Fire Department Service Charge

This additional coverage applies up to $500 for fire department service charges that the insured has assumed under contract. Covered fire department service charges must be incurred when the fire department is called on to save or protect covered property from a covered peril. No fire department service charges are payable if the insured property is located within the limits of the city of fire protection district furnishing the response. When this additional coverage applies, it is payable in addition to the policy limit and without application of a deductible. Credit Card, Forgery, and Counterfeit Money With the rise in identity theft, this additional coverage is one more policyholders should be aware of. Under this coverage, the insurer will pay up to $500 for the legal obligation of an insured to pay because of the theft or unauthorized use of credit cards or electronic fund transfer (EFT) cards issued to or registered in an insured’s name. This coverage is subject to limitations. In addition, it obligates the insurer to provide the insured with a legal Loss of Use and Additional Coverages 61 defense in the event the insured is sued to collect the charges incurred by the unauthorized user. This additional coverage also applies to loss caused by forgery or alteration of any check or other negotiable instrument and by an insured’s good faith acceptance of counterfeit United States or Canadian currency. This coverage is an addition to the policy limit and applies without a deductible. The following restrictions apply—no coverage exists for use of a credit card, electronic fund transfer card, or access device: ◆ by a resident of a named insured’s household; ◆ by any person who an insured entrusts with a credit card or EFT card or device; or, ◆ if an insured has not complied with all the terms and conditions under which the cards or devices are issued (such as, for example, disclosing personal identification members to others). In addition, this coverage does not apply to loss arising out of business use or to loss arising out of dishonesty by an insured. Loss Assessment Loss assessment coverage can be important to insureds who are members of a homeowners association or cooperative association and potentially subject to assessments for the costs of repairs to common areas that are jointly owned by all the members of the association. This could occur, for example, if the homeowners association’s own policy limits were not sufficient to repair or replace the damaged common area property. The insurer will pay up to $1,000 per loss (regardless of the number of assessments) for the insured’s share of a loss assessment that results from direct loss to common property of a type that would have been a covered peril (excluding earthquake and land tremors before or after a volcanic eruption). This coverage only applies to assessments by the homeowners association against the members of the homeowners association. This additional coverage does not apply to assessments imposed by any governmental body or agency. 62 The Complete Book of Insurance A single deductible applies per unit owned by an insured. This coverage is in addition to the policy limit. Collapse The collapse coverage of the current ISO HO 2 and HO 3 policies has been redrafted in an attempt to address a legal debate that has existed as to whether the collapse coverage required an actual falling down or caving in of all or part of the building or whether an imminent collapse was sufficient to trigger coverage. The current edition of the ISO HO 2 and HO 3 policies contains clarifications intended to make clear that an actual collapse is required for collapse coverage to apply. The collapse coverage begins with a series of four definitions that state what is and is not considered to be a collapse. These definitions state that: 1. collapse means an abrupt falling down or caving in of a building or any part of a building with the result that the building or part of current intended purpose; 2. a building or any part of a building that is in danger of falling down or caving in is not considered to be in a state of collapse; 3. a part of a building that is standing is not considered to be in a state of collapse even if it has separated from another part of the building; and, 4. building or any part of a building that is standing is not considered to be in a state of collapse even if it shows evidence of cracking, bulging, sagging, bending, leaning, settling, shrinkage, or expansion. The insuring agreement of the collapse coverage next provides that coverage will exist only if the collapse was caused by one or more of the named perils applicable to the personal property coverage or five additional specified perils. These five additional specified perils include the following: 1. decay hidden from view, unless the presence of such decay is known to an insured prior to collapse; Loss of Use and Additional Coverages 63 2. insect or vermin damage (i.e., termite) that is hidden from view, unless the presence of such damage is known to an insured prior to collapse; 3. weight of contents, equipment, animals, or people; 4. weight of rain that collects on a roof; and, 5. use of defective materials or methods in construction, remodeling, or renovation if the collapse occurs during the course of the construction, remodeling, or renovation. Finally, if the cause of the collapse is one of the five specified perils, the collapse coverage provisions state that collapse coverage does not apply to: ◆ awnings; ◆ fences; ◆ patios; ◆ decks; ◆ pavements; ◆ swimming pools; ◆ underground pipes; ◆ flues; ◆ drains; ◆ cesspools; ◆ septic tanks; ◆ foundations; ◆ retaining walls; ◆ bulkheads; ◆ piers; ◆ wharves; or, ◆ docks. This is unless the loss to these categories of property is the direct result of the collapse of all or a part of a building. The inclusion of collapse coverage in the policy does not operate to increase the policy limits.

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