Dear Sales Professional:

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1 Dear Sales Professional: The purpose of this Desk Reference is to help you understand and present the key benefits of the Universal Security Policy (USP) from Encompass. For years, the USP has been a premier personal lines package policy in the insurance industry. The USP offers higher limits and special features many ordinary policies don t include. Please consider it for any of your personal lines customers. The customer who combines home and auto insurance into one USP package will realize many benefits, but you can also sell the USP as individual segments, just like a monoline policy. This flexibility is one of the advantages of the USP. This Desk Reference can be used in several ways. You can use it to train new producers, or as a refresher and quick reference for seasoned producers. It is intended for training and reference use by agency personnel only. It should not be used to present the USP directly to clients. Also, please remember that coverages and limits vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your client. At Encompass, we are committed to making insurance easy to understand and easy to buy. With the USP, we offer various levels of coverage so you can help your customer choose the plan that best meets their needs and budget. Please look through the Desk Reference now, and keep it handy for quick and easy reference in the future. As you review it, you will notice that we have included three different types of examples. Some are advantages of the USP package compared to separate monoline policies for the same coverages. Other examples demonstrate the advantages of a particular USP provision versus its standard counterpart. The third type explains certain important policy features that merit additional clarification but are not necessarily better than competitive policies. Please do not assume that just because a particular feature is discussed here, that means it is automatically better than, or not available from, the competition. We do, however, believe that considered as a whole, the USP is a great choice to help your personal lines customers meet their needs and budgets. The USP provides really good insurance, but there are other reasons to recommend Encompass to your customers. They ll like our quick and responsive claim service, our convenient Easy Pay plan, our money-saving discounts, and the benefit of working with a knowledgeable independent agent like you. We are sure you will find this USP Desk Reference useful. If you need additional assistance, please contact your Encompass representative.

2 Table of contents USP Package...4 Why Sell/Buy the USP?...4 The Power of One Policy One Deductible...4 Credit for Existing Insurance...5 USP Package Discounts...5 Auto Coverage...6 Extended Transportation Rental Reimbursement...6 Trip Interruption...6 Emergency Transportation...7 Towing...7 Automobile Electronic Equipment...7 Replacement Value Coverage...8 Air Bag Deployment Replacement...8 Auto Coverage Discounts...9 Homeowners Coverage...11 Property Location Limit...11 Dwelling Replacement Cost...11 Replacement Cost on contents...12 Mortgage Extra Expense...13 Additional Living Expense...13 Building Ordinance Increased Costs...14 Personal Computers...14 Back-up of Sewers and Drains...15 Land Restoration...15 Lock Replacement...16 Jewelry and Furs...16 Loss to a Pair or Set...16 Loss Assessment...17 Silverware...17 Business Property...18 Refrigerated Products...18 Reward...18 Fire Department Service Charge...19 Police Department Service Charge...19 Trees and Shrubs...19 Trading Cards...20 Fair Rental Value...20 Personal Injury...20 Workers Compensation...21 Property Coverage Discounts and Credits...21 Boat Coverage...22 Replacement Cost Coverage...22 Coverage for On-board Personal Property...22 Coverage for On-board Business Entertainment...22 Uninsured Boaters Coverage...22 Hull Coverage for Borrowed or Rented Boats...22 Lifestyle Endorsement...23 Increased Cost of Education or Care...23 Advanced Payment Reimbursement...23 Sports and Hobbies...23 Family Member in a Resident Health Care Facility...23 ATM Theft...23 Jewelry...23 Homework Supplement...24 Business Liability and Medical Expense...24 Business Property...24 Business Data...24 Accounts Receivable...24 Business Income and Extra Expenses...24 Business Checks, Credit Cards and ATM Cards...24 Money, Coins or Precious Metals...24 Debris Removal...24 Identity Fraud Endorsement...25 A Growing Problem...25 Pays Up to $20, Lost Wages...25 Loan Application Fees...25 Attorney Fees...25 Notary Public, Certified Mail and Long Distance Expenses...25

3 USP Package Why sell the USP? Why buy the USP? The USP offers the convenience of one annual policy. With the USP, your insured can get a single bill for everything he insures with us, which can include: Auto Home Boat Seasonal Home Snowmobile Dwelling Fire Motorhome Condo Excess Liability Renters The USP offers higher limits and special features many ordinary policies don t include. Insureds receive quality claims service. Multiple coverage level choices are available. The Power of One Policy One Deductible With a USP package, if a single incident damages multiple covered exposures, the insured pays only one deductible the highest deductible of the involved risks. The deductible will apply to each covered location that is listed separately. With separate monoline policies there would be a separate deductible for each policy. R I S K S W I T H L O S S Policy Segments USP Package Monoline Deductibles Deductibles auto #1 $250 $250 auto #2 $250 $250 boat $500 $500 home $500 $500 Total Deductible Paid $500 $1,500 By having a USP package, if a loss occurs with multiple risks there can be less out-of-pocket expense for deductibles. 4

