Once you get accustomed to the insurance industry as an agent, there are a few basic terminologies you will have to understand. These words come up frequently and might have a different meaning in insurance. One such language is exclusions.
Exclusion does not accommodate the insurance policy by adding or modifying coverage. It strictly removes the coverage from the insurance plan.
I will touch upon the HO3 policy exclusions for today's topic.
Most carriers base their policies on the forms of the Insurance Services Office (ISO). More specifically, when it comes to the HO3 policy. Sometimes, the plan explicitly mentions the HO3 policy exclusions. Other times, an endorsement makes the exclusions known to the insured and producers.
Homeowners agents can negotiate for the removal of some policy exclusions if the excluded coverage is essential for them.
The HO3 policy has two coverage: Property and Liability. I will brief both coverage exclusions in this section.
HO3 policy exclusions: Property
The damage in the property of the home that are not eligible for claims are:
- Mold: Mold damage due to poor maintenance, defect in construction, long-term leaks, or floods do not qualify for a complaint.
- Wear and tear: As homeowners' insurance is for accidental damages, general wear and tear expenses fall on the insured itself.
- Infestations: Like in wear and tear, bedbugs, termites, and rats are the homeowner's responsibility, not the policy.
HO3 policy exclusions: Liability
Standard liability exclusions that confuse young insurance agents are:
- Dog breeds: Carriers exclude certain aggressive dog breeds. Pitbulls, Wolf hybrids, and Rottweilers are in the carriers' blacklist. An individual dog's history of aggression is taken into account too.
- Golf cart: Carriers exclude golf carts except in some cases.
- Shared homes: Host sharing homes on platforms like Airbnb, VRBO, etc. have to add extra endorsements in their coverage policy.
Always ask the homeowners whether they know about these exclusions to make sure if they might need any other coverage. Add endorsements or other policies to the HO3 policy if your client needs extra protection. Sometimes, your clients encounter with freaky accidents in their homes and might need protection for that as well.