HOMEOWNERS PROGRAM NEW JERSEY

Transcription

1 HOMEOWNERS PROGRAM AMERICAN ASSOCIATION OF INSURANCE SERVICE 1745 S. Naperville Road, Wheaton, IL REV. 06/ 11 NJ HO Manual - 1 AAIS

2 HOMEOWNERS MANUAL TABLE OF CONTENTS INTRODUCTION RULES > Eligibility > Program Description > Policy writing Instructions > Premium Determination > Deductibles > Premium Modifications > Optional Coverages Section I Section II > Additional and Secondary Locations > Territorial Definitions STATE RATE PAGES > Basic Policy Premiums > Optional Coverages REV. 06/ 11 NJ HO Manual - 2 AAIS

3 HOMEOWNERS MANUAL INDEX Page Additional Interest 13 Additional Living Costs 32 Additional And Secondary Locations 49 Alarm Systems 22 Automatic Adjustment Of Limits 27 Association Deductible 39 Assignment 13 Basic Limits of Liability 12 Burglary Alarm Credit 22 Business Activities-Business Not Owned by the Insured 42 Calculation of Premium 19 Cancellation 14 Care Provided for Others 44 Changes in Limits of Liability 19 Coverage A Options & Special Coverage Form HO Computer Coverage 31 Condominiums 38 Continuous Renewal Plan 13 Contributing Insurance 14 Co-Owner Occupancy 6 Coverages (Basic) and Amounts (Minimum) 12 Coverage C Increased Limits 29 Reduced Limits 29 Deductibles 20/21 Dwellings Under Construction 6 Earthquake 25 Eligibility 6 Equipment Breakdown Coverage 52 Fire Alarm Credit 22 Fire Department Service Charge 33 Fire Resistive Construction 19 Glass 34 Golf Cart Liability Coverage 44 Home-Based Business 73 REV. 06/ 11 NJ HO Manual - 3 AAIS

4 HOMEOWNERS MANUAL Identity Fraud Inception Time Incidental Farming Incidental Property Coverage Increase Cost Ordinance or Law Ineligible Occupancies Lead Liability Exclusion Liability Exclusions Fuel Oil and Other Pollutants Lifestyle Program 51 Limits of Liability 12 Limited Bacteria, Fungi, Wet Rot, Or Dry Rot Coverage 40/48 Loss Assessment Condominiums 35 Loss Cost Multiplier 19 Loss Settlement Provisions 9 Medical Payments 11 Mid-Term Changes 13 New Home Discount 22 Office, Professional, Private School, or Studio Occupancy 43 Optional Liability Coverage 41 Optional Section 1 Property Coverages 25 Perils Insured Against 10 Personal Injury 44 Personal Property 29 Personal Property, Limitation on Certain Property 30 Personal Liability 11 Personal Property, Used for Business 31 Policywriting Instructions 13 Policy Term 13 Premium Determination 19 Principal Liability Coverages (Mandatory) 11 Principal Property Coverages (Mandatory) 8 Private Structures 27 Extension of Coverage A 14 Optional Coverages 27 Program Description 8 Protective Devices 22 Refrigerated Property Increase 33 REV. 06/ 11 NJ HO Manual - 4 AAIS

5 HOMEOWNERS MANUAL Refrigerated Property Exclusion 15 Renovation Credit 50 Replacement or Repair Cost Protection Coverage A 22 Replacement Value Personal Property 29 Residence Under Construction Theft 40 Restriction of Coverage 14 Row or Townhouses 19 Scheduled Motorized Golf Cart Coverage 32 Seasonal Dwellings 6 Smoke Detectors 22 Snowmobiles 43 Specifically Rated Dwellings 19 Territorial Definitions 54 Transfer of Policy 13 Waterbed Liability 41 Water Backup and Sump Discharge or Overflow 34 Watercraft 43 Wind Loss Mitigation Factors 15 Waiver of Premium 13 Workers Compensation and Employers Liability 45/68 REV. 06/ 11 NJ HO Manual - 5 AAIS

6 HOMEOWNERS MANUAL RULE 1 ELIGIBILITY 1.1 Owner Occupied A policy may be issued to an owner-occupant of a dwelling used only for private residential purposes and occupied by no more than four families and no more than two boarders or roomers per family. Exception for Bed and Breakfast exposure up to five rooms available to boarders or roomers. Refer to Rate Home-Base Business Manual. 1.2 Tenant Occupied Forms HO 0001, HO 0002, HO 0003 and HO 0005 A policy may be issued to the tenant (non-owner) of a dwelling or apartment if the residence occupied by the insured is used only for residential purposes and is occupied by no more than one additional family or two boarders or roomers. Form HO Condominiums A policy may be issued to the owner of a condominium, co-operative or townhouse unit if the residence occupied by the insured is used only for residential purposes and is occupied by no more than one additional family or two boarders or roomers. Form HO Co-owner Occupancy A policy may be issued to one of the co-owners provided each occupies separate apartments within the dwelling. Forms HO 0001, HO 0002, HO 0003 A Form HO 0004 policy may be issued to the other co-owner(s). 1.5 Dwellings Under Construction A policy may be issued to cover the interest of the intended owner-occupant of a dwelling under construction. Refer to Company. 1.6 Seasonal Dwellings A policy may be issued to cover a seasonal dwelling that otherwise meets eligibility requirements REV. 06/ 11 NJ HO Manual - 6 AAIS

7 HOMEOWNERS MANUAL 1.7 Ineligible Occupancies The following are ineligible for coverage under this manual: > Mobile homes, trailer homes or house trailers whether or not set on foundations or otherwise made stationary. > Property to which farm forms or rates apply. REV. 06/ 11 NJ HO Manual - 7 AAIS

