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5.7 Selected Endorsements

Automatic Increase in Insurance Endorsement​

The Automatic Increase in Insurance Endorsement, also known as the Inflation Guard Endorsement, helps the policy's coverage limits keep pace with inflation and rising construction costs. It automatically increases the Coverage A and Coverage B limits each year according to the percentage specified in the endorsement.

The coverage increases are calculated on a daily basis throughout the policy term. At each annual renewal, the dwelling coverage limit is adjusted upward, and the policy premium generally increases to reflect the higher amount of insurance.

Example

A Dwelling policy begins on January 1 with a Coverage A limit of $200,000 and a 5% Automatic Increase in Insurance Endorsement. A 5% annual increase equals $10,000. Because the increase accumulates throughout the policy term, the Coverage A limit would be approximately $205,000 six months later. At renewal, the full annual increase raises the Coverage A limit to $210,000. During the next policy term, the 5% inflation adjustment is calculated using the new $210,000 limit.

Theft Coverages​

None of the Dwelling policy forms automatically cover theft of personal property. To add theft protection, the named insured must purchase one of two available endorsements. The Broad Theft Coverage Endorsement may be added to any Dwelling form when the described premises is occupied by the owner. When the dwelling is occupied by a tenant, the Limited Theft Coverage Endorsement must be used instead.

Broad Theft Coverage Endorsement​

This endorsement covers direct physical loss to personal property owned or used by an insured when the loss results from theft, attempted theft, or related vandalism or malicious mischief. Coverage remains subject to the policy's standard 60-day vacancy provision.

The endorsement may provide both on-premises and off-premises theft coverage. On-premises coverage applies to covered property located at the described premises or placed for safekeeping in a bank, safe-deposit company, or public warehouse. It also covers personal property owned by a residence employee while at the described premises. Off-premises coverage applies when covered property is temporarily away from the described premises and is owned or used by an insured or owned by a residence employee. This coverage does not apply to property moved to a newly acquired principal residence. On-premises coverage is required before off-premises coverage may be purchased.

Certain categories of personal property covered by the endorsement are subject to special limits of liability. These limits apply per occurrence and restrict the maximum amount the insurer will pay, regardless of the broader limits selected for on-premises or off-premises theft coverage. Property subject to special limits includes:

  • Money
  • Securities and passports
  • Watercraft
  • Trailers
  • Jewelry and furs
  • Firearms
  • Silverware and goldware

The theft endorsement does not cover the following types of property:

  • Aircraft, hovercraft, or their component parts
  • Motor vehicles and motor vehicle equipment
    • Exceptions: Limited coverage may apply to certain portable electronic equipment and to vehicles used solely to service the residence or assist individuals with disabilities.
  • Property held for sale and other business property
  • Animals, birds, and fish
  • Property in the custody of a bailee
  • Credit cards

Limited Theft Coverage Endorsement​

The Limited Theft Coverage Endorsement is similar to the Broad Theft Coverage Endorsement, but it provides coverage only for property located on the premises. Coverage applies to property at the described location when it is owned or used by the named insured or the named insured's resident spouse. It also covers property owned by a residence employee. In addition, coverage applies to eligible property placed for safekeeping in a bank, safe-deposit company, or public warehouse.

Dwelling Under Construction Endorsement​

This endorsement is necessary because Dwelling property coverage generally requires the insured structure to be occupied for residential purposes. A dwelling under construction does not yet meet this occupancy requirement. By adding the endorsement, coverage may apply during the construction period. The named insured must notify the insurer when construction is completed so the policy can be updated appropriately.

The Coverage A limit is provisional and is based on the dwelling's estimated value when construction is complete. Before completion, the amount of insurance available is adjusted to reflect the building's current stage of construction. The applicable limit equals the same percentage of the final Coverage A limit that the building's current value represents of its expected completed value.

After construction is completed, the dwelling may be occupied for up to 30 days. Before the end of this period, the named insured must notify the insurer, obtain approval for continued occupancy, and allow the insurer to make any necessary adjustment to the policy premium.

Personal Liability Supplement​

Dwelling policy forms provide property coverage only and do not automatically include personal liability protection. An insured who wants liability coverage must purchase it for an additional premium. The Personal Liability Supplement may be issued as a separate policy or added to a Dwelling policy by endorsement. It covers certain liability exposures associated with the residence premises, which generally must be occupied by the insured.

The Personal Liability Supplement provides liability protection similar to the coverage included in a Homeowners policy. It contains two primary coverages:

  • Coverage L – Personal Liability
  • Coverage M – Medical Payments to Others

Coverage L - Personal Liability​

Coverage L – Personal Liability applies when an insured faces a claim or lawsuit seeking damages for bodily injury or property damage caused by a covered occurrence. The insurer will pay damages for which the insured is legally responsible, up to the liability limit shown in the Declarations. The insurer will also provide and pay for the insured's legal defense. These defense costs are paid in addition to the applicable liability limit.

The standard Coverage L limit is $100,000 for each covered occurrence, regardless of the number of claims made or individuals involved.

Example

An insured's dog escapes from the backyard and bites a person walking on the sidewalk. The injured person files a lawsuit, and the insured is found legally responsible for the resulting injuries. Coverage L would pay the compensatory damages awarded to the injured person, up to the personal liability limit shown in the policy.

Coverage M - Medical Payments to Others​

Coverage M – Medical Payments to Others pays necessary medical expenses incurred or medically determined within three years of the date of bodily injury. Coverage generally does not apply to the named insured or regular residents of the named insured's household. However, residence employees are eligible for coverage.

Coverage M – Medical Payments to Others may apply when a person is injured:

  • At an insured location while there with the insured's permission
  • Away from an insured location because of the activities of an insured
  • Away from an insured location because of the activities of a residence employee acting within the scope of employment
  • By an animal owned by or in the care of an insured
  • Because of a condition at an insured location

Example

If the insured's dog bites a passerby, Coverage M may pay the injured person's necessary medical expenses, such as ambulance transportation and hospital treatment, up to the Coverage M limit. Unlike Coverage L, Coverage M may apply without requiring the insured to be found legally liable or ordered to pay damages.

The standard limit for Coverage M – Medical Payments to Others is $1,000 for each injured person.

Additional Coverages​

The Personal Liability Supplement includes Additional Coverages for claim expenses, first-aid expenses, and damage to the property of others. The Damage to Property of Others Additional Coverage provides a limited amount of insurance for accidental damage an insured causes to another person's property. Payment may be made without first establishing that the insured was legally negligent or liable for the damage.

Exclusions​

The Personal Liability Supplement excludes coverage for certain hazards and liability exposures, including:

  • Liability arising from the ownership, maintenance, use, loading, or unloading of motor vehicles, watercraft, aircraft, or hovercraft
  • Bodily injury or property damage that is expected or intended by an insured
  • Liability arising from an insured's business activities conducted at an insured location
  • Liability resulting from professional services
  • Losses associated with war
  • Liability arising from the transmission of a communicable disease
  • Sexual molestation, corporal punishment, or physical or mental abuse
  • Liability involving controlled substances