What does a HO-2 policy cover?

PERILS INSURED AGAINST (HO-2)

Property insurance plans take one of two simple formats: (1) they may define the risks that may result in an insured loss, or (2) they may have comprehensive or open coverage and specify the exclusions that apply. Previously, insurers now avoid the used word, coverage of 'all risks,' since no insurance policy covers all potential losses.

For the same cause, the word "comprehensive coverage" is now evaded.

Fire or lightning

"Fire" means a hostile fire, not in its proper location. "Lightning" is an intense electricity discharge. Direct losses from lightning are often challenging to prove, significantly when only TV sets and other appliances are affected.

Windstorm and Hail

HO-2 protects against tornadoes and all other forms of violent wind destruction. The coverage excludes damage to the buildings or contents inside if the building's exterior first does not suffer damage.

Explosion

An explosion is a difficult concept to describe, and legislation does not define the term. Fire or loud noise can follow an explosion. Gas can be contained under pressure. For example, when a combination of these events causes damage, HO-2 covers the damage caused by the occasion when a furnace blows up.

Riot or commotion

War, civil war, and rebellion are not contained, but fewer hostilities. Possibly courts and insurers would have to handle the question of terrorist attacks.

Aircraft and vehicles

Aircraft damage involves damage caused by a house-missing spacecraft. HO-2 (but not HO-3) removes losses to gates, driveways, and walks from vehicles driven by a house occupant.

Sudden and unintended smoke

This clause may cover smoke damage caused by a smoldering electric blanket, as may damage resulting from defective cooking appliances. If firefighters cause water damage by exposing the smoldering, this would be shielded as the smoldering blanket or stove would be the proximate cause of the loss.

Vandalism or mischief.

If others knowingly and deliberately destroy the homeowner's property, coverage under the HO-2 contract is suspended if the house has been vacated thirty days before the loss. Vacant means the household insured and their belongings are missing. If an insured takes a holiday with plans to return home, the house is "unoccupied" rather than empty, and the policy remains effective.

Diebstahl

Theft is the act of taking property without the owner's permission. Theft usually does not entail fraud losses or unexplained property disappearance. Three fraud coverage exclusions are in the HO, including insured theft. Additional limitations apply if the robbery happens outside the home, whether in a dorm or apartment.

Glass breakage

Glass breakage is a result, not a failure. That's extensive coverage. Any danger shattering structural glass (part of the building) causes an insured loss.

Objects failing

Before internal damage is covered, the building must suffer external damage. If a tree branch were to fall and crash through the roof, the roof would be covered with damaged contents.

Snow, ice, or sleet weight

Accidental damage from plumbing

Losses to pipes, machinery, sprinklers, or air conditioners are not protected. Only the damages arising from these units are insured. However, damage caused by slow and frequent leaks is excluded, as is damage incurred if the building is empty more than thirty consecutive days before loss.

The sudden destruction of heaters, air conditioners, or sprinklers

The provision covers these units' explosion, but freezing damages are covered separately.

Freezing plumbing

If the building is occupied or if the building is unoccupied, as long as there is a serious attempt to heat it and frozen pipes that burst cause damage, HO-2 offers coverage.

Sudden damage from artificially-generated electricity

Electrical appliances are protected, except for damage to tubes, transistors, and similar sections. There is coverage if a power surge is sent through the electric lines and a motor burns out. Short-circuit damage can also often be shielded.

Eruption

Damage from the eruption, lava flow, or volcanic ash will be covered; earthquake damage is excluded.

Mount St. Helen's eruption raised some concerns about HO insurance coverage.

EXCLUSION

Section 1 scope in HO-2 includes eight exclusions. Any of the eight exclusions excludes the insurer's responsibility for insured damage. HO's vocabulary renders this as follows: We don't cover any of the following damages incurred directly or indirectly. Such loss is omitted regardless of any other cause or occurrence leading to the loss in any series.

Ordinance of law

Means enforcement of any ordinance or law governing the construction, repair, or demolition of a building or other structure, as stated in this regulation.

Earthquakes

Meaning earthquake including earth shock waves or tremors before, during, or after a volcanic eruption; landslide; mudflow; falling, rising or moving earth; or direct loss from fire or explosion.

Glass breakage or protection glazing part of a house, storm door or storm window

Flood

Flood, surface water, waves, tidal water, overflow or spray from all of these, whether or not powered by wind;

Water backing into sewers or drains;

water below ground level, including water that exerts pressure or leaks through houses, roads, driveways, foundations, pools, or other structures;

Direct fire, explosion, or theft from water damage is secured.

