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Insurance Services Office (ISO) has released to Big I’s Virtual University the upcoming Homeowners’ multi-state filing tentatively effective beginning in March 2022. Yes, 2022. Eleven years have passed since ISO’s last major multi-state filing, so this is major. Within this filing, ISO:
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One noticeable change in these revised forms and endorsements is not coverage-based but rather is design-based. ISO has replaced the familiar double-column format choosing to adopt a single-column format. This appears to make it easier to read the forms on a computer screen (no more scrolling up and down).
Many of the changes in this filing can be traced back to the work of Big I’s Technical Affairs Committee (TAC). Most Big I members are unaware of the contribution of the TAC team. Over the years, many changes have resulted from the persistence of the TAC team and the willingness of ISO to hear our thoughts. It is a small team consisting of five members, but the results are amazing. The 12 changes contained in this filing originating from TAC are noted as “TAC Item.”
New Forms and Endorsements
ISO created one new homeowners’ (HO) form and 13 new endorsements. Each new form and endorsement is introduced within this section.
HO 00 14: Homeowners 14 – Contents Comprehensive Form
ISO has introduced a new coverage form for renters. Renters now have the option of the traditional HO-4 (Contents Broad Form) or this new HO-14 (Contents Comprehensive Form).
Two major difference between the HO-14 and the traditional HO-4 are:
Beyond these differences, the HO-14 offers many coverages not offered by the HO-4 or even the other HO forms. These coverage expansions include:
One limitation unique to the HO-14 is contained within the “Special Limits” coverage section. Unlike the other HO forms which list specific dollar amounts for certain property (money, silverware, firearms, jewelry, etc.), the HO-14 extends 10% of the Coverage C limit to the listed property types. This 10% is a total limit for all the property lost or damaged in a single incident. The 10% of Coverage C limit applies to:
Note also that some property specifically listed within the Special Limits in other HO forms is not found in this Special Limits section of the HO-14. Watercraft, other than hobby craft, is completely excluded in the HO-14; trailers are not listed or addressed; coverage for antennas, tapes, wires, disks, records, or other media for use with portable electronic equipment is not specifically addressed (no limit listed and not found in the list of property not covered); and portable electronic equipment for motor vehicles is not addressed.
Whether this is less than or more than the special limits offered by the other HO forms depends on the Coverage C limit. For property not specifically addressed, the HO-14 may be broader.
However, the HO-14 is narrower than the other HO forms in some respects. On the property side, the HO-14 does not extend coverage to or for:
On the liability side, the HO-14 does not extend protection for:
In some ways, the HO-14 is preferrable to the HO-4, but in some it is not. Deciding which to use depends on the specifics of the insured.
Limited Cannabis Property Coverage – HO 06 01 (TAC Item)
The name says it all. Cannabis has “grown” (pun intended) over the last several years to become a HO exposure. The current HO program addresses by excluding cannabis only on the liability side applying the controlled substances exclusion. On the property side, there was no apparent need to address cannabis because it was illegal to own or grow.
Because states are beginning to allow medical and even recreational possession and use of marijuana, ISO feels the need to address the exposure. Within the new HO forms, ISO has defined “Cannabis” and specifically excluded it on both the property and liability side but allows the insured to buy back some coverage.
HO 06 01 Limited Cannabis Property Coverage, if allowed by the underwriter, extends coverage for direct property loss to “Cannabis” caused by certain named perils:
Cannabis Liability Coverage – HO 24 01 (TAC Item)
Where the HO 06 01 extends property coverage to cannabis, the HO 24 01 addresses the liability exposure from cannabis. With this endorsement, the carrier can extend bodily injury and property damage protection for legal liability arising from the cannabis exposure when used in accordance with the law. Illegal possession, use, sale, etc. remains excluded.
Specified Other Structure(s) Exclusion – HO 06 21
As ISO explains, this new optional exclusion allows the underwriter to exclude property coverage on a specified other structure(s). The ability to exclude one or several other structures gives the underwriter the ability to write an account they would gladly write but for the age, condition, use or whatever of an other structure on the premises. Examples given in the filing include a dilapidated old shed, garage, barn or silo.
