics and other valuables that he had moved to tabletops and counters. While the theft was the consequence of persons taking advantage of the flood, the loss is eligible for coverage.

8) The policy’s separate water exclusion does NOT apply to such instances IF the source of loss is a domestic appliance or the insured home’s air conditioning, plumbing, heating, sprinkling systems or water heater at the described location. However, the coverage only applies if the insured either did not, or could not, have been reasonably expected to know about the damage. Eligible loss sources do NOT include plumbing, sump equipment or similar equipment used for handling the removal of subsurface water or regular drainage water.

h. Power Failure

The policy does not respond to damage caused by an interruption of utility service unless the cause occurs on the described location, but the policy will cover any direct damage due to a subsequent covered peril.

i. Intentional Acts

The policy does not cover intentional acts of any insured (who acts alone or in collusion) that results in a loss. The exclusion extends to losses resulting from intentional acts committed by persons acting on the directions of any insured.

Note: Not only must the act be intentional but also the intent must be to cause a loss. This distinction is important since it allows the exclusion to be applied more broadly to merely deliberate acts.

When one insured causes intentional damage to property that is owned or co-owned by another insured, the loss that would be payable to the innocent insured is still not covered.

Example: The Merseys file a claim after a fire destroys their mobile home. After a long investigation, they discover that the home’s breaker box was tampered with, so it would short out and start a fire. Later, Jeff Mersey confesses that he hid the fact, unknown to his wife, that he gambled away their life savings and hoped to collect insurance money. His wife attempts to collect the claim, but she is denied.

j. Bacteria, Fungi, Wet Rot, or Dry Rot

The policy does not cover loss involving mold, bacteria and similar substances. Neither does it respond to circumstances that directly create rotted property. If, somehow, rotting or bacterial, mold and similar events trigger a loss from an eligible hazard or peril (source of loss) that damage is eligible for coverage.

Related Court Case: Homeowner Disputes Third-Party Exclusion

2. If a covered loss ensues from either of the following exclusions, there is coverage for the ensuing loss.

a. Weather Conditions

Coverage is not provided for losses that result from weather conditions that CONTRIBUTE IN ANY MANNER to losses excluded under the preceding Exclusions That Apply to Property Coverages. In other words, losses caused by legal ordinances, civil authority, nuclear activity, war, neglect, earth movement, water damage, power disruption or intentional acts DO NOT become eligible for coverage because of weather conditions. Weather conditions do not mitigate or eliminate any excluded sources of loss.

b. Errors, Omissions, and Defects

The Special Form Mobile-Homeowners policy intends to cover accidental property damage so, by its nature, it would be contradictory to provide coverage for errors, defects and mistakes, which become an inherent source of loss. In light of this, the policy DOES NOT cover losses due to acts, errors or omissions (whether negligent or not) involving any of the following:

1) Land use

2) The design, specification, construction, workmanship, or installation of property

3) Planning, zoning, development, surveying, siting, grading, or compaction

4) Maintenance of property (including land, structures, or improvements), whether on or off the insured premises

5) A defect, weakness, an inadequacy, a fault, or unsoundness in materials used in construction or repair, whether on or off the insured premises, except as provided under the Incidental Property Coverage for Collapse.

LIABILITY COVERAGES

Principal Coverages—Liability and Medical Payments to Others

Unlike the first part of the policy, which concerns itself with damage to property belonging to the insured, this part provides protection for a person’s responsibility for injuring other people or their property. The liability portion of the policy has its own set of coverages, exclusions (with exceptions) and conditions.

1. Personal Liability—Coverage L

The insurer is obligated, up to the limit shown on the declarations, to pay the amounts for which an insured is legally liable because of bodily injury or property damage to others. However, any payment under Coverage L—Personal Liability is subject to all of to the following:

· Any loss has to arise out of an eligible occurrence

· The loss has to occur within the policy period

· The bodily injury or property damage must not be excluded under this coverage.

Example: Hannibal is very handy. He recently dug several large post holes in preparation for installing a fence for his backyard. He leaves his home to pick up cement, posts and other supplies at a hardware store. While he’s gone, several of his neighbor’s children and their friends play a game of hide and seek. They frequently use Hannibal’s yard during their play. Three children fall into various holes, with assorted cuts and broken limbs. Hannibal’s policy will handle the resulting medical expenses and lawsuits.

The insurer has the option of investigating and, IF the insurer decides it is appropriate, settling claims or suits. The insurer does not have to continue defending an insured after it has paid a judgment or made a settlement that is equal to the limit shown on the declarations.

For more details, please refer to the Incidental Coverages Section, Claims and Defense Costs.

2. Medical Payments to Others—Coverage M

Under this coverage, the insurer agrees to pay for necessary medical expenses, which are related to an eligible loss that involves bodily injury. Medical expenses refer to a reasonable (as determined by the insurer) amount for medical, surgical, x-ray, dental, ambulance, hospital, and professional nursing services. It also covers items such as funeral services, prosthetic devices, hearing aids, prescription drugs, and eyeglasses or contact lenses.

In order to qualify for coverage, the expense must be incurred or medically determined within three years from the date of an accident-causing bodily injury covered by this policy.

Medical payment coverage is provided for situations that occur either on, or away from, the insured premises. While on the premises, the injured party merely needs to be on the premises with an insured’s permission. In order to qualify for coverage while away from the premises, the bodily injury must at least one of the following criteria:

· Result from a condition on an insured premises

· Result from an activity of an insured

· Be caused by a person who is performing duties as a domestic employee

· Be caused by an animal owned by or in the care of an insured

The above elements are independent of each other. Meeting any single element may qualify an injury for medical payment coverage.

Note: There is no coverage for medical payments for the named insured or for any regular resident of the named insured’s household. However, there is coverage for domestic employees.

Incidental Liability Coverages

The policy includes eight incidental liability coverages and they are subject to all of the terms, which apply to principal coverages L—Personal Liability and M—Medical Payments to Others.

Note: These incidental liability coverages do not increase the limits of liability, except under the following:

· Damage to property of others

· Claims and defense costs

· First aid expense

· Loss assessment

1. Business

The Special Form Mobile-Homeowners policy only provides very limited coverage for bodily injury or property damage related to a business use of the insured premises. Specifically, coverage is granted for such injuries or damage created by two types of business activities.

a. The following types of rental activities are covered:

· The occasional rental, as a residence, of the insured premises that is usually occupied by the person appearing on the declarations

· The rental of other parts of the insured premises for use as a residence as long as no one family unit includes more than two roomers or boarders

Example: Charlie, a single dad, became an empty nester when his daughter moved out on her own. Several months ago, he rented out the, now, spare room. Clyde, his tenant, is injured when while trying to open a jammed window. The window suddenly flies open, breaking and severely cutting Clyde’s face, and hands. Clyde sues Charlie for his medical expenses. This suit is eligible for coverage.

· The rental of a part of the insured premises for use as a school, studio, office, or private garage

b. The policy also covers business activities involving younger members of an insured household. Businesses run by persons younger than 21 are eligible for coverage as long as the activity does not include employees and any loss is related to the activity.

