Pass The South Dakota Property Insurance Test

Coverage D provides coverage for loss of use. The insured receives a payout if the insured dwelling is rendered uninhabitable as the result of a covered loss. The two possible methods of reimbursement are: 1) additional living expense, which allows the insured to maintain their standard of living if the insured loses use of the residence dwelling; and 2) Fair rental value, which covers lost rental payments if the dwelling is rented to another person.

Coverage B is other structures coverage that insures other buildings that are separate from the main dwelling, but located on the same property (e.g. a detached residential garage). Exemptions from Coverage B are business use structures and properties that are rented to people, when the renter is not a tenant of the main dwelling.

Coverage A insures the main dwelling and:
-any structures attached to it
-any fixtures or materials on the same premises as the dwelling that are necessary to maintain the dwelling

Coverage C is personal property coverage. It covers the personal property when an event occurs. If off-premises coverage is provided, the property does not need to be located at the insured premises to obtain coverage. If the insured is moving to a new principal residence, full coverage for the property is provided for up to 30 days. Additionally, full coverage is available when the insured residence is uninhabitable or is under repair or construction and the covered property is stored at the insured’s temporary residence. It does not cover property of a boarder/roomer or the insured’s property located within an apartment rented out by the insured or property being stored away from the insured residence. It also does not cover animals or fish, motorized vehicles, aircraft, water/steam or credit cards.

An HO6 is an insurance policy for condominium owners and is similar to a renter’s insurance policy. For assessments against a condo owner due to a building loss, maximum coverage provided to a H06 policyholder is typically $1,000 (e.g., a building’s roof is destroyed, which results in an assessment against all unit owners, since the condominium does not have enough money in the common charge account to cover the loss). An HO6 insurance policy only covers the condominium’s interior, including property, walls, ceilings, floors and property from the same perils covered in HO2 home insurance policies. The exterior of the condominium building is typically covered through a policy purchased by the Homeowners association or management company community manager. An HO6 policy may also provide coverage for reimbursement for additional living expenses. Additionally, HO6 policies provide personal liability protection, in the event a person is injured on the insured property and the insured is liable for the injury. The personal liability coverage pays for the cost of an attorney, court costs, medical expenses and any money awarded to the injured party.

H01 is the Basic Homeowner Policy, which covers the home’s structure and the property inside. It also covers structures located on the property due to damage caused by:

Windstorm/hail
Fire/lightning
Vandalism/criminal mischief
Vehicles/aircraft
Explosions/riots
Glass breakage
Smoke
Volcanic eruption
Personal liability

Damage from flooding and earthquakes is excluded from coverage in HO1 policies. Coverage is provided on a replacement cost basis, so the insured receives the cost of rebuilding or repairing damage to the dwelling with materials of similar quality.

HO2 Homeowners policies provides more coverage than an HO1 policy. It is also called a broad form policy. In addition to the eleven events covered under a basic policy, HO2 policies also cover:

Falling debris/objects
Freezing
Collapses due to the weight of ice, snow or sleet
Accidental discharge or overflow of water or steam
Sudden and accidental destruction, burning, cracking or burning
Accidental damage caused by surges of electrical current

HO2 policies are available with replacement cost or actual cash value coverage. Be aware that an HO2 policy does not cover water damage caused by a water backup and foundation or slow leaks. It also does not cover open perils, including earthquakes or floods. However, they may provide mechanical breakdown coverage with respect to heat and air conditioning systems or water heaters, but not for kitchen or laundry appliances, computers, televisions, sound equipment or systems.