4 Credit For Existing Insurance In a perfect world, converting existing insurance to a package policy would be a cinch because all expiration dates would be the same. Unfortunately, we don t live in a perfect world, but we do have a perfect solution for this problem. When the first segment of the new package policy becomes effective, rates and underwriting for the whole package are locked-in for the first policy term, but the package policy doesn t begin to charge for the subsequent segments until each additional piece of existing insurance expires. If there are differences in coverage between the existing insurance and the corresponding segment in the new USP, the USP provides excess insurance to compensate for any gaps between the two policies. In other words, if a loss occurs during the transition period, gaps between the insured s existing coverage and the USP are covered, as long as the underlying coverage is maintained. The insured purchases an Elite USP package policy incorporating both auto and homeowners coverage. Due to existing insurance, the auto segment becomes effective first on June 1, but the homeowners segment doesn t become effective until November 30. On September 5, the insured s home is broken into and $7,000 worth of unscheduled jewelry is stolen. The insured s existing homeowners insurance only covers unscheduled jewelry up to $1,000. Since the Elite USP covers unscheduled jewelry up to $10,000, the $6,000 of loss not covered by the existing policy is covered by the USP. The insured may have the benefit of additional coverage for certain losses during the transition period. If coverage in the insured s USP is better than coverage in the existing policy, the USP will cover the difference as additional or excess insurance. USP Package Discounts Package Discount USP package rates include a Package Discount, found in your state s Universal Security Policy Portfolio Manual. Depending on your state, significant discounts may be available. Policy Loss-Free Discount A discount of 2 to 5 percent may apply if all segments of the package policy remain loss free for 5 years. The discount does not apply to some coverages such as auto fixed expense premiums, uninsured/underinsured motorist rates, premiums for some additional motor vehicle coverages and earthquake premiums. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 5

5 Auto Coverage Extended Transportation Rental Reimbursement Rental reimbursement coverage helps take the expense out of renting a replacement vehicle after a covered loss because it reimburses the insured for rental costs, up to the policy limit. To qualify for this reimbursement, the damaged or disabled vehicle must carry comprehensive coverage. The insured takes his car to a repair shop after an accident. The clerk tells him it will take a week to get the parts and complete the job. The insured needs to get to work and his only option is to rent a car. He will be reimbursed for the rental car up to the per-day maximum ($50 per day or a maximum of $1,500) indicated on his policy. Your insured doesn t have to worry about being without personal transportation when his car is being repaired due to a covered loss. Also, there isn t a 30 day time restriction for this coverage, which is common in the industry. So if he chooses, he can rent a less expensive car for a lower daily rate, and keep the rental car longer than 30 days if necessary while his car is being repaired. Extended Transportation Trip Interruption If your insured s vehicle is disabled as the result of a covered loss 100 miles or more away from home, the USP will reimburse the insured for certain expenses related to the interruption, up to the amounts shown on the Coverage Summary. The limits are $100 a day, up to $500 total. To qualify for this reimbursement, the vehicle must carry comprehensive coverage. This money can be used to pay for: Reasonable and necessary food and lodging. Substitute transportation if the vehicle is damaged to the extent that it isn t safe to drive. The vehicle must: Be 100 miles away from its principal garaging place at the time it is disabled. Be disabled as a result of a covered comprehensive or collision loss. Have been occupied by the insured or a family member (as defined in the policy) at the time it became disabled. Your insured hits a deer with her car while she s vacationing 110 miles away from home. Her car can t be driven because of the broken windshield. It s Sunday morning and there s no place to have the car repaired until Monday. The insured will receive reimbursement for reasonable and necessary food and lodging, up to $100 a day, $500 total, if she chooses to wait while her car is being repaired. Or she can use this coverage to defray the cost of alternate transportation to her original destination or an alternate destination. Your insureds can have peace of mind knowing that their vacation plans can continue if they have a covered loss. 6

