2011 ISO Homeowners Changes
This file contains revisions to the Homeowners Policy Program and the Mobile home Supplement to the Homeowners Policy Program.
Allstate Vehicle, Property, & Roof ACV
Allstate Vehicle and Property Company had homeowner rates, rules, and forms approved effective April 16, 2012 that are being used to write ALL new homeowners business in Tennessee.
The base policy provides a percentage of replacement cost for roof surfaces damage caused by windstorm or hail. The Roof Surfaces Extended Coverage endorsement can be purchased to extend coverage to replacement cost. Factors which differ by premium component, age of roof, and predominant roof surface material type are applied to a policy’s variable premium when this endorsement is not purchased. A factor of 1.00 will be applied when this endorsement is purchased. Considering the variables involved, Allstate’s computer may be necessary to calculate the charge for the Roof Surfaces Extended Coverage endorsement.
The base policy coverage contains a roof surface payment schedule that calculates a percentage that will apply to all roof surface components and installation including the applicable overhead, profit, labor, taxes and fees associated with replacement of the roof surface(s). A composition roof five years old would be paid at 85% with a ten years old composition roof paid at 70%. To see the roof surface payment schedule click here
Roof surface as defined in the policy means the roof surface material type (slate, composition, wood, tile, metal, all other roof surface material types) of a building structure or other structure covered under Dwelling Protection–Coverage A or Other Structures Protection–Coverage B and all other roofing components, including, but not limited to:
1. Flashing, caps, vents, drip edges, and ice shields;
2. Sheeting, felt and membranes;
3. Modified bitumen, bitumen, rubber, built-up and sprayed polyurethane foam roofing;
4. Foam inserts & elastomeric coating; Finials, eave and gable trim and snow guards;
5. Battens, counter battens, bird stops, gravel stops; and
6. Coatings, adhesives, adherents and other finishing materials for roof surface materials and all other roofing components.
This filing differs from the recent Farm Bureau filing in that it depreciates more than just materials.
Lenders Requiring Excessive Insurance
What do you do when lenders require insurance on the entire value of the loan, completely ignoring that the real property the house sits on has an intrinsic value which cannot be destroyed by fire or other peril.
Here is an example just down the street from our office:
Single family home with an appraisal value of $373,700
Land value is $207,000
Structure value is $166,700
If the structure was somehow lost entirely, the land is still worth $207,000 (probably more by the time you read this). Even if a purchaser borrowed 100% of the money to buy the property, the most, by law, a lender could require be insured is the replacement cost of roughly $166,700.
The law is Tenn. Code Ann. 56-8-106(b)(13):
56-8-106. Lending money or extension of credit; insurance.
(b) No person or depository institution, or affiliate of a depository institution, who lends money or extends credit shall:
(13) Require, in connection with a loan or extension of credit secured by real property, that the debtor procure insurance for the protection of the property for an amount that exceeds the replacement cost of the structures existing on the secured property at the time of the loan or extension of credit or, in the case of a construction or improvement loan, insurance that exceeds the replacement value the structures are expected to have upon completion of the construction or improvements.
Insurors reached out to the Consumer Insurance Services department and in conjunction with the Financial Services Division, they will look into any complaints of lenders requiring excessive insurance. The online complaint form may be found here https://sbs-tn.naic.org/Lion-Web/servlet/org.naic.sbs.ext.onlineComplaint.OnlineComplaintCtrl?spanishVersion=N . Since the form is tailored for an insurance complaint, select “other” and detail the complaint in the box provided.
Mortgagee Clause for Fire Insurance
§ 56-7-804. Policies held by persons with non-possessory interests in property
When any person, as trustee, mortgagee, assignee, or otherwise, possesses or has any fire insurance policy on realty made payable to the person, or other person as that person's interest may appear, then the insurance as to the interest of the trustee, mortgagee, assignee or other person named in the policy shall not be invalidated by an act or neglect of the mortgagor owner of the property so insured, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by change in title or ownership of the property, nor by occupation of the premises for purposes more hazardous than are permitted by the policy; provided, that, in case the mortgagor or owner neglects to pay any premium due under the policy, the mortgagee, trustee, assignee, or other person shall on demand, pay the premium; and provided, further, that the mortgagee, trustee, assignee, or other person shall notify the insurance company of any change of ownership or occupancy or increase of hazard that comes to the knowledge of the mortgagee, trustee, assignee, or other person, and, unless permitted by the policy, it shall be noted on the policy, and the mortgagee, trustee, assignee, or other person shall, on demand, pay the premium for the increased hazard for the term of the use of the property, or otherwise the policy shall be null and void; and provided, further, that in the event the insurer concludes to cancel its policy under its terms, then ten (10) days' notice of the determination shall be given to the mortgagee, trustee, assignee, or other person so interested.