Note: Exclusion g., under Exclusions that Apply to Coverage L and Coverage M, does not apply to this Incidental Liability Coverage.

2. Claims and Defense Cost

In a defense action, the insurance company will pay all of the following:

· The costs that are taxed to an insured and the costs incurred by the insurance company

· The premiums on bonds but only on the amount of the bond that is within the limits in the policy. The insured is responsible for the premium of the bond limits in excess of the policy limits.

· The necessary costs incurred by the insured at the request of the insurance company including an insured’s lost earnings caused via time spent away from work (subject to a $250 daily maximum)

· The interest accruing on the entire judgment amount following its award. Once the insurance company deposits its policy limits with the courts, it stops paying such interest even if the limits did not satisfy the entire judgment.

· The portion of prejudgment interest levied against the insured up to the insurers limits. Once a full limits offer is made, the insurer will no longer pay this type of interest.

Related Court Case: , Cover No, Defend Yes

3. Contracts

There is coverage for damages for bodily injury or property damage under a written contract if either of the following applies:

· The contract directly relates to the ownership, maintenance, or use of an insured premises

· The contract where the liability of others is assumed by an insured was made before the loss

The loss causing the bodily injury or property damage must take place during the policy period. Exclusion c., under Additional Exclusions that Apply to Coverage L does not apply to this Incidental Liability Coverage. However, this incidental provision is subject to all other exclusions that apply to this policy’s Liability and Medical Payments parts.

4. Damage to Property of Others

This coverage is often called voluntary property damage. Its purpose is to handle smaller losses without being concerned about an insured’s legal liability. Under this provision, the insurer will pay replacement cost for property damaged by the insured without regard to legal liability.

Note: The limit for this coverage is $1,000.

The exclusions that apply to coverages L and M do not apply to this coverage. However, there are certain circumstances under which the insurance company will not pay for damage to property:

a. If the property is covered under the property section of the policy. However, if the property section limit does not satisfy the loss, this coverage will pay the excess up to the limit of the coverage.

b. If the property is owned by an insured, or owned by, rented to, or leased to another resident of the named insured’s household or by a tenant of an insured.

Now this exclusion is confusing for a couple of reasons. First, it should be obvious that it wouldn’t cover property owned by any insured, because it is called Damage to Property of Others. Second, while it doesn’t cover property that is owned by an insured, if the person is either a tenant of any insured or is a resident of the named insured’s household, there’s no coverage for property that they own, lease or rent. Therefore, it appears that this coverage does pay for property that is either rented or leased by any insured.

c. When the loss is caused intentionally by an insured who has reached the age of 13.

d. Involving an insured’s business activities or a premises owned, rented, or controlled by an insured other than an insured premises.

e. Arising from the ownership, operation, maintenance, use, occupancy, and renting, loaning, entrusting, supervision, loading, or unloading of motorized vehicles, aircraft, hovercraft, or watercraft.

Note: There is coverage for property damage that arises from motorized vehicles not owned by the insured and meant for recreational off-road use or handicap assistance. There is also coverage if the nonowned vehicle is a service vehicle for the insured premises or another premises provided the service use is not part of a business. However, coverage only applies if the vehicles are not required to be registered by a governmental authority.

5. First Aid Expense

If the insured incurs first aid expenses caring for persons injured by bodily injury under the policy, the insurance company will pay for those expenses provided the persons are not insureds under the policy.

6. Loss Assessment

There is coverage for the named insured’s share of an assessment made by his or her homeowners, condominium, or similar residential association if the assessment is due to either of the following:

· Bodily injury or property damage eligible for insurance under coverages L and M of this policy

· Damages or legal fees the association has a legal obligation to pay for the acts of a director, officer, or trustee but only if they result from the exercise of his or her duties performed on behalf of the association. These individuals must be elected by the association and serve without compensation.

There is no coverage if the assessments charged against the named insured or the residential associations are made by any governmental body or authority.

Coverage applies if the assessment is made during the policy period. This means that coverage is based not on the occurrence of the loss that causes the assessment, but instead is based on the timing of the assessment charge. As a way to prevent confusion, the Policy Period condition of the liability section does not apply to this coverage.

The limit for this coverage is $1,500 per occurrence. Regardless of the number of assessments, this limit is the most that will be paid for either of the following:

· A single accident, including repeated exposures to similar conditions

· A particular act of a director or trustee. (An act involving more than one director or trustee is considered a single act.)

7. Motorized Vehicles

a. This provision involves the policy’s limited-basis coverage for bodily injury or property damage that is a result of the ownership, maintenance, use, loading, or unloading of the following:

· A motorized vehicle that is in dead storage and is at the insured premises. This exception is granted because such vehicles represent a premises rather than an auto exposure.

· A motorized vehicle that services the insured premises provided any occurrence takes place on an insured premises but not a connected premises to the insured premises or a cemetery lot or burial vault

· A motorized vehicle designed only for off public roads use and is used to service the insured premises, or premises of another

· A motorized vehicle that assists a handicapped person

· A motorized recreational off-road vehicle that is not owned by an insured but is used by an insured (not required to be on premises)

· A motorized recreational off-road vehicle that is owned by an insured provided any occurrence takes place on an insured premises. Insured premises in this case does not include premises that are used by the named insured in connection with other insured’s premises. It also does not include cemetery lots or burial vaults.

· A battery operated, very low speed (15 m.p.h. or less) motorized vehicle that is not a motor-driven bike, moped or golf cart

· A motorized golf cart owned by the insured and not designed to seat more than four persons, nor designed to exceed a speed of 25 m.p.h. but only if the occurrence takes place at one of the following:

o At a golf club or similar establishment and the cart is being stored or parked or is being used by an insured in a manner appropriate for the golf club – on the marked paths and in accordance with club rules. Coverage continues if the cart must travel across public roads but only if traveling where marked and to other parts of the golf club.

o A residential community where golf carts are allowed on the public roads, the community has a property owners association and the insured premises is located within the community.

b. This provision’s wording reiterates that any coverage is barred if, at the time of a loss, the applicable vehicle is subject to registration because it is designed for public road use or in order for it to be used at the described location. Coverage is also barred if the vehicle is part of a speed or performance contest, if it is used in business (exception exists for golfing), is rented to others, or if an insured is compensated for using the vehicle to transport anyone or anything.

c. Exclusion c. and e. under Exclusions that Apply to Coverages L and M do not apply to this Incidental Liability Coverage and exclusion g. also does not apply but only for golf carts being used at golfing establishments.

Note: The other exclusions applicable only to Coverage L and that apply only to Coverage M still apply to motorized vehicles.

Related Court Case: ATV Injury Not Covered by Homeowners Policy

8. Watercraft

a. There is coverage for bodily injury or property damage resulting from the maintenance, use, loading, or unloading of watercraft if any of the following apply:

· It is in storage

· It is less than 26 feet and a sailing vessel

· It is powered by outboard engines of 25 horsepower of less

· The watercraft is not owned by an insured and it is powered by inboard or inboard/outboard engines or motors totaling 50 horsepower or less.