6 Extended Transportation Emergency Transportation Emergency transportation coverage can provide up to $20 for the cost of transportation for the insured to get from the place of a covered loss to an alternate destination. To qualify for this reimbursement, the vehicle must carry comprehensive coverage. If your insured s covered car is stolen from his employer s parking lot, he ll probably need a way home. If your insured has this coverage, the USP will pay up to $20 for his transportation. This may eliminate unexpected expenses for transportation when your insured is stranded due to a covered loss. Towing Towing coverage is available for any covered vehicle that has comprehensive coverage. The coverage pays for towing each time a covered vehicle is disabled and towed, and labor is performed at the place where the vehicle became disabled. The definition of covered autos includes certain non-owned cars. Your insured borrows a friend s car, which breaks down while it s in her care. Towing is covered for up to the limit she has on her own auto. If your insured has the USP policy with towing coverage for her own auto, she s covered for towing expenses for her own car, as well as for borrowed cars in her care. Automobile Electronic Equipment The USP will pay for direct and accidental loss of electronic equipment that is permanently installed in a covered automobile, if the policy includes comprehensive coverage for that vehicle. Media used with the equipment (e.g., tapes, compact discs) are also covered. Some examples of covered, permanently installed electronic equipment are: Any electronic equipment designed for the reproduction of sound Radios Compact disc players Televisions Tape decks Stereos Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 7

7 An insured has custom stereo equipment installed in his car that includes extra speakers and an amplifier mounted in the trunk. The car is broken into and all of the equipment is stolen. Coverage is provided under the USP. The comprehensive deductible applies. Many standard auto policies provide coverage for only factory-installed equipment. The USP provides coverage for any permanent equipment, whether factory installed or not. Replacement Value Coverage To qualify for automobile replacement value coverage, the automobile must be new (i.e., previously untitled). This coverage does not apply to losses that result from fire, theft or larceny. It can be renewed until the age of the car exceeds four model years. If the insured has this optional coverage and a total covered loss occurs, the automobile will be replaced with a current model year automobile of the same make, if possible, or with one of similar size and class, with similar body type and equipment. An insured s 2-year-old Camry is totally demolished in a covered accident. The insured has replacement value coverage on that specified vehicle. She receives a new (current model year) Camry comparably equipped. Except for the policy deductible, the insured incurs no out-of-pocket expense to replace her car with a new car of the same type. Air Bag Deployment Replacement If a factory-installed air bag deploys when there has not been a covered collision or comprehensive loss, the policy will pay up to $2,500 for the cost of reinstalling the air bag. This coverage is excess over any other collectible insurance or warranty contract. If the air bag deploys in the course of a covered loss, we will pay for replacement under the terms of that coverage. The covered vehicle must have both comprehensive and collision coverage. The factory-installed air bag in the insured s car deploys for no apparent reason and the deployment is not covered by the vehicle s warranty. The policy will pay up to $2,500 to have the air bag reinstalled. The insured incurs no out-of-pocket expense, up to $2,500, due to deployment of the air bag in her vehicle. 8

8 Auto Coverage Discounts Accident Violation/Free Discount This discount applies, per policy, to new customers and per vehicle for existing customers when the insured and all covered drivers have been loss and major violation free for the past 5 years. The discount doesn t apply to some coverages, such as auto fixed expense premiums, uninsured/underinsured motorist rates and premiums for some additional motor vehicle coverages or to vehicles whose principal operator is under 21. Youthful Driver Training Discount Applies to each youthful operator who is under 21, has successfully completed a driver s training course, and has completed several hours of actual driving experience. Youthful Good Student Discount Youthful operators with a B (3.0) average or better qualify for this discount. The insured must present a certified statement from a school official at each anniversary date of the policy to qualify. Resident Student Discount A student qualifies if he resides at school, which is at least 100 miles from the insured s residence, and does not have any vehicle at school. Anti-Theft Device Discount There are different types of theft devices (passive, active special lock and VIN etching). A discount to comprehensive coverage applies, depending on the device. Passive Restraint Discount Applies to medical/personal injury protection (PIP) if air bags or a motorized automatic belt restraint system are factory installed. Anti-Lock Brake System (ABS) Applies to private passenger vehicles and motorhomes equipped with factory installed two or four wheel Anti-Lock Braking Systems (ABS). Mature Defensive Driver Discount Applies to new and renewal business where the operator has reached the required age and has successfully completed an approved driving course with a certificate dated within the last 36 months. The operator cannot have had any moving traffic violation convictions or surchargeable accidents, or have had their license revoked or suspended during the last 36 months. Accident/Violation Forgiveness If the policy has been in force with Encompass and free of at-fault/not-at-fault accidents and major/minor violations for 5 years, the first at-fault accident or minor violation will be charged one half of the applicable Merit Rating Points. If a subsequent incident occurs, the previously forgiven incident will remain forgiven. Enhanced Accident Forgiveness Elite No merit rating points applied for accidents that occur while the driver is insured with Encompass Edge Elite. Enhanced Accident Forgiveness Deluxe No merit rating points applied for first chargeable accident or violation after 5 years accident/violation free with Encompass Edge Deluxe. Safe Driving Bonus/Discount Elite Bonus or discount earned if no driver has a chargeable accident while insured with Encompass Edge Elite for 12 months. If coverage for all vehicles is terminated prior to renewal effective date, no credit will be earned for that policy term. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 9

