6.13 Selected Endorsements

Selected Section II Endorsements

When attached to the policy, the following endorsements modify only Section II of the Homeowners policy. These endorsements affect the liability and medical payments coverages, but they do not change the property coverages provided under Section I.

Business Pursuits Endorsement

This endorsement extends liability coverage for the insured's involvement in a business pursuit that the insured does not own, financially control, or participate in as a partner. To be covered, the specific business pursuit must be listed in the endorsement. This endorsement is commonly used for teachers, whose work-related liability exposure may otherwise be limited or excluded under the standard Homeowners policy.

Coverage does not apply to bodily injury or property damage arising out of the rendering of professional services other than teaching. Examples of excluded professional services include architectural, medical, and beauty services. The endorsement also excludes bodily injury to an employee. This means the endorsement does not replace Workers' Compensation or other employment-related coverage that may be required for employee injuries.

If the insured is a member of the faculty or teaching staff of a school or college, coverage for bodily injury arising out of corporal punishment is optional. This coverage applies only if it is specifically selected and shown as covered in the endorsement. The endorsement also excludes bodily injury or property damage arising out of the ownership, maintenance, operation, or negligent supervision of certain property and activities. This includes motor vehicles, aircraft, hovercraft, watercraft, draft animals, saddle animals, and vehicles or equipment used with those animals.

Watercraft Liability Endorsement

This endorsement modifies the Section II Watercraft Liability exclusion. Watercraft that would otherwise be excluded may be specifically listed, or scheduled, on the endorsement. Once scheduled, Coverage E – Personal Liability and Coverage F – Medical Payments to Others may apply to liability arising out of that watercraft. Watercraft eligible for liability coverage when scheduled on this endorsement include:

• Watercraft powered by outboard motors with more than 25 total horsepower
• Watercraft powered by inboard motors
• Sailing vessels 26 feet or more in length, whether or not they have auxiliary power

Even when watercraft liability coverage is added by endorsement, certain exclusions still apply. The policy continues to exclude liability arising from watercraft that is:

• Operated in, or being used to practice for, an organized race, speed contest, or other competition
  • This exclusion does not apply to sailing vessels or predicted log cruises.
• Rented to others
• Used to transport people or cargo for a fee
• Used for any business purpose

Coverage also excludes bodily injury to any employee whose job duties involve the maintenance or operation of the watercraft. This means the endorsement does not provide coverage for employee injuries connected to working on, servicing, or operating the watercraft.

Example

An insured owns an inboard motorboat. Under an unendorsed Homeowners policy, liability arising out of the motorboat would be excluded. If the insured adds the Watercraft Liability Endorsement and schedules the motorboat, liability coverage may apply to claims involving the boat. However, the endorsement only addresses liability coverage. It does not provide physical damage coverage for damage to the boat itself.

Personal Injury Endorsement

This endorsement expands Coverage E – Personal Liability to include liability coverage for personal injury. Personal injury refers to certain non-physical injuries that may result from wrongful acts involving a person's rights, reputation, or occupancy of property. Under the endorsement, personal injury includes:

• False arrest, detention, or imprisonment
• Malicious prosecution
• Wrongful eviction, wrongful entry, or invasion of the right of private occupancy of a room, dwelling, or premises occupied by a person, when committed by or on behalf of the owner, landlord, or lessor
• Oral or written publication of material that:
  • Violates a person's right of privacy
  • Slanders or libels a person or organization
  • Disparages a person's or organization's goods, products, or services

Under this endorsement, the policy will pay damages for personal injury for which an insured is legally liable, up to the applicable limit of liability. The insurer will also provide a defense against a covered suit, even if the allegations are groundless, false, or fraudulent. The limit of liability for personal injury coverage cannot exceed the Coverage E – Personal Liability limit shown in the policy.

The Section II Loss Assessment Additional Coverage is revised to include loss assessments arising out of personal injury. Under this revision, the policy will pay up to $1,000 for the insured's share of loss assessments charged against the insured by a corporation. This limit applies regardless of the number of assessments charged. However, the coverage does not apply to assessments charged by a governmental body.

Exclusions

The insurance provided by this endorsement does not apply to all personal injury claims. Certain personal injury exposures remain excluded, even when the endorsement is attached to the policy. Coverage does not apply to personal injury that:

• Is intentionally caused by an insured
• Arises out of oral or written publication of material when the insured knows the material is false, or when the publication occurred before the beginning of the policy period
• Arises out of a criminal act committed by, or at the direction of, an insured
• Arises out of contractual liability assumed by an insured, except for an indemnity agreement that relates directly to the ownership, maintenance, or use of the premises
• Arises out of an employment-related offense committed against an employee of the insured
• Arises out of, or is connected with, a business conducted from an insured location or engaged in by an insured
  • This business exclusion does not apply to:
    • The rental of an insured location on an occasional basis
    • The rental of an insured location for use only as a residence
    • The rental of part of an insured location for use as an office, school, studio, or private garage
    • Part-time, self-employed business pursuits of an insured under age 21, provided the insured has no employees
• Arises out of civic or public activities performed by an insured for compensation
• Is sustained by the named insured or any other insured under the policy

Selected Endorsements Applying to Section I and Section II

Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement

Under an unendorsed Homeowners policy, the peril of accidental discharge or overflow of water or steam generally excludes most losses involving mold, fungus, or wet rot. This means coverage for these types of losses is limited under the standard policy. More comprehensive protection may be added by endorsement, which can broaden coverage for mold, fungus, or wet rot when the loss meets the endorsement's requirements.

