Chapter 24
Other Property
and Liability
Insurance
Coverages

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Agenda
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ISO Dwelling Program
Mobile Home Insurance
Inland Marine Floaters
Watercraft Insurance
Government Property Insurance Programs
Title Insurance
Personal Umbrella Policy

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ISO Dwelling Program
• Some dwellings that are ineligible for coverage under the
HO policy can be insured under an ISO dwelling policy
– The forms are narrower in coverage and there is no coverage for
theft or personal liability, unless the policy is endorsed
– Dwelling Property 1 (basic form) provides coverage similar to
Coverages A-D of the Homeowners Policy
• Only a limited number of named perils apply to both the dwelling and
the personal property
– Additional perils can be added for an additional premium

• Coverage D covers the fair rental value if part of the dwelling is rented
Coverage E can be added to provide coverage for additional living
expenses
• All covered property losses are paid on an actual cash value basis, with
some exceptions

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ISO Dwelling Program
– Dwelling Property 2 (broad form) covers losses to the dwelling and
other structures on a replacement cost basis
• The form also includes a benefit for additional living expense
(Coverage E)
• The list of named perils is expanded

– Dwelling Property 3 (special form) covers the dwelling and other

structures on an “all-risks” basis
• All direct physical losses to the dwelling and other structures are
covered except those losses specifically excluded
• Personal property is covered for the same named perils found in the
broad form

– Endorsements to the dwelling form include:
• Theft coverage
• Personal liability supplement

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Mobile Home Insurance
• Under the ISO program, mobilehome insurance is written
by adding an endorsement to an HO-2 or HO-3 policy
– The mobilehome must be at least 10 feet wide and 40 feet long,
and capable of being towed on its own chassis
– The coverage is similar to the HO policy
• Coverage A covers the mobilehome on a replacement cost basis
– An optional actual cash value endorsement can be added to reduce the
cost

• An additional coverage pays up to $500 for the cost incurred in
transporting the mobilehome to a safe place to avoid damage when it is
endangered by a covered peril, such as a fire

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Inland Marine Floaters
• An inland marine floater is a policy that provides broad and
comprehensive protection on property frequently moved
from one location to another
– Coverage can be tailored to the specific type of personal property
to be insured, e.g., jewelry, coins, or stamps
– Desired amounts of insurance can be selected
– Broader and more comprehensive coverage can be obtained
• All direct physical losses are covered unless excluded

– Most floaters cover insured property anywhere in the world
– Inland marine floaters typically do not impose a deductible

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Inland Marine Floaters
• The personal articles floater (PAF) is an inland marine
floater that provides comprehensive protection on valuable
personal property
– It can be written as a stand-alone contract
• Insures certain classes of property on an “all-risks” basis
• Classes of property that can be covered include jewelry, furs, cameras,
fine arts, etc.


– It can also be added as a scheduled personal property
endorsement to an HO policy
• Coverage is essentially the same as provided by the freestanding PAF

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Watercraft Insurance
• The homeowners policy provides limited coverage for boats
• A boatowners package policy combines physical damage
insurance on the boat, medical expense insurance, liability
insurance, and other coverages into one policy
– Physical damage is covered on an “all-risks” basis
– The insured is covered for property damage and bodily injury liability
arising out of negligent use of the boat
– The policy also includes medical expense coverage and an
uninsured boaters coverage (may be optional)

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Watercraft Insurance
• Yacht insurance is designed for larger boats
– Policies are not standard, but have many common features
– Physical damage to the yacht and its equipment is covered

on an “all-risks” basis
– The policy includes liability coverage, medical expense
coverage, and uninsured boaters coverage

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Government Property Insurance
Programs
• Some government insurance programs are necessary
because certain perils are difficult to insure privately
– Coverage may not be available or may not be affordable

