Scheduling Personal Property for the Homeowners Insured

July 27, 2015

 Making Sure All Bases Are Covered

Summary: Homeowners forms commonly limit amounts paid for loss to certain classes of property. For example, Insurance Services Office form HO 00 03 05 11 limits are: money ($200); securities ($1,500); watercraft ($1,500); trailers ($1,500); theft of jewelry and furs ($1,500); theft of guns ($2,500); theft of silverware ($2,500); business property—on premises ($2,500), off premises ($1500-changed from $500 in the 2000 form); and some types of electronic apparatus ($1500). When discussing homeowners insurance with a client, the agent should make sure that the client understands there is often a need to increase the coverage for these classes of property, either by endorsement to the homeowners policy or by separate insurance (a boat owners’ policy, for example).

Other areas to be explored for possible coverage needs include the client’s outside interests and hobbies. Photography, sports, collecting antiques, etc. may call for additional insurance. Emphasize to the client that although these items are not limited by dollar amount in the basic policy, there may not be enough insurance to cover all of them plus the other unscheduled personal property in the home in case of a large or total loss. Also, many of these items—because of their portable nature and use in many places—are subject to losses not covered by the HO 00 03. A strong selling point for the agent is the “open perils” coverage of the HO 04 61 05 11. Remember the personal property coverage in the homeowners form is named perils, and the list is short, with only sixteen listed perils. There is no named peril for losing jewelry, breaking figurines, insect damage to furs, dropping a piece of silverware into the garbage disposal, and other perils that can happen to an insured’s most treasured items.

An additional selling point is that endorsement HO 04 90 05 11, personal property replacement cost, provides replacement cost coverage for “classes of property separately described and specifically insured in this policy.” Replacement coverage, up to the limit of insurance per item, therefore applies to scheduled jewelry, furs, cameras, musical instruments, silverware, and golfing equipment.

Many times the coverage C increased special limits of liability endorsement, HO 04 65 05 11, is used to provide additional coverage for valuable items. However, this endorsement does not provide coverage for additional perils. Although the dollar amounts are increased, the scope of the coverage remains that of the underlying policy. Increasing the limit for jewelry, for example, means that the total amount for loss by theft is greater, but there is a per-item limit of $1000.

This discussion, therefore, focuses on the advantages of scheduling jewelry, fine arts, cameras, furs, and stamps and coins, which are the items frequently scheduled on the personal property endorsement, the HO 04 61. Underwriting concerns for these classes of property are also reviewed.

Topics covered:

Why schedule?

Jewelry

Cameras

Fine arts

Golfer’s equipment

Furs

Musical instruments

Bicycles

Silverware

Stamp and coin collections