8 HOMEOWNERS MANUAL RULE 2 PROGRAM DESCRIPTION The following is a general description of the coverages provided by the Homeowners policy forms. The policy forms state the complete conditions. 2.1 Policy Forms The following forms are used to provide homeowners coverage. HO Basic Form HO Broad Form HO Special Form HO Contents Broad Form HO Special Building And Contents Form HO Unit-Owners Form 2.2 Principal Property Coverages (Mandatory) Forms HO 0001, HO 0002, HO 0003, and HO 0005 provide all of the principal coverages described below. Form HO 0004 provides only Coverages C and D. Form HO 0006 provides only Coverages A, C, and D Coverage A -- Residence With the exception of form HO 0006, Coverage A covers the residence on the described location, including additions and built-in components. On form HO 0006, Coverage A covers the fixtures, alterations, and additions that are part of the condominium or cooperative unit, structures owned solely by the insured, and other property that is the insured's insurance responsibility Coverage B -- Related Private Structures Coverage B covers unattached structures on the described location that are related to the residence, other than structures: -- rented to person who is not a tenant of the residence (unless used solely for private garage purposes); -- used in whole or part for the direction or operation of a business; or -- used in whole or part for the storage of business property. Coverage also applies to fences, driveways, sidewalks, and other permanently installed outdoor fixtures on the described location. REV. 06/ 11 NJ HO Manual - 8 AAIS

9 HOMEOWNERS MANUAL Coverage C -- Personal Property Coverage C covers personal property owned or used by an insured. Coverage for an insured's personal property usually at a residence other than the described location is limited to 10% of the Coverage C limit or $1,000, whichever is greater Coverage D -- Additional Living Costs And Loss Of Rent Coverage D covers increased living costs and loss of fair rental value that occur when a covered loss makes the described location unfit for use as a residence. 2.3 Loss Settlement Provisions Coverages A And B With the exception of form HO 0006, an 80% insurance-to-value requirement triggers replacement cost loss settlement terms for buildings covered under Coverages A and B. On form HO 0006, loss to property covered under Coverage A is settled on a replacement cost basis Coverage C With the exception of form HO 0005, loss to property covered under Coverage C is settled on an actual cash value basis. On form HO 0005, loss to property covered under Coverage C is settled on a replacement cost basis. REV. 06/ 11 NJ HO Manual - 9 AAIS

10 2.4 Perils Insured Against UTICA FIRST INSURANCE COMPANY HOMEOWNERS MANUAL Forms HO 0001 and HO 0002 insure property covered under Coverages A, B, and C and the related costs covered under Coverage D against risks of direct physical loss by the perils indicated below. Perils Covered HO 0001 HO 0002 Fire Or Lightning X X Windstorm Or Hail X X Explosion X X Riot Or Civil Commotion X X Aircraft X X Vehicles X X Smoke X X Sinkhole Collapse X X Volcanic Eruption X X Vandalism Or Malicious Mischief X X Theft X X Falling Objects X Weight Of Ice, Snow, Or Sleet X Sudden And Accidental Tearing Apart, Burning, Or Bulging X Accidental Discharge Of Water Or Steam X Freezing X Sudden And Accidental Damage From Artificially Generated Electrical Currents X Form HO 0003 insures property covered under Coverages A and B and the related costs covered under Coverage D against all risks of direct physical loss, with certain exceptions. Property covered under Coverage C is insured against risks of direct physical loss by the perils shown for form HO Form HO 0004 insures property covered under Coverage C, the insured's interest in building improvements and betterments, and the related costs covered under Coverage D against risks of direct physical loss by the perils shown for form HO Form HO 0005 insures property covered under Coverages A, B, and C and the related costs covered under Coverage D against all risks of direct physical loss, with certain exceptions. Form HO 0006 insures property covered under Coverages A and C and the related costs covered under Coverage D against risks of direct physical loss by the perils shown for form HO REV. 06/ 11 NJ HO Manual - 10 AAIS

11 HOMEOWNERS MANUAL 2.5 Principal Liability Coverages (Mandatory) Coverages L and M can be omitted only when contributing insurance applies or when the policy is written to cover an additional or secondary location. See Rules 3.9 and Coverage L -- Personal Liability -- Coverage L pays on behalf of the insured for damages due to bodily injury or property damage caused by an occurrence related to an insured premises or the insured's personal activities Coverage M -- Medical Payments To Others -- Coverage M pays medical expenses incurred by persons who are not insureds if bodily injury occurs in connection with an insured premises or an insured's personal activities. REV. 06/ 11 NJ HO Manual - 11 AAIS

12 HOMEOWNERS MANUAL 2.6 Basic Limits The following basic limits apply to the coverages provided by the homeowners policy: Property Coverages Related Additional Private Personal Living Costs & Form Residence Structures Property Loss Of Rent HO 0001, Refer to 10% of limit 50% 1 of limit 20% 2 of limit HO 0002, & Company on residence on residence on residence HO 0003 Guidelines HO 0004 Refer to 40% of limit Company on personal Guidelines property HO 0005 Refer to 10% of limit 70% of limit 20% 2 of limit Company on residence on residence on residence Guidelines HO % of limit Refer to 40% of limit on personal Company on personal property Guidelines property 1 30% for three and four family dwellings 2 10% for three and four family dwellings Liability Coverages Form Coverage L Coverage M All Forms $100,000 Each Occurrence $1,000 Per Person $25,000 each accident REV. 06/ 11 NJ HO Manual - 12 AAIS