· The watercraft is not owned or rented by an insured, there is coverage under either of the following:

o It is a sailing vessel with or without auxiliary power over 26 feet

o It is powered by inboard or inboard/outboard engines or motors totaling more than 50 horsepower

· When a watercraft is powered by outboard engines or motors that total more than 25 horsepower there is coverage under any of the following circumstances:

o The engines or motors are acquired by an insured prior to the policy period and they are listed on the declarations as insured for personal liability; or if a request for liability coverage is made within 45 days after they are acquired

o The engines or motors are acquired by an insured during the policy period

o The engines or motors are not owned by an insured.

In other words, coverage is restricted to loss situations involving watercraft owned by an insured as long as it is not in active use or is low risk (small, minimally powered craft), or loss situations involving slightly more powerful craft, which is not owned by an insured.

b. This provision’s wording reiterates that any coverage is barred if, at the time of a loss, the applicable craft is part of a speed or performance contest (exception for sailing vessels participating in either a cruise or predicted log contest), if it is rented to others, or if an insured is compensated for using the vehicle to transport anyone or anything.

c. Exclusions c. and e. under Exclusions that Apply to Coverages L and M do not apply to this Incidental Liability Coverage.

Note: The other exclusions applicable only to Coverage L and that apply only to Coverage M still apply to motorized vehicles.

Exclusions That Apply to Liability Coverages

1. Exclusions That Apply to Coverages L (Personal Liability) and M (Medical Payments to Others)

This policy does not apply to:

a. bodily injury or property damage caused by war or warlike situations including:

undeclared war	civil war
insurrection	rebellion
revolution	warlike act by a military force or military personnel
destruction, seizure, or use of property for a military purpose	discharge of a nuclear weapon (even if accidental)
defense or hindering of hostilities by a military force

b. bodily injury or property damage resulting from an insured owning or leasing an aircraft or hovercraft. There is also no coverage for any person who operates, maintains, uses, occupies, loads, or unloads an aircraft or hovercraft. In addition, if an insured entrusts or loans a hovercraft or aircraft to a person, there is no coverage. Finally, there is no coverage for the insured’s negligence or nonexistent supervision of a person with respect to an aircraft or hovercraft. This exclusion does not apply to bodily injury that may occur to a domestic employee of the insured if the injury occurs in the course of that employee’s duties.

Remember that based on the definition of aircraft and hovercraft, models are covered provided they are not designed to carry cargo or people.

Example: Jerry was teaching his son how to operate a radio-controlled model airplane. They used a large, grassy field that was across the street from their home. Jerry’s son asked if he could land the plane. Jerry soon regretted agreeing to let him. His son brought the plane down too fast to land, it swooped by them, flew across the street and through their neighbor’s large bay window. Besides the broken window, the plane slammed into a T.V. The damage from this accident is NOT excluded.

c. bodily injury or property damage resulting from an insured owning or leasing a motorized vehicle or watercraft. There is also no coverage for any person who operates, maintains, uses, occupies, loads, or unloads a motorized vehicle or watercraft. In addition, if an insured entrusts or loans a motorized vehicle or watercraft to a person, there is no coverage. Finally, there is no coverage for the insured’s negligence or nonexistent supervision of a person with respect to a motorized vehicle or watercraft. This exclusion does not apply to bodily injury that may occur to a domestic employee of the insured if the injury occurs in the course of that employee’s duties. This exclusion also does not apply in situations where the policy’s Incidental Liability Coverage provides coverage for Motorized Vehicles or Incidental Liability Coverage for Watercraft.

d. bodily injury or property damage that arises from an aircraft or hovercraft even if the insured is considered vicariously liable because the actions of a child or minor caused or led to the injury or property. This exclusion holds whether or not law imposes the liability.

e. bodily injury or property damage that arises from a motorized vehicle or watercraft even if the insured is considered vicariously liable because the actions of a child or minor caused or led to the injury or property. This exclusion holds whether or not law imposes the liability. This exclusion also does not apply in situations where the policy’s Incidental Liability Coverage provides coverage for Motorized Vehicles or Incidental Liability Coverage for Watercraft.

f. bodily injury or property damage resulting from rendering or failing to render a professional service

g. bodily injury or property damage that is created by any insured’s business activities whether on or away from the insured premises and whether or not the business is owned or operated by an insured.

Example: Dan is an ace mechanic who supervises a large car dealership’s repair shop. Money has been tight, so he supplements his pay by regularly servicing and repairing small engines in his detached garage. One day, a neighbor comes by to test out a lawn mower that Dan was working on, but the blade has not been tightened. The neighbor’s feet and legs are severely cut when the blade flies loose. This incident is not eligible for coverage.

An exception exists for the limited circumstances insured under the form’s incidental business coverage and when a golf cart is used at a golfing establishment.

Note: This exclusion also applies to other forms of injury to others that may be directly related to an insured’s business activity as well as loss involving expectations related to such activity (i.e., activity related service, etc.).

h. bodily injury or property damage that is connected to locations that, while not shown as a described location, an insured owns, rents, or controls.

Note: There is coverage for bodily injury to a person in the course of performing duties as a domestic employee.

i. bodily injury or property damage expected by, directed by, or intended by an insured, as a result of a criminal act of an insured, or the result of an intentional and malicious act by or at the direction of an insured

Note: This exclusion applies even if the bodily injury or property damage that occurs is different than what was expected by, directed by, or intended by the insured, or if someone suffers the bodily injury or property damage other than the person or persons expected by, directed by, or intended by the insured.

This exclusion makes an exception for bodily injury or property damage that is caused by an insured using reasonable force to protect people or property.

Related Court Case: Stabbing Attack Excluded Under HO Policy

j. bodily injury or property damage because a communicable disease is transmitted by an insured.

This is a broad exclusion with no limitation.

k. bodily injury or property damage due to sexual molestation.

The term insured is not used in this exclusion and there is no further explanation. Since there are no explanations or limitation, this means that if an insured is named in any suit involving sexual molestation there is no coverage even if the insured is not alleged to have perpetrated the molestation.

Related Court Case: Sexual Misconduct Claim Denied

l. bodily injury or property damage that is a result of physical or mental abuse.

There is no requirement that this be a direct result of the abuse, the amount of time that can be between the abuse and the bodily injury and the property damage. It doesn’t even say who must cause the physical or mental abuse. It is a very open-ended exclusion.

Related Court Case: HO Policy Excludes Physical Abuse of Minor

m. bodily injury or property damage that arising out of corporal punishment

Example: Dana agreed to babysit for pay for the kids of her old friend, Beth, even though Dana knew the twins were unruly. Dana reaches her limit when one twin is caught beating her small dog. Dana puts the child over her lap and starts spanking him. They struggle and the child is injured when he falls onto the hard floor. Beth sues Dana for the treatment of the child’s severely sprained ankle and for dental work. The loss is not covered.

n. bodily injury or property damage arising from any aspect of the illegal drug trade. This includes manufacturing, selling, using, delivering, transferring or possessing of a controlled substance such as cocaine, LSD, marijuana along with other narcotic and hallucinogenic drugs by a person (does not have to be an insured).