Potential failure

Meaning power failure or other utility services if the failure happens off the But, if a Peril Insured Against occurs, we can only compensate for the resulting loss.]

Neglect

The insured's neglect to use all appropriate means to save and protect property after a loss.

War

Including undeclared war, civil war, uprising, revolt, revolution, military or military personnel warlike act, destruction or capture or use for military purposes, and any result thereof. Discharge of a nuclear weapon is considered a warlike act, even if unintended.

Atomic hazard

To the point of Section I Nuclear Threat Clause - Requirements.

Deliberate failure.

Any loss resulting from any act performed by or in the direction intended to cause loss.

IMPORTANT INFO:

• WHAT MAKES INSURANCE EXPENSIVE?
• WHAT ARE THE ECONOMICS OF INSURANCE?
• WHAT ARE THE FATAL FLAWS OF PROPERTY INSURANCE?
• WHAT IS UMBRELLA INSURANCE?
• RESTAURANT INSURANCE QUESTIONS

CONDITIONS SECTION 1

Several HO-2 conditions are derived from the Standard Fire Policy (SFP).

Loss settling.

The loss settlement clause provides different ways to assess the amount of payment in case of loss to the insured.

Covered property damages are settled:

Buildings under coverage A or B without deduction for depreciation, subject to the following:

a. If at the time of failure, the amount of insurance under this damaged building policy is 80% or more of the building's maximum placement expense, we shall pay the cost of repairing or rebuilding the structure immediately before the loss, after applying the premium and without depreciation deduction, but not more than the following amounts:

1.  The building's liability cap under this policy;
2. Replacement costs of that section of the building destroyed similar construction and usage on the same premises;
3. The sum needed to fix or rebuild the damaged house.

b. If at the time of loss, the amount of insurance under this damaged building policy is less than 80% of the building's maximum repair cost immediately before the loss, we will pay the greater of the following sums, but not more than the liability cap under this policy that applies to the building:

1. The actual cash value of the damaged building part; or
2. The proportion of the cost of repairing or rebuilding the building section that the total amount of insurance in this policy on the damaged building covers up to 80% of the building's replacement cost after premium and without depreciation deduction.

Replacement costs and value-added insurance

HO-2's loss settlement clause includes a penalty provision that applies if the insured purchased less than 80% of replacement costs. HO's penalty

Provision resembles that commonly seen in commercial property insurance plans. Both coinsurance provision and HO loss settlement clause are meant to make the insured unattractive under insurance. Both requirements allow for the insured to pay the penalty depending on the insurance number.

Many property plans include a provision requiring the insured to buy minimum insurance if the insured requires maximum coverage on all damages. If the insured buys less than the minimum, only partial damage recovery can occur. The insurer's minimum insurance typically needs specifying as a percentage of the insured property's replacement cost.

To determine if the insured fulfilled the dwelling coinsurance condition, -insurers use the following formula: insurance amount purchased amounts X of = insurance 80 percent of replacement cost loss proceeds.

If the first term is less than 1, the insured will bear part of the damage. If the fraction is equal to or greater than 1, the insurer will pay the entire amount of the loss, limited to the face amount of insurance purchased.

Reasons for the reimbursement

What triggers the coinsurance requirement? Holding insurance rates equal exists.

If property owners, knowing most risks, are partial, bought insurance equal to only 50 percent of the insured property's value, they may assume the most considerable portion of the liability had been transferred. They'd have an advantageous deal without the coinsurance penalty. The coinsurance provision of property insurance plans prohibits the insured from using the insurers' average rate structure. If someone buys insurance equal to 50% of the property's value while the insurer needs 80% coverage, the insured will obtain an only partial recovery for a loss.

Mortgage clause

The HO has provisions protecting creditors making insured property loans. This defense is contained in mortgage proof of debt. When a property loan is made, it's the protection arrangement. A mortgage gives the lender (mortgagee) legal interest in mortgaged land. If the borrower (mortgage) defaults on the loan agreement, the mortgage will foreclose the mortgage and sell the property to the debt. The mortgage both has an insurable interest in the land.

The mortgagee includes the trustee.

If a mortgage is named in this policy, you and the mortgagee will collect any loss payable under Coverage A or B as interest occurs. If more than one mortgagee is called, the payment order will be the same as the mortgage order.