13 HOMEOWNERS MANUAL RULE 3 POLICYWRITING INSTRUCTIONS 3.1 Inception Time The policy issued will take effect at 12:01 A.M. Standard Time at the described location. 3.2 Policy Term Annual policies only. 3.3 Three-Year Policy Prepaid or Deferred Payment Plans This rule does not apply. Company writes only one (1) year policies Waiver of Premium An additional or return premium due when a policy is endorsed after its inception may be waived, however, return premiums must be refunded at the request of the insured. Refer to the rules filed by the company with the New Jersey Department of Banking and Insurance for the amount that may be waived. 3.4 Continuous Renewal Plan This rule does not apply. 3.5 Additional Interests A policy can be endorsed to cover the interests of co-owners, executors, administrators, trustees, or beneficiaries in the described location or the interests of other residents of the described location. Attach endorsement HO Interest in Coverages A, B, C, L, and M A policy can be endorsed at no additional premium charge to cover the insurable interests of others in property covered under Coverages A, B, and C, and their liability arising out of all premises insured under Coverages L and M. Attach endorsement HO 6072 and make entries to show the names of the additional insureds and the extent of their interests. 3.6 Transfer or Assignment At the option of the Company and subject to the rules of this manual, a policy can be endorsed to effect: > transfer to another location within the same state; or > assignment from one insured to another in the event of transfer of the title of the dwelling. REV. 06/ 11 NJ HO Manual - 13 AAIS

14 HOMEOWNERS MANUAL 3.7 Restriction of Coverage If a policy would not be issued because of unusual exposures, the applicant may request a restriction of coverage at no reduction of premium. The request, signed by the applicant, must be referred to the company, and must be filed with and approved by the Commissioner of the New Jersey Department of Banking and Insurance in accordance with N.J.S.A. 29A-7.1 and New Jersey Department of Banking and Insurance Regulation N.J.A.C. 11:4-7:1 to 7: Cancellation or Reductions In Limits of Liability or Coverages Mandatory coverages may not be canceled unless the entire policy is canceled. The policy must be canceled in accordance with the terms of applicable cancellation provisions. The return premium, if any, is computed on a pro rata basis, subject to any minimum premium requirement. 3.9 Contributing Insurance This rule does not apply Extension of Coverage A - No Private Structures - Forms HO 0001, HO 0002, HO 0003, HO 0005, If there are no private structures on the premises exceeding $1,000 combined replacement value, the Coverage B limit may be added to the Coverage A limit. Endorsement HO Interpolation of Premiums Premiums for policy amounts not shown in the State Rate Pages may be obtained by interpolation Increase In Limits Or Addition Of Coverages Policy limits may be increased and/or coverages may be added during the policy term. REV. 06/ 11 NJ HO Manual - 14 AAIS

15 HOMEOWNERS MANUAL 3.13 Manual Revisions Revised forms, endorsements, rules, and rating information will be implemented as indicated in the announcement of the revisions. Unless specified in the announcement, a revision will not affect: -- the premium for an in-force policy paid in annual installments until the next policy anniversary date; or -- the forms, endorsements, or premiums for all other in-force policies until the policy is renewed Refrigerated Property Exclusion New Jersey Insurance Code requires that only companies specifically licensed to provide insurance against loss caused by mechanical breakdown/power failure may issue policies that include coverage for refrigerated property. Companies not licensed to provide insurance against loss caused by mechanical breakdown/ power failure must attach an endorsement to delete the incidental coverage for refrigerated property. Premium Determination -- No premium charge or credit applies. Endorsement -- Attach endorsement HO Wind Loss Mitigation Factors The performance of a dwelling, apartment, condominium, or co-operative unit subjected to high speeds of wind, such as during a hurricane, is dependent on the quality of its construction type and various building features. The premium for covered property may be eligible for a wind loss mitigation credit, depending on the use of roof to wall connection, the presence of storm shutters, and the shape of the roof. Further credits are also allowed for additional building features, and a charge applies when a building has an unrestrained wall to foundation connection. The company reserves the right to require the services of an independent inspector in situations where either the insured or the company is unable to determine the building features of a risk. In these circumstances, the insured may hire an independent and qualified inspector or authorize and reimburse the company for the cost of hiring an independent and qualified inspector to ascertain features other than an unrestrained wall to foundation connection. REV. 06/ 11 NJ HO Manual - 15 AAIS

16 HOMEOWNERS MANUAL Certain building features can be easily verified by photographs or an external examination completed by a company representative. A policy issued to an insured who does not hire an inspector to verify the building features of a risk may still qualify for a wind loss mitigation factor, based on the level of opening protection and construction of the building. The following terms are used in conjunction with the wind loss mitigation factors shown in the premium determination portion of this rule. Roof To Wall Connection Yes No Double Wraps Single Wraps Clips A building with double wraps, single wraps, or clips (as defined below). A building without double wraps, single wraps, or clips. Wrap style metal straps are attached to the side and/or bottom of the wall's top plate and are wrapped and nailed around the top of the rafter or truss from each side. Wrap style metal straps are attached to the side and/or bottom of the wall's top plate and are wrapped and nailed around the top of the rafter or truss. A clip is a piece of metal which is nailed into the side of the rafter or truss and into the side of the wall's top plate or stud. The metal does not wrap around the top of the rafter or truss and the clip is located only on one side of the connection. REV. 06/ 11 NJ HO Manual - 16 AAIS