This very broad exclusion should make homeowners wary of activities in or around their home since they would have no coverage even if they had no knowledge of the activity on their premises. This exclusion does not apply to prescription drug use provided the person to whom it was prescribed uses the drugs.

2. Additional Exclusions That Apply Only to Coverage L (Personal Liability)

Coverage L (Personal Liability) does not apply to:

a. bodily injury to any of the persons who meet the conditions found under items 13. a.-e. in the definition portion of this policy.

This would include the named insured, residents of the named insured’s household, the named insured’s relatives and more. It also means that persons defined as insureds under definition 13.f. are covered for bodily injury. The 13.f. insured definition includes real estate managers, persons accountable for animals and watercraft, etc.

Example: The Herks’ modest mobile home is a favorite of the neighborhood! One summer day, nearly two dozen kids are running around in bathing suits, slinging water balloons at each other. At the height of the battle, Jimmy and Josef slam head-on. They both have to be taken to an emergency room. Jimmy’s treatment is eligible for coverage. Josef’s treatment is not since he is the Herks’ son.

b. any claim made or suit that is brought against an insured that is seeking contribution to or reimbursement of damages for which another person may be liable because of bodily injury to an insured.

This exclusion is trying to eliminate coverage that might be gained when one insured may have assisted another in the injury of another insured.

c. liability held by an insured due to entering a contract or an agreement. However, an exception exists via the protection provided by the Incidental Liability Coverage for Contracts.

d. damage to property that any insured owns

e. costs and expenses for actions taken at owned property to prevent injuries and damages to others.

Such efforts should be handled by insureds without expecting payment from the insurance carrier.

f. damage to property that is rented to, occupied by, used by, or in the care of an insured, except for property damage caused by fire, smoke, or explosion

Note: This coverage exception concerning property in the control of an insured is often referred to as Fire Legal Liability.

g. sickness, disease, or death of a domestic employee. This applies only when a written notice is not received by the insurance company within 36 months following the end of the policy period during which the injury occurred. Stated another way, such injury to a domestic employee IS covered but only IF notice of the injury is received no more than 3 years after the end of the policy period during which the loss occurred.

h. bodily injury to a person, including a domestic employee, if the insured has a workers compensation policy covering the injury. Such injury is also not covered if benefits are payable or are required to be provided by the insured under a workers compensation, non-occupational disability, occupational disease, or like law. This exclusion places the coverage onto the workers compensation carrier and prevents double dipping. It also doesn’t protect the employer from shirking his or her legal responsibilities.

i. liability for any assessment made by a homeowners, condominium, mobile homeowners, or similar residential association, except as provided by the Incidental Coverage for Loss Assessment.

Example: Tom turns in a bill to his insurance company. His neighborhood association charged him $490. After getting more information about the assessment, his insurance company denied the claim. It turns out that the assessment is for snow removing equipment that is jointly owned by all of the association members.

j. bodily injury or property damage that results from an occurrence for which an insured is also an insured under a nuclear energy liability policy or would be an insured but for the exhaustion of its limits. A nuclear energy liability policy is a policy issued by American Nuclear Insurers, Mutual Atomic Energy Liability Underwriters, Nuclear Insurance Association of Canada, or their successors.

3. Additional Exclusions That Apply Only to Coverage M (Medical Payments to Others)

Coverage M (Medical Payments to Others) does not apply to the following bodily injury:

a. To an insured or other person who resides on the insured premises, except a domestic employee

b. To a person, including a domestic employee, if a workers compensation policy covers the injury or if benefits are required to be provided under a workers compensation, non-occupational disability, occupational disease, or like law

c. To a domestic employee if the injury occurs off of the premises and does not arise out of the employment of an insured

d. That results from and all consequences of nuclear reaction, nuclear radiation or radioactive contamination, however caused.

WHAT YOU MUST DO IN CASE OF LOSS OR CLAIM

This section of the policy discusses a very important part of the policy: the promise of the insurer, under described circumstances, to pay for a loss (including defending a lawsuit). Since the policy is a contract, both the insurer AND the insured have responsibilities. The manner in which a loss or possible loss is handled by an insured is critical to making sure that the policy properly responds to a loss.

1. Property Coverages

a. Notice

When a loss occurs, the insured is obligated to do all of the following:

· Promptly notify the insurance company or the insurance company’s agent

Note: The company providing coverage has a right to ask that the notification be in writing.

· If the act that causes the loss is a crime, the insured must promptly notify the police

· Notify the credit, debit or similar funds-handling card company if the loss involves a credit, debit or similar card.

The above actions serve important functions. First, they permit the company to begin the loss investigation process, including any action to protect its rights and to determine if its insured is actually liable for payment under the policy. The quick reporting to the police and any credit or debit card companies help to minimize a potential loss by initiating any criminal investigation and terminating a thief’s ability to make continued use of stolen cards. The reporting duty also minimizes fraud on the part of an insured. Persons tempted to make phony claims may be stopped by the requirement of a police report.

Related Court Case: Loss Notice Dispute Blocks Repairs

b. Protecting Property

Under this policy, an insured is required to extend a good faith effort to protect covered property at and after an insured loss to avoid additional loss. The company agrees to reimburse the insured’s REASONABLE costs incurred for necessary repairs or emergency measures performed solely to protect covered property from further damage. However, the preservation effort must involve covered property that is endangered by a covered peril or a covered peril that has already caused damaged. The insured must keep an accurate record of such costs. However, the insurer will not pay for such repairs or emergency measures performed on undamaged property.

Example: During a snowstorm with very heavy snowfall, Theo’s mobile home was damaged by the weight of snow that partially pulled down the roof over the front porch. A claims adjuster took information about the loss over the phone and told Theo that, due to the heavy number of more serious storm claims, it may be a week before anyone could come out to see his home. Because more poor weather was forecast, Theo hires a handyman to install a heavy tarp as well as a temporary brace to prevent further damage. Later, an adjuster tells him it was smart to take the precautions and the expenses would be eligible for reimbursement.

This provision does not increase the insurance policy’s limit.

c. Cooperation

The insured must cooperate with the insurer in performing all acts required by this policy. The policy requires that an insured work with, rather than against, the insurer in order to investigate and process a possible claim.

d. Inventory of Damage Personal Property

This refers to the quantity, description, cost, amount of loss, and actual cash value of the personal property involved in the loss. The insured must give the insurance company copies of all bills, receipts, and related documents to confirm these.

e. Showing Damaged Property

The insured must show the damaged property and allow the insurer to take samples of damaged property for inspection, testing, and analysis. Such requests can be made at the insurer’s discretion and the number of requests should be kept reasonable. Of course, what is considered reasonable is subjective.

f. Records and Documents

The insured must show records, including tax returns and bank records of all canceled checks that relate to the value, loss, and costs, and permit copies to be made of them as often as the insurance company reasonably requests.

g. Examination under Oath

The insured must agree to be questioned by the insurer with regards to a claim and the questioning can include answering questions under oath. When more than one insured is questioned, the sessions can be taken separately and without any other insured witnessing the separate sessions.

