This discussion about exclusion of liability in the insurance policies is a continuation of previous discussion in taking care of exclusions part one . The loss assessment exclusion The loss assessment exclusion denies coverage for assessments for injuries or property damage made against you by a community of home, town house, or condominium owners of which you are a member. If you own a home, town house, or condominium that is part of an association, you can buy optional loss assessment coverage as an endorsement to your homeowner’s policy that covers some but not all of these assessments.
The contracts exclusion
The homeowner’s policy excludes liability coverage for all contracts, oral or written, but it also has two nice coverage givebacks. A coverage giveback means that the exclusion in your policy is nullified or the insurance company’s excuse for not paying you in a given circumstance is taken away.
These givebacks apply to the following written not oral contracts:
1. Contracts that involved the ownership, maintenance, or use of a location you have insured, such as your home
2. Contracts in which you assume the liability of others prior to any claim (for example, you rent a chainsaw and in the rental agreement you agree to protect the hardware store if it’s sued for any injury that occurs while you’re using the saw)
The first coverage giveback for written contracts will do what she contracted to do because the contract has to do with the maintenance of her home. So, if someone is injured in the elevator when a cable snaps, the homeowner’s liability coverage will defend and pay any judgment against Betty and, because of the elevator contract, it will do the same for the elevator maintenance company.
good personal umbrella policy will cover most of the liability you assume when you sign a contract.
The property in your custody exclusion
Homeowner’s policies exclude coverage for damage to the property of others in your possession, whether you rent it (for example, when you rent a boat), occupy it (when you borrow a friend’s cabin for the weekend), or use it (when you borrow your employer’s laptop computer). There is one coverage giveback — coverage for fire, smoke, or explosions you cause, such as for a kitchen fire you cause in your rented apartment.
When you know that this pitfall exists, you can protect yourself, at least partially. Here’s how:
1. Buy a personal umbrella policy that plugs this gap by covering damage to property you don’t own that is in your care.
2. When renting equipment, boats, and so on, if the value of what you’re renting exceeds what you’re willing to pay for out of pocket, buy coverage from the rental company, if you don’t have an umbrella policy that covers it.
Good neighbor property damage coverage
Every homeowner’s policy includes a very useful supplemental coverage called damage to property of others. It covers up to $1,000 (depending on the insurance company) for damage you or your kids cause to other people’s property, including property in your custody, and there’s no deductible. It even covers intentional damage (pranks) by your children if they’re under a certain age (the age varies from one company to the next).
This coverage applies if your 10-year-old throws a rock through the neighbor’s window, or if you cut down a tree limb and it crashes through your neighbor’s sunroom, or if your dog chews apart the neighbor’s new couch. If your neighbor does any of this damage to your property, remember that he has this coverage, too, if he has a homeowner’s policy. Just ask him to report the claim — that’s all there is to it.
✓ When using other people’s property on a long-term basis, like a laptop computer, you can specifically insure it on your homeowner’s policy (called scheduling). Be sure to list the owner as a loss payee on the policy to protect the owner’s interest.
The workers’ compensation exclusion
Workers’ compensation is an insurance program of state-mandated benefits that employers provide employees, usually covering the employee’s medical bills and lost wages from a job-related injury or illness. Workers’ compensation is no-fault coverage.
To collect benefits, an injured person must only meet two requirements: He is your employee, and he has been hurt on the job. If an employer fails to buy a workers’ compensation policy, he has to pay, out of his own pocket, the same benefits to the injured worker that the policy would have paid. If you have no employees but you hire contractors or laborers who do not have their own workers’ compensation policies, A very small number of homeowner’s insurers offer CWC overage as a policy endorsement for a nominal charge. If your homeowner’s insurer doesn’t offer CWC coverage, find one that does — or buy a CWC policy from your state workers’ compensation insurance pool, if it’s available. Some companies included CWC for small exposures — another good
reason to have your agent find the best company for you. CWC works like this: If any injured contractor ever sues for workers’ compensation benefits, this optional coverage completely defends you and, if you lose, pays the state-required benefits.
Your state may have a law exempting homeowners from this risk. Check with your state insurance department or the Department of Labor if in doubt.
The mold exclusion
Historically, damage caused by mold has never been covered under homeowner’s insurance but mold cleanup resulting from covered water damage has been covered. However, as a result of a couple of high-profile successful lawsuits, homes worth hundreds of thousands of dollars were declared total losses by the courts because of “hazardous” mold infestation. Insurers were forced to demolish the homes and rebuild at their expense. The courts’ decision has led to a very strong reaction from the insurance industry, which immediately began to also exclude or severely limit claims for mold cleanup that are part of a covered water damage claim.
There’s very little consistency in the insurance industry in the way they limit or exclude mold claims. Some companies completely exclude property claims involving mold; others also exclude liability claims (such as defending you if you’re sued because a guest staying in your home suffered severe lung damage as a result of an asthma attack from breathing in some mold you didn’t know existed in your basement).
Other companies include a modest amount of mold coverage on the policy, most commonly $10,000 on property losses and $50,000 for liability claims. For mold to grow, it needs water. So the key at claim time to avoid getting burned by this exclusion/limitation is to make sure that all the water has been removed — not just the obvious water on the floor but also hidden water, such as replacing the sheet rock that has wicked up water and replacing moldings. If a water damage claim is covered by your homeowner’s policy, even though the policy may not cover the cost to remove mold, the insurer is obligated to pay to repair and replace any parts of the home that have been damaged by water. If you’re diligent about getting rid of the water at the time of the claim, you shouldn’t have to worry about future mold problems.
A good strategy for protecting yourself against large mold liability claims is to buy a personal umbrella policy that will defend and pay any judgment against you for any losses that exceed the small coverage limit that you have on your homeowner’s policy.