17 Storm Shutters UTICA FIRST INSURANCE COMPANY HOMEOWNERS MANUAL Yes No Glazed Openings All glazed openings (as defined below) are protected for impact resistance. Some or all glazed openings (as defined below) are not protected for impact resistance. A glazed opening is defined as glass or transparent or translucent plastic sheets used in windows, doors, or skylights. Roof Shape Hip Other A hip roof has sloping ends and sloping sides down to the roof eaves line. The roof geometry does not qualify as Hip. Gable Roof Bracing Gable roof bracing means the end walls, which are a vertical inverted V, have been braced within the attic to the interior roof rafters. All Openings Covered All openings, including but not limited to, windows, entry doors, swinging doors, sliding doors, door sidelights, garage doors, skylights, and all other non-glazed openings, are protected for impact resistance. Masonry Construction A building with at least 66-2/3% of the total wall area, including gables, comprised of masonry or masonry veneered construction. Unrestrained Wall To Foundation Connection A building has an unrestrained wall to foundation connection if it is built on posts, piles, or concrete blocks that rely solely on gravity and friction forces for resistance to uplift and lateral loads. Building Code Homes built to meet or exceed the New Jersey State Uniform Construction Code (UCC) which is adopted, administered, and enforced by the Commissioner of the New Jersey Department of Community Affairs REV. 06/ 11 NJ HO Manual - 17 AAIS

18 HOMEOWNERS MANUAL Premium Determination -- Adjust the wind component of the policy premium using all applicable factors shown in the tables for this rule that correspond to the installed, maintained, and validated building features described in this rule. The factors in Table B apply in addition to any factors in Table A that may apply. Roof Shape Territory All Territories Table A for Rule 3.15 Roof To Wall Connection Yes No Storm Shutters Hip Other Yes No Yes No Building Feature All Territories Gable Roof Bracing.980 All Openings Covered.980 Masonry Construction.980 Unrestrained Wall To Foundation Connection Building Code.990 Table B for Rule 3.15 REV. 06/ 11 NJ HO Manual - 18 AAIS

19 HOMEOWNERS MANUAL RULE 4 PREMIUM DETERMINATION Annual premiums and rates are shown in the State Rate Pages. The Basic Policy Premiums are for property and liability coverages. Liability coverage for the following exposures is required if they exist. The additional premium is shown in the State Rate Pages. > All additional or secondary residence premises where the named insured or spouse maintains a residence, other than business or farm properties. > Incidental office, professional, private school or studio occupancies by the named insured on residential premises of the named insured. > Three or four family dwellings. (When the Section II limits are increased, the increased limit premiums for three or four family dwellings apply in addition to the increased limit premiums shown for a one or two family dwelling.) 4.1 Calculation of Premium The premium is computed as follows: Determine the Basic Policy Premium" based on the amount of Coverage A or Coverage C, as applicable. This basic premium must reflect revised limits of Coverage C Adjust basic policy premium to reflect the selected deductible option Adjust basic policy premium for other premium credits or charges Add the additional premium for all mandatory or optional Section I Property Coverages and all mandatory or optional Section II Liability Coverages Loss Cost Multiplier effective for AAIS LC loss cost filing is Changes in Limits of Liability or Addition of Coverages The limits of liability may be increased or coverages added during the policy term. Compute the additional premium on a pro rata basis using the same rates in effect when the current policy premiums were calculated. 4.3 Specifically Rated Dwellings - Forms HO 0001, HO 0002, HO 0003, HO 0005 The premium for specifically rated dwellings of fire resistive or fireproof construction is 85% of the applicable brick or masonry premium. The applicable Fire and Extended Coverage rates shall be used for other specifically rated dwellings when written under a Homeowners policy. 4.4 Row and Townhouses This rule does not apply. REV. 06/ 11 NJ HO Manual - 19 AAIS

20 HOMEOWNERS MANUAL RULE 5 -- DEDUCTIBLES The deductible rules are replaced by the following: A deductible amount is subtracted from all covered property losses, except those losses covered by the following incidental property coverages: Credit Card, Electronic Fund Transfer Card Or Access Device, Forgery, And Counterfeit Money; Fire Department Service Charge; Refrigerated Property; and, in form HO 0005, Lock And Garage Door Transmitter Replacement. When coverage is provided for loss caused by earthquake, a separate deductible provision applies to such loss. See Rules 7.2, , and for earthquake deductibles. The deductible amount is subtracted only once per occurrence at each location, regardless of the number of covered items affected. 5.1 Flat Deductibles -- All Perils Other Than Earthquake A policy may be issued with a single deductible amount that applies to all perils (other than earthquake). Show the deductible amount on the declarations. Premium Determination See State rate page Deductible Amount $500 (Mandatory) $1,000 $2,500 REV. 06/ 11 NJ HO Manual - 20 AAIS