This duty helps to protect a company against attempts to conspire to file false claims. On the positive side, it may also assist in getting the most details concerning a valid loss.

Note: While an insurance company has the right to make requests concerning gathering insured statements, seeing the damaged property and securing related records, the emphasis is on the insurer making reasonable demands. The request must be for the purpose of moving along their claims investigation and a formal decision on accepting or denying the claim.

h. Proof of Loss

If the insurance company requests it, the insured is required to provide the insurer with a signed, sworn proof of loss. The proof of loss must be submitted within 60 days from the date of the insurer’s request and it must show the following:

· The time, place, and the details of the loss

· The (insurable) interest of the insured and the (insurable) interest of all others, such as mortgagees and lien holders, in the property. If a party cannot demonstrate an insurable interest in the damaged property, the insurer is not obligated to make payment to an insured.

· Other policies that may cover the loss, since other policies may have to also provide coverage for an eligible loss

· Changes in title or use

· Available plans and specifications of buildings

· Detailed repair estimates

· An inventory of lost items (the inventory must meet the requirements stated separately in this section)

Further, an insured must document any claim that includes any request for reimbursement for a credit card, debit card or other, similar funds-handling card. Finally, any requests that involve additional living expenses have to be supported by proof of the property’s current market rental value and actual additional living expenses incurred.

i. Assistance with Enforcing Right of Recovery

This duty requires an insured to help with any reasonable insurance company effort of recovery. In many instances where insurers make payments to their clients, other parties are responsible for the damage or injury. When possible, insurers act to recover payments from these other parties and they often need the insured’s help to do so.

2. Liability Coverages

Once there has been an occurrence, the following duties must be performed. It is important to notice the word occurrence is used and not claim. This means that an obligation exists even before a claim is presented. The named insured can choose to have another insured perform the duties but the ultimate responsibility of getting the duties completed remains with the named insured.

a. Notice

While speed in reporting a loss is important, quick notification is useless if it doesn’t include enough information with which to make decisions. Therefore, the notification has some content requirements. Specifically, the notice should include all of the following:

· The name of the named insured

· The policy number

· The time, place, and the details of the occurrence, and

· The names and addresses of all known potential claimants and witnesses.

Further, any notification has to be done in writing and, if not performed by an insured, must be completed by an insured’s legitimate representative (a person with proper authority to work with the insurer on behalf of the insured AND to be held accountable for actions or errors).

b. Volunteer Payments

An insured must not make payments, pay or offer rewards, or assume obligations or other costs, except at the insured's own cost. This stipulation does not apply to costs that are allowed by this policy, such as minor payments (i.e., first aid) that are permitted under the policy’s incidental coverage section.

The policy allows an insured some leeway to make payments in order to respond to emergencies or to help mitigate problems. However, an insured has to take great care in making payments that fall outside of the parameters permitted by the company. EVEN when an insured agrees to make payments out of his or her own pocket, he or she needs to be aware of the ramifications of such payments. Certain actions may be interpreted as an admission of guilt or responsibility for a loss when that interpretation may be wrong. It is important that an insured not put his company on the hook for a loss when the facts don’t support liability on the insured’s part.

c. Cooperation

d. Notice, Demands, and Legal Papers

Insureds are required to provide rapid notification to the insurer of any communications, especially paperwork that is related to an occurrence. Specifically, the insured must send copies of such paperwork to the insurer as quickly as possible. Failure or significant delays can compromise the insurance company’s ability to properly investigate and handle a claim.

e. Assistance with Claim and Suits

At the request of the insurance company, an insured must help the company with any of all of the following:

· To settle a claim

· To participate with lawsuits, such as appearing at trials and hearings

· With their efforts to recover payments or take other action against separate parties who may be legally responsible for applicable injury or damage

· With efforts to obtain and provide evidence

· To ensure attendance of all witnesses.

f. Other Duties—Damage to Property of Others

In case of a damage to property of others loss, the insured must give a signed, sworn statement of loss within 60 days after the loss and must exhibit the damaged property but only if the property is still within the insured’s control.

HOW MUCH WE PAY FOR LOSS OR OCCURRENCE

In this portion of the policy, the company’s obligation to provide insurance protection to the insured is described, including explanations of limits, deductibles, losses to pairs, set and parts and loss settlement terms.

1. Property Coverages

a. Our Limit

Subject to the deductible or any other limitation that may apply, the insurance company providing coverage has the option to pay either the policy’s applicable limit or the amount that is developed according to the policy’s loss settlement terms. The amount that is paid will be the LEAST EXPENSIVE option. The option will be exercise without being affected by the total number of insureds, claimants or financial interests involved with a given occurrence. However, the amount paid will also be subject to the actual insurable interest that exists.

b. Deductible

1) The deductible that appears in the policies applies to all of the principal and incidental property coverages, except for Refrigerated Property; Fire Department Service Charge; Credit Card, Electronic Fund Transfer Card or Access Device; and Forgery and Counterfeit Money losses.

Unless a specific exception is made, the deductible that appears on the policy declarations page applies to losses caused by all covered perils. The insurance company providing coverage will pay the part of the loss that exceeds the deductible (subject to applicable policy limits).

Note: When a towing expense is eligible for reimbursement under the policy’s Incidental Property Coverage for Emergency Removal, the deductible is not applicable.

2) Important Factors to Remember About the Deductible

· The deductible applies per occurrence.

· The deductible applies separately at each covered location.

· Only one deductible applies at each location.

c. Loss to a Pair or Set

If there is a loss to an item that is part of a pair or set, the insurer has the option of just paying to replace or repair the item, or to pay the difference in the actual cash value of the pair or set just before the loss and the actual cash value just after the loss. In other words, the insurer does not become obligated to compensate such losses by providing the value of a full pair or set.

d. Loss to Parts

When an occurrence involves a loss to a part of an item that consists of several components, the insurer’s obligation is only according to the value of the lost or damaged part or the cost to repair or replace it.

Both the Loss to a Pair or Set and the Loss to Parts provisions are meant to control the insurer’s exposure. In this case, the insurer makes it clear that it is not automatically obligated to treat a partial loss as, for all intents, a total loss. Of course, the loss circumstances and the type of property involved have a great deal to say about the values involved and what is considered to be fair.

When such losses involve damage to a covered mobile home, the insurance company’s payment obligation is to make either repairs or replacements that reasonably match any non-damaged pieces or panels. If matching, using reasonable effort is not possible, then the obligation is met by incorporating cosmetic means to complete repairs or to make a replacement.

