HOMEOWNERS UNDERWRITING GUIDE

Transcription

1 HOMEOWNERS UNDERWRITING GUIDE October 15, /15/2011

2 The outline below is not intended to replace the underwriting manual and is intended as a quick reference guide only. Please refer to the complete underwriting manual for more detail or call the Underwriting Department at option 3. *** All Bound Applications and supporting documents MUST be received by the company within 15 days of binding (not the effective date of the policy). *** A - Dwelling Coverage HO-3 HO-6 HO-4 $150,000 - *$1,300,000 (Tri-County) $100,000 - *1,300,000 (Non Tri-County) $15,000 - $250,000 NA B - Other Structures 1%, 2%, 5%, 10%, 15%, 20% of Cov of "A" NA NA C - Contents 50% of Cov. "A" / Cov. may be excluded $10,000 - $150,000 (If RTO $10,000 only) $10,000 - $50,000 D - Loss of Use 20% of Cov. 'A' 40% of Cov. 'C' 20% of Cov. 'C' E - Personal Liability F - Medical Payments $100,000 or $300,000 $1,000 (No adjustments) * High Value Homeowner additional guidelines Risk HO-3 HO-6 HO-4 PC Class Dwelling Age PC 1-8 / 9-10 (subject to UW approval) up to 50 years old 4 - Points Product Line When TIV (Coverage A,B,C & D combined) is $1,000,000 - $2,500,000 the following additional guidelines apply : * Must be 1975 or newer construction * Exterior Walls must be 75% Masonry * Flat roof cannot exceed 10% of total roof area * Monitored alarm for Burglary AND Fire Required * Secondary / Seasonal Allowed (TIV limited to $2 Million if not Primary Home) * Cannot be rented to other at any time * PC 1-5 only Shingle Roof Flat Roof Underwriting yrs. Old Roof, Elec. & Plumbing must show 5+ years life expectancy. Inspections are valid up to 18 months. All homes 20+ years old without proof that the roof has either been replaced or has 5+ years of life expectancy remaining are ineligible (This requirement does not apply to Tile/Metal roofs) Not Required NA Not Required Wood Shingle Roof Unacceptable NA NA Animal Liability Lapse in Coverage Bankruptcy / Foreclosure Distance to Coast Hurricane Coverage Pool & Trampolines All liability is Excluded. No Restriction on breeds of dogs as liability coverage is Excluded without a buy back option. Horses, for personal use, are acceptable, subject to Underwriting approval. Lapse Acceptable. (10% surcharge applies on lapses greater than 45 days, subject to Underwriting approval) Acceptable All Coastal risk are eligible / Including Barrier Islands Available in all open counties (Including Wind Pool) ($25,000 sub limit applies) Note: Diving boards and pool slides are Acceptable. If pool, trampoline or other attractive nuisance is not completely secured by a Screened Enclosure, Wall or Fence that is permanent and lockable with a minimum height of 4 feet then it is UNACCEPTABLE. (Child gates/fences that are not permanently installed with a locking gate are unacceptable.) NA Claims Ineligible if : * Applicants that have incurred three (3) or more claims in the three (3) years immediately preceding the policy effective date. Acts of God not counted. * Applicants that have had a property or contents loss and not installed a monitored Burglar/Fire Alarm system and had damage repaired. * Applicants with a prior water damage loss of $10,000 or more in the last three (3) years. * Applicants that have had more than one (1) water damage claim in the past ten (10) years for new business. Seasonal Occupancy Rented to Others Foundation Type Acceptable - Must be in a gated community or have monitored Burglar/Fire Alarm or supply Caretaker Information. (Insured cannot be their own Caretaker) Unacceptable Acceptable : Lease cannot be less than 3 months. Slab and Crawl Space acceptable. (See page 16 of manual for additional information) NA NA Contact Information Marketing Department: Claims Department: / option 2 marketing@tchcusa.com / Fax: Underwriting Department: / option 3 Marketing Department: / option 4 Mailing Address: Overnight Address: PO Box W. Oakland Park Blvd Application Submission: uwinfo@tchcusa.com Fort Lauderdale, FL Suite 300 Fax: Fort Lauderdale, FL myfnic.com NASDAQ Symbol : TCHC Demotech Rated "A" (Exceptional) (Rev. 9/15/2011) Established in 1992