21 HOMEOWNERS MANUAL 5.2 Hurricane Deductible Hurricane is defined as wind attaining Hurricane Category 1 status (sustained winds of 74 miles per hour or more) or higher, as determined by the National Weather Service. A mandatory 3% hurricane deductible applies to the zip codes in the following counties: Hudson 07002, 07302, 07304, 07305, Union 07036, 07201, 07202, Middlesex 07008, 07064, 07077, 08832, 08861, 08862, 08878, Monmouth 07701, 07702, 07704, 07709, 07711, 07712, 07713, 07715, 07716, 07717, 07718, 07719, 07720, 07721, 07723, 07724, 07730, 07732, 07734, 07735, 07737, 07739, 07740, 07748, 07750, 07753, 07755, 07756, 07757, 07758, 07760, 07762, 07764, 08730, 08736, Ocean 08005, 08006, 08008, 08050, 08087, 08092, 08721, 08722,08723, 08731, 08732, 08734, 08735, 08738, 08739, 08740, 08741, 08742, 08751, 08752, 08753, 08754, 08755, 08756, 08757, Atlantic 08201, 08203, 08205, 08221, 08225, 08232, 08234, 08241, 08244, , 08402, 08403, 08404, 08406, Cape May 08202, 08204, 08210, 08212, 08223, 08226, 08230, 08242, 08243, 08247, 08248, 08251, 08260, Cumberland 08311, 08324, 08327, 08332, 08345, Apply the premium credit shown in the State Rate Pages. Optional higher deductibles with additional credits are available. Refer to the State Rate Page. Endorsement: NJ HD-414 RULE Hurricane Loss Mitigation Option The policyholder may elect to take specific loss mitigation measures prior to a hurricane event recommended by the Institute of Building and Home Safety. All windows, entry doors and garage doors must be adequately protected to sustain wind speed of 74 miles per hour or more or higher. Refer to agent for specific recommendations. Endorsement: NJ HDMM-1 REV. 06/ 11 NJ HO Manual - 21 AAIS

22 HOMEOWNERS MANUAL RULE 6 PREMIUM MODIFICATIONS 6.1 Protective Devices The premium credits shown in the State Rate Pages may be allowed for the installation of the following approved and properly maintained alarm and/or sprinkler systems: > Central Station Burglary and/or Fire Alarms. > Fire Department and/or Police Department Alarms. > Local Alarms - Including smoke and/or gas detection. > Sprinkler Systems. Endorsement HO Replacement or Repair Cost Protection - Coverage A - Dwelling The policy may be extended to include replacement or repair cost protection for the dwelling, provided: > The dwelling is insured for 100 percent replacement value. The Estimator must be completed with the application. > The Coverage A limit is adjusted according to the index. > One family dwellings only. > The additional premium is shown in the State Rate Pages. Attach Endorsement UFRCD RESERVED FOR FUTURE USE REV. 06/ 11 NJ HO Manual - 22 AAIS

23 HOMEOWNERS MANUAL 6.4 Increased Cost -- Ordinance Or Law -- Increased Limit Of Coverage -- Forms HO 0001, HO 0002, HO 0003, And HO 0005 Forms HO 0001, HO 0002, HO 0003, and HO 0005 provide a limited amount of coverage for the increased cost that results from the enforcement of a code, ordinance, or law that regulates the construction, repair, replacement, or demolition of property following a covered loss. Coverage is limited to 10% of the Coverage A limit. This limit can be increased as shown below by applying the appropriate listed factors to the basic policy premium: -- 25%, 50%, 75%, or 100% of the Coverage A limit; or -- a percentage in excess of 100% of the Coverage A limit. When the percentage is increased in excess of 100%, it must be increased in 25% increments. Increase Total Percentage Factor 15% 25% % 50% % 75% % 100% 1.47 Each additional 25% increment.13 Endorsement -- Attach endorsement HO 2557 and make an entry to show the total percentage that applies. REV. 06/ 11 NJ HO Manual - 23 AAIS

24 HOMEOWNERS MANUAL 6.5 Increased Cost -- Ordinance Or Law -- Increased Limit Of Coverage -- Forms HO 0004 and HO 0006 Forms HO 0004 and HO 0006 provide a limited amount of coverage for the increased cost that results from the enforcement of a code, ordinance, or law that regulates the construction, repair, replacement, or demolition of property following a covered loss. For form HO 0004, coverage is limited to up to 10% of the limit that applies to the incidental coverage for Tenant's Improvements. This limit can be increased to: % of the limit that applies to Tenant's Improvements; or -- a percentage in excess of 100% of the limit that applies to Tenant's Improvements. When the percentage is increased in excess of 100%, it must be increased in 25% increments. For form HO 0006, coverage is limited to up to 10% of the Coverage A limit. This limit can be increased to: -- 50% of the Coverage A limit; or -- a percentage in excess of 50% of the Coverage A limit. When the percentage is increased in excess of 50%, it must be increased in 25% increments. Endorsement -- Attach endorsement HO 2557 and make an entry to show the total percentage that applies. REV. 06/ 11 NJ HO Manual - 24 AAIS

25 HOMEOWNERS MANUAL RULE 7 OPTIONAL SECTION I PROPERTY COVERAGES 7.1 Vandalism HO 0008 Only This rule does not apply. 7.2 Earthquake -- Forms HO 0001, HO 0002, HO 0003, HO 0004, HO 0005, And HO 0006 Coverage for direct physical loss caused by earthquake can be added. Coverage for exterior masonry veneer is optional. A special deductible provision applies to loss caused by earthquake. Refer to the state manual pages for the minimum earthquake deductible amount that applies. The earthquake deductible can be increased to a maximum of 20%. Refer to Rules and for earthquake coverage options for the incidental property coverages of Association Deductible and Loss Assessment. Premium Determination -- For forms HO 0001, HO 0002, HO 0003, and HO 0005, apply the rating information shown in the state manual pages to the Coverage A limit shown on the declarations. (When the earthquake deductible exceeds 5%, the rating information is developed by adjusting the rating information shown in the state manual pages for a 5% earthquake deductible using the pertinent factor shown in the table for this rule. Factors for deductible options not shown in the table can be developed by interpolation.) Also apply the rating information to the total amount of insurance that applies to the incidental property coverage of Increased Cost -- Ordinance Or Law (including any increase that applies from the attachment of an endorsement providing increased ordinance or law coverage as described in Rule 6.4.). If the limit that applies to property covered under Coverage C has been increased or if the Coverage D limit has been increased, apply the applicable earthquake rating information to the increased amount(s). If the policy includes any of the optional endorsements for related private structures described in Rules 7.4.1, 7.4.2, 7.4.3, or 7.4.6, apply the applicable earthquake rating information to the limit shown in the endorsement for each related private structure. REV. 06/ 11 NJ HO Manual - 25 AAIS