While limited coverage exists under the policy’s Incidental Property Coverage for Increased Cost – Ordinance or Law, an insurance company’s repair or replacement effort does not have to include any consideration for work that must be done to undamaged pieces of panels.

e. Loss Settlement Terms

Depending upon the policy’s applicable settlement terms, eligible losses are handled according to either the replacement cost terms or according to the actual cash value term.

Regardless of the terms used to handle an eligible loss, increased costs or expenses that are created by a law, code or ordinance will not affect the payment. However, there is an exception for the limited coverage that exists under the policy’s incidental property section.

1) Replacement Cost Terms

These terms are for losses involving a covered mobile home and to other structural property which have foundations and roofs that are protected under Coverages A and B. They do not apply to any of the following:

· Window air conditioners

· Awnings and canopies

· Antennas

These exceptions have much to do with the fact that such property is either protected under another coverage part or is too vulnerable to depreciation, or both. The exclusion of such property is not affected by whether they are attached to structural property.

When attempting to determine the replacement cost for property that is covered under Coverages A and B, do not include the cost of and of the following:

· Excavations; brick, stone, or concrete foundations; piers; and other supports that are below the undersurface of the lowest basement floor or below the surface of the ground inside the foundation walls, if there is no basement.

· Underground flues, pipes, wiring, and drains

The policy makes these exceptions in the replacement cost computation because this property often survives even total losses and, therefore, shouldn’t be included in determining a building or structure’s full replacement value.

Most carriers have a goal to preserve the property that they insure. Therefore, it is in their interest to encourage that damaged or destroyed property is repaired or replaced. For larger losses, the insurer has the option to make incremental settlements. Specifically, when the cost to repair or replace damaged or destroyed property exceeds the lesser of $2,500 or 5% of the limit on the damaged building, the insurance company will not pay for more than the actual cash value of the loss until repair or replacement is completed.

The insured also has options. He or she may make a claim for the actual cash value of the loss before repairs are made and then make a further claim for the replacement cost provided a notification has been provided to the insurance company within six months of the loss of the intent to claim replacement cost.

If the limit on the damaged building is less than 80% of its replacement cost at the time of loss, the larger of the following amounts is used in applying the terms under the Our Limit terms:

1. The actual cash value at the time of the loss

2. That part of the replacement cost of the damaged part which the policy limit on the building bears to 80% of the full current replacement cost of the building.

If the limit on the damaged building is at least 80% of its replacement cost at the time of loss, the smaller of the following amounts is used in applying the terms under the Our Limit terms:

1. The cost to repair or replace the damage on the same premises for the same use and utilizing materials of like kind and quality, to the extent practical

2. The amount spent to repair or replace the damage.

Note: The named insured may decide to rebuild at a different location. This is acceptable under the policy but the replacement cost is limited to the costs that would have been incurred had the building been rebuilt where the loss occurred.

Related Article: Replacement Cost Valuation

2) Actual Cash Value Terms

Actual cash value includes a deduction for depreciation.

The actual cash value terms are used to settle losses in all instances where items are not eligible for replacement cost settlement. In those instances, the least expensive option among the following is used:

1. To the extent practical, the cost to repair or replace the lost or damaged property with materials of like kind and quality

2. The actual cash value of the property at the time of loss

3. When loss or damage involves a mobile home, the difference between the lost or damaged property’s pre-loss and post-loss actual cash value.

2. Coverage L—Personal Liability

The policy’s Coverage L limit appears on the declarations and it acts as the maximum possible amount that the insurer is obligated to pay for a single occurrence. This maximum obligation is not affected by the number of persons who are insureds, the number of parties who sustained injury or damage, or the number of legal actions (claims or lawsuits). The above limit also acts as the maximum when more than one policy period is involved and it applies regardless of the number of claims. Repeated exposure to similar conditions is considered one occurrence as are all bodily injury and property damage from any one accident.

Example: Joey and Ramona Tumbledowns’ mobile home policy includes Coverage L limit of $100,000. After experiencing the fun of a zip line at a festival, the Tumbledowns decide to install one in their backyard. Once it was up, their 5-year-old son invited many of his friends over to try it out. Unfortunately, things soon got out of hand. The Tumbledowns didn't use the proper support materials. Besides the line collapsing, so did an overloaded launch platform. Several families sued them due to injuries to their children. The lawsuits were as follows:
Plaintiff	Damages Sought	Defendant (named in suit)
Family A	$41,000	Ramona
Family B	$18,000	Joey
Family C	$29,500	Ramona & Joey
Family D	$14,000	Joey
Family E	$36,000	Joey
Family F	$22,000	Ramona & Joey
Total	$138,500	Joey (3), Ramona (1), Both (2)
The fact that there are five separate suits and that Joey and Ramona have been sued both singly and as a couple has no effect on the policy limit of $100,000 being the maximum amount of available coverage. The policy treats the event as one loss. One area that will be substantially affected is the amount provided for defense costs because the carrier could, conceivably, have to defend all five suits. The good news for Joey and Ramona is that the defense costs are including outside of limits and will not reduce the amount available to actually for the loss.

3. Coverage M—Medical Payments to Others

The coverage limit that appears for Coverage M is the maximum amount of protection available for medical expenses paid to a given third party for a single accident.

The payment of a claim under Coverage M does not imply liability under Coverage L. In other words, the policy may cover the medical expenses of an injured person without giving up the right to investigate and decide upon the merits of any related liability claim.

4. Severability

Each insured under the policy is treated individually under the policy with one exception—the limit of insurance applies per occurrence not per insured.

5. Insurance under More Than One Coverage

If more than one coverage of this policy applies to a loss, no more than the actual loss itself will be paid. This condition assures that a person is not allowed to benefit from the fact that coverage under the policy exists from more than one area.

6. Insurance under More Than One Policy

a. Property Coverage

Depending upon the source of coverage that is available (in addition to this policy), the policy may respond to the loss on either a proportional or an excess basis.

When there is other insurance that applies to the loss, the insurance company providing coverage under this form is only obligated to pay its share of the loss. This policy’s share is based upon the portion of coverage it provides in relationship to the total amount of coverage available from all sources of coverage, which apply to the loss.

Loss, cost or expenses that are covered under a government fund or a home warranty type plan are not considered insurance under this provision.

When a loss also is covered by the master policy of an association or corporation of property owners, this insurance responds on an excess basis. In other words, this policy would provide coverage ONLY AFTER any available protection from the master policy is exhausted. While this is an important provision, it is likely to be a rare occurrence since master policies are unlikely to provide coverage for property owned individually by a condo unit-owner.

b. Personal Liability

This insurance is excess over other valid and collectible insurance that applies to the loss or claim. However, this condition does not apply to insurance written specifically to act as a second or additional tier of coverage above this policy's limits.

If the other insurance is also considered excess, this policy will pay only its share of the loss. The part of the loss that will be paid is that part of the loss that the applicable limit under this policy bears to the total amount of insurance covering the loss.

This condition attempts to make any liability protection provided by this policy act only after another source of coverage responds to a loss. It adds an option of responding on a proportional basis when the other source of coverage provides its protection on an excess basis. Unfortunately, not all circumstances can be foreseen by policy conditions so there are times that insureds and insurers will dispute how coverage is to apply.