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The contracts exclusion
The homeowner’s policy excludes liability coverage for all contracts, oral or written, but it also has two nice coverage givebacks. A coverage giveback means that the exclusion in your policy is nullified or the insurance company’s excuse for not paying you in a given circumstance is taken away.
These givebacks apply to the following written not oral contracts:
1. Contracts that involved the ownership, maintenance, or use of a location you have insured, such as your home
2. Contracts in which you assume the liability of others prior to any claim (for example, you rent a chainsaw and in the rental agreement you agree to protect the hardware store if it’s sued for any injury that occurs while you’re using the saw)
The first coverage giveback for written contracts will do what she contracted to do because the contract has to do with the maintenance of her home. So, if someone is injured in the elevator when a cable snaps, the homeowner’s liability coverage will defend and pay any judgment against Betty and, because of the elevator contract, it will do the same for the elevator maintenance company.
good personal umbrella policy will cover most of the liability you assume when you sign a contract.
The property in your custody exclusion
Homeowner’s policies exclude coverage for damage to the property of others in your possession, whether you rent it (for example, when you rent a boat), occupy it (when you borrow a friend’s cabin for the weekend), or use it (when you borrow your employer’s laptop computer). There is one coverage giveback — coverage for fire, smoke, or explosions you cause, such as for a kitchen fire you cause in your rented apartment.
When you know that this pitfall exists, you can protect yourself, at least partially. Here’s how:
1. Buy a personal umbrella policy that plugs this gap by covering damage to property you don’t own that is in your care.
2. When renting equipment, boats, and so on, if the value of what you’re renting exceeds what you’re willing to pay for out of pocket, buy coverage from the rental company, if you don’t have an umbrella policy that covers it.
Good neighbor property damage coverage
Every homeowner’s policy includes a very useful supplemental coverage called damage to property of others. It covers up to $1,000 (depending on the insurance company) for damage you or your kids cause to other people’s property, including property in your custody, and there’s no deductible. It even covers intentional damage (pranks) by your children if they’re under a certain age (the age varies from one company to the next).
This coverage applies if your 10-year-old throws a rock through the neighbor’s window, or if you cut down a tree limb and it crashes through your neighbor’s sunroom, or if your dog chews apart the neighbor’s new couch. If your neighbor does any of this damage to your property, remember that he has this coverage, too, if he has a homeowner’s policy. Just ask him to report the claim — that’s all there is to it.
✓ When using other people’s property on a long-term basis, like a laptop computer, you can specifically insure it on your homeowner’s policy (called scheduling). Be sure to list the owner as a loss payee on the policy to protect the owner’s interest.
The workers’ compensation exclusion
Workers’ compensation is an insurance program of state-mandated benefits that employers provide employees, usually covering the employee’s medical bills and lost wages from a job-related injury or illness. Workers’ compensation is no-fault coverage.
To collect benefits, an injured person must only meet two requirements: He is your employee, and he has been hurt on the job. If an employer fails to buy a workers’ compensation policy, he has to pay, out of his own pocket, the same benefits to the injured worker that the policy would have paid. If you have no employees but you hire contractors or laborers who do not have their own workers’ compensation policies, A very small number of homeowner’s insurers offer CWC overage as a policy endorsement for a nominal charge. If your homeowner’s insurer doesn’t offer CWC coverage, find one that does — or buy a CWC policy from your state workers’ compensation insurance pool, if it’s available. Some companies included CWC for small exposures — another good
reason to have your agent find the best company for you. CWC works like this: If any injured contractor ever sues for workers’ compensation benefits, this optional coverage completely defends you and, if you lose, pays the state-required benefits.
Your state may have a law exempting homeowners from this risk. Check with your state insurance department or the Department of Labor if in doubt.
The mold exclusion
Historically, damage caused by mold has never been covered under homeowner’s insurance but mold cleanup resulting from covered water damage has been covered. However, as a result of a couple of high-profile successful lawsuits, homes worth hundreds of thousands of dollars were declared total losses by the courts because of “hazardous” mold infestation. Insurers were forced to demolish the homes and rebuild at their expense. The courts’ decision has led to a very strong reaction from the insurance industry, which immediately began to also exclude or severely limit claims for mold cleanup that are part of a covered water damage claim.
There’s very little consistency in the insurance industry in the way they limit or exclude mold claims. Some companies completely exclude property claims involving mold; others also exclude liability claims (such as defending you if you’re sued because a guest staying in your home suffered severe lung damage as a result of an asthma attack from breathing in some mold you didn’t know existed in your basement).
Other companies include a modest amount of mold coverage on the policy, most commonly $10,000 on property losses and $50,000 for liability claims. For mold to grow, it needs water. So the key at claim time to avoid getting burned by this exclusion/limitation is to make sure that all the water has been removed — not just the obvious water on the floor but also hidden water, such as replacing the sheet rock that has wicked up water and replacing moldings. If a water damage claim is covered by your homeowner’s policy, even though the policy may not cover the cost to remove mold, the insurer is obligated to pay to repair and replace any parts of the home that have been damaged by water. If you’re diligent about getting rid of the water at the time of the claim, you shouldn’t have to worry about future mold problems.
A good strategy for protecting yourself against large mold liability claims is to buy a personal umbrella policy that will defend and pay any judgment against you for any losses that exceed the small coverage limit that you have on your homeowner’s policy.
Related Posts
Choosing home and investing in it basing on your comfort
Invest money in home basing on your way of thinking
Consider partner views while buying home
Manage investing and portfolio ideasSell stocks on right time and get good returns on investments
Divident stock investing as long term investment stratagy
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