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ISO Updates Homeowners Policy Form: What’s New in 2022?

This is the first major revision of the homeowners form in over 11 years and will be effective in March 2022.
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iso updates homeowners policy form: what’s new in 2022?

ISO has released its upcoming homeowners multi-state filing. This is the first major revision of the homeowners form in over 11 years and will be effective in March 2022.

Within this filing, ISO:

  • Introduced one new form and 12 new endorsements.
  • Revised 120 forms and endorsements.
  • Withdrew 11 forms and endorsements.

Here is an overview of the changes:

New Form! HO 00 14: Homeowners 14 – Contents Comprehensive Form

ISO has introduced a new renters coverage form. Renters now have the option of the traditional HO-4 (Contents Broad Form) or the new HO-14 (Contents Comprehensive Form).

Two major differences between the HO-14 and the traditional HO-4 are:

  • The new HO-14 extends coverage on an open-perils basis while the HO-4 provides property coverage on a named peril basis.
  • The new HO-14 extends coverage at replacement cost. The HO-4 provides coverage on an actual cash value basis but can be endorsed with the HO 04 90 to provide replacement cost coverage.

Also, the HO-14 offers many coverages not offered by the HO-4 or other HO forms, such as:

  • Automatic coverage for home-sharing host activities.
  • Additional coverage for bed bug remediation with a $500 limit per policy period.
  • Hard drive data recovery up to $300.

One unique limitation on the HO-14 is the “Special Limits" coverage. Unlike all other HO forms, which list specific dollar amounts for certain property, the HO-14 extends 10% of the Coverage C limit to the listed property types. Additionally, some property specifically listed within the Special Limits in other HO forms is not found in the Special Limits section of the HO-14.

In some ways, the HO-14 is broader than the HO-4, but in some ways, the coverage is more limited. Deciding which to use depends on the specifics of the insured.

Limited Cannabis Property Coverage – HO 06 01

Because states are beginning to allow medical and even recreational possession and use of marijuana, ISO feels the need to address the exposure. The HO 06 01 Limited Cannabis Property Coverage, if allowed by the underwriter, extends coverage for direct property loss to “Cannabis" caused by nine named perils.

Cannabis Liability Coverage – HO 24 01

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 and more remain excluded.

Specified Other Structure(s) Exclusion – HO 06 21

This optional exclusion allows the underwriter to exclude property coverage on a specified other structure. The ability to exclude one or more other structures gives the underwriter the ability to exclude undesirable other structures so they can write the account that is otherwise acceptable.

Limited Theft – Coverage A and B – Dwelling Under Construction – HO 06 67

The unendorsed HO policy excludes theft to any property when or if the dwelling is under construction. 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 can only endorse the HO policy to extend coverage to other structures away from the residence premises on an actual cash value basis. The HO 06 91 changes the valuation method to replacement cost for all building structures—walled and roofed—located at a premises that is not the residence premises.

Specific Structures Away From The Residence Premises - Replacement Cost Loss Settlement – HO 06 92

This is the companion to the HO 06 91 but requires the building structure to be specifically listed to garner replacement cost coverage.

Broadened Water Back-Up and Sump Discharge or Overflow Coverage – HO 06 95

This new endorsement requires that the water backs up through sewers and drains, or overflows or is discharged from a sump, sump pump, or related equipment.

The “within the dwelling" requirement found in the HO 04 95 is removed when this endorsement is attached. Both the HO 04 95 and the HO 06 95 will remain available for use.

Other Insured Location(s) – HO 24 02

ISO introduced the HO 24 02 endorsement to give insureds the ability to extend liability coverage to specifically scheduled locations.

Motorized Bicycle and Motorized Scooter Liability

Motorized bicycles, motor-assisted bicycles and motorized scooters have become more common over the last few years. Both riders and renters have taken on a liability risk that was not covered by either the homeowners or personal auto policy. ISO altered one endorsement and created two new endorsements for this exposure. They are:

  • Incidental Low Power Recreational Motor Vehicle Liability Coverage – HO 24 13. This has been revised to provide coverage for owned and non-owned vehicles meeting certain requirements, including motorized bicycles, motor-assisted bicycles and motorized scooters.
  • Non-Owned Motorized Bicycle and Motorized Scooter Liability Exclusion – HO 24 03. This 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, on and off the premises subject to speed and use requirements.
  • Motorized Bicycle and Motorized Scooter Liability Exclusion – HO 24 04. This fully excludes the use of motorized bicycles and scooters whether owned or non-owned.

