Endorsements and Scheduled Property

Homeowners Insurance Endorsements

Several endorsements are available and may be added to a homeowners policy at the time of issuance or mid-term (for an additional premium). The following is a list of the endorsements that may appear on the state licensing exam:

Inflation Guard

This endorsement automatically increases the amount of coverage on the dwelling at various intervals once the policy goes into effect. This is done in order to keep up with the increase in replacement value that will result.

Business Pursuits

Some insureds conduct business activities within their home. This endorsement allows such a person to extend liability coverage to cover liability arising out of these business activities. Remember, unless this endorsement is added, the insured has no liability coverage under his/her policy for bodily injury to others arising out of such business activities.

Permitted Incidental Occupancies

This endorsement deletes the homeowner policy exclusion of liability coverage for business activities on the premises. It allows liability protection if the business activities are incidental to the occupancy of the business (i.e., the insured offering piano lessons in his/her home).

Home Day Care

It extends homeowner coverage to include liability protection arising out of the operation of a home daycare business conducted on the insured’s premises. This endorsement specifically excludes liability arising from the following:

• Sexual molestation or abuse
• Injury arising from the use of saddle animals
• Motorized land vehicles or watercraft

Mobile Homes

An endorsement can be added to a homeowner policy for an insured who wishes to provide homeowner-like protection for a mobile home. This coverage can also be purchased as a separate policy.

Water Craft

This endorsement provides liability protection for certain types of watercraft. It extends liability for larger watercraft arising out of the ownership, maintenance, or use of the watercraft described in the endorsement.

Personal Injury

This endorsement, when added, amends Section II of the policy to include liability as a result of personal injury on the part of the insured. Personal injury may be contrasted with bodily injury and includes libel, slander, invasion of privacy, defamation, wrongful eviction or entry, and others. This endorsement will not cover personal injury arising from:

• Contracts
• Violation of law
• Business activities

Personal Property Replacement Cost

This endorsement modifies the loss settlement of an insured’s personal property and provides that the policy will reimburse the loss of personal property on a replacement cost basis rather than actual cash value

Scheduled Personal Property

This endorsement allows an insured to individually list pieces of property that possess a higher value than is covered by the basic policy. Items that are commonly covered under this endorsement include:

• Jewelry
• Furs and fur-trimmed garments
• Cameras
• Guns and equipment
• Musical instruments
• Silverware
• Golf equipment
• Fine arts
• Stamps and coin collections

Unit Owners Coverage

This endorsement can be used to amend Coverage A of an HO6 policy to provide coverage for risks of direct loss. This endorsement makes the perils insured under Coverage A of an HO6 become identical to those insured by the HO3 in order to cover additional alterations and improvements made to a condominium unit.

Water Back-up and Sump Over-flow

This type of loss is generally excluded from coverage under a homeowner policy. For an additional premium, it may be covered.

Lesson Summary

Homeowners insurance policies can be enhanced with various endorsements, offering additional coverage for specific needs:

• Inflation Guard: Automatically increases dwelling coverage to keep up with replacement value changes over time.

• Business Pursuits: Extends liability coverage for business activities conducted within the insured’s home.

• Permitted Incidental Occupancies: Allows liability protection for business activities that are incidental to home occupancy.

• Home Day Care: Provides liability protection for operating a home daycare business with specific exclusions.

• Mobile Homes: Offers homeowner-like protection for mobile homes.

• Water Craft: Provides liability protection for certain types of watercraft owned, maintained, or in use by the insured.

• Personal Injury: Includes liability for personal injury such as libel, slander, and more, excluding specific instances.

• Personal Property Replacement Cost: Reimburses loss of personal property on a replacement cost basis instead of actual cash value.

• Scheduled Personal Property: Allows listing high-value items not covered by the basic policy individually.

• Unit Owners Coverage: Modifies HO6 policy to provide coverage for direct loss risks, aligning it with HO3 policy.

• Water Back-up and Sump Overflow: Covers losses typically excluded from a homeowner policy for an additional premium.

Chapter Vocabulary