Limited Theft – Coverage A and B – Dwelling Under Construction – HO 06 67
In the unendorsed HO policy, theft is excluded when/if the dwelling is under construction. The theft exclusion applies to all property coverage parts (A, B and C). Within the last major multi-state filing in 2011, ISO introduced the HO 06 07 – Limited Coverage For Theft of Personal Property Located in a Dwelling Under Construction (which is being revised by this filing) to provide theft coverage for personal property inside a dwelling under construction. But there was never an option for theft of real property (Coverage A and B) once the property was attached to the dwelling.
This new endorsement allows theft coverage for real property covered under Coverage A or Coverage B.
Coverage B – Other Structures Away From The Residence Premises – Replacement Cost Loss Settlement For Buildings – HO 06 91
Presently insureds have two options for insuring Other Structures (Coverage B) away from the residence premises, HO 04 91 – Coverage B – Other Structures Away From The Residence Premises; and HO 04 92, Specific Structures Away From The Residence Premises. Both endorsements extend protection on an actual cash value (ACV) basis.
As the endorsement name suggests, the HO 06 91 changes the valuation method for all building structures located at a premises that is not the residence premises to replacement cost. With the introduction of this endorsement, the HO 04 91 is renamed to highlight that coverage is provide on an ACV basis (HO 04 91 – Coverage B – Other Structures Away From the Residence Premises – Actual Cash Value Loss Settlement).
Specific Structures Away From The Residence Premises – Replacement Cost Loss Settlement – HO 06 92
This is the companion to the HO 06 91 and the replacement cost version of the HO 04 92. It requires the structures to be specifically listed to garner coverage. Like the HO 06 91, replacement cost is applicable only to other structures that are buildings (walled and roofed). And like with the HO 04 91, with the introduction of this endorsement, the HO 04 92 is renamed to indicate it provides coverage on an ACV basis.
Broadened Water Back-Up And Sump Discharge or Overflow Coverage – HO 06 95
Since at least 1984 ISO has offered a water back up and overflow endorsement. In the 2000 edition of the Homeowners’ program, ISO revised the endorsement. The HO 04 95 – Limited Water Back Up & Sump Discharge or Overflow Coverage required the water to originate from within the dwelling.
In response to recommendations from the industry, ISO created the HO 06 95 – Broadened Water Back-Up And Sump Discharge or Overflow Coverage. The new endorsement requires only that the water:
The “within the dwelling” requirement is removed when this endorsement is attached. Both the HO 04 95 and the HO 06 95 will remain available for use.
Other Insured Locations(s) – HO 24 02
ISO recognized there is currently no means to specifically identify or schedule other locations owned or rented by the insured with respect to liability coverage. For example, there is no current ability to extend coverage to land on which structures other than dwellings may be present.
To remedy this gap, ISO is introducing the Other Insured Location(s) – HO 24 02 endorsement. This optional endorsement allows specific locations to be scheduled as “insured locations.”
Non-Owned Motorized Bicycle And Motorized Scooter Liability – HO 24 13 (TAC Item)
Motorized bicycles, motor-assisted bicycles and motorized scooters have become more common over the last few years. Rental options such as Lime and Bird have put people on motorized scooters within busy cities without requiring proof of competence. Riders have taken on a liability risk that was not covered by either the HO or the personal auto policy (PAP).
Within this filing, the HO 24 13 – Incidental Low Power Recreational Motor Vehicle Liability Coverage Endorsement has been revised to provide coverage for owned and non-owned vehicles meeting certain requirements, including motorized bicycles, motor-assisted bicycles and motorized scooters. The revised HO 24 13 endorsement will read (this is the exception to the exclusion):
Paragraph A.2.e. is replaced by the following:
In the absence of the HO 24 13, the insured has coverage for the use of a non-owned vehicle designed for recreational use off public roads including motorized bicycles, motor-assisted bicycles and motorized scooters. But there is no coverage for owned vehicles such as these when used off the premises.