Valued Policy Law
The valued policy law applies to "buildings" totally destroyed by fire.
A March 14, 1974 Attorney General opinion said that the valued policy law applies to mobile homes provided they are affixed to a permanent foundation. There was no reference as to what "affixed to a permanent foundation" means.
The law provides that after ninety (90) days the amount of coverage shown in the policy or application shall be presumed to be reasonable and settlement made on that basis. In other words, after ninety (90) days and there is a total loss by fire only, the company must pay the amount shown in the policy for the building if the insured will not settle for less.
The actual code sections are shown below. Section 56-7-801 was amended April 8, 2014 to allow the inspection by the insurance company or it's designee, not just the agent.
56-7-801. Inspection of property insured against fire - No insurance exceeding fair value of property.
(a) Within ninety (90) days after making or writing any contract of fire insurance on any building or structure in this state, the company, its designee or agent, shall cause the building or structure to be inspected.
(b) No company, agent or insurance producer shall knowingly issue, negotiate, continue or renew, or cause the permit to be issued, negotiated, continued or renewed any fire insurance policy upon property or interests in the property within this state of an amount that, with any existing insurance on the property, exceeds the fair value of the property.
[1927 Pub.Acts, c. 72, § 1; 2014 Pub.Acts, c. 652, § 1, eff.April 8, 2014.]
56-7-802. Measure of damages for loss by fire - Insured reimbursed for excess premiums.
If buildings within the state insured against loss by fire are totally destroyed by fire, the company shall not be liable beyond the actual value of the insured property at the time of the loss or damage; and if it appears that the insured has paid premiums on an amount in excess of the actual value, the insured shall be reimbursed the proportionate excess or premiums paid on the difference between the amount named in the policy and the actual value, with interest at six percent (6%) per annum from the date of issue; and the excess of premiums, and interest thereon, shall be allowed the insured from the time any companies carrying the insurance at the time of the loss have continuously carried the insurance on the destroyed buildings, whether under policies existing at the time of the loss or under previous policies in the same companies.
[Acts 1927, ch. 72, § 2; Code 1932, § 6173; T.C.A. (orig. ed.), § 56-1138.]
56-7-803. Measure of damages in case of agent's failure to inspect property.
If the agent fails to place a reasonable value on any such insured property within the ninety (90) days, as provided in § 56-7-801, and which is agreed to by the insured, and a loss occurs, in that event the value as shown by the policy or application shall be conclusively presumed to be reasonable, and settlement shall be made on that basis.
[Acts 1927, ch. 72, § 2; mod. Code 1932, § 6174; T.C.A. (orig. ed.), § 56-1139.]
Wildfire Homeowners Tips
Insurors of Tennessee Provides Tips for Homeowners Affected by the Sevier County Wildfires
Nashville, Tenn., December 1, 2016 – Thousands of people have been affected by the recent wildfires in Sevier County, Tennessee. Many of these individuals have had severe damage to or total loss of their homes. The Insurors of Tennessee, a trade association of independent insurance agents, has put together the following tips for homeowners to keep in mind as they go through the claims process.
• If your property has been damaged or destroyed by fire contact your insurance company or agent with as much relevant information as you have.
• Take photographs of the damage. Inventory what has been lost.
• Save all receipts.
• If you are able, make any repairs to avoid further damage.
What Is Covered by Standard Homeowners Insurance?
Most standard homeowners insurance policies include four essential types of coverage:
• Coverage for the structure of your home – most policies pay to repair or rebuild your home if damaged or destroyed by fire
• Coverage for your personal belongings – personal items such as furniture and clothes are covered if destroyed by fire. Coverage is generally 50-70% of the insured value of the home
• Additional living expenses if you are temporarily unable to live in your home because of an insured disaster – will cover hotel bills, meals and other costs while living away from your home, there are limits to this coverage
• Liability protection – cost of defense should someone be injured on your property
For more complete information visit the Insurance Information Institute website at http://www.iii.org/article/what-covered-standard-homeowners-policy
The Tennessee Department of Commerce & Insurance (TDCI) has established a Community Resource Center in Pigeon Forge. It will open Thursday, Dec. 1 in the Boyd’s Bear parking lot at 149 Cates Lane in Pigeon Forge. The Community Resource Center will have:
• Numerous insurance carriers on-site with mobile emergency teams.
• Representatives from the Tennessee Department of Labor available to help facilitate the unemployment filing process.
• TDCI Consumer Insurance team members who can help answer questions and provