Foreclosures, Auto Suspensions and Personal Trusts
By: Bill Wilson
Insuring Homes in Foreclosure
Do you have any homeowner insureds whose homes are or have been in foreclosure? Do you have any mortgage companies who, as a result of a foreclosure, are insisting you return unearned premium to them and not the insured?
In examining the current ISO HO-3 policy, the Big “I” Virtual University sees nothing in the form that gives a lender a right of cancellation of a contract to which it is not a direct party. There is also nothing in the form that entitles a lender to any unearned premium proceeds under a contract between two parties, one of which is not privy to the loan agreement.
Whether the lender has any rights that supersede the policy is a question that a qualified legal professional has to answer. Because of this, these inquiries or demands from lenders should be deferred to the insurer since the insurer and insured are the parties in the contract—absent circumstances that give rise to rights for the mortgagee.
There are two important coverage issues that the agency may want to address. To learn more about these issues and review the full commentary, click here.
Auto Insurance Suspensions
In the current economy, many businesses are looking for ways to reduce their insurance premiums. Contractors may have vehicles, such as dump trucks and semi tractors, they want to store while the vehicles are not needed during a construction slow-down. One contractor was told he could park his vehicles on his shop premises, turn in the tags, delete them from the auto policy and they would be covered under the CGL policy as mobile equipment.
If you have a current ISO CGL, pull it out. The two most likely categories of mobile equipment that would apply fall under items 12.b. and 12.f.of the mobile equipment definition. However, both these categories have downsides that might preclude coverage. In addition, since 2004, the CGL has had to contend with a motor vehicle law provision.
An alternative might be to pursue a lay-up endorsement from the auto carrier, but even that approach has its downsides. For a complete discussion of all of these issues, click here.
Insuring Personal Trusts
Two insureds, a husband and wife, put their residence into a personal trust as a part of a financial plan they developed with their attorney and CPA. Both have been in declining health for several years and, earlier this year, the wife had to go into a nursing home. A couple of months ago, the husband moved into an assisted living facility. The agency is wondering how to handle their insurance. What they don’t know is that it’s possible the couple and their trust have no insurance on the home.
One of the most common questions fielded by the Big “I” Virtual University’s “Ask an Expert” service deals with how to insure trusts under a homeowners policy. ISO provides a mechanism using the HO05 43 endorsement to insure trusts, grantors, trustees and beneficiaries. However, you have to be very careful in how you structure this coverage approach or you could end up with a catastrophic coverage gap. To read the entire article, plus two more on this subject, click here.
Bill Wilson (bill.wilson@iiaba.net) is Big “I” director of the Virtual University, an online learning center for agents and brokers.
Do you have any homeowner insureds whose homes are or have been in foreclosure? Do you have any mortgage companies who, as a result of a foreclosure, are insisting you return unearned premium to them and not the insured?
In examining the current ISO HO-3 policy, the Big “I” Virtual University sees nothing in the form that gives a lender a right of cancellation of a contract to which it is not a direct party. There is also nothing in the form that entitles a lender to any unearned premium proceeds under a contract between two parties, one of which is not privy to the loan agreement.
Whether the lender has any rights that supersede the policy is a question that a qualified legal professional has to answer. Because of this, these inquiries or demands from lenders should be deferred to the insurer since the insurer and insured are the parties in the contract—absent circumstances that give rise to rights for the mortgagee.
There are two important coverage issues that the agency may want to address. To learn more about these issues and review the full commentary, click here.
Auto Insurance Suspensions
In the current economy, many businesses are looking for ways to reduce their insurance premiums. Contractors may have vehicles, such as dump trucks and semi tractors, they want to store while the vehicles are not needed during a construction slow-down. One contractor was told he could park his vehicles on his shop premises, turn in the tags, delete them from the auto policy and they would be covered under the CGL policy as mobile equipment.
If you have a current ISO CGL, pull it out. The two most likely categories of mobile equipment that would apply fall under items 12.b. and 12.f.of the mobile equipment definition. However, both these categories have downsides that might preclude coverage. In addition, since 2004, the CGL has had to contend with a motor vehicle law provision.
An alternative might be to pursue a lay-up endorsement from the auto carrier, but even that approach has its downsides. For a complete discussion of all of these issues, click here.
Insuring Personal Trusts
Two insureds, a husband and wife, put their residence into a personal trust as a part of a financial plan they developed with their attorney and CPA. Both have been in declining health for several years and, earlier this year, the wife had to go into a nursing home. A couple of months ago, the husband moved into an assisted living facility. The agency is wondering how to handle their insurance. What they don’t know is that it’s possible the couple and their trust have no insurance on the home.
One of the most common questions fielded by the Big “I” Virtual University’s “Ask an Expert” service deals with how to insure trusts under a homeowners policy. ISO provides a mechanism using the HO05 43 endorsement to insure trusts, grantors, trustees and beneficiaries. However, you have to be very careful in how you structure this coverage approach or you could end up with a catastrophic coverage gap. To read the entire article, plus two more on this subject, click here.
Bill Wilson (bill.wilson@iiaba.net) is Big “I” director of the Virtual University, an online learning center for agents and brokers.
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