Non-Owned Motorized Bicycle And Motorized Scooter Liability Exclusion – HO 24 03
The HO 24 03 excludes coverage when the insured rents or borrows a motorized scooter or motorized or motor-assisted bicycle. Protection is still in force for other types of non-owned and owned vehicles, such as Barbie Jeeps, etc., on and off the premises subject to low speed and specific use requirements.
Motorized Bicycle and Motorized Scooter Liability Exclusion – HO 24 04
As the name suggests, this fully excludes the use of motorized bicycles and scooters whether owned or non-owned. Because the insured has coverage for non-owned vehicles designed for recreational use off public roads regardless of where they are being used, the insurance carrier can use the HO 24 04 to delete coverage for all vehicles other than those used to assist the handicapped while in active use of assisting the handicapped or parked on the insured premises.
Within the HO 00 14 (the new Contents Comprehensive Form), coverage for motorized scooters is bicycles is expressly granted. This endorsement can be used to remove that grant of coverage.
Personal Injury Coverage (Aggregate Limit Of Liability) – HO 24 49
Essentially provides the same coverage as the HO 24 82 – Personal Injury Coverage endorsement. However, this endorsement allows the insured to pick an aggregate limit for personal injury claims. This appears to be designed for use with the HO 00 14 because it grants coverage for personal injury arising out of home-sharing activities (which is automatically covered by the HO 00 14 but not other HO forms).
Personal Injury Coverage – HO 24 89
Designed for use with the HO 00 14. This endorsement provides personal injury protection but is not subject to an aggregate limit.
Oops, One More New Endorsement (Even Though Not New)
Although not part of the 2022 filing, ISO introduced a new endorsement in December 2020, about which most within insurance are unaware – Utility Line Expense Coverage – HO 06 69.
Utility services began offering/selling protection for the various utility service lines several years ago. Consumers regularly receive direct mail from the utility detailing the fact that insurance does not cover damage to utility lines damaged by various causes.
Because agents are often asked about this exposure and lack of coverage, carriers requested ISO create an option to provide such protection. Agents may now have the opportunity to provide this protection as part of the homeowners’ coverage rather than the insured having a separate contract.
This endorsement:
Coverage extends to utility lines owned by the insured or not owned by the insured if the insured is responsible for the line due to a municipal or commercial utility service contract or agreement.
The basic coverage limit is $10,000 per loss but can be increased to $25,000 or $50,000. Rates appear to be company specific and are adjusted based on the age of the dwelling. Newer homes (15 years old or newer) garner a 25% rate credit for this coverage. Homes over 45 years old see the rate for this coverage doubled.
Revised Forms and Endorsements
ISO revised 120 forms and endorsements with this filing. Although this sounds like a lot of reading may be required, these revisions can be grouped, so this review won’t be as bad as it sounds.
Revising Definition of “Motor Vehicle Liability”
In a previous filing ISO revised and expanded the definition of motor vehicle liability to include (or exclude) maintenance, occupancy, operation, use, loading or unloading of such vehicle or craft by any person. According to some carriers this revised wording removed coverage the insured should or could reasonably expect.
The current wording could be interpreted to remove coverage for host liability situations because it removes coverage for the use of a motor vehicle by “any person.” “Any person” includes someone other than the insured. If a party guest drinks too much and is involved in an accident after leaving the party, the homeowner/insured could be held liable for the injury or damage as the host of the party. Current wording will not (or might be interpreted to not) provide protection to the insured homeowner.
To remedy this apparent lack of coverage the insured had in previous forms and that might or should be reasonably expected by the insured, ISO rearranged the definition. Motor vehicle liability was moved to a separate subparagraph to specify that it applies only to motor vehicles used by an insured. The “any person” wording does not apply to autos.
This change was made to all HO forms and the HO 34 02 – Model or Hobby Aircraft Liability Exclusion endorsement.
Definition of “Business” Revised to Address Mineral Rights
Currently the HO policy’s definition of “Business” does not address the leasing of mineral rights. Because homeowners may lease mineral rights to third parties for purpose of extraction, ISO has redefined “business” to include such activity. All reference to “business” in the policy will include reference to the leasing of mineral rights.
