10.4 Other Personal Packages, Watercraft & the Farmowners Policy
Key Takeaways
- The mobile homeowners policy is a homeowners form modified by endorsement for a manufactured home, typically settling the structure at actual cash value rather than replacement cost.
- A comprehensive personal liability policy provides Section II style liability and medical payments coverage on a standalone basis for an insured who needs no property coverage.
- Yacht policies combine hull physical damage with protection and indemnity liability, and are subject to navigational limits and a lay-up warranty.
- Protection and indemnity is the marine liability coverage that responds to bodily injury and property damage arising from ownership or operation of the vessel.
- The farmowners policy is a package combining dwelling and household property, scheduled and unscheduled farm personal property, farm structures, and farm liability in a single contract.
10.4 Other Personal Packages, Watercraft & the Farmowners Policy
The North Carolina adjuster content outline includes three small but distinctly tested items: other personal packages (mobile homeowners and comprehensive personal liability), watercraft and yacht coverage, and — inside the commercial domain — the farmowners policy. Each carries only a question or two, but they are easy points for a candidate who knows the structure and near-certain losses for one who does not.
1. The Mobile Homeowners Policy
A manufactured home is not eligible for a standard homeowners policy. Coverage is written by attaching a mobilehome endorsement to a homeowners form, which adapts the contract to the different construction, mobility, and depreciation characteristics of the risk.
| Feature | Standard homeowners | Mobile homeowners |
|---|---|---|
| Coverage A settlement | Replacement cost, subject to the eighty percent condition | Commonly actual cash value, because manufactured homes depreciate more like vehicles than site-built structures |
| Eligible structure | Site-built dwelling | Manufactured or mobile home, usually with a minimum size requirement |
| Transportation | Not applicable | Transportation / permission to move coverage available by endorsement for damage while the home is being relocated |
| Other structures | Percentage of Coverage A | Often a reduced percentage |
| Section II | Coverage E and F | Coverage E and F, substantially unchanged |
Adjuster consequence: the settlement basis is the point that changes the number. On a total loss to a fifteen-year-old manufactured home, actual cash value settlement produces a materially lower payment than replacement cost, and the adjuster must confirm which basis the endorsement specifies before communicating a figure.
Transportation coverage is the second tested item. Damage occurring while the home is in transit is excluded unless the endorsement is in place, and it is typically written for a limited period and a stated route.
2. The Comprehensive Personal Liability Policy
A comprehensive personal liability (CPL) policy provides personal liability and medical payments coverage on a standalone basis, without any property coverage attached. It is functionally Section II of a homeowners policy sold by itself.
Who Needs One
| Situation | Why a CPL fits |
|---|---|
| An insured who owns vacant land | There is no dwelling to insure, but premises liability exposure exists |
| A tenant whose landlord's policy covers the structure and who wants no contents coverage | Liability without property |
| An owner of a secondary or seasonal location insured elsewhere for property | Avoids duplicate property coverage |
| A person needing liability to sit beneath a personal umbrella | The umbrella requires an underlying liability limit |
The insuring agreement, exclusions, and additional coverages track homeowners Section II closely: bodily injury and property damage caused by an occurrence, defense in addition to the limit, medical payments to others on a no-fault basis within three years, and the familiar exclusions for business pursuits, professional services, motor vehicles, and intentional acts.
3. Watercraft and Yacht Coverage
The homeowners form covers only small watercraft — craft below stated length and horsepower thresholds. Anything larger requires either the HO-24-75 Watercraft endorsement for liability, a boatowners policy, or, for larger vessels, a yacht policy.
The Two Halves of a Yacht Policy
| Coverage | What it insures | Notes |
|---|---|---|
| Hull | Physical damage to the vessel, machinery, and equipment | Written on an agreed value basis on larger vessels, or actual cash value on smaller ones. A deductible applies, often a percentage of the insured value |
| Protection and Indemnity (P&I) | Marine liability: bodily injury and property damage arising from ownership, maintenance, or use of the vessel | Broader than a general liability form because it includes maritime obligations such as crew injury, wreck removal, and pollution liability |
Additional coverages commonly written alongside: medical payments, uninsured boater, personal effects, and towing and assistance.
The Two Warranties That Decide Yacht Claims
| Warranty | Operation |
|---|---|
| Navigational limits | The policy defines the geographic waters within which the vessel is covered. Operating outside those limits suspends coverage. A North Carolina vessel warranted to inland and coastal waters that sails to the Bahamas is outside its warranty |
| Lay-up warranty | Requires the vessel to be out of commission and secured during a stated period, usually winter. Premium credit is given for the lay-up period, and operating during it breaches the warranty |
Trap: unlike most policy conditions, a marine warranty is strictly construed. Breach can suspend coverage even where the breach did not cause the loss — a doctrinal inheritance from ocean marine practice, which is covered in Section 10.3.
4. The Farmowners Policy
A farmowners policy is a package contract combining personal and commercial exposures for a farm or ranch operation in a single form. It exists because a farm is simultaneously a residence and a business, and neither a homeowners policy nor a commercial package alone fits.
Property Coverages
| Coverage | Insures |
|---|---|
| Dwellings | The farm residence and attached structures |
| Other private structures | Detached garages, fences, and structures serving the residence |
| Household personal property | Contents of the residence |
| Loss of use | Additional living expense and fair rental value |
| Scheduled farm personal property | Specifically listed livestock, machinery, equipment, and produce, with values shown |
| Unscheduled farm personal property | Blanket coverage on farm personal property, subject to sublimits by category |
| Other farm structures | Barns, silos, outbuildings, and equipment sheds |
Liability Coverages
| Coverage | Insures |
|---|---|
| Farm liability | Bodily injury and property damage arising from the residence and from farming operations |
| Medical payments | No-fault medical expenses for persons injured on the premises |
| Additional coverages | Damage to property of others, first aid, and claim expenses |
What Makes Farm Claims Different
- Livestock losses are usually written on a named perils basis, with specific perils such as accidental shooting, drowning, electrocution, and attack by dogs or wild animals. Death from disease is generally not covered.
- Farm machinery may be scheduled at agreed values or covered blanket, and mobile equipment raises the same auto-versus-equipment questions as commercial property.
- Custom farming performed for others is a business exposure that may require separate treatment.
- Pollution from fertilizer, fuel, or animal waste storage is a recurring farm exposure with narrow coverage.
Worked example. Lightning strikes a Sampson County farm, killing four head of cattle in a field, destroying a grain bin, and damaging the farmhouse roof. The dwelling coverage responds to the roof; other farm structures responds to the grain bin; and the cattle are paid under scheduled or unscheduled farm personal property, but only because lightning is an enumerated livestock peril. Had the same cattle died of disease, the livestock coverage would not respond.
Exam Focus
- Mobile homeowners commonly settles the structure at actual cash value; transportation coverage requires an endorsement.
- CPL = homeowners Section II sold alone, no property coverage.
- Yacht = hull plus protection and indemnity; watch navigational limits and the lay-up warranty.
- Farmowners blends residence and farm exposures; livestock is named perils, so disease death is generally excluded.
An insured owns twelve acres of undeveloped land in Chatham County with no structures. A hiker is injured crossing the property and sues. Which policy is designed for this exposure?
A yacht insured under a policy containing a winter lay-up warranty is taken out for a December cruise and is damaged in an unrelated engine fire. What is the likely coverage consequence?
Under a farmowners policy, three head of cattle die from a contagious bacterial infection. How does the livestock coverage typically respond?
A fifteen-year-old manufactured home in Robeson County is destroyed by fire. Which settlement feature most distinguishes the mobile homeowners policy from a standard homeowners policy?