7. Warranties and Service or Maintenance Plans or Agreements

The policy’s available coverage is directly affected when a warranty, service plan or similar agreement applies to an occurrence. In such instances, the policy responds on an excess basis. This provision applies even if such agreements or plans are structured to operate similarly to insurance. Regardless, the policy’s coverage would apply as excess (as opposed to the proportional basis that applies when other sources of insurance are available).

8. Government Funds

The policy’s available coverage is directly affected when a government fund also applies to an occurrence. In such instances, the policy responds on a proportional basis. Specifically, this policy would apply coverage based on the share of total protection that its limit represents.

PAYMENT OF LOSS

1. Property Coverages

a. Losses are adjusted between the named insured (including resident spouse) and the insurance company. The insurance company is obligated to pay an insured loss within 60 days after receiving an acceptable proof of loss and coming to a written agreement on amount of the loss.

If there is a dispute between the insured and the insurer and the appraisal condition is exercised, the insurer has to make payment within 30 days after the filing of an appraisal award. Unless there is a loss payee, payment is made to the named insured.

b. The insurance company has some flexibility in paying for an eligible loss. The settlement may be paid in money; or the insurer may choose to rebuild, repair, or replace the property. The insurance company is obligated to give the insured notice of its intent within 30 days after the insurance company receives an acceptable proof of loss.

The insurance company has a right to take all or part of the damaged property at the agreed or appraised value. If the insurance company pays for or replaces property, it then belongs to them. This last option is another way to make certain that an insured is indemnified for, rather than enriched by a loss. Insurers also salvage property as one way to help recoup their loss payments.

c. If a covered loss makes the described location unfit for use for more than one-month, additional eligible expenses will be paid on a monthly basis. The insured must submit proof of the extra living expenses.

2. Liability Coverages

Once a person has been granted a judgment against an insured or insurance company, the insured and the claimant have reached an agreement; that person can recover under the policy based on the available, applicable coverage.

Note: That extent is based on the limits section of the policy.

3. Damage to Personal Property of Others - At the option of the insurance company, a loss may be handled and paid either with an insured or with the actual owner of the damaged or destroyed property. These handling options are mutually exclusive.

Note: If it is not clear, the above reference to owner is to the owner of the damaged or destroyed property (not the owner of the policy paying the coverage). This insurer option could help to mitigate adverse feeling between the insured and the property owner.

POLICY CONDITIONS

Conditions Applicable to All Coverages

1. Assignment

No insured or other party can sign this policy and its coverages over for use by any other party unless, first, getting the insurance company’s permission (in writing).

2. Cancellation and Nonrenewal

This policy may be canceled by the insured by returning the policy to the insurance company or by giving the insurance company written notice that states at what future date coverage is to stop.

The insurance company providing coverage may cancel or not renew this policy by written notice to the insured at the address shown on the declarations. Proof of delivery or mailing is sufficient proof of notice.

Related Court Case: Insurer Did Mail Policy Termination

If it is during the first 59 days, the insurance company may cancel for any reason with at least 10 days’ notice before the cancellation is effective.

After this policy has been in effect 60 days or more, or if it is at the policy’s annual renewal, the insurance company may cancel only at the anniversary date unless any of the following applies:

· The premium has not been paid when due

· The policy was obtained through fraud, material misrepresentation, or omission of fact, which, if known by the insurance company, would have changed the decision to accept the risk, or

· A material change or an increase in the hazard of the risk has occurred.

This condition goes on to say that, if the policy is canceled for nonpayment of premium, the company providing insurance will give the named insured at least 10 days’ notice before the cancellation is effective. If the policy is to be canceled for any other reason after it has been effective for 60 days or more, the insurance company is obligated to provide at least 30 days’ notice before cancellation. If the company providing coverage elects to non-renew the policy, it is obligated to provide at least a 30-day notice.

Important: Generally, this provision is pre-empted by state law regarding cancel or nonrenewal reasons, amount of notice and proof of delivery. It is critical that state law is followed concerning any decision to cancel or non-renew a homeowner policy.

If any return premium is owed, it will be refunded at the time of the cancellation or as soon as is practical. Payment of the unearned premium has no bearing on cancellation.

3. Change, Modification, or Waiver of Policy Terms

Only the insurance company has the option of waiving or changing this policy’s terms and such waiver or change must be in writing. If the insurance company providing coverage under this policy adopts a revision that broadens coverage without additional premium, the broadened coverage will apply to this policy as of the date the insurance company adopts the revision in the state in which the described location is located. This condition applies only to revisions adopted 60 days prior to or during the policy period shown on the declarations. This condition does not apply to changes in a policy that both broaden and restrict coverage whether in an edition change or an endorsement.

An insurer asking for either appraisal or to formally interview and insured (examination under oath) does not waive any of the policy’s other applicable terms.

Related Court Case: Suit Limitation Waived by Insurer

4. Conformity with Statute

Terms in conflict with the laws of the state in which the premises shown on the declarations is located are changed to conform to such laws. This provision is rarely relied upon since amendments or endorsements are added to policies based on the described location’s state. However, there are instances where the condition is relied upon such as when a law changes after the policy issuance and prior to the attachment of a revised amendatory endorsement.

5. Death

If the named insured or the named insured’s in-resident spouse dies the legal representative of the person who died becomes an insured with respect to the deceased insured’s premises and property but only for the coverage provided by the policy at the time of that person’s death.

Recognizing that the status of the residents in the household change in the policy once the named insured or spouse die, the definition of insured is changed for the time of transition following the death. The definition of insured is expanded to include members of the deceased person’s household who were members at the time of death but only while residing at the described premises. In addition, if a person is granted temporary custody of the covered property belonging to the deceased, that person is an insured but only for that property and only under a legal representative is appointed.

6. Inspections

The insurer reserves the right to inspect the property it insures and it can do so with its own personnel or it can have another organization inspect on its behalf. The condition also warns the insured that, while an inspection and related information about the results of the inspection may imply a type of warranty or guarantee about the fitness of the insured location; that is not an assumption that should be made.

What purpose does this serve? This is a warning and a notice to an insured that a company inspection cannot be used as evidence of the worthiness of the property. A company has their own underwriting rules and philosophy for providing coverage and will not permit its actions to be used to the benefit of other parties. This also prevents the company from being held liable to other areas of authority concerning the property.

Related Court Case: Inspection of Premises by Insurer Was Not Performance of a Duty Owed the Insured – although this involves a commercial situation, it illustrates how allegations that an inspection creates a distinct obligation is handled.

7. Misrepresentation, Concealment, or Fraud

Any intentional concealment or misrepresentation on the part of any insured can void the policy for ALL insureds. If an insured lies or hides a material fact or any circumstance that relates to the insurance that is granted by this policy will cause the insurance to bar coverage for any insured. Therefore, such instances or acts will bar coverage even for innocent insureds. This negative consequence may take place due to incidents that occur either before or after any loss.