• The National Flood Insurance Program provides insurance
coverage to property owners in flood-prone areas
– Flood insurance is purchased from agents or brokers who represent
private insurers
• The private insurers sell federal flood insurance under their own names,
collect the premiums, and receive an expense allowance
• The federal government is responsible for all underwriting losses
• The program is not currently self-supporting, due to losses from
Hurricane Katrina and other hurricanes in 2005

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Government Property Insurance
Programs
– Buildings and their contents can be covered by flood insurance if
the community agrees to adopt and enforce sound flood control
and land use measures
• A flood hazard boundary map shows the general areas of flood losses
• Residents can purchase limited amounts of insurance at subsidized
rates under the emergency portion of the program

– A flood is defined in the Standard Flood Insurance Policy as:
• A general and temporary condition of partial or complete inundation of
two or more acres of normally dry land area or of two or more
properties (at least one of which is your property) from overflow of
inland or tidal waters, from unusual and rapid accumulation or runoff of
surface waters from any source, or from mudflow

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Exhibit 24.1 Amount of Federal Flood
Insurance under the Emergency and
Regular Programs

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Government Property Insurance
Programs
– There is a 30-day waiting period for new applications and
endorsements for flood coverage
• This prevents property owners from waiting to purchase
coverage until an imminent flood threatens their property

– The cost of protection is relatively low
• The average flood insurance policy costs about $400 annually,
and is less expensive than interest on federal disaster loans

– Criticisms of the federal program include:
• Policies are heavily subsidized, and many buildings in flood
zones incur repeated losses
• Less than half of the eligible properties participate in the program

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Government Property Insurance
Programs
• The Urban Property and Reinsurance Act of 1968 created
FAIR plans (Fair Access to Insurance Requirements)
– Plans provide coverage to urban property owners who are unable
to obtain coverage in the standard market
• Covers property for fire and extended-coverage perils, vandalism, and
malicious mischief
• Seven states have beach and windstorm plans, where property is

vulnerable to damage from severe windstorms and hurricanes

– A state with a FAIR plan creates a pool or syndicate of private
insurers to provide basic property insurance
• Each insurer in the pool is assessed its proportionate share of losses
and expenses based on the proportion of property insurance premiums
written in the state

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Title Insurance
• Title insurance protects the owner of property or the lender
of money for the purchase of property against any unknown
defects in the title to the property under consideration
– If there is a defect in a title, the owner could lose the property to
someone with a superior claim
– Examples of defects to the title include an invalid will, incorrect
description of the property, and undisclosed liens
– The policy provides protection against title defects that have
occurred in the past, prior to the effective date of the policy
– The insurer assumes no losses will occur
– The premium is paid only once when the policy is issued
– The policy term runs indefinitely into the future
– If a loss occurs, the insured is indemnified in dollar amounts up to
the policy limits (usually the purchase price of the property)

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Personal Umbrella Policy
• The personal umbrella policy provides protection against a
catastrophic lawsuit or judgment
– Excess liability insurance is provided in amounts from
$1–$10 million
– Certain minimum amounts of liability insurance must be carried on
the underlying contracts
– Coverage is broad and includes protection against certain losses
not covered by the underlying contracts
• For example, the policy covers liability for personal injury (e.g., false
arrest, slander)

– A self-insured retention must be satisfied for losses covered by the
umbrella policy but not by any underlying contract
– The umbrella policy is reasonable in cost

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Exhibit 24.2 Typical Underlying Coverage
Amounts Required to Qualify for a
Personal Umbrella Policy

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Personal Umbrella Policy
– Insurers can use a standard Personal Umbrella Policy developed by
the ISO
– The policy pays for damages in excess of the retained limit for bodily
injury, property damage, or personal injury for which the insured is
legally liable
• The retained limit is either:
– The total limits of the underlying insurance or any other insurance available
to an insured, or
– The deductible stated in the declarations if the loss is covered by the
umbrella policy but not by any underlying insurance or other insurance

– Exclusions include liability for expected or intentional injury, business
liability, and professional services

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