An HO3 policy is one of the most comprehensive Homeowners policies available. It covers the dwelling’s structure from all perils unless specifically excluded. It does not cover the contents inside. The contents can be covered with a named perils policy. Some typical exceptions to HO3 dwelling coverage include:

Laws/ordinances
Earth movement
Water damage
Power failure
Animals owned by insured
Neglect
War/nuclear hazards
Intentionally caused loss
Government action
Collapse of structure
Theft of property from an under construction dwelling
Vandalism/Malicious mischief if the property is vacant for over 60 days
Mold/fungus/rot
Wear and tear or deterioration
Mechanical breakdown
Smog, rust, corrosion
Smoke caused by agricultural smudging or industrial operations
Discharge, dispersal, seepage of pollutants
Settling/shrinking/bulging/expansion
Birds/vermin/rodents/insects

If something happens to your home and it isn’t listed as an exclusion, then it is probably covered by your insurance policy. Some HO3 insurance plans have a named perils policy, which means it specifically lists what is covered. Regardless of the type of coverage, HO3 insurance typically does not include floods and earthquakes in its perils coverage, according to the NAIC.

An HO4 policy is also called the contents broad form. It is the tenant’s or renter’s form that provides named peril protection for the personal property of tenants. The coverage is meant for residents who rent and do not own a property, including single-family homes, apartment units/condominiums and mobile homes. The HO4 policy provides coverage similar to an HO-2 policy, though it covers personal property only and not any structures.

HO5 – Premier Homeowner Policy
This type of coverage includes everything that is included in an HO3 policy, but its applied to the structure and the property within your home, including your furniture, clothes, and appliances. Although an HO5 policy is the most comprehensive available, it does not include coverage for earthquakes or floods. HO5 insurance policies are available to homes that were either built within the last 30 years or renovated within 40 years, and they typically cover any damages at replacement cost.

An HO8 policy covers special risks, such as unique properties and older properties whose market values are much lower than the replacement costs. It provides peril coverage to dwellings and personal property and may provide extended coverage for certain perils. It may also cover vandalism and criminal mischief. Payouts are made on an actual cash value basis.

All of the items have coverage limits. Coverage C is personal property coverage. It covers the personal property wherever it is located when an event occurs. Thus, the property does not need to be located at the insured premises to obtain coverage.

For homeowner’s insurance policies, there are special liability limits for certain types of Coverage C (a/k/a sublimits), covered property, including:
-Cash, jewelry silverware and precious metals
-Securities, deeds, manuscripts and passports
-Firearms
-Computers and electronic devices
-Business use property stored off of the property

If the insured is moving to a new principal residence, full coverage for the property is provided for up to 30 days. Additionally, full coverage is available when the insured residence is uninhabitable or is under repair or construction and the covered property is stored at the insured’s temporary residence. It does not cover property of a boarder/roomer or the insured’s property located within an apartment rented out by the insured or property being stored away from the insured residence. It also does not cover animals or fish, motorized vehicles, aircraft, water/steam or credit cards.

Other optional Coverage C is available for:
-Personal property of the insured’s invited guests and employees at the premises
-Personal property of other people if the property is stored together with the insured’s property in the insured premises.

Coverage A insures the main dwelling and:
-any structures attached to it
-any fixtures or materials on the same premises as the dwelling that are necessary to maintain the dwelling

Coverage B is other structures coverage that insures other buildings that are separate from the main dwelling, but located on the same property (e.g. a detached residential garage). Exemptions from Coverage B are business use structures and properties that are rented to people, when the renter is not a tenant of the main dwelling.

Coverage D is provides coverage for loss of use. The insured receives a payout if the insured dwelling is rendered uninhabitable as the result of a covered loss. The two possible methods of reimbursement are: 1) additional living expense, which allows the insured to maintain their standard of living if the insured loses use of the residence dwelling; and 2) Fair rental value, which covers lost rental payments if the dwelling is rented to another person.

HO1 is the Basic Homeowner Policy, which covers the home’s structure and the property inside. The collapse of a building due to the weight of ice is not covered. Basic perils are covered under all homeowner’s insurance policies include:

-Windstorm and hail damage (damage to the interior is covered only when the wind or hail first creates a hole in the structure and then the interior is damaged)
-Lightning/Fire/Explosion/Smoke (including discharges from furnaces and boilers. Fireplaces are not included)
-Vandalism/criminal mischief (unless the premises has been vacant for at least 60 continuous days)
-Damage caused by vehicles (unless vehicle is owned or operated by the insured or residents of the insured property)
-Damage caused by an aircraft

