NEW ORLEANS, Sept. 22—A new homeowners program developed by the Insurance Services Office (ISO) has significant changes in limits and language that need to be explained to the typical homeowner, instructors told independent agents today during a continuing-education (CE) workshop at the Independent Insurance Agents & Brokers of America’s (IIABA) New Orleans InfoXchange.
“HO2000 did broaden some coverage, but a lot of coverage also was taken away,” said David Thompson, a full-time instructor for the Florida Association of Insurance Agents (FAIA) and one of the top personal lines technical experts in the country. “It is important for agents to know more about these significant reductions in coverage and how they are impacting the typical homeowner.”
The workshop—HO2000…The Good, The Bad and The Ugly—provided agents with the details they need to properly insure homeowners in today’s world. Thompson and fellow instructor Jay Williams, CIC, a professional educator and 21-year veteran of the insurance industry who teaches classes across the country, shared with attendees a compilation of 54 changes in HO2000 that include coverage reductions, coverage enhancements, and new endorsements/editorial changes.
One of the most significant reductions in coverage comes in the motor-vehicle exclusion. Under the HO-91 program, there was no liability coverage if the vehicle involved in a claim was owned by, operated by, rented to, or loaned to an insured. HO2000 excludes the claim if the vehicle involved was owned, maintained, occupied, operated, loaded, or unloaded by any person. Also newly excluded is entrustment of a vehicle, failure to supervise, and vicarious liability relating to a motor vehicle. “The effect of this new exclusion is all-encompassing and far-reaching with serious E&O exposure,” Thompson noted.
HO2000 can also bring about a reduction in coverage for homeowners with students away at school. Under HO-91, almost every insurance professional and company viewed a student away at college as clearly covered under the parent’s policy, subject to a few limitations. Now ISO has added wording that states a student away at school is “an insured” only if enrolled as a full-time student as defined by the school and under the age of 24.
“An endorsement is available to correct a problem that never existed, but the endorsement states that coverage applies only while the student resides at the address shown in the endorsement,” Thompson said. “Should the student move and the agency or company not be advised, there is no coverage under the policy. Many insurance professionals feel that coverage under HO2000 is the same as under HO-91 despite this new language, but the best course of action is to nail the issue down with the carrier before a claim.”
On the positive side, HO2000 provides increases in the special limits of liability for Coverage C. For example, limits for watercraft, trailers, and theft of jewelry have been raised from $1,000 to $1,500. HO2000 also brings good news to those who occasionally use personal property for business. HO-91 limited coverage for personal property used at any time or in any manner for any business purpose, but HO2000 rewords the limitation to apply to personal property used primarily for business purposes. “The limitation would no longer apply for an insured who, for example, owns a personal computer and only occasionally uses it to check their business email,” Thompson explained. “About 20 percent to 25 percent of the American public has some business exposure at home, and HO2000 has provided some limited relief to those who use personal property for business on an infrequent basis.”
Several new endorsements included in HO2000 address such issues as the increasing number of “live-in” situations and residences held in trust. An endorsement is now available to account for “live-in” arrangements by listing such person(s) by name. Coverage is afforded to the person(s) named with all terms and conditions of the policy except Coverage A, Coverage B, and the fair rental coverage portion of Coverage D.
Certain situations of putting a residence in the name of a trust can now be written under a homeowners policy, with the new endorsement attached for an additional premium determined by the company.
The New Orleans InfoXchange, IIABA’s showcase meeting, features an exclusive reception and lunch for Trusted ChoiceSM agencies and company/strategic partners; a compelling company CEO panel; a wide variety of innovative continuing-education (CE) classes offering 19 CE credits; several prominent guest speakers; one of the largest exhibit halls in the insurance industry; numerous networking opportunities; and many other exciting events. The event runs through Tuesday.
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.