THE NEW ISO HOMEOWNERS INSURANCE CHANGE:
PREVENTING FINANCIAL DISASTER
ISO’s Homeowners 3 Special Form policy covers the dwelling at the “residence premises.”
The form defines “residence premises” as the dwelling “where you (the named insured) reside.”
What happens when the named insured stops residing there?
People sometimes relocate for jobs on a moment’s notice.
People vacate a home because the bank is foreclosing.
People buy a home but don’t move in because they’re renovating.
People buy a home but let the sellers live there for a few days after closing.
People sell a home and move out before the closing.
People move out of state and let their children live in their old home.
People get divorced. Sometimes, the policy's only named insured is the spouse who moves out.
People go into the hospital.
Instead of going home, they go to an assisted living facility. Or a hospice.
What happens to their Homeowners coverage when they do these things?
Some insurers have denied coverage for damage to the dwelling;
damage to other structures;
and loss of use.
They have said that the dwelling is not at the “residence premises” because the named insured doesn’t reside there.
A number of state courts have agreed with the insurers.
In New York, one insurer denied coverage to someone who was renovating a house before moving in.
In 2012, the New York State Court of Appeals ruled against the insurer.
Four judges voted against the insurer, three voted in favor.
IIABA has fought this for years.
In November 2014, IIABA’s Technical Affairs Committee worked out a solution with ISO.
The TAC includes agents from Iowa, Missouri and Texas and association staff from the IIABA and
ISO has introduced new endorsements to carry out the solution
They will be effective in October 2015.
The “Residence Premises Definition Endorsements” will be mandatory on all policies.
They define “residence premises” as the dwelling where the named insured resides on the policy’s inception date.
Residency requirement is met if the insured resides in the home on the inception date.
Named insured will have coverage even if she stops residing there mid-term.
Renewal policy will not provide coverage if named insured does not reside in home on renewal date.
ISO has developed a questionnaire for underwriters to use to determine residency.
Endorsement has fields for inception/termination dates.
Between these two dates, the policy will not have a residency requirement.
Example: Insured will not move into home until renovations are complete. She expects them to take six weeks.
Broadened Residence Premises Definition Endorsement should be attached
Inception date = Policy inception date
Termination date = Latest date she expects to move in
If policy inception date is July 1, endorsement’s inception date should also be July 1.
Termination date should be much later than expected, just to be safe.
The Broadened Residence Premises Definition Endorsements are optional and replace the mandatory endorsements.
ISO has started filing these endorsements in the states.
As of June 5, 2015, they have not been approved in New York.