COVERAGE CORNER

REVISIONS FORTHCOMING: A LOOK AT SOME HO POLICY CHANGES FROM THE ISO

By Kevin C. Amrhein, CIC

The year was 2011.

While you were watching “Harry Potter and the Deathly Hollows: Part II” and jamming to Adele’s “Rolling in the Deep” (that year’s highest grossing film and top single), the folks at the ISO were releasing a major revision to its Homeowners’ form – their first in 11 years.

Eleven years later, with a tentative release date of March 2022, ISO is at it again.

The purpose of this article is not to provide a comprehensive review of all new and revised forms (there are resources available to agents looking for such.) Rather, I’ll highlight a few things that peaked my specific interest. In no way is it my intention to deemphasize the importance of other updates I’ve not specifically mentioned here.

Virtual Currencies – Like it or hate it, crypto is everywhere. Your personal lines insureds are buying/ trading/mining this stuff and, when something goes wrong (think theft), may assume they have coverage. To clarify, ISO has added Virtual Currencies to the list of property not covered.

Definition of “Motor Vehicle Liability” – Current wording would likely exclude the maintenance, occupancy, operation, use, loading or unloading of such vehicle or craft by any person. Intended or not, a result of this wording is the possible exclusion of coverage should the insured be liable as a social host for damage/injury in an auto accident caused by a guest after leaving the insured’s party. Updates to the definition will benefit the insured by clarifying that the “any person” wording does not apply to autos.

Dollar Threshold for “Business” Exception – For over 20 years, the dollar threshold in an important exception to the business exclusion has been $2,000. Specifically, the exception doesn’t apply should the amount of total compensation generated by the activity exceed this amount during the 12 months prior to the policy period. ISO is increasing this threshold to $5,000.

Special Limit of Liability for Model or Hobby Aircraft – Current wording allows for damage to model or hobby aircraft to be covered up to the Coverage C limit. As the sophistication of such aircraft evolve, so do their value, and many such aircraft can be very expensive. The revised forms will limit coverage for model or hobby aircraft to $2,000.

Limit for Debris Removal Expense – Readers of this column and students in my classes may tire of my constant droning regarding coverage for debris removal expense. Regarding trees, current wording limits coverage to no more than $500 per tree, $1000 total per occurrence. Anyone who has actually paid the expense to remove fallen trees from their premises knows the cost is steep and that these limitations are woefully low. ISO is increasing the amounts to (a still low but improved) $1,500 / $3,000.

Renovation, Remodeling or Repair – Due to several inquiries I’ve received in the last few years, this one stood out. Current wording excludes certain things – for example, vandalism – if the house has been vacant for more than 60 consecutive days but makes an exception to a dwelling being constructed. To avoid the common interpretation that “constructed” refers only to groundup construction, ISO has revised the exception to say “a dwelling being constructed, remodeled, renovated or repaired is not considered vacant.”

Riding Lawn Mowers Off Premises – Current wording gives back coverage when certain motor vehicles (such as a riding lawn mower) are used solely to service a residence. If the insured used the mower to cut grass at their vacant lot or office, coverage would not apply. ISO has reworded the exception to remove the “residence” requirement and extend coverage to a riding lawn mower that is being used to mow a lawn (apologies, but it appears the “or pull a float in the holiday parade / drive to the beer store” exceptions must have died on the vine).

Cannabis – Current forms don’t specifically mention the “C” word. The revision will include a definition of “Cannabis” and specifically exclude it for both property and liability. However, two new endorsements – one for property (HO 06 01) and one for liability (HO 24 01) – will allow willing carriers to extend coverage on a limited basis.

CONCLUSION

I’d be remiss if I didn’t extend appreciation to the Big I’s Technical Affairs Committee (TAC) for their hard work with the ISO on these and other form revisions. I’d also like to give special thanks to Chris Boggs, Executive Director of the Big I Virtual University, for his always insightful breakdown and analysis of the forthcoming revisions.

That’s all for now. Until the next round … cheers!

Kevin C Amrhein, CIC, is IA&B's education consultant. He works with our CISR and CIC programs, as well as our special topic seminars and live webinars. Catch him at one of our upcoming professional training offerings: IABforME.com