Another decade has passed since the Insurance Services Office Inc. 2011 HO Program debuted. Prior to that, it was the 2000 HO Program. Now comes the 2022 HO Program and I am more than a little excited about it. There are many interesting enhancements and limitations, and many coverage holes that have been plugged. There are 13 new forms, 130 revised forms and 11 withdrawn forms in this filing. The new program is proposed to be effective March 1, 2022.
Broadenings of the HO policy
Host liquor liability. The 2000 (and later) edition of the ISO HO policy forms thoroughly closed the door to liability coverage for a loss involving the use of a motor vehicle, regardless of who is operating it. Consequently, no standard HO or personal auto policy covered a homeowner’s host liquor liability that results from serving alcohol to guests who cause auto accidents when they leave the homeowner’s house.
The 2022 HO policy has been enhanced to cover this exposure by changing the definition of “motor vehicle liability” to read:
(2) Maintenance, occupancy, operation, use, loading or unloading of:
(a) An aircraft, hovercraft, or watercraftby any person; or
(b) A motor vehicle by an “insured”;
By isolating motor vehicle use by “an insured,” as opposed to “any” person, liability for someone other than the insured operating a vehicle is no longer excluded as “motor vehicle liability” in the HO policy.
Business income threshold. In the 2000 edition of the HO policy, an exception to the business exclusion was introduced for part-time activities that included income from such businesses as garage sales, babysitting, mowing lawns and delivering newspapers. A threshold of $2,000 in total compensation for the 12 months prior the inception date of the policy was established. The 2022 HO policy will increase this threshold to $5,000 to accommodate more part-time activities.
Special limits. Nearly all special limits in the policy are increased due to inflation. Only the “business property away from the residence premises” and the “fire department service charge” limits remain unchanged. However, the “credit card, electronic fund transfer card or access device, forgery and counterfeit money” limit and its coverage is removed, but it may be added by endorsement. Below are the revised limits:
|Category||Current Limit||New Limit|
|Personal property at other residences||10% or $1,000, whichever is greater||10% or $1,500, whichever is greater|
|Personal property located in a self-storage facility||10% or $1,000, whichever is greater||10% or $1,500, whichever is greater|
|Theft of jewelry, etc.||$1,500||$2,000|
|Theft of firearms, etc.||$2,500||$3,000|
|Theft of silverware, etc.||$2,500||$3,000|
|Business property on the residence premises||$2,500||$3,000|
|Portable electronic equipment in or upon a motor vehicle||$1,500||$2,000|
|Antennas, tapes, wires, records, disks or other media||$250||$300|
|Debris Removal Tree Removal||$1,000 total; $500 per tree||$3,000 total; $1,500 per tree|
|Trees, Shrubs and Other Plants||5% but no more than $500 for any one tree||5% but no more than $1,500 for any one tree|
|Section I – Loss Assessment||$1,000||$2,000|
|Section II – Damage to Property of Others||$1,000||$5,000|
|Section II – Loss Assessment||$1,000||$2,000|
In addition to the increase in the watercraft limit from $1,500 to $2,000, a new option is introduced to purchase an increase in the limit up to $5,000 by endorsement.
Vehicle parts. Prior to the 2011 edition of the HO policy, vehicle parts were covered while not in or upon a motor vehicle. This included accessories, equipment or parts (think snow tires and rooftop cargo carrier) that were lying around in the garage. In 2011, ISO inadvertently changed this wording to exclude a motor vehicle’s equipment and parts without the restriction to be in or upon the motor vehicle. PIA Northeast brought this inadvertent change to ISO’s attention, and the 2022 edition now restores coverage for vehicles parts not in or on a motor vehicle.
Additional living expense. The current policy covers only additional living expense incurred by the named insured and resident spouse. There may be times when other resident family members may incur the expense (e.g., after the death of the named insured). The 2022 policy now includes other household members.
Vacancy. As you know, vacancy of the home can affect vandalism and glass coverage. PIA Northeast has been concerned that the “constructed” exception appeared to be limited to ground-up construction. Now, in addition to an exception for a dwelling being constructed, the 2022 policy includes a dwelling being remodeled, renovated or repaired.
Replacement cost threshold. The loss settlement provision in the current policy stipulates that if the repair or replacement cost is less than 5% of the amount of insurance on the dwelling or other structure, and less than $2,500, then the loss will be settled at replacement cost “whether or not the actual repair or replacement is complete.” This threshold has been increased to $5,000.
Service vehicles. The 2000 edition of the HO policy revised the motor vehicle exclusion by broadening the exception for the sole service of an insured’s residence to include “any” residence. The 2022 policy goes a step further by making an exception for “A riding lawn mower that, at the time of the ‘occurrence,’ is being used to mow a lawn.” This now grants coverage while mowing a vacant lot or assisting a nonprofit entity (e.g., a church).
Watercraft. If you are preparing to take the state insurance exam, you are going to love this revision. When determining watercraft coverage, instead of going through a maze of horsepower, ownership and configuration of the watercraft, you now need only consider the following exceptions to the exclusion:
- Owned sailing vessels less the 26 feet in length, with or without auxiliary power;
- Non-owned sailing vessels 26 feet or more in length, with or without auxiliary power;
- Owned watercrafts that are not sailing vessels with engines or motors of 25 horsepower or less;
- Non-owned watercrafts that are not sailing vessels with engines or motors of more than 25 horsepower; and
- Newly acquired watercrafts that have outboard engines or motors with 25 horsepower or more, so long as such engines or motors are reported to the insurer within the reporting requirements contained in the policy.
Next month, Part II will examine 2022 reductions in coverage, new endorsement options and endorsement withdrawals.
Includes copyrighted material of Insurance Services Office Inc. with its permission. Copyright, Insurance Services Office Inc. 2021.
Dan Corbin, CPCU, CIC, LUTC
Dan Corbin joined the PIA team in 1992 and is the association’s director of research. His insurance background spans 45 years, with varied experience as agency owner, commercial service representative, producer, personal-lines manager and insurance specialist for a mortgage lender. Each year, he responds to approximately 800 technical inquiries from members. Dan is a member of the Chartered Property Casualty Underwriter Society and the Society of Certified Insurance Counselors. On Jan. 1, 2021, he became a contracted provider of membership services.