Do you have homeowners clients that might unexpectedly be confined to nursing homes? Insureds who may relocate for work and leave homes unoccupied, rented on a short-term basis or occupied by a relative? Clients facing foreclosures?

What about a client purchasing a home for a relative, such as a child or parent? Or an insured who sells and allows the buyer to move in days before closing? Any insured homes unoccupied due to renovations or remodeling?

The above situations represent times when adjusters have denied otherwise covered claims that arose during periods of non-residency by the named insured—some of which the courts have upheld. So what’s the problem? And what’s the solution ISO proposes for carriers using its homeowners program?

In 2001, a potentially catastrophic coverage gap in most homeowners policies came to light in more than just ISO and independent agency company forms. Since then, the Big “I” Virtual University (VU) national Technical Affairs Committee has written about and discussed the “Where You Reside” issue in seminars and webinars across the country. For 10 years, the committee has worked with ISO to negotiate a resolution all affected parties can live with. This effort has culminated in a change ISO recently filed.   

ISO has introduced two HO endorsements, one mandatory and the other optional, effective in most states Oct. 1. ISO subscribing carriers may elect to adopt these endorsements prior to the ISO effective date or at some date beyond that time. The mandatory endorsement HO 06 48 10 15 establishes that if residency by “you” exists on the effective date of the policy, but a non-residency situation arises at a later date, coverage will continue until the policy expiration date, subject to traditional existing vacancy exclusions or other governing policy terms.

The optional endorsement HO 06 49 10 15 completely removes any perceived residency requirement from the Coverages A and B insuring agreement for a period of time specified on the endorsement. Some carrier HO policies already do this, particularly those on many “upscale” homeowners exposures, and the time period can equal the entire policy period at the insurer’s discretion. This endorsement might also apply if a home purchaser does not immediately assume residency at the time of closing or later anticipates a period of non-residency. Check out the VU article linked above for more information on the use of these endorsements, along with a non-filed ISO advisory notice form.

The VU recently presented a one-hour webinar about this change that is available to Big “I” member agents for free.

Please direct any questions to Bill Wilson, webinar presenter and VU director.

Bill Wilson is director of the Big “I” Virtual University.