3 WEBSITE: myfnic.com CONTACT INFORMATION CUSTOMER SERVICE/UNDERWRITING (800) Option # 3 (M-F 8am-5pm) (954) Fax uwinfo@tchcusa.com MARKETING DEPARTMENT (800) Option # 4 (954) Fax marketing@tchcusa.com CUSTOMER SERVICE HOURS OF OPERATION: 8:00AM - 5:00PM Monday Friday CLAIMS DEPARTMENT (800) Option #2 (954) Fax CLAIMS HOURS OF OPERATION: 24 HOURS MAILING ADDRESS FEDERATED NATIONAL INSURANCE COMPANY ATTN: HOMEOWNERS DEPT P.O. BOX FORT LAUDERDALE, FL CERTIFIED MAIL FEDERATED NATIONAL INSURANCE COMPANY ATTN: HOMEOWNERS DEPT 3661 WEST OAKLAND PARK BOULEVARD SUITE 300 LAUDERDALE LAKES, FL /15/2011 2

4 Homeowners Manual Use this Federated National Insurance Company ( Federated National ) underwriting guide, as well as bulletins, as they become effective. Bulletins may change this guide. Our rating/policy management software is located at: myfnic.com All Correspondence/Information Submission Portals Federated National s Underwriting Department is now accepting All Correspondence via , fax, and US mail. The address is uwinfo@tchcusa.com. The fax number is (954) The mailing address is: Federated National Insurance Company, P.O. Box , Fort Lauderdale, FL New Business All new business must be bound online via myfnic.com and submitted on a Federated National application. Authorized agents have full binding authority. After fully completing an application, it must be signed by both producer and insured(s). The insured(s) initials are required on the No Loss section of the application. Payment in full or down payment amount, as per payment option selected, must be collected at time of binding and submitted with the required application and supporting documents. All bound applications must be postmarked, ed or faxed within 15 days of the date coverage is bound. Agents may bind policies up to thirty (30) days in advance of the effective date. (NOTE: Power of Attorney is acceptable. Copy must be submitted with application) Proof of Prior Coverage: Homes without proof of prior insurance or a coverage lapse of greater than forty-five (45) days are subject to a 10% surcharge with underwriting approval. This surcharge does not apply to new purchases on HO-3 & HO-6 provided a settlement statement is submitted with the application. The surcharge does not apply to a new lease or rental agreement for HO-4 risks with an effective date within 45 days of the effective date of the lease Please Note: In an effort to manage our exposure, Federated National may close certain geographical areas. Federated National may accept risks in certain closed geographical areas with additional underwriting information. Available Homeowners Forms Homeowner s forms: HO-3, HO-4 and HO-6. We do not offer Dwelling Fire policies. 10/15/2011 3

5 Definition of Policy Forms & Coverage Homeowners (HO-3) Provides replacement cost coverage on the insured structures and replacement cost coverage on personal property within the insured premises. Replacement cost coverage on contents is automatically included in the base coverage for HO-3 policies. ACV coverage can be added by endorsement. Tenants (HO-4) Provides replacement cost coverage on improvements and betterments and actual cash value on personal property. ACV coverage on contents is automatically included in the base coverage with Replacement Cost coverage available by endorsement. Unit Owners (HO-6) Provides replacement cost coverage on additions and alterations that are not the responsibility of the association and actual cash value on personal property within the insured premises. ACV coverage on contents is automatically included in the base coverage with Replacement Cost coverage available by endorsement. Appraisals are deemed valid for a period of one (1) year. Minimum and Maximum Limits HO-3 Coverage A - $150,000 - $1,300,000* (wind & x-wind, tri-county) Coverage A - $100,000 - $1,300,000* (wind & x-wind, non tri-county) Coverage B - 1%, 2%, 5%, 10%, 15% or 20% of A Coverage C - 50% of A (No adjustments. However coverage may be excluded.) Coverage D - 20 % of A Coverage E - $100,000 or $300,000 Coverage F - $1,000 (no adjustments) HO-4 Coverage C - $10,000 to $50,000 Coverage D - 20% of C Coverage E - $100,000 or $300,000 Coverage F - $1,000 (no adjustments) HO-6 Coverage A - $15,000 to $250,000 Coverage C - $10,000 to $150,000 Coverage C If Rented to Others Endorsement is selected $10,000 max limit Coverage D - $40% of C Coverage E - $100,000 or $300,000 Coverage F - $1,000 (no adjustments) * Limits in excess of $500,000 are only available with prior underwriting approval. 10/15/2011 4