9 New Car Discount Applies to vehicles that were purchased new. The Encompass Easy Pay Plan Discount Applies to all vehicles if the insured is enrolled in The Encompass Easy Pay Plan. Good Payer Discount Automatically applies to all vehicles at new business. Continues on renewal as long as a cancellation notice for non-payment of premium was not sent during the past 12 months. Home Ownership Discount Applies to all vehicles if the insured owns a home, condominium, townhouse, or mobile home. Future Effective Date Discount Applies to all vehicles if the insured binds coverage 7 or more days prior to the policy effective date. Preferred Protection Discount Applies to all vehicles if the insured has multiple cars, owns a home and has prior liability limits of 100/300 or 300,000 CSL. 10

10 Homeowners Coverage Property Location Limit Deluxe and Elite A standard HO-3 policy establishes a coverage limit for the dwelling, then sets limits for contents, other structures and additional living expenses based on a percentage of the dwelling limit. Unlike the standard HO-3 policy, most coverage levels of the USP policy applies a single property location limit to all covered dwelling, contents and other structure losses. Additional living expenses are over and above the limit and are covered up to one year. The property location limit is 200 percent of the residence value for Deluxe and Elite. A client with an Elite policy, who has a $200,000 home, has a covered loss, which completely destroys his detached garage (other structures), valued at $30,000. A standard HO-3 would cover the garage for up to only $20,000, which is 10 percent of the dwelling s insured value. Under the USP, the $30,000 garage loss is fully covered because of the property location limit. COVERAGE USP Deluxe/Elite HO-3 A. Dwelling $400,000 $200,000 for Dwelling, Other B. Other Structures Structure & Contents $20,000 (10%) C. Contents/Personal Property $140,000 (70%) D. Additional Living Expense Outside Limit $40,000 (20%) Your insured s $30,000 garage is fully covered, assuming the losses to the dwelling, other structures and personal property do not exceed the $400,000 limit. With the Elite USP policy, your insured s covered property will be returned to its condition prior to the covered loss because the limit can be applied as necessary, with no sub-limits according to the type of property. Plus, additional living expenses incurred due to the covered loss are just that additional. They re not limited to 20 percent of the dwelling limit, as with standard HO-3 policies. NOTE: Caps on Other Structures coverage have been imposed in some states. Please consult your Universal Security Policy Portfolio Manual for the amount of coverage available in your state. Dwelling Replacement Cost Covered losses for the insured residence are settled on a replacement cost basis (without deduction for depreciation) if, at the time of loss, the following conditions are met: The insured agrees to accept the current replacement cost of the residence based on the residential construction cost index provided to us by a major appraisal company. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 11

11 The insured intends to rebuild at the same location. The insured has notified the company within 90 days of the start of any alterations that would increase the replacement cost of the real property by 5 percent or more above the current insured value. When a covered loss occurs, if the dwelling replacement value indicated on the coverage summary is less than the current replacement cost and the insured has met these conditions, the USP will: Increase the dwelling replacement value to equal the current replacement cost Increase the limit by the same percentage applied to the dwelling replacement value Adjust the policy premium from the time of the loss for the remainder of the policy term, based on the increased limit of liability Your insured has a total loss to her covered home. The dwelling value as indicated on the coverage summary is $300,000, but it will cost $346,000 to rebuild the house to its previous condition. The insured has met the conditions stated above, so the policy will pay the $346,000 necessary to rebuild the house. If the insured meets the stated conditions, the USP will pay to rebuild or replace the property, even if the rebuilding cost exceeds the dwelling s stated replacement value. NOTE: Caps on this type of coverage have been imposed in some states. Please consult your Universal Security Policy Portfolio Manual for the amount of coverage available in your state. Replacement Cost on Contents The USP provides for replacement of covered personal property with property of the same like, kind and quality as the lost or stolen property, up to the policy limits. There is no deduction for the age or condition of the property. The deductible does apply. The insured recovers on an actual cash value (ACV) basis and depreciation is withheld until the property is repaired or replaced. (ACV + depreciation = replacement cost) After repair/replacement is completed, the insured is reimbursed the amount of withheld depreciation. The withholding step is waived for covered losses of less than $3,000. In those cases, the insured receives the replacement cost amount. An insured has a set of 5-year-old tools stolen from his garage. The insured provides verification that a new set of tools of the same like, kind and quality costs $2,300. Because the cost to replace the tools is less than $3,000, the insured will receive the full price for a new set of tools, less policy deductible, (subject to policy conditions) prior to replacement of the property. When the loss is less than $3,000, the insured receives full payment and can replace the property at a time that is convenient for him. 12