According to ISO this is not a change in coverage as the leasing of mineral rights was not considered a covered activity previously, it simply was not addressed. This revision serves to somewhat clarify intent.
All HO forms, the HO 06 15 – Trust Coverage endorsement and the HO 24 73 – Farmers Personal Liability Coverage endorsement are all revised as a result of this change.
Increasing Dollar Threshold for Business (TAC Item)
A current exception to the business exclusion contained within the HO coverage forms is a dollar threshold. The form currently states that the activity must generate more than $2,000 in total compensation during the 12 months prior to the policy period. This threshold has been in place for more than 20 years.
ISO is increasing the threshold to $5,000 with this filing.
This revision applies to all HO coverage forms and the HO 24 73 – Farmers Personal Liability Coverage endorsement.
Coverage C Special Limits and Sub Limits (TAC Item)
Certain limits within the ISO HO coverage forms have not been increased in 20 or more years. Given the time elapsed, these limits have not kept pace with the realty of values. To remedy this, ISO is making the following changes.
Coverage C – Personal Property Special Limits of Liability
| Category | Current Limit | New Limit |
|---|---|---|
| Money, etc. | $200 | $300 |
| Securities, etc. | $1,500 | $2,000 |
| Watercraft and their Trailers | $1,500 | $2,000 |
| Trailers | $1,500 | $2,000 |
| Theft of jewelry, etc. | $1,500 | $2,000 |
| Theft of firearms, etc. | $2,500 | $3,000 |
| Theft of silverware, etc. | $2,500 | $3,000 |
| Business property on the residence premises | $2,500 | $3,000 |
| Business property away from the residence premises | $1,500 | Unchanged |
| Portable electronic equipment in motor vehicle | $1,500 | $2,000 |
| Antennas, tapes, wires, records, disks, or other media | $250 | $300 |
In addition to the increase in the watercraft limit, a new option to purchase increased limits up to $5,000 is also available via Coverage C Increased Special Limits of Liability, HO 04 65 and HO 04 66.
Coverage C – Personal Property at Other Locations
| Category | Current Limit | New Limit |
|---|---|---|
| Personal property at other residences | Greater of 10% of C or $1,000 | Greater of 10% of C or $1,500 |
| Personal property in self-storage facility | Greater of 10% of C or $1,000 | Greater of 10% of C or $1,500 |
Section I (Property) Additional Coverages
| Category | Current Limit | New Limit |
|---|---|---|
| Debris removal / Tree removal | $500 per tree / $1,000 total | $1,500 per tree / $3,000 total |
| Trees, shrubs and other plants (not HO-8) | 5% but no more than $500 for any one tree | 5% but no more than $1,500 for any one tree |
| Trees, shrubs and other plants – HO-8 | 5% but no more than $250 for any one tree | 5% but no more than $500 for any one tree |
| Glass or Safety Glazing Material for HO-8 | $100 | $200 |
| Fire Department Service Charge | $500 | Unchanged |
| Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money | $500 | Removed from base policies – optional endorsement with a $1,000 base limit |
| Loss Assessment | $1,000 | $2,000 |
| Landlord’s Furnishings (Not HO-4, HO-6 or HO-8) | $2,500 | $3,000 |
Section II (Liability) Additional Coverages
| Category | Current Limit | New Limit |
|---|---|---|
| Damage to Property of Others | $1,000 | $5,000 |
| Loss Assessment | $1,000 | $2,000 |
All six HO forms are revised because of these changes. Another 16 endorsements are revised as a result of these changes.
Model or Hobby Aircraft and Watercraft (Liability is TAC Item)
ISO is revising both property and liability coverage related to model or hobby aircraft and watercraft. On the property side ISO is reducing coverage limits; and on the liability side, ISO is expanding coverage to include model or hobby watercraft.
Currently, the only property limit applicable to model or hobby aircraft and watercraft is the Coverage C limit. Carriers are concerned because some of these crafts can be very expense. In response, ISO is introducing a new classification under its Special Limits of Liability section within the property coverage parts. The new forms will limit coverage for these hobby or model aircraft or watercraft to $2,000.