Personal Injury Coverage (Aggregate Limit of Liability) – HO 24 49

This 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.

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.

Revised Forms and Endorsements

ISO revised 120 forms and endorsements with this filing. Further reading is required, but here is a list of the changes:

  • Revised definition of “motor vehicle liability:" Intended to give back coverage for host liability that was unintentionally removed in the 2011 filing.
  • Definition of “business" revised to address mineral rights: Redefined “business" to include the insured's leasing of mineral rights to third parties.
  • Increased dollar threshold for business: Increased the dollar limit exception to the business exclusion to $5,000 from the current $2,000.
  • Coverage C special limits and sublimits: ISO has not increased certain sublimits within the homeowners form in more than 20 years. The new filing increases many current sublimits and special limits within Coverage C.
  • Model or hobby aircraft and watercraft: 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. On the liability side, ISO is expanding coverage to include model or hobby watercraft. 
  • Revision to lack of coverage for motor vehicles within property not covered: In a previous filing, ISO “over drafted" exclusionary wording regarding auto equipment and parts. The wording was used to exclude damage to and destruction of auto parts not attached to the vehicle. ISO revised the wording 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 currencies have been added to the list of property not covered.
  • Additional living expenses: The current Coverage D policy states that the policy will cover additional living expenses “incurred by you." ISO is revising the additional living expense provision to state that it applies to expenses incurred by “you and resident relatives or others who are under 21 and in the care of the you or resident relatives."
  • 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 homeowners forms.
  • Renovation, remodeling or repair: ISO has added wording to clarify and reinforce that “being constructed" includes property being renovated, remodeled or repaired.
  • Loss settlement deductible: ISO reintroduced the phrase “after application of any deductible" to clarify that the deductible is applied before payment of a loss, especially when the insurance-to-value provision applies.
  • Replacement cost threshold provision: If damage to real property is $5,000 or less, new wording will state that replacement cost is paid whether the property is replaced or not. If the HO 04 90 is attached, the same provision applies to personal property if the damage is $1,000 or less.
  • Riding lawn mowers off premises: ISO reworded the motor vehicle exception to extend coverage to a riding a lawn mower that is being used to mow a lawn. The “residence" requirement is removed.
  • Watercraft liability exclusion and exceptions revised: The watercraft exceptions have been simplified. Coverage for watercraft is excluded unless the:
    • Watercraft is a sailing vessel less than 26 feet in overall length—owned or not owned.
    • Watercraft is a sailing vessel more than 26 feet in overall length provided the insured does not own it.
    • Watercraft is not a sailing vessel and has engines or motors of 25 horsepower or less, owned or not owned.
    • Watercraft is not a sailing vessel with engines or motors of more than 25 horsepower that are not owned by the insured.
    • The watercraft is newly acquired with outboard engines or motors with 25 horsepower or more provided such engines or motors are reported to the insurer.
  • Subrogation waiver: ISO revised the language to specify that subrogation can be waived against a person or organization.
  • Earthquake deductibles: Both the HO 04 36 – Loss Assessment Coverage For Earthquake and the HO 04 54 – Earthquake Coverage endorsements will now allow the dollar deductible to be entered along with the percentage deductible.
  • Home-Sharing Host Activities Endorsements. ISO introduced six home-sharing host activity exclusionary endorsements in 2016 along with six broadening home-sharing activity endorsements allowing the underwriter to give coverage back. Each coverage form had a dedicated exclusionary and broadening endorsement. The exclusionary wording is incorporated into each coverage form in this new filing leaving only the broadening endorsements.

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.

  • All six Home-Sharing Host Activity Endorsements.
  • HO 04 14 – Special Computer Coverage.
  • HO 04 62 – Scheduled Personal Property Endorsement.
  • HO 04 85 – Fire Department Clause.
  • HO 12 45 – Change Endorsement.
  • HO 12 76 – Homeowners Rating Information.

Many of the changes in this filing can be traced back to the work of the Big “I" 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.

Chris Boggs is Big “I" executive director of risk management and education.

To learn more, register for “ISO's 2022 Homeowners Changes: Some Big, Some Small, But All Important," a Big “I" Virtual University webinar. Sign up and find out if the session is approved for continuing education credits in your state.

Tuesday, July 18, 2023