12 Mortgage Extra Expense If a new mortgage is required for an insured to rebuild or replace her home, and the mortgage rates have increased since she obtained her pre-loss loan, this coverage provides up to $250 a month to lessen the impact of the higher lending rate, and defray mortgage acquisition costs, up to a total of $20,000. This coverage applies to Deluxe and Elite policies and is not found on most monoline policies. This coverage applies only to the first mortgage (not a second or third) on the residence premises. Claims under this coverage are paid semi-annually for up to four years, or until the insured no longer occupies the home, whichever comes first. Your insured had an 8 percent mortgage on a home that burned down. The lowest current interest rate she qualifies for is 10 percent. She has to finance her new home as a result of the loss, so the difference between the two mortgage rates, up to $250 a month, is offset by this coverage. She remains in the house, so semi-annual payments are made for four years. Helps keep the insured s monthly mortgage costs at their pre-loss level for up to four years after a covered loss. Additional Living Expense Additional living expenses are covered in the event the insured must leave his home due to a covered loss. This coverage is for additional expenses over and above the cost to maintain his normal standard of living. Normal living expenses, such as mortgage payments, utilities and groceries are not reimbursed under this coverage. However, additional living expenses, such as hotel accommodations or restaurant bills, are reimbursed under this coverage up to the coverage limits. If the damaged home is repaired or replaced, the extra living expenses will be reimbursed until the home can be reoccupied. If the insured chooses to relocate, the extra living expenses will be reimbursed until the family has settled into its new home. If reasonable and necessary, extra living expenses are covered for up to one year. Part of your insured s home sustains severe damage in a fire. The house is uninhabitable due to the loss, so the insured and his family must live in a hotel and eat most of their meals at restaurants until their home is repaired. This coverage pays for those additional living expenses over and above his normal expenses. The insured is not burdened with living expenses incurred due to a covered loss that are in addition to normal living expenses. He will be reimbursed for the amount of reasonable and necessary expenses over and above his normal expenses. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 13

13 Building Ordinance Increased Costs New building codes derived from ordinances or laws regulating construction, repair or demolition of dwellings and other covered structures may require costly, upgraded materials when repairing or rebuilding a property after a covered loss. With the Deluxe and Elite USP, these increased costs are covered up to 5 percent above the policy limit. The insured s home, built under a previous version of the local building code, has one electrical outlet per room. A room in the home must be rebuilt due to a covered loss and the local laws require that it be rebuilt according to current code. Current code states that each wall must have an electrical outlet. The USP will pay the additional cost to bring the room up to code. There will be no out-of-pocket expenses due to ordinances or laws that have changed since the property was built, if the cost of compliance does not exceed the policy limit by more than 5 percent. Personal Computers Coverage for personal computer hardware and software is provided on both the Deluxe and Elite policies, and is optional on the Special policy. Deluxe: $10,000 limit, plus $1,000 to recreate personal data Elite: Included with no sublimit, plus $5,000 to recreate personal data Your insured has an Elite policy. She also has personal computer hardware valued at $10,000 and software valued at $4,000. There is no added premium for covering the computer and software. During an electrical storm, the computer is damaged by a power surge. The policy will pay not only to replace the computer and software, but to have all of the lost personal data recreated up to $5,000. If your insured has invested a substantial amount of money in a personal computer and software, and is storing her own personal data on the computer, the Elite policy will replace the hardware and software, and also provide up to $5,000 for someone to research, recreate and restore the lost personal data. 14

14 Back-up of Sewers and Drains This feature provides coverage for all covered real property and tangible personal property losses caused by water that backs up through a sewer or drain pipe, and damage from water that has entered into the area from a sump pump that has overflowed. The sewer backs up through your insured s drain pipe, releasing water into the basement and ruining furniture, clothing and children s toys. The damage is covered, less the applicable deductible. After the deductible has been satisfied, the insured will have no out-of-pocket expense to replace the damaged items, up to the specified limit subject to policy conditions. NOTE: Caps on this coverage have been imposed in some states. Please consult your Universal Security Policy Portfolio Manual for the amount of coverage available in your state. Land Restoration If there s a covered loss to an insured s property, and the related repair or rebuilding requires excavation, replacement, stabilization or filling of land under or around the foundation of the property, the USP will pay for that work, up to the limits specified in the policy. An insured with an Elite USP policy experiences a fire that causes $200,000 in damage to his home. The home is located on a heavily wooded hillside and the fire also damaged trees around the house, the loss of which will cause future erosion and make the foundation of the house unstable. Because the land must be stabilized prior to reconstruction, this coverage will pay up to 10 percent of the total loss $20,000 to stabilize the land and foundation. The USP provides more coverage at no extra cost. Where many standard policies would require out-of-pocket expense for restoring land caused by repairs or land damage, some coverage is provided with the USP. NOTE: This example is for an Elite policy only. Coverage amounts for other policies may vary. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 15