Simply put, the company should be able to rely on the statements made by the insured in making its decision to insure a person or property. If the statements are seriously in error, the insurance contract has no right to exist and the company has no obligation to honor it.

8. Subrogation

When an insurer pays damages, it may ask the insured to transfer his or her right to attempt to recover damages from another party. The insured must agree, in writing, to do so and to fully cooperate with the insured in pursuing the recovery. This act of seeking payment from a party responsible for a loss is called subrogation.

This right is very valuable to an insurer. In fact, if an insured damages this right to recover payment after a loss has occurred, the insurer may no longer be obligated to pay for the loss.

The insured may waive all rights to recover before a loss occurs—but this waiver must be in writing. Signing this waiver BEFORE a loss does not affect coverage under the policy.

Subrogation problems do arise under homeowner policies. Many insurers aggressively assert and protect their rights to subrogate against other parties. In some instances, insurers are taking legal action against their clients who harm this right.

Note: Subrogation does not apply to losses involving medical payments made to other parties or to the Damage to Property of Others, Incidental Liability Coverage.

Conditions Applicable to Property Coverages Only

1. Abandonment of Property

An insured may not abandon property to the insurer without the insurer’s permission.

Of course, if the insurer agrees to accept the damaged property, the act is NOT abandonment.

2. Appraisal

If the insurer and the named insured do not agree over the value of the covered property or the amount of the loss, each party has 20 days (after receiving a written request from the other party) to select an appraiser. The two appraisers will select an umpire.

If, within 15 days, they do not agree on an umpire, the two appraisers may ask a judge of a court of record of the state where the described location is located to make the selection. If the two appraisers agree in writing, that sets the amount of the loss. However, if they do not agree, the differences are submitted to the umpire and then the written agreement of any two of the parties sets the amount of loss. Each party will pay its appraiser and the two parties will share the cost of the umpire and related expenses equally.

Note: Appraisals are ONLY about resolving disputes over loss amounts. The process is not to determine any other issue between the insured and the insurer.

3. Loss Payable Clause

If the form includes a loss payee with an insurable interest in any covered contents, that loss payee (appearing in the declarations) is granted status as an insured. However, any coverage is only to the extent of the amount and nature of their interest in any personal property that is protected by this policy. A copy of any termination notice or non-renewal sent to the insured will also be sent to the applicable loss payee.

4. Mortgage Clause

a. When a mortgage interest appears on the declarations, loss settlements under Coverages A or B will be arranged with both that interest and the policy’s named insured. The payments will be made with proper consideration of each party’s financial interest. Similar payment procedures will take place in the event that a policy includes more than one mortgage (including trustee) interest.

A mortgage interest, which is listed on the declarations, has rights and obligations under the policy, which, as far as loss payment goes, are comparable to an insured’s rights. Any payments involving property losses under Coverage A (dwelling) and Coverage B (related structures) will be made to each party according to their share of the claim.

b. If an insured’s claim is denied, coverage may still apply for the mortgagee. However, in order to secure coverage for its legitimate claim, the mortgagee has to notify the insurer regarding any changes in the risk, such as different ownership or occupancy. The mortgagee must pay the policy premium once it becomes aware of the insured’s failure to pay and, again if the insured fails, the mortgagee can preserve possible coverage if it sends a valid, timely proof of loss statement.

c. The insurer has the obligation to give any mortgagee 10-day advance notice of a decision to cancel or non-renew the applicable policy.

d. If a mortgagee is paid for a claim that involves a denial to the named insured, it is likely that the insurer will secure the mortgagee’s subrogation rights and, in turn, go after the named insured for reimbursement. Further, when payment is made to a mortgagee, the insurer may decide to buyout the mortgagee’s complete financial interest and, if applicable; secure rights to the mortgage debt and/or collateral.

Any reference to mortgage includes a secured party (a person with, typically, a lenders interest in the covered mobile home). While the mortgage clause’s protection is extended to secured parties, that protection has exceptions. Unless the applicable policy has specific coverage (along with a premium charge) this policy’s protection does not apply to financial loss that involves the insured of the covered property that is in his or her possession doing any of the following:

· Conversion

· Embezzlement

· Hiding (secretion) of encumbered property

5. No Benefit to Bailee

This policy is not intended to provide protection for the direct or indirect benefit to parties who are paid to assume custody of the covered property. In other words, such persons or organizations should secure their own insurance instead of piggybacking onto an insured’s coverage.

6. Policy Period

The policy period sets the time frame in which a loss must occur in order for it to be covered under the policy.

7. Recoveries

There are instances when the insurer pays for a loss and then the property is recovered. Similarly, after the insurer’s payment, damage payments are received from those responsible for the loss. When this happens, the named insured and the insurer are obligated to inform each other. The costs of the recovery efforts are paid first. (The policy isn’t clear as to who is paying the cost–does the cost come out of recovery prior to the dispersal or does the party who secured the recovery pay the cost?)

The named insured can decide to keep the property or give it to the insurer. If the recovery is not wanted, then nothing changes but if the named insured wants the property, claim payments received from the insurer, or some lesser agreed upon amount, must be returned to the insurer. If the named insurer did not receive a complete payment for the claim, due to a deductible or a coverage limitation, the recovery is prorated based on the interest of each party in the loss.

What is important about recoveries is that they are resolved in a manner that is fair to the insurer and the insured. One party should not significantly benefit from the recovery of property or money if it comes at the expense of the other party.

Related Court Case: Insured Has Right to Claim Recovered Property

8. Suit Against Us

A suit against the insurer cannot be filed without the Property Coverage’s terms being complied with. Further, the suit must be filed within two years after the loss.

Note: If applicable state law makes this time period invalid, the suit must be filed according to that state’s mandated time frame.

9. Volcanic Eruption

All volcanic eruption action that occurs within a 72-hour (3-day) period is considered a single occurrence.

Conditions Applicable to Liability Coverages Only

1. Bankruptcy of an Insured

Bankruptcy or insolvency of an insured does not relieve the insurance company of its obligations under this policy.

2. Duties of an Injured Person—Medical Payments to Others Coverage

When there is a loss, the injured person or his or her representative must provide the insurance company with a written proof of claim as soon as it is practical. The insurer has the right to request the statement be made under oath. The insurer must also receive permission or authorization to receive copies of medical records.

In addition, the person who was injured must agree to allow the insurers chosen doctors to conduct medical exams on a reasonable schedule.

Note: Although all of this may sound reasonable, the injured party is not a part of the insurance contract so this may be difficult to enforce.

3. Policy Period

This policy’s protection only extends to the bodily injury or property damage losses occurring within the applicable policy period.

4. Suit Against Us

The insured is not permitted to file suit against the insurer without, first, complying with all of the policy’s terms. Further, the amount of the insured’s liability must have been determined by either of the following:

· A final judgment against the insured as a result of a trial

· A written agreement between the insured, the claimant, and the insurer

Note: No person has a right under this policy to join the insurance company or to speak for the insurance company in actions related to determine the amount of an insured’s liability.