Fungi means any type or form of fungus, including mold and mildew. The term also includes mycotoxins, spores, scents, or by-products produced or released by fungi. However, it does not include fungi that are contained in edible goods or products. This endorsement adds a Fungi, Wet or Dry Rot, or Bacteria Additional Coverage to Section I. This coverage may apply to:

• Covered property losses caused by fungi, wet or dry rot, or bacteria
• The cost to remove fungi, wet or dry rot, or bacteria from covered property
• The cost to tear out and replace any part of the building or other covered property when necessary to reach the fungi, rot, or bacteria
• The cost of testing air or property to confirm the presence, absence, or level of fungi, wet or dry rot, or bacteria

The policy continues to exclude losses caused by constant or repeated seepage or leakage of water, or by the presence or condensation of moisture. However, an exception may apply when the seepage, leakage, or moisture is hidden from view within the walls, ceilings, or floors. This distinction is important because visible or ongoing water and moisture problems are generally excluded, while certain hidden conditions may qualify for coverage if they meet the policy's requirements.

The endorsement includes two scheduled limits of insurance. The first limit applies to Section I and covers property damage resulting from fungi, wet or dry rot, or bacteria. This limit is a sublimit, meaning it is part of, and does not increase, the limit of liability that applies to the damaged property. The second limit applies to Coverage E – Personal Liability. This sublimit applies to damages arising out of the alleged or threatened inhalation, ingestion, or exposure to fungi, wet or dry rot, or bacteria.

Permitted Incidental Occupancies Endorsement

This endorsement is commonly used when a permitted incidental occupancy, such as a studio, office, or private school, is located at the residence premises. There are two versions of the Permitted Incidental Occupancies Endorsement. One applies to incidental occupancies located on the residence premises, and the other applies to incidental occupancies located at another residence.

When the endorsement applies to the residence premises, the business must be specifically scheduled. The schedule describes the business and identifies whether it is located in the dwelling or in another structure on the residence premises. If the permitted incidental occupancy is located in another structure, that structure is covered for direct physical loss caused by a peril insured against, subject to the limit of liability shown in the endorsement. In this situation, the structure is covered under the endorsement rather than under Coverage B – Other Structures.

When the permitted incidental occupancy is located at another residence, the endorsement must describe both the business and the location where it is conducted. The endorsement also broadens the definition of insured location to include the described premises. This allows the policy's applicable coverages to extend to the scheduled business location, subject to the terms and limits of the endorsement.

Furnishings, supplies, and equipment used in the scheduled business are covered under the full Coverage C – Personal Property limit of liability. This means these business-related items are not limited by the Coverage C special limit that would otherwise apply to business property.

Under Section II, the business exclusion does not apply to the necessary or incidental use of the residence premises for the described business. In other words, the endorsement gives back liability coverage for certain business-related activities connected to the scheduled permitted incidental occupancy. However, Section II does not provide coverage for bodily injury to an employee arising out of the business. Employee injuries require separate insurance, such as Workers' Compensation or another appropriate business insurance policy.

Home Day Care Coverage Endorsement

This endorsement is similar to the Permitted Incidental Occupancies Endorsement, but it is designed specifically for a home day care business. The endorsement identifies whether the day care is conducted in the dwelling or in another structure on the residence premises. If the day care uses another structure, that structure is covered subject to the limit of liability scheduled in the endorsement, rather than under Coverage B – Other Structures. Business personal property used for the on-premises day care is covered under the primary Coverage C – Personal Property limit, rather than being limited by the special limit that would otherwise apply to business property.

Section II is modified to provide liability coverage for bodily injury and property damage arising out of home day care services that are regularly provided by an insured for compensation. As a result, the standard business exclusion does not apply to the covered home day care operation. However, the endorsement adds specific exclusions. Coverage does not apply to:

• Bodily injury or property damage arising out of the ownership, maintenance, operation, or negligent supervision of draft animals, saddle animals, vehicles used with those animals, motor vehicles, aircraft, hovercraft, or watercraft
• Bodily injury to an employee arising out of the home day care business

This endorsement modifies the Limit of Liability condition by adding an aggregate limit for Coverage E – Personal Liability and Coverage F – Medical Payments to Others. An aggregate limit is the maximum amount the insurer will pay for all covered claims during the policy period that are subject to the endorsement. Once the aggregate limit is exhausted, no additional payments are available under Coverages E or F for those covered exposures.