15 Lock Replacement If your insured s keys are lost or stolen, the USP will pay up to the coverage limit to have the locks replaced. Clients must notify the agency or the company within 72 hours of discovering the loss. No deductible applies to this coverage. EXAMPLE / An insured s purse is stolen with her identification and house keys inside. She doesn t have to worry about someone using the keys to enter her home and steal her personal property or harm her. Her Deluxe policy provides up to $500 in coverage to replace the locks. NOTE: This example is for a Deluxe policy only. Coverage amounts for other policies may vary. Jewelry and Furs USP provides higher limits and broader coverage than most standard homeowner policies for the theft of unscheduled jewelry or furs. This enhancement is provided under most levels of the USP. While your insured is having dinner at a restaurant, her $4,000 fur is stolen from an unattended coat rack. Since she has an Elite policy with an internal limit of $10,000, her fur will be replaced. Your insured does not have to schedule jewelry or furs whose value is less than the limits automatically included in her USP. Loss to a Pair or Set If the insured has a covered loss to one of a pair or set, the USP will pay: To repair or replace any part to restore the pair or set to its value before the loss, or The difference between the actual cash value of the property before and after the loss, whichever is less. One earring of a $1,000 pair of earrings is lost. If the lost earring cannot be recreated, USP will pay the difference between the actual cash value of the set before and after the loss, minus your deductible. 16

16 Loss Assessment USP will pay up to the coverage limit for your share of any loss assessment charged by an association or corporation of real property owners, if a direct covered loss occurs to common property. Your insured has an Elite policy and belongs to a condominium association. A fire totally destroys the common area club house, tennis court and swimming pool at your insured s condo, and the amount it will cost to replace the property is higher than the limits of the association s insurance. Association members are responsible for sharing payments for the association s insurance deductible, and to repair damaged property that is common to the association: If the damages assessed are not covered by the association s insurance, or If the cost of the damage exceeds the association s insurance coverage limits. To cover the difference, the condominium association imposes a special assessment on all unit owners. The insured s share of the assessment is covered up to the coverage limit. The insured is spared out-of-pocket expense from a special assessment due to a community loss, up to the limit of coverage. Silverware Theft Stolen silverware is covered under the USP up to the amount specified in the policy. Misplaced or Lost Lost or misplaced silverware is included on the Elite policy and can be endorsed on the other levels of coverage, up to the amount specified in the policy. Your insureds have a wedding reception in their home, with 100 people attending. After the guests leave, they notice that silver worth $6,000 is missing. Because their Elite policy provides coverage for both theft and loss of silverware, the silver will be replaced with no per-piece limit. The policy deductible applies. Your insured does not have to schedule silverware that is valued at less than the limit included on the USP. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 17

17 Business Property If a covered loss of business property occurs at the insured s home, the USP provides coverage up to the business property limit. Covered losses of business property away from the residence premises are also covered, up to a different limit. Many standard policies have lower limits for business property. An insured has a fax machine that is used for business and it is stolen from his house. The loss is covered up to the business property limit, minus the deductible. The USP provides insureds some coverage for business property without the need to purchase additional insurance. Refrigerated Products The USP will pay up to $500 for a loss of contents in a freezer or refrigerator on an insured s premises if the loss is caused by power interruption or mechanical failure. This loss is subject to the policy deductible. EXAMPLE / An insured would only need to pay his deductible to replace the spoiled food stored in his freezer or refrigerator if either were to malfunction, up to the limit of coverage. This also applies when an insured experiences an extended power outage that causes all the food stored in the freezer or refrigerator to spoil. Reward If your insured is the victim of a robbery, burglary or arson, the policy offers a reward amount for information leading to the arrest and conviction of the person(s) responsible. This reward amount is 10 percent of the loss, up to $1,000. Someone provides information that leads the police to arrest the persons responsible for robbing the insured s home and then setting it on fire, and the prosecutors obtain a conviction. The covered loss is $12,000. A reward of $1,000 was offered for information leading to the arrest and conviction of the persons responsible. The USP covers the reward amount. People are more likely to come forward with information leading to an arrest if a reward is offered. By catching and prosecuting offenders, the number of future incidents may be reduced. 18