If we reject your application, it won't apply to a legitimate mortgage claim if the mortgagee:

• Please inform us of any change in ownership, occupancy, or significant risk known to the mortgagee
• Pay any premium due under this policy if you have failed to pay the premium
• Submits a signed, sworn declaration of loss within 60 days of obtaining notification of your failure by us

Policy conditions for Assessment, Suit Against Us, and a payment applies to the mortgagee. If we cancel or not renew the policy, the mortgagee will be informed at least IO days before the date of termination or non-renewal.

If we pay the mortgagee for any loss, refuse your payment:

• We are subrogated to all mortgage rights given under property mortgage.
• Upon our option, we will pay the entire mortgage principal plus any accrued interest. We will obtain full assignment and transfer of the mortgage and all securities held as collateral to the mortgage debt.

Subrogation would not affect the mortgagee's right to recover the mortgagee's claim completely.

HELPFUL LINKS:

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LIABILITY COVERAGE

Coverage E - Personal Liability

If a claim is made or a suit is brought against and for damages due to or induced by one to whom this coverage applies, we shall:

• Pay our responsibility for losses for which it is legally liable.
• Have counsel of choice to represent us, even if the suit is groundless, misleading, or fraudulent. We may investigate and resolve any allegation or suit we deem necessary. Our obligation to settle or protect ends when the amount we pay for damages arising from the incident is our liability cap.

COVERAGE F — MEDICAL PAYMENTS

We will cover the required medical costs for your medical, surgical, x-ray, dental, ambulance, hospital, specialist nursing, prosthetic devices, and funeral care within three years of an accident requiring medical expenses. This coverage does not extend to you or your household's daily residents except workers. This coverage extends only to others:

1. To an insured person with an insured's permission;
2. If bodily harm to a person off the insured location;
   1. Arises from an insured place state or the immediately adjacent ways;
   2. Is caused by the insured operation.
   3. Is induced by an insured resident employee during the residence employee's employment.
   4. Is caused by an animal owned by an insured.

The interpretation of these provisions is that the insurer offers to reimburse the insured for successful decisions arising from non-business actions of the designated insured and residents. It agrees to provide legal advocacy to the insured. Insurers maintain the right to negotiate with a claimant if the insurer feels a settlement is reasonable (advantageous).

In professional liability insurance schemes, such as health liability insurance, the insured, whose professional reputation may be at issue, may prohibit an insurer from attempting to settle a lawsuit without a court battle.

Insurers' obligation to make payment on behalf of their insured doesn't precisely align with their duty to protect their insureds. Only protected actions require payment. Fake, malicious, or groundless lawsuits need legal protection. Because of the potential discrepancy between an insured's obligation to protect and the duty to pay insurance claims, the insurer's duty was litigated.

Section 2 — Exclusion

Since coverage E and F are extensive coverage forms, some significant exclusions limit the insurer's liability. Such claims resulting from personal harm or property damage are not covered.

Which the insured expects or intends. The "purpose" needed to exempt coverage is neither the "intention to act nor the "intention to cause a particular injury complained of" but the "intention to cause bodily injury."

An analysis of the cases on this issue does not lead to any general conclusions. Various courts in different jurisdictions have drawn different conclusions, given similar circumstances. Maybe the safest point to note is that if an insured injures others while engaging in a monetary benefit operation, there is a chance that the HO can not prove it.

• It is resulting from the rendering or inability to provide professional services. This clause confirms the preceding clause, making it clear that if an insured is sued as an accountant, an attorney, or a physician, the HO will not have protection.
• It is arising from the possession, maintenance, use of motor vehicles, aircraft, or watercraft. There are several exceptions to these exclusions, such that the HO offers some coverage in limited situations arising from the transmission of infectious diseases. Growing litigation during the latter half of the 1980s and 2020 alleged injury resulting from infectious diseases transmission, particularly disease transmission.

This exclusion is new and does not yet appear in all company policy forms. Section 2, like Section 1 of HO-2, includes some additional coverage and conditions.

They follow the Section 1 pattern established.

Parts 1-2 - Conditions

HO-2's final section includes criteria for both Sections 1 and 2.

• Deceipt and fraud;
• Waiving provisions;
• Insurer and insured cancelation;
• Assignment (not valid unless approved by the insurer);
• Subrogation
• Death of the insured (the insured's legal representative remains safe after the insured's death).

Liability insurance plans typically allow for the full liability cap for each incident. Additionally, there usually is no extra premium payable.

Combination of fire, personal responsibility, and extra cost protection. HO-2's main divisions include:

• Definitions
• Section 1 -Property Coverage's
• Section 1-Perils Insured Against
• Section 1-Exclusions
• Section 1-Conditions
• Section 2-Liability Coverage's
• Section 2-Exclusions