12.2 Scheduled Personal Property, Flood (NFIP), and Earthquake

Scheduled Personal Property, Flood (NFIP), and Earthquake

Quick Answer: Unendorsed homeowners special limits are why jewelry, fine arts, cameras, instruments, and silverware get scheduled on a personal inland marine (personal articles) form—often agreed value, worldwide, with a low or no deductible. Flood is generally excluded on HO. The National Flood Insurance Program (NFIP) Dwelling Form offers building coverage up to $250,000 and contents up to $100,000 for most residential policies; the two are purchased separately, and a 30-day waiting period generally applies (loan-closing and similar documented exceptions exist). Earthquake is typically an earth-movement exclusion; buy an endorsement, standalone policy, or difference-in-conditions (DIC) cover, and expect a percentage deductible of Coverage A.

Assignment 4's property half is three different gaps that all look like “the house policy should have paid this” to a customer—and do not. Section 12.1's umbrella will not rebuild a flooded kitchen or replace an unscheduled ring. These are first-party products.

Why HO special limits force scheduling

Section I contents on an HO-3 or HO-5 looks generous until a theft hits a class ISO (and most proprietary forms) sublimit. Typical unendorsed homeowners special limits that AINS 102 expects you to recognize as a scheduling trigger include:

• Money and related property: a few hundred dollars (often $200).
• Theft of jewelry, watches, furs, and precious stones: often $1,500 total, not per item.
• Theft of firearms and theft of silverware / goldware / pewterware: often $2,500 each class.
• Business property, watercraft, and portable electronics in a vehicle: similarly modest caps.

Those caps are not the Coverage C limit. A household with $150,000 of unscheduled contents can still recover $1,500 for a stolen $18,000 engagement ring. The rest is uninsured unless the ring was scheduled.

Personal inland marine—the scheduled personal property endorsement on a homeowners policy, or a standalone personal articles floater—is how personal lines treats movable, high-value property. Classes commonly scheduled: jewelry, fine arts, cameras, musical instruments, silverware, furs, stamp and coin collections, and golfer's equipment.

What the schedule usually buys compared with unscheduled contents:

• Agreed value on many items (especially jewelry and fine arts): the listed amount is the value, not a debate about actual cash value after a loss.
• Open-perils / fewer exclusions than named-perils contents. Mysterious disappearance and breakage can still be class-specific, so read the form.
• Low or no deductible.
• Worldwide territory for most classes (fine arts are often limited to specified locations unless the schedule says otherwise).
• Newly acquired property windows (jewelry and furs often a short period such as 30 days; fine arts sometimes longer) and pair-and-set clauses.

The producer's job is not “buy more Coverage C.” Raising unscheduled contents does not erase the jewelry theft special limit. Itemize, appraise, and schedule.

Application: a camera kit worth $9,000 is stolen from a hotel room in another state. Unendorsed HO theft special limits and off-premises rules will disappoint. A scheduled camera floater with worldwide territory and a $0 deductible is the product that matches the exposure. A fine-arts collection that travels to a gallery show needs the schedule's exhibition and location conditions checked before anyone promises worldwide coverage.

Flood is not a homeowners peril

Standard HO and dwelling forms exclude flood: overflow of a body of water, surface water, waves, tides, and often spray, whether or not driven by wind. A hurricane can produce a covered wind claim to the roof and an uncovered flood claim to the first floor on the same night. Anti-concurrent-causation wording can make that split even sharper. Do not tell a customer “you have an HO-3 special, so flood is covered.”

The public backstop is the National Flood Insurance Program (NFIP), administered with FEMA. For most residential risks the NFIP Dwelling Form offers:

Those are separate purchases. A mortgagee in a Special Flood Hazard Area (SFHA) can require building coverage; that requirement does not automatically buy contents. A renter in a floodplain can buy contents only. Building and contents have separate deductibles.

Waiting period and flood definition

NFIP coverage generally does not start for 30 days after the application and premium. Documented exceptions exist; the one AINS 102 will test is loan closing—when the policy is purchased in connection with making, increasing, extending, or renewing a loan, coverage can be effective at closing rather than after 30 days. Map revisions can also change the wait. Renewals of an in-force NFIP policy are not a new 30-day clock. A bind on June 1 and a river overflow on June 10 is uncovered unless an exception applies.

Flood definition (NFIP). Flood is a general and temporary condition of partial or complete inundation of normally dry land from overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source, or mudflow—and, in the NFIP definition, it must involve two or more acres or two or more properties (one of which is yours). A burst water heater, a single-property sump overflow that never leaves the basement, and an earthquake crack with no inundation are not NFIP floods. Sewer backup without flood is a different HO exclusion (sometimes endorsable); it is not “the flood policy.”

NFIP building coverage on a principal residence can settle on a replacement-cost basis if eligibility rules (including an 80% insurance-to-value type condition) are met; contents are typically actual cash value. Increased Cost of Compliance (ICC) may be available after a flood for required elevation or demolition, but ICC sits inside the building maximum, not on top of $250,000.

When $250,000 of building or $100,000 of contents is not enough—coastal high-value dwellings, finished basements, expensive furniture—private excess flood sits above NFIP. Private primary flood also exists in some markets. Excess flood does not rewrite the HO exclusion; it layers on the flood product.

Earthquake and earth movement

HO forms typically exclude earth movement: earthquake, landslide, mine subsidence, earth sinking, rising, or shifting. Fire following an earthquake may still be a fire claim; the shake damage to the chimney is not.

Households buy earthquake in three main ways:

1. An earthquake endorsement on the homeowners policy.
2. A standalone earthquake policy (including residual-type markets in high-risk states).
3. A difference-in-conditions (DIC) policy on a high-value home, which can fill earthquake, flood, and other HO gaps in one specialty form.

Deductibles are the exam trap. Earthquake deductibles are commonly a percentage of Coverage A (often 5%, 10%, 15%, or 20%), not a $1,000 HO property deductible. On a $600,000 dwelling, a 10% earthquake deductible is $60,000. That is planned retention, and it is why some households decline the coverage after the quote. Percentage deductibles may apply separately to other-structures and contents depending on the form.

Aftershocks are often treated as one occurrence if they fall inside a stated period (72 hours is a common form window). Do not promise a new limit for every tremor. A producer who raises Coverage C instead of scheduling, who tells a coastal mortgagor that HO-3 is enough, or who quotes earthquake with a $1,000 deductible has not done Assignment 4.

Section 12.3 adds the personnel products—life, health, and disability—and the remaining personal P&C toys: boats and recreational vehicles.