This limit can be increased by endorsement. Obviously, an additional premium is required.
Within the watercraft exclusion of the current HO coverage forms, there is no exception for model or hobby watercraft such as exists for hobby or model aircraft. In the upcoming revision, ISO is adding a specific exception for model or hobby watercraft to match the exception for model or hobby aircraft.
Revision to Lack of Coverage for Motor Vehicles Within Property Not Covered (TAC Item)
In a previous filing, ISO “over drafted” exclusionary wording regarding auto equipment and parts. Although not the intent, the wording was used to exclude damage to and destruction of auto parts not attached to the vehicle.
For example, assume the insured has several auto parts stored in the garage such as a removable top, spare parts, etc. If these are damaged by a fire, the current policy language exclude coverage for these parts. According to ISO, this was not the intent of the wording.
To remedy this “over application” of the exclusionary wording, ISO revises the wording in the 2022 edition to clarify that the exclusion applies only to parts in or upon the vehicle. Parts not attached to the vehicle are covered like all other personal property.
Virtual, Digital or Electronic Currency
Virtual, digital and electronic currency did not functionally exist when the last multistate filing was made. Although it may have existed in some form, it was not known, used or owned by individuals. Cryptocurrency has gained prominence over the last few years.
ISO is now forced to address these “fuzzy” currencies and has chosen to do so by excluding them. Virtual currencies have been added to the list of property not covered.
Additional Living Expenses (TAC Item)
Current policy wording within Coverage D states that the policy will cover additional living expenses “incurred by you.” The “you” is the named insured, thus this wording suggested that the only person and expenses covered were those of the named insured.
Of concern was the situation where the named insured has died but other insureds are still covered by the policy (as is granted within the policy’s “Death” provision). ISO is revising the Additional Living Expense provision to state that is applies to expenses incurred by the you and resident relatives or others who are under 21 and in the care of the you or resident relatives.
ISO states that this is a broadening of coverage.
Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage
Coverage for loss from use of these forms of payment has been completely removed from the base HO forms (as was seen in the Special Limits discussion). To garner any coverage for these losses, the insured must purchase the revised HO 04 53 – Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage endorsement.
The base limit within the revised HO 04 53 will be $1,000 (rather than the $500 in the current HO form). The limit can be increased up to $10,000 with payment of an additional premium.
Renovation, Remodeling or Repair (TAC Item)
Current HO policy wording excludes coverage for vandalism and malicious mischief if the house has been vacant for more than 60 consecutive days. Further, the current language excludes loss to glass or safety glazing material for the same reason. However, current language states that these exclusions do not apply to a dwelling “being constructed.”
“Being constructed” can potentially be viewed as and limited to ground up construction only. This was not ISO’s intent. To clarify and reinforce that “being constructed” was intended to include property being renovated, remodeled or repaired, ISO has specifically added this wording. Now the exception reads, “A dwelling being constructed, remodeled, renovated or repaired is not considered vacant.”
Loss Settlement – Deductible (TAC Item)
ISO reworded the loss settlement provision in regard to application of the deductible as part of the 2011 filing. This rewording produced some unintended consequences, specifically mis- or non-application of the deductible, especially when the insurance-to-value (often incorrectly referred to as the co-insurance) provision applied.
In the 2011 filing, ISO removed the phrase, “after application of any deductible….” In the upcoming filing, ISO has reintroduced that phrase to clarify that the deductible is applied before payment of a loss, especially when the insurance-to-value provision applies.
Essentially, ISO reintroduced the wording to bolster the formula:
Replacement Cost Threshold Provision
Within the current HO forms one of the loss settlement conditions states that if the real property loss is less than 5% of the amount of insurance carried and less than $2,500, the insurance carrier will pay replacement cost even if the property is not repaired or replaced. Likewise, there is a similar provision applicable to personal property protection when the HO 04 90 (Personal Property Replacement Cost Loss Settlement Endorsements) is attached stating that if the loss is less than $500 the carrier will pay replacement cost even if the property is not replaced.
