Home Associations, Business Income and Personal Lines

Wouldn’t life be easier for agents and others in the insurance industry if there were no such things as condo or homeowners associations? Given the variety of CC&Rs, condo statutes and demands from lenders and others, properly insuring either the association or individual unit owners can be a challenge.

On the flipside, it’s very unlikely that many purchasers of a townhome or a stand-alone home in an association ever consider the insurance implications of these purchases. Only when it’s time for the agent to provide coverage do the issues surface.

These issues include condo vs. HO association, CC&Rs, state statutes, type of architecture and form of ownership, insurable interests, one master policy with individual HO-4s or HO-6s vs. a limited master policy and HO-3s, additional insureds, flood insurance requirements—and more.

The full article examines some of the insurance aspects of owning homes in a homeowners’ association, including situations where residential property is often improperly insured to the extent that a serious E&O exposure is presented. For the full article, click here.

ISO business income forms include coverage for loss arising out of a civil authority prohibiting access to the insured’s premises due to direct damage by a covered peril to property away from the insured location. However, what if the civil authority doesn’t specifically prohibit access to the insured’s property, but rather to the insured’s products?

This situation came to light in at least one area of Florida following Hurricane Frances. The county commission temporarily suspended the sale of alcoholic beverages. The insured inquiring about coverage was a tavern owner who said the order effectively put him out of business; he could open his doors, but his revenue would be negligible.

The ISO CP 00 30 says that the policy pays loss of business income and extra expense “…caused by a civil authority that prohibits access to the described premises due to direct physical loss of or damage to property, other than at the described premises, caused by or resulting from any Covered Cause of Loss.” Coverage begins 72 hours after the time of action and applies for up to three weeks.

This is an interesting twist on the civil authority coverage where the local government doesn’t expressly prohibit access to the premises but effectively does so by ordering that the insured’s primary product cannot be sold. Unfortunately, the wording of the policy seems clear and unambiguous. Since no civil authority has prohibited access “to the described premises,” it does not appear that coverage is triggered.

For the full article, click here.

Much has been said (and litigated) about one vs. multiple occurrences in commercial lines, particularly with regard to 9/11 and the World Trade Center. However, this issue has arisen in personal lines for years, particularly with regard to animal and weather-related losses. First, is damage cause by animals over time a single occurrence or possibly thousands of occurrences? Second, are Hurricanes Charley and Frances (and perhaps Ivan) one or separate occurrences?

The biggest problem is that while the ISO Homeowners policies define “occurrence” to include repeated exposure to substantially the same general, harmful conditions, the term is only used in the liability section. That requires some inferences and examination of case law. This article and two others explore varying conditions and case law to gain greater insight into whether or not these exposures represent one or more occurrences.

For the full article, click here.