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New AAIS Homeowners Option Addresses Occupancy

AAIS Press Release: Aug. 14, 2013

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Wheaton, Ill., Aug. 14, 2013—A new endorsement option will allow homeowners insurers to limit their exposure to property losses incurred after a named insured moves out of an insured residence permanently or indefinitely.

The American Association of Insurance Services (AAIS) has developed an optional exclusion entitled “You Live At A Location Other Than The Described Location.”

The exclusion option has been filed in most states under Homeowners and Mobile-Homeowners programs provided by AAIS, a national insurance advisory organization that develops policy forms and rating information used by more than 700 property/casualty companies throughout the U.S.

The endorsement excludes coverage for first-party property loss that occurs 61 days or more after the named insured begins living at a location other than the described location on other than a temporary basis.

On this topic, courts have issued divergent rulings on whether “where you reside” provisions can work to deny property coverage when the named insured no longer occupies the residence indicated in the policy or the declarations.

In light of that uncertainty, some AAIS member companies have requested policy language that would reinforce the premise that homeowners and mobile home policies are designed and priced to cover owner‐occupied risks.

In a program bulletin announcing the filing, AAIS explains that the coverages and loss cost rating information provided under its Homeowners and Mobile-Homeowners programs contemplate that the covered residence is occupied by its owner.

The application of the exclusion option is limited in several ways:

  • The exclusion does not take effect until 61 days after the named insured has moved out of the described residence;
  • The exclusion does not apply if the named insured is temporarily residing elsewhere;
  • The exclusion cannot be used to deny coverage for certain risks acknowledged “upfront” to be other than full-time owner-occupied residences, including seasonal dwellings, dwellings under construction, and condominium units held for rental; and
  • The exclusion does not apply to liability coverage.

For information on affiliating with AAIS for use of its Homeowners and Mobile-Homeowners Programs, contact Rick Maka, director of marketing and strategic relations, by email or by calling 630-457-3222.

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