ISO has undertaken to increase these limits in the upcoming filing. The real property limit is being increased to $5,000 and the personal property limit is increasing to $1,000 (when the HO 04 90 is attached).
Riding Lawn Mowers Off Premises (TAC Item)
In its 2000 multi-state revisions, ISO revised the motor vehicle exception to give back coverage when the vehicle was used solely to service a residence. The requirement that the mower be used solely to service a residence created a gap in protection; if the insured used a riding mower to mow the grass at their church or a vacant lot, there was no coverage.
To remedy this gap, ISO reworded the exception. Now the exception extends coverage to a riding lawn mower that is being used to mow a lawn. The “residence” requirement is removed.
Watercraft Liability Exclusion and Exceptions Revised (TAC Item)
The watercraft exceptions have long been a problem area within the homeowners’ coverage forms. Distinguishing between and among inboard, outboard, inboard-outdrive, jet pump and other motor types has created confusion. Additionally, the exceptions changed based on whether the craft was owned or not owned. In response to requests from the industry, ISO is revising the watercraft exclusion and exceptions within the form in an attempt to simplify the language.
The new exception language has been simplified. Coverage for watercraft is excluded unless the:
Beyond this change to the base form, ISO revised the HO 24 75 – Supplemental Watercraft Liability Coverage as part of this filing to assure the wording and coverages dovetail between the form and the endorsement.
Subrogation Waiver
Current policy language allows the insured to waive subrogation against a person only. Although the concept of “person” can include more than just a flesh and blood individual (i.e., a corporation, an association, etc.), ISO was asked to clearly expand the ability of the insured to wave subrogation to more than just flesh and blood persons.
The revised language allows the insured to waive subrogation rights against “…any person or organization….”
Earthquake Deductibles
Evidently there is (or was) confusion regarding the calculation of the earthquake deductibles in the HO 04 36 – Loss Assessment Coverage For Earthquake and the HO 04 54 – Earthquake Coverage endorsements. Currently these endorsements list the percentage deductible applicable to earthquake coverage. ISO has been told that these percentage deductibles confuse insureds who are accustomed to seeing and applying percentage deductibles as a percentage of the claim amount and not the limit.
ISO has sought to remedy this confusion by allowing the dollar deductible to be entered within the endorsements.
Although the industry knows that a 5% (or whatever) deductible represents 5% of the coverage limit, apparently this is confusing to the masses. Now the dollar amount can also be entered.
Home-Sharing Host Activities Endorsements
ISO introduced six home-sharing host activity endorsements in 2016. Each altered coverage for home-sharing activities and each applied and were attached to a different HO coverage form:
| Home-Sharing Host Activity Endorsement | HO Form to Which Endorsement Applied |
|---|---|
| HO 06 52 | HO-2 |
| HO 06 53 | HO-3 |
| HO 06 54 | HO-4 |
| HO 06 55 | HO-5 |
| HO 06 56 | HO-6 |
| HO 06 58 | HO-8 |
In the upcoming 2022 multi-state revision, the wording found within each endorsement is incorporated into the HO coverage forms. As a result, all six endorsements are withdrawn.
After this revision, the various Broadened Home-Sharing Host Activities Coverage Endorsements (HO 06 62, HO 06 63, HO 06 64, HO 06 65, HO 06 66 and HO 06 68) will still be available to expand coverage.
Withdrawn Forms and Endorsements
As part of this filing and due also to many of the changes made in this filing, ISO is withdrawing 11 endorsements.
March 2022 Will Be Here Soon
ISO has made a lot of very good changes within this filing. Many of these are the result of your TAC team’s activity. Although March 2022 sounds like a long way off, it’s closer than it seems. Get ready for the change.
This article also appeared in Big I Virtual University’s Insurance Illustrated newsletter. Insurance Illustrated is a weekly newsletter published by Big I’s Virtual University containing key coverage information and other technical topics important to the insurance industry. Distributed every Friday, Insurance Illustrated is available to anyone who subscribes, and it is FREE. For current coverage and policy related insights from the Big I, subscribe to the Insurance Illustrated newsletter today.