Homeowners’ Form and Endorsement Changes Coming in ISO’s 2022 Multistate Filing

Insurance Services Office (ISO) has released its upcoming homeowners’ multi-state filing. This first major revision in over 11 years is filed to be effective in March 2022. Within this filing, ISO:

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

New Forms and Endorsements

ISO created one new homeowners’ (HO) form and 12 new endorsements.

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 difference 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; and;
• 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 to include:

• Automatic coverage for Home-Sharing Host activities;
• Additional coverage for bed bug remediation ($500 limit per policy period); and
• Hard drive data recovery ($300).

One limitation unique to the HO-14 is the “Special Limits” coverage is that 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, etc. remains excluded.

Specified Other Structure(s) Exclusion – HO 06 21

This exclusion allows the underwriter to exclude property coverage on a specified other structure(s). This 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/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 endorse the HO policy to extend coverage to other structures away from the residence premises only on an actual cash value (ACV) 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

ISO’s newly created HO 06 95

Broadened Water Back-Up And Sump Discharge or Overflow Coverage requires only 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 Locations(s) – HO 24 02

ISO introduced the Other Insured Location(s) – 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. Riders/renters have taken on a liability risk that was not covered by either the HO or the personal auto policy (PAP). ISO altered one endorsement and created two new endorsements for this exposure.

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

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

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. Following is simply a listing of the changes.

• Revising Definition of “Motor Vehicle Liability”: Intended to give back coverage for host liability 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.
• Increasing 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 Sub Limits: ISO has not increased certain sub-limits within the HO form in more than 20 years. The new filing increases many current sub-limits.
• 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; and 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: 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 is applies to expenses incurred by the 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 HO forms.
• Renovation, Remodeling or Repair: ISO has added wording to clarify and reinforce that “being constructed” was intended to include 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: New HO form wording will state that replacement cost is paid whether the property is replaced or not if damage to real property is $5,000 or less. 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 lawn mower that is being used to mow a lawn. The requirement that the loan be that of a residence 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 whether they owned or non-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. Exclusionary wording found in the six ISO home-sharing host activity endorsements introduced in 2016, will be incorporated into the appropriate HO coverage forms.

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.

March 2022 Will Be Here Soon

ISO has made a lot of very good changes within this filing. Although March 2022 sounds like a long way off, it’s closer than it seems. Get ready for the change.