6 Policy Term & Payment All policies will be issued on an annual policy period. Full term premium or company direct bill down payment is required with all applications and is payable to Federated National Insurance Company. Federated National offers quarterly and semi-annual payment plans. If a policy premium payment is received without a payment option indicated on the application, the policy will be set up to be paid on an installment payment plan relative to the premium amount received. Payment Plan Fee Structure Two payment option/semi-annual Down payment of 60% (base premium) + $10 (set up fee) + All Assessments & fees added back in. Four payment option/quarterly Down payment of 40% (base premium) + $10 (set up fee) + All Assessments & fees added back in. Subsequent Payments Total Premium including Fees ranging from: The fee per payment is: $0 to $399 $3 $400 to $499 $4 $500 to $649 $5 $650 to $799 $6 $800 to $949 $7 $950 to $1,099 $8 Add $1 fee per payment for every $150 of total premium over $1,099. High Value Homeowner Guidelines TIV (Coverage A,B,C&D combined) of $1,000,000 to $2,500,000 have the following additional underwriting requirements. Home must be built 1975 or newer Home must have a minimum of 75% masonry construction Home cannot have a flat roof greater than 10% of total roof line Homes with shingle roofs must meet UW guidelines as published 10/15/2010 Central Station/Monitored Burglar and Fire Alarm are Required Secondary/Seasonal Allowed. $2 Million limit on TIV if this option is selected. Home cannot be rented to others at any time. Protection class 1-5 only 10/15/2011 5

7 HO-3 Deductibles Standard deductibles are $1,000 for all-perils and 2% of Coverage A for wind loss caused by hurricanes. Other options are $500 or $2,500 for all perils. Windstorm/Hurricane deductible options are $500, 2%, 5% or 10% of Coverage A. Mid-term changes to wind deductibles are not acceptable. Please Note: (1) A hurricane deductible of $500 is only available if Coverage A is under $250,000 and AOP deductible is $500 or $1,000; (2) A hurricane deductible of 2% with a $2,500 AOP deductible is only available if Coverage A is above $126,000; (3) On ex-wind policies, the AOP deductible of $2,500 is only available if Coverage A is over $126,000 or on HO-6 policies, if Coverage C is over $10,000. HO-6 Deductibles Standard deductibles are $1,000 for all-perils and 2% of Coverage C for wind caused by hurricanes. Other options are $500 or $2,500 for all perils. A $2,500 AOP deductible is only available if Coverage C is above $126,000. Construction Definitions Frame Exterior wall of wood or other combustible construction, including wood ironclad, stucco on wood or plaster on wood, combustible supports and aluminum or plastic siding over frame. Masonry Veneer Exterior walls of combustible construction veneered with brick or stone. Masonry Exterior walls constructed of masonry materials such as adobe, brick, concrete, gypsum block, hollow concrete block, stone, tile or similar materials, and floors and roof of combustible construction. Superior Construction Exterior walls, floors and roof constructed of masonry or other non-combustible material(s). Note: Mixed Construction (Masonry/Frame) A combination of both frame and masonry construction shall be classified as frame when the exterior walls of frame construction (including gables) exceed 33 1/3 % of the total exterior wall area. 10/15/2011 6