In addition to the eleven events covered under a basic policy, HO2 policies also cover:
-Falling debris/objects
-Freezing
-Collapses due to the weight of ice, snow or sleet
-Accidental discharge or overflow of water or steam
-Sudden and accidental destruction, burning, cracking or burning
-Accidental damage caused by surges of electrical current

HO2 policies are available with replacement cost or actual cash value coverage. Be aware that an HO2 policy does not cover water damage caused by a water backup and foundation or slow leaks. It also does not cover open perils, including earthquakes or floods. However, they may provide mechanical breakdown coverage with respect to heat and air conditioning systems or water heaters, but not for kitchen or laundry appliances, computers, televisions, sound equipment or systems.

A coinsurance provision requires the policyholder to maintain a specific amount of insurance in order to obtain full payment for a loss. This has a different meaning than coinsurance for health insurance.

Vixon is incorrect, because, while he could purchase a specialized form policy, he can simply obtain an endorsement on his standard homeowners policy as long as his insurance agent can add a mobile home endorsement to the policy. Even though a mobile home requires unique coverage that is not found in a typical homeowners policy, he does not have to purchase a separate or specialized policy. Dwellings eligible for a Homeowners policy include mobile homes that have been purchased, second homes/vacation residences, life estate and trustees occupied homes, under construction dwellings, properties that are subject to installment contract payment plans.

A hired auto is an automobile that is borrowed, leased or hired by the insured from a non-family member or certain other individuals. Vehicles that do not constitute a hired auto are automobiles borrowed, leased or rented from a family member, business partner or employee.

Countersigning refers to the insurance agent’s authentication of an insurance contract. An agent is required to review and sign new insurance policies. Subrogation is the insurance principle referring to an insurer stepping into the shoes of the insured to recover money or damages paid out to or on behalf of the insured from another party

Solicitors sell insurance policies, receive insurance premiums and represent the insurance company. They share several duties with agents and can work for agents, but they cannot issue or countersign policies. Countersigning refers to the insurance agent’s authentication of an insurance contract. An agent is required to review and sign new insurance policies.

A dwelling policy does not cover a mobile home situated on a temporary foundation (e.g. cinder blocks). It covers mobile homes that are on permanent foundations. Dwelling insurance is a personal lines policy that covers property only. It is meant for people who rent out a property, want to insure a vacation home or are not eligible for other types of coverage, such as someone who is too much of a risk for a Homeowners policy. A dwelling policy also covers:

-Dwellings with four families or less
-Apartments with five people or less
-Vacant dwellings
-Personal property located in covered dwellings

Employee dishonesty coverage protects a business against an employee’s theft of money, property or securities.

A loss payable provision authorizes insurance payments to someone or an entity that has an insurable interest in the insured property.

Building ordinance coverage is used to protect against losses that occur due to a government agency’s enforcement of regulations concerning construction and repair of damaged buildings or losses caused due to the building or construction regulations themselves.

Depreciation is the reduction in a property’s value that occurs over a period of time, which results from age, wear and tear or economic obsolescence.

With respect to general liability policies, property damage is the physical injury to property, which results in the destruction or loss of use of the property.

Depreciation is the reduction in a property’s value that occurs over a period of time, which results from age, wear and tear or economic obsolescence.

The relationship formed by entrusting personal property to another is a bailment.

Subrogation is the insurance principle referring to an insurer stepping into the shoes of the insured to recover money or damages paid out to or on behalf of the insured from another party. Waiver of subrogation is the insurance principle referring to an insurer giving up that right. The person from whom the insurer seeks recovery usually caused the loss requiring the payout. It is also called “transfer of rights of recovery”. For example, if a plumber causes a flood in the home of an insured, which results in the insurance company paying the insured for the loss, the insurance company can seek recovery (subrogate) of the amount paid from the plumber. A waiver of subrogation clause prevents the insurance company from pursuing the plumber. The insurance company is considered the subrogee, while the insured is the subrogor.

Robbery is the theft of property accompanied by the use or threat of physical force.

Burglary is the theft of property by forced entry into a premises with visible evidence of the forced entry.