26 HOMEOWNERS MANUAL Rule 7.2 continued For form HO 0004, apply the rating information shown in the state manual pages to the Coverage C limit shown on the declarations. (When the earthquake deductible exceeds 5%, the rating information is developed by adjusting the rating information shown in the state manual pages for a 5% earthquake deductible using the pertinent factor shown in the table for this rule. Factors for deductible options not shown in the table can be developed by interpolation.) Also apply the applicable earthquake rating information to the total amount of insurance that applies to the incidental property coverage of Increased Cost -- Ordinance Or Law (including any increase that applies from the attachment of an endorsement providing increased ordinance or law coverage as described in Rule 6.5). If the limit that applies to property covered under the incidental property coverage of Tenant's Improvements has been increased or if the Coverage D limit has been increased, apply the applicable earthquake rating information to the increased amount(s). For form HO 0006, apply the rating information shown in the state manual pages to the Coverage C limit shown on the declarations. (When the earthquake deductible exceeds 5%, the rating information is developed by adjusting the rating information shown in the state manual pages for a 5% earthquake deductible using the pertinent factor shown in the table for this rule. Factors for deductible options not shown in the table can be developed by interpolation.) Also apply the applicable earthquake rating information to the total amount of insurance that applies to the incidental property coverage of Increased Cost -- Ordinance Or Law (including any increase that applies from the attachment of an endorsement providing increased ordinance or law coverage as described in Rule 6.5). If the limit that applies to property covered under Coverage A has been increased or if the Coverage D limit has been increased, apply the applicable earthquake rating information to the increased amount(s). If the policy includes any of the optional endorsements for related private structures described in Rules , 7.4.3, or 7.4.5, apply the applicable earthquake rating information to the limit shown in the endorsement for each related private structure. Earthquake Deductible Factor 10%.89 15%.79 20%.68 Endorsement -- Attach endorsement HO 2754 and make an entry to show the earthquake deductible percentage that applies. When coverage is provided for exterior masonry veneer, make an entry to show that the masonry veneer exclusion does not apply. REV. 06/ 11 NJ HO Manual - 26 AAIS

27 HOMEOWNERS MANUAL 7.3 Automatic Adjustment of Limits Forms HO 0001, HO 0002, HO 0003 and HO 0005 This rule does not apply 7.4 Private Structures Increased Limit -- Forms HO 0001, HO 0002, HO 0003, And HO 0005 An additional amount of insurance can be provided for a specific related private structure on the described location that is covered under Coverage B. Endorsement -- Attach endorsement HO 3048 and make entries to describe the covered structure and show the additional limit that applies Rented To Others -- Forms HO 0001, HO 0002, HO 0003, HO 0005, And HO 0006 Coverage can be provided for a related private structure on the described location that is rented or held for rental to others, used for residential purposes, and occupied by no more than two families. The limit that applies to such a structure is the limit shown in the endorsement for that structure. The limit shown on the declarations for Coverage B (or Coverage A if the policy includes form HO 0006) does not apply. When such coverage is provided, coverage for liability arising out of that structure is also provided. Endorsement -- Attach endorsement HO 3540 and make entries to describe the covered structure, indicate the number of families, and show the limit that applies With Incidental Occupancies -- Forms HO 0001, HO 0002, HO 0003, HO 0005 and HO 0006 Coverage can be provided for a related private structure on the described location with an office, professional, private school, or studio occupancy if liability coverage for such occupancy also applies. The limit that applies to such a structure is the limit shown in the endorsement for that structure. The limit shown on the declarations for Coverage B (or Coverage A if the policy includes form HO 0006) does not apply. Endorsement -- Attach endorsement HO 3542 and make entries to describe the business, describe the covered structure, and show the limit that applies Increased Coverage A Limit -- No Private Structures -- Forms HO 0001,HO 0002, HO 0003, And HO 0005 If the combined replacement cost of all covered related private structures does not exceed $1,000, an amount equal to the Coverage B limit may be added to the Coverage A limit. REV. 06/ 11 NJ HO Manual - 27 AAIS

28 HOMEOWNERS MANUAL Away From The Described Location -- Coverage B Extension -- Forms HO 0001, HO0002, HO 0003, And HO 0005 The Coverage B limit can be extended to apply to a private structure that is owned by the named insured, located away from the described location, and used in connection with the described location. Such structures are subject to actual cash value loss settlement terms. Coverage does not apply to a structure: -- being used or capable of being used as a residence; -- used, in whole or in part, for the direction or operation of a business; -- used, in whole or in part, for the storage of business property; or -- rented or held for rental to any person who is not a tenant of the residence covered under Coverage A. This extension of coverage does not increase the Coverage B limit. Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO Away From The Described Location -- Specifically Scheduled Structures -- Forms HO 0001, HO 0002, HO 0003, HO 0005, And HO 0006 Coverage can be provided for a specific private structure that is owned by the named insured, located away from the described location, and used in connection with the described location. Such structures are subject to actual cash value loss settlement terms. Coverage does not apply to a structure: -- being used or capable of being used as a residence; -- used, in whole or in part, for the direction or operation of a business; -- used, in whole or in part, for the storage of business property; or -- rented or held for rental to any person who is not a tenant of the residence covered under Coverage A. The limit that applies to Coverage B (or Coverage A if the policy includes form HO 0006) does not apply to a specifically scheduled structure. Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO 6218 and make entries to describe the covered structure and show its location and the limit that applies. REV. 06/ 11 NJ HO Manual - 28 AAIS