8 HO-3: Older Home Rules Homes that are built within the last fifty (50) years are eligible for coverage. Homes that are thirty (30) years old or older must be accompanied by an acceptable 4-point Inspection. Inspections must be performed by a licensed/qualified inspector or inspection company and the license # and contact phone number must appear on the report. (see page 8-9 & 10 for specific prohibited risks). The 4-point inspection is valid for up to 18 months, must be performed prior to the effective date of coverage and must include information on the roof, plumbing, heating and electrical. Life expectancy must be five (5) years or greater for three (3) points of the inspection which are the roof, plumbing and electrical. Inspection must be sent with the application. This inspection rule does not pertain to HO-4 or HO-6 policies. There is no age restriction on Air Conditioners. All homes 20 years old or older with a composition Shingle roof or Flat roof are ineligible unless submitted with documentation indicating that the roof has been updated within the last 15 years or evidence of sound condition issued by a licensed contractor or approved home inspection service which indicates a life expectancy of 5 or more years. Electrical system must be on Breakers. Fuses are unacceptable. Electrical No knob-tube or aluminum wiring Plumbing No poly-butylene pipes. HO-3 & HO-6: Seasonal Homes Homes that are not the insured s primary residence and are not rented to others must have at least one of the following four: 1. Gated community (Proof must be on association letterhead) 2. Guarded community (Proof must be on association letterhead) 3. Caretaker (Need full name and contact information, must visit location at least 2 times per month) Note: Insured cannot be their own Caretaker. 4. Monitored burglar and fire alarm (Alarm certificate within one (1) year) 10/15/2011 7

9 HO-6: Unit Owners Rental to Others Must include Unit Owners Rental to Others Endorsement Seasonal & dual occupancy accepted If rented, the term of lease must be at least 3 months or greater If seasonal, must have at least one of the following: 1. Gated community (Proof must be on association letterhead) 2. Guarded community (Proof must be on association letterhead) 3. Caretaker (Need full name and contact information, must visit location at least 2 times per month) Note: Insured cannot be their own Caretaker. 4. Monitored burglar and fire system (Alarm certificate within one (1) year) Replacement Cost Estimator All new business must be accompanied by a current Replacement Cost Estimator (RCE). If an appraisal is submitted along with an RCE, the appraisal will override the RCE if the estimated cost new is greater than what the RCE indicates. We accept other companies RCE s. If submitting another company s RCE, please provide the detailed report and not just the summary page. Coverage A must be at least 100%, but not more than 120%, of the appraisal or RCE, whichever is greater. Coverage should be rounded up to the nearest thousand. Premium Premium shall be returned pro-rata upon mid-term cancellations. All coverage will be rounded to the nearest thousand, and all premiums will be rounded to the nearest dollar. Changes and Mid-Term Premium Adjustments All changes shall be made pro-rata subject to the rules and rates in effect at the inception date of the policy or latest subsequent renewal date thereafter. If insurance is increased, decreased, or cancelled, the additional or return premium shall be calculated on a pro-rata basis subject to the minimum premium requirement. The agent s signature is required in order to make changes to policies. All cancellation requests must be signed by the insured and agent. Windstorm Exclusion, Contents Exclusion and Screen Enclosure Endorsements can only be done at time of renewal (endorsements must be postmarked within fifteen (15) days of the renewal). (Note: Screen Enclosure coverage can be added mid-term if proof that the Screen Enclosure is newly added within 30 days of request). 10/15/2011 8

10 Sinkhole Coverage If Sinkhole Coverage is rejected: a signed acknowledgement form (FNIC HO 37 (10 10)) rejecting coverage must be submitted. If it is not submitted with the application, a request for missing information letter will be generated giving the agent 15 days to comply. If form is not received within the 15 days, a Notice of Cancellation will be issued. If Sinkhole Coverage is selected: and the acknowledgement form (FNIC HO 37 (10 10)) is submitted selecting the coverage but the coverage selection/rejection form (FNIC HO 38 (10 10)) is not submitted with the application, a request for missing information letter will be generated giving the agent 30 days to comply. If the form is not received within the 30 days, the coverage will be endorsed off of the policy creating a revised declaration page and a premium refund. Coverage can be added back to the policy if the missing form is received within 30 days of the endorsement date. After 30 days, it can only be added back on at renewal. No mid-term endorsements ADDING or REMOVING sinkhole coverage is allowed. Contents Coverage ACV Request If the ACV Coverage form (FNIC HO ) is not submitted with the application, a request for missing information letter will be generated giving the agent 15 days to comply. If form is not received within the 15 days, a Notice of Cancellation will be issued. Mid-term endorsements ADDING or REMOVING the ACV Endorsement is allowed. Screen Enclosure Coverage If the screen enclosure coverage is rejected: a signed acknowledgement form (FNIC- FLORIDA HO99 (10/08)) rejecting coverage must be submitted. If it is not submitted with the application, a request for missing information letter will be generated giving the agent 15 days to comply. If form is not received within the 15 days, a Notice of Cancellation will be issued. If the screen enclosure coverage is selected: and the acknowledgement form (FNIC-FLORIDA HO99 (10/08)) is not submitted, a request for missing information letter will be generated giving the agent 30 days to comply. If the form is not received within 30 days, the coverage will be endorsed off of the policy creating a revised declaration page and a premium refund. 10/15/2011 9

