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HO Coverage for Timeshares

Author: David Thompson

What coverage does an insured have, if any, under his main residence's homeowners policy for a time-share unit? In this article, HO guru David Thompson suggests some changes to the HO package to account for some coverage gaps.


Question"I have recently been discussing a personal insurance program with a prospective insured. They asked me what, if anything, they need to do regarding insurance due to their ownership in several timeshares. I did some research and the only thing I've found related to travel or title insurance. I have not found anything that advises how they might insure any property or liability exposures. Do they have a property loss exposure for the time share and, if so, how would we provide insurance? Regarding liability insurance, anything we should advise? The main residence is covered by the 1991 ISO HO-3 policy. Thanks for your assistance."

Answer?We can answer this by citing an article from our Florida association: Assuming your client already has a homeowners policy on their main residence they need to make some changes to account for a few coverage gaps. Let's take a look at what is provided under the primary homeowners policy, as well as what needs to be changed. 
Personal Property
The belongings that the insured takes to the time-share for the period of occupancy are covered up to the Coverage C limit --- there is not a 10% limitation. Assuming the unit comes furnished the personal property usually situated there (beds, chairs, tables, etc.) is covered up to 10% of the Coverage C limit. Considering the number of owners of that property it's difficult to imagine this limit not being adequate, but should it not be the HO 04 50 04 91​ Increased limit on Personal Property in Other Residences may be added. 
Loss of Use
There is no coverage under Coverage D for loss of rents if the unit is rented out, nor for additional living expenses incurred by the insured if the unit is uninhabitable during the insured's ownership period. No endorsement is available to fill this gap. 
If the unit is for the insured's use (not rented out) it should be listed on the declarations page as an insured location, otherwise there is no coverage for the unit if it was owned at policy inception. If the unit is rented out the HO 24 70, Additional Residence Rented to Others endorsement should be added. If it is both used by the insured and rented to others make both changes. (The cost is normally under $20 for each change.) 
Loss Assessment
While the exposure is most likely remote, there is a potential for a loss assessment. The HO 04 35 endorsement needs to be attached and the additional location listed. Increased limits above the $1,000 that's automatically included should be considered, especially in light of the minor cost. 
Personal Injury
In view of the low cost (about $10) the Personal Injury endorsement ( HO 24 82​) should be considered. Adding it provides coverage for claims that might result from libel, slander, as well as loss assessments from such claims. 
Foreign Exposures
Since there is no policy territory restriction in the homeowners program, time-share units outside the United States are covered as above. 
So, there you have it. By taking a few minutes to identify the exposure with your client, and then by spending probably less than $50 your client will be ready to go enjoy the time share with the family and have no insurance concerns while there. Now, bring on the sun tan oil and burgers!

Last Updated:  November 5, 2010

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