29 HOMEOWNERS MANUAL 7.5 Personal Property Increased Limit - The Coverage C limit of liability may be increased at the additional premium shown in the State Rate Pages. Show limit on Declarations Page Reduced Limit - For one or two family dwellings, the Coverage C limit may be reduced to not less than 40% of the Coverage A limit at the credit shown in the State Rate Pages. This reduction is not permitted when Endorsement HO 3542 is attached. Show limit on Declarations Page 7.6 Replacement Value Personal Property Homeowners Replacement Value Coverage Endorsement HO 0002 and HO 0003 (1-2 Family) with value of $100,000 or more; HO 0004 and HO 0006 with value of $20,000 or more HO 0005 Attach endorsement UF-RCC-1 For use with property values of $150,000 or more built after See Rate Pages for surcharge HO 0002 and HO 0003 (3-4 Family) The minimum coverage A limit is $100,000 Coverage C will be increase to 50% of Coverage A Limit Premium Determination To develop the additional premium for this coverage, multiply the basic policy premium by 15% Attach endorsement ML-55 REV. 06/ 11 NJ HO Manual - 29 AAIS

30 HOMEOWNERS MANUAL Personal Property Limitations On Certain Property Forms HO 0001, HO 0002, HO 0003, HO 0004, HO 0005, And HO Money and Securities The special limits under Coverage C that apply to loss to money, securities, and related items can be increased at the additional premium shown in the State RatePages. Endorsement HO Unscheduled Jewelry, Watches and Furs The special limit under Coverage C that applies to loss to unscheduled jewelry, watches, and furs can be increased at the additional premium shown in the State Rate Pages. When the limit is increased, the most paid for loss to any one article is $1,000. The limit for unscheduled jewelry, watches and furs may be increased at the additional premium shown in the State Rate Pages. Endorsement HO Guns and Gun Accessories The limit for guns and gun accessories may be increased at the additional premium shown in the State Rate Pages Electronic Devices Endorsement HO 2565 The special limits under Coverage C that apply to loss to electronic devices and accessories that can be operated from the electrical system of a motorized vehicle or watercraft and other sources of power can be increased. Endorsement HO Silverware, Goldware and Pewterware The special limit under Coverage C that applies to loss to silverware, goldware, platinumware, pewterware, and items plated with silver, gold, or platinum can be increased at the additional premium shown in the State Rate Pages. Endorsement HO 2565 REV. 06/ 11 NJ HO Manual - 30 AAIS

31 HOMEOWNERS MANUAL 7.12 Personal Property Used For Business Purposes The special limit under Coverage C that applies to loss to personal proper used primarily for business purposes while on the described location (other than property rented or held for rental to others) can be increased. The increased limit does not apply to business property: -- in storage; -- held as a sample or for sale or delivery after sale; or -- pertaining to a business conducted on the described location. When the limit that applies to personal property used primarily for business purposes while on the described location is increased, the special limit that applies to personal property used primarily for business purposes while away from the described location (other than property rented or held for rental to others) is automatically increased to 20% of the limit that applies to property while on the described location. Endorsement HO Physicians, Surgeons, Dentists and Veterinarians On or Away from Premises This rule does not apply Computer Coverage -- Forms HO 0001, HO 0002, HO 0003, HO 0004, and HO 0006 Coverage for computer hardware and software can be provided for all risks of direct physical loss, with certain exceptions. Such coverage does not increase the Coverage C limit, change the special limits that apply under Coverage C, or change the terms that apply to personal property not covered. This option is not permitted on a policy that includes an endorsement providing special coverage for Coverage C -- Personal Property as described in Rules 7.27 and 7.28 Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO REV. 06/ 11 NJ HO Manual - 31 AAIS

32 HOMEOWNERS MANUAL 7.15 Scheduled Motorized Golf Cart Coverage -- Forms HO 0001, HO 0002, HO 0003, HO 0004, HO 0005, And HO 0006 Coverage for a motorized golf cart that is: -- designed to carry no more than four persons on a golf establishment for the purpose of playing the game of golf; and -- not built or modified after manufacture to exceed a speed of 25 miles per hour on level ground; can be provided for all risks of direct physical loss, with certain exceptions. Coverage for loss caused by collision is optional. When coverage is provided for a scheduled motorized golf cart, coverage is also provided for parts, equipment, and accessories that are designed for use with the scheduled golf cart and not permanently installed if, at the time of loss, the parts, equipment, or accessories are at residential premises occupied by an insured or are in or upon a golf cart while away from residential premises occupied by an insured. The limit that applies to such parts, equipment, and accessories is 10% of the largest limit shown for a scheduled golf cart. Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO 3831 and make entries to show the make or model and serial or motor number of the golf cart and the limit and deductible that apply. When coverage is provided for loss caused by collision, make an entry to show that coverage for loss caused by collision applies Additional Living Costs and Loss of Rent Coverage D may be increased at the additional premium shown in the State Rate Pages. Show limit on Declarations Page REV. 06/ 11 NJ HO Manual - 32 AAIS