18 Fire Department Service Charge The company will pay up to $1,000 of the insured s liability, incurred by contract or agreement with the fire department, for service to save or protect covered property from a covered loss. The deductible doesn t apply to this coverage. EXAMPLE / Your insured has a contract with his local fire department requiring him to pay for service. A covered fire loss occurs. The USP will pay up to $1,000 for that service. Police Department Service Charge The company will pay up to $50 per occurrence, subject to a maximum of $250 per policy period, for charges incurred when the police department is called due to accidental activation of a burglar alarm system. The deductible does not apply to this feature. EXAMPLE/ Many communities charge a fee when a resident s burglar alarm is activated by mistake and the police are called to investigate. The USP will pay up to $50 of that fee. Trees and Shrubs The USP will pay up to the coverage limit to replace damaged landscaping, with a per tree or shrub limit. Coverage is not provided for trees and/or shrubs grown for sale or business purposes. The loss may be caused by: fire explosion aircraft vandalism lightning riot vehicles not owned or operated by the client theft During a thunder storm, lightning strikes one of three adjacent trees on an insured s property, setting all of them on fire. The insured has an Elite policy and the coverage limit for the property is $100,000. Coverage of up to $3,000 is available for replacing the trees. Even landscaping is covered and will be replaced up to the policy limit with this feature of the USP policy. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 19

19 Trading Cards If an insured collects trading cards, such as baseball or football cards, and has a covered loss, the company will pay up to $250 per card up to the coverage limit. The deductible applies to this coverage. Your insured has the USP Elite policy with a $500 deductible and has 10 trading cards stolen. They are worth $1,200 and no individual card is worth more than $250. The insured will be reimbursed $700 for the cards. $1,200 (their worth) $500 (the deductible) = $700 (the amount paid). With the USP, there s no worry about a loss due to stolen trading cards. They re covered up to the coverage limit. Fair Rental Value If a covered loss occurs to an insured s rental property that is part of the insured s residence and the property becomes uninhabitable due to the loss, the USP will pay the fair rental value up to the coverage limit - less any charges and expenses that do not continue - for the shortest time required to repair or replace the damage. Losses or expenses due to cancellation of a lease or agreement are not covered. An insured with a USP Deluxe policy rents the upstairs apartment in his home for $500 a month. As a result of a fire, the tenant must move out while repairs are made. The lease agreement specifies that during this time period the tenant is not responsible for rent payments. The policy will pay $500 per month until the property is repaired. The insured will not suffer loss of rental income if a tenant must vacate the property due to a covered loss. The period of time is not limited by expiration of the policy. Personal Injury If an insured has a claim or suit caused by a covered occurrence brought against her or any covered person, the company will pay the claims on her behalf where the person is legally liable, including pre-judgment interest awarded against her, up to the policy s limit of liability. EXAMPLE / An insured makes libelous or slanderous remarks about another person that damage the person s reputation. Coverage is provided for defense and award payments should a suit be brought against the insured. 20

20 Workers Compensation If your state requires your insured to provide Workers Compensation insurance for his residence employees, the USP will make any required statutory payments. Any amounts payable under this coverage will be reduced by any other amounts paid out or payable under any other section of the policy. Not available in Connecticut and Massachusetts and may be modified in other states. See your state s Universal Security Policy Portfolio Manual for details. Your insured s resident housekeeper falls down the stairs while cleaning the house. In your state, she is required to be covered by Worker s Compensation. She breaks a leg. Payment for injuries and wages is provided per the state statutes in which the insured resides. This coverage may eliminate the need for an insured to buy a separate Workers Compensation policy. Property Coverage Discounts and Credits Claim Free Discount A discount of 10 percent is available for primary residences that have been free of claims for the past 5 years. Dwelling Age Discount In some states, homes 20 years or newer may be eligible to receive a discount of up to 40 percent off the rates for the primary residence. Dwelling Renovation Discount Where available, homes over 11 years old or older with either heating/cooling, plumbing, wiring system and/or roof, updated in the past 10 years, may be eligible to receive a discount up to 15 percent off the rates for the primary residence. Home Buyer Discount Applies to primary homes that have been purchased in the past 5 years and are less than 49 years old. Home Protective Devices Credit Fire alarms, burglar alarms, fire extinguishers and other devices qualify, up to a 20 percent premium credit in some states, applied to the rates for the primary residence. In-Vault Credit The rate to schedule jewelry that is housed in a bank vault is approximately one-fifth the normal scheduled jewelry rate. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 21