11 Coverage can be added back to the policy if the missing form is received within 30 days of the endorsement date. After 30 days, it can only be added back on at renewal. No mid-term endorsements or REMOVING screen enclosure coverage is allowed. Screen Enclosure & Carport Buy Back Option Please be advised that screen enclosures and carports are excluded for hurricanes. You may buy back up to $50,000 in coverage ($5,000 increments) for the Screen Enclosure through the quoting system under the Additional Coverage section of the quoting process. Trusts Risks written in the name of a Trust or Live Estate must be occupied by the owner or beneficiary. Note: If risk is not owner occupied but is occupied by a direct relative, please submit for approval. Protection Class Limitations 1. Risks located in a Protection Class rating of 9-10 require underwriting approval. 2. In a classified area where two or more classifications show (i.e. 4/9), the classification is determined as follows: DISTANCE TO FIRE STATION/FEET TO FIRE HYDRANT 5 road miles or less AND within 1,000 feet = use 1 st PC listed 5 road miles or less AND beyond 1,000 feet = use 2 nd PC listed Over 5 road miles = PC 10 In an area classified as Protection Class 9 or 10 where the responding Fire Department will certify their response distance is less than 5 road miles AND the availability of a fire hydrant or acceptable Alternate Water Source within 1,000 feet of the structure use the 1 st rate class indicated for that jurisdiction. Wind Pool We do write policies in the Wind Pool as long as they do not fall under The Prohibited Risks Section of our guidelines. Under no circumstances is coverage to be backdated. There is complete animal liability exclusion on all policies. 10/15/

12 Hurricane/Tornado Procedures PLEASE REFER TO BULLETINS AT myfnic.com FOR BINDING RESTRICTIONS & UPDATES The Company may suspend binding authority for new business and endorsements when a tropical storm or hurricane watch or warning has been issued by the National Weather Service. Please self-monitor the storms. Claim Reporting Procedures Please be advised that we have a toll free number available 24/7 for homeowner claims. To expedite claim service efficiently and effectively please instruct your insureds and claimants to call our Claims Department directly at (800) , Option #2. Credits/Discounts Policies received without the proper documentation will have the applicable credits removed resulting in the generation of an additional premium billing. Non Renewals Policies that have been non-renewed for exposure and risk management are eligible to be re-written with FNIC with prior Underwriting approval. All other non-renewed policies are not eligible to be re-written with Federated National. 10/15/

13 Prohibited Risks The following are not acceptable for Federated National s Homeowners program: Type 1. Risks older than fifty (50) years. 2. Risks built on piers, piling, or stilts. (Crawl spaces are acceptable / see pg.16) 3. Risks with excessive or unusual liability exposure i.e. skateboard or bicycle ramps, etc. 4. Risks with pools or similar structures that is not completely screened, fenced or walled. The surrounding structure must be permanent and lockable with a minimum height of 4 feet. (Child gates/fences that are not permanently installed with a locking gate are not acceptable) 5. Risks in poor condition and/or are poorly maintained or have unapproved roofs, such as cedar shingles. 6. Risks heated, in whole or in part, by solid fuel heating devices, such as wood burning stoves or fireplace inserts (wood burning stoves inserted into masonry fireplaces), or heated by any other device which is not controlled by a wallmounted thermostat. Exception: Factory or professionally installed central heat systems or fireplace systems. 7. Mobile homes, pre-fabricated homes, Modular or kit homes. 8. Risks that do not have circuit breakers. 9. Risks made of EIFS, synthetic stucco. 10. Risks with Aluminum branched wiring. (Aluminum main feed wire is acceptable) 11. Risks that have electrical fuses. 12. Risks that have polybutylene pipes. 13. Risks that have a remaining life expectancy of less than five (5) years on any of the following: roof, electrical or plumbing. 14. Risks that are not insured to 100% of the replacement cost of the appraisal, or RCE. 15. Risks with more than two (2) mortgages. 10/15/