33 HOMEOWNERS MANUAL Incidental Property Coverages 7.17 Refrigerated Property -- Forms HO 0001, HO 0002, HO 0003, HO 0004, HO 0005, and HO 0006 The limit that applies to the incidental coverage for refrigerated property can be increased. This option is not permitted on a policy that includes endorsement HO 1104 which deletes the incidental coverage for refrigerated property. Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO 2530 and make entries to show the amount of the increase and the total limit that applies 7.18 Credit Card, Electronic Fund Transfer Card Or Access Device, Forgery, And Counterfeit Money -- Forms HO 0001, HO 0002, HO 0003, HO 0004, HO 0005, And HO 0006 The limit that applies to the incidental coverage for loss by: -- theft or unauthorized use of credit cards, electronic fund transfer cards, or electronic access devices that make possible the deposit, withdrawal, or transfer of funds; -- forgery or alteration of checks, drafts, or negotiable instruments; and -- acceptance of counterfeit United States or Canadian paper money can be increased. Endorsement HO Reserved for future use 7.20 Fire Department Service Charge -- Forms HO 0001, HO 0002, HO 0003, HO 0004, HO 0005, And HO 0006 The limit that applies to the incidental coverage for fire department service charges can be increased at the additional premium shown in the State Rate Pages. Endorsement HO 2530 REV. 06/ 11 NJ HO Manual - 33 AAIS

34 HOMEOWNERS MANUAL 7.21 Liquid Fuel Remediation -- Forms HO 0002, HO 0003, HO 0004, HO 0005, and HO 0006 The limit that applies to the incidental coverage for loss caused by the discharge, dispersal, emission, escape, leaching, leakage, migration, release, seepage, or spillage of liquid fuel from the fuel system of a heating or air-conditioning system, water heater, or domestic appliance located on the described location can be increased. Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO 2530 and make entries to show the amount of the increase and the total limit that applies Tenant's Improvements Increased Limit -- Described Location -- Form HO 0004 The limit that applies to the incidental coverage for tenant's improvements at the described location (10% of the Coverage C limit) can be increased. Endorsement -- Attach endorsement HO 2530 and make entries to show the amount of the increase and the total limit that applies Scheduled Personal Property 7.24 Glass Coverage may be provided for physical loss, with certain exceptions, on scheduled personal property. Refer to Company. Attach Endorsement IM-175 and IM-100 This rule does not apply Water Back Up And Sump Discharge Or Overflow Coverage for direct physical loss caused by water or matter present in water that backs up through sewers or drains or overflows or discharges from a sump, sump pump, or related equipment can be added. Coverage is limited to $5,000. A $250 deductible applies to the total of all loss, other than loss covered under Coverage D. Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO 2708 REV. 06/ 11 NJ HO Manual - 34 AAIS

35 HOMEOWNERS MANUAL 7.26 Loss Assessment -- Forms HO 0001, HO 0002, HO 0003, HO 0004, HO 0005, and HO Additional Limit -- Described Location The incidental property coverages and the incidental liability coverages provide a limited amount of coverage for loss assessment levied against the insured as owner or tenant of the described location by a homeowners, condominium, or similar residential association. An additional limit, which can be applied to assessments arising out of a loss covered under one or both of these incidental coverages, can be added. Regardless of the limit that applies: -- coverage for an assessment that results from a deductible in the insurance purchased by the association is limited to $1,500 under the incidental liability coverage for loss assessments; -- there is no coverage for an assessment that results from loss to property caused by earthquake (Refer to Rule for loss assessment coverage for earthquake); and -- there is no coverage for an assessment that results from a deductible in the insurance purchased by the association under the incidental property coverage for loss assessment. (Refer to Rule 7.30 for coverage for association deductibles.) Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO 2550 and make an entry to show the additional limit that applies Additional Locations Coverage for loss assessments arising out of an additional location owned by or rented to the insured can be added. A specific limit applies at each additional location. The limit applies to assessments arising out of loss covered under the incidental property coverage for loss assessments and/or the incidental liability coverage for loss assessments. Regardless of the limit that applies: -- coverage for an assessment that results from a deductible in the insurance purchased by the association is limited to $1,500 under the incidental liability coverage for loss assessments; -- there is no coverage for an assessment that results from loss to property caused by earthquake (Refer to Rule for loss assessment coverage for earthquake); and REV. 06/ 11 NJ HO Manual - 35 AAIS

36 HOMEOWNERS MANUAL -- there is no coverage for an assessment that results from a deductible in the insurance purchased by the association under the incidental property coverage for loss assessment. (Refer to Rule 7.30 for coverage for association deductibles.) Premium Determination -- Use the rating information shown in the state manual pages. Endorsement -- Attach endorsement HO 2550 and make entries to show the location of the premises and the limit that applies at that location Loss Assessment - Earthquake Coverage Coverage for loss assessments arising from direct loss to property caused by earthquake can be added. There is no coverage for an assessment that results from a deductible in the insurance purchased by a homeowners, condominium, or similar residential association. (Refer to Rule 7.30 for coverage for association deductibles.) A specific limit applies at each covered location. Coverage is subject to a deductible, expressed as a percentage of the limit applies. Premium Determination Use the rating information shown in the state manual pages. The rating information reflects a 5% deductible. When the earthquake deductible exceeds 5%, the rating information is developed by adjusting the rating information shown in the state manual pages using the pertinent factor shown in the table for this rule. Factors for deductible options not shown in the table can be developed by interpolation. Deductible Factor 10%.90 15%.80 20%.70 Endorsement -- Attach endorsement HO 2753 and make entries to show the location of the premises, the limit that applies at that location, and the percentage deductible that applies to the coverage. REV. 06/ 11 NJ HO Manual - 36 AAIS