21 Boat Coverage Replacement Cost Coverage For covered losses to boats up to 10 model years old, claims are settled on a replacement cost basis with no deduction for depreciation. Coverage for On-board Personal Property Automatically pays up to $1,000 for a covered loss to personal property belonging to a member of your household (excluding money, jewelry, computer equipment, etc.). Coverage up to $5,000 and coverage for personal property of guests is available. Coverage for On-board Business Entertainment Liability and medical payments coverages under your policy apply when you entertain business clients or employees and there is no direct payment for use of your boat. Uninsured Boaters Coverage Pays up to $15,000 total per accident for bodily injury to you and your passengers caused by an uninsured boater due to a covered boat accident. Hull Coverage for Borrowed or Rented Boats Extends the amount of hull coverage on your boat to a boat you borrow or rent. (Airboats, hovercraft and similar types of watercraft are excluded.) 22

22 Lifestyle Endorsement Increased Cost of Education or Care Pays up to $1,000 for the extra cost of alternative school or care for a family member if the usual facility is closed due to a loss that would have been covered by your homeowners policy. A 48-hour waiting period following loss will apply. Coverage is provided for a maximum of 60 days but may end earlier if the facility resumes normal operations prior to the 60 days. Advanced Payment Reimbursement Pays up to $1,500 if you lose a deposit, initiation fee or other advance payment when the school, club, etc. is closed due to a loss that would have been covered by your homeowners policy. Sports and Hobbies Doubles your USP s medical payments coverage limit for amateur sports injuries and provides an additional $1,000 for covered loss to sport and hobby equipment. Family Member in a Resident Health Care Facility Pays up to $10,000 for loss to personal property a parent, child, spouse or sibling you support keeps at an extended care residence (such as a nursing home) while living there. Also extends the liability coverage provided by your policy to that family member. ATM Theft Pays up to $1,000 for cash stolen in a robbery within 24 hours of withdrawal from a bank or ATM. Jewelry Increases your USP s coverage for unscheduled jewelry as a result of theft or misplacement by $2,500. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 23

23 Homework Supplement Business Liability and Medical Expense Pays up to the full personal liability and medical expense coverage limits of your USP for covered business-related losses whether they occur at home or elsewhere. Included are business-related losses due to Personal Liability, Advertising Injury Liability and Products Liability. Business Property Pays up to the full property location limit of your policy for covered business property losses at home, and up to $15,000 for covered business property losses away from home. Business Data Pays up to $10,000 for a covered loss of business records stored on paper, tape or disk. Accounts Receivable Pays up to $10,000 to help you recreate lost receivables records (due to a covered loss) and if necessary to make up for receivables you can t collect because the record of them was lost. Business Income and Extra Expenses Pays your lost profits and extra expenses for the length of time necessary to resume normal operations for up to one year if a covered loss prevents you from conducting business from your home. Business Checks, Credit Cards and ATM Cards Pays up to $10,000 if you suffer losses due to unauthorized use of your business checks, credit cards or ATM cards, or because your business received counterfeit money. Money, Coins or Precious Metals Pays up to $5,000 if money, coins or precious metals owned by your business are at home when a covered loss occurs, $2,000 if the loss occurs away from home. Debris Removal Pays up to $25,000 for debris removal when personal property at home that is used for your business is destroyed due to a covered loss. 24

24 Identity Fraud Expense Coverage Endorsement A Growing Problem Due to the popularity of the Internet and the increasing frequency of electronic financial transactions, identity fraud is a growing problem. Identity fraud is knowingly using, without lawful authority, some means of identification of a covered person with the intent to commit an unlawful activity that is either a violation of federal law or a felony. Although the victim may not be liable for money stolen, it can cost the victim a lot to prove the fraud and restore her damaged credit rating. That s what identity fraud expense coverage is for. Pays Up to $20,000 The policy will pay up to $20,000 (for most states) expenses you incur as a direct result of an identity fraud act or series of acts. The following are examples of expenses covered by this insurance. Lost Wages Pays up to $500 per week for up to four weeks for wages lost if you have to take time off from work because of identity fraud to meet with law enforcement agencies, credit agencies or legal counsel, or to complete affidavits. Loan Application Fees If you apply for a loan and are refused because the lender received incorrect credit information due to identity fraud, and you have to re-apply for the loan, any cost for new application fees is covered. Attorney Fees Pays reasonable attorney fees, with prior approval from Encompass, to defend you against lawsuits brought by merchants or collection agencies, or to remove criminal or civil judgments wrongly entered against you, or to challenge consumer credit reports you believe are inaccurate or incomplete. Notary Public, Certified Mail and Long Distance Expenses Pays the cost of notarizing fraud affidavits or similar documents, if that is required by a financial institution or credit agency, and the cost of certified mail for sending required documentation to law enforcement, financial institutions or credit agencies. Also pays long distances charges for calls you have to make to merchants, law enforcement, financial institutions or credit agencies to report or discuss an identity fraud. Remember that coverages, limits and discounts vary by state, so you should always consult your state s Universal Security Policy Portfolio Manual when discussing those specifics with your customer. 25