14 Prohibited Risks (Continued) The following are not acceptable for Federated National s Homeowners program: Location 1. Risks within one (1) mile of a confirmed sinkhole. 2. Risks located where there is past or current sinkhole activity. 3. Risks located on more than 5 acres of land or on a farm, ranch, orchard or grove; or where farming activities or ranching operations take place. 4. Risks located in territories 5, Risks subject to brush or forest fire. 6. Risks under a tornado, tropical storm, or hurricane watch or warning. 7. Risks located in a condemned area due to conditions such as urban renewal or highway construction. Occupancy 1. HO-3: A single family home that is occupied by more than two (2) families. 2. HO-4 and HO-6: Homes occupied by more than two (2) families. 3. Multiple family homes with more than two (2) units. A duplex is acceptable as long as the owner is a resident. 4. A single family dwelling, that has more than two (2) roomers or boarders. 5. Fraternity and sorority dwellings or any similar housing arrangement. 6. Dwellings used for commercial or business purposes. 7. A home that is under construction. 8. All vacant and or unoccupied dwellings. Loss History 1. Applicants convicted of arson in the past twenty-five (25) years. 2. Applicants that have been cancelled for insurance fraud in the past fifteen (15) years 3. Applicants that have had a material misrepresentation on an application for insurance in the past seven (7) years. 4. Applicants that have incurred three (3) or more claims in the three (3) years immediately preceding the policy effective date. Exception: An act of God. 5. Applicants that have suffered a personal liability claim in the past three (3) years. 6. Applicants which have had a property or contents loss within the past three (3) years and do not have a monitored Burglar/Fire alarm system(s) and had damage repaired. 10/15/

15 7. Applicant that has suffered more than one (1) water damage claim in the past ten (10) years for new business and more than two (2) water damage claims in the past ten (10) years for renewal business. 8. Applicants with a prior water damage loss of $10,000 or more in the last three (3) years. Loss History Surcharge Properties that have a history of prior losses with the company (6/1/2008 and later) shall receive an additional surcharge. An eligible loss is any property or liability loss incurred by the insured, within the most recent 36 month period were $ or more was paid by the company. Any loss resulting from windstorm, hail, earthquake, sinkhole collapse, mine subsidence, or an act-of- God shall not be considered in the history of prior losses. Losses where payment was made only under Medical Payments to Others or similar coverage is not considered in the history of prior losses. Surcharges apply to the non-wind portion of the premium only. 10/15/

16 Requirements for Submission Money & Paperwork All money and paperwork must be received within fifteen (15) days of the date coverage is bound. Please see our underwriting guidelines for our complete instructions or contact the Marketing Department at (800) , Option: 4. Federated National Application fully executed Applications may be forwarded to us via , fax, and US mail. The address is The fax number is (954) The mailing address is: Federated National Insurance Company, P.O. Box , Fort Lauderdale, FL RCE An easy to use RCE link is now available at the rating/policy management site. We accept other companies RCE s. 4 Point Inspections / Roof Inspection Inspections must be submitted on homes thirty (30) years of age and older. Inspections are valid for a period of up to eighteen (18) months prior to the policies inception date. Inspections must be on the contractor s letterhead or our form, have their license number displayed and be signed and dated by the inspector. Uniform Mitigation Verification Inspection Form Effective June 1, 2011 we only accept the current OIR-B form with a revision date of 02/10 or later. No exceptions. If the form is signed by a Certified Home Inspector we require a copy of the inspectors Course Completion Certificate. NOTE: Mitigation and 4-point inspections may be verified by the Company. 10/15/

17 Crawl Space Guideline Unacceptable Acceptable Final approval on acceptability will be made by the Underwriting Department. Pride of ownership should exist on all submitted risks. 10/15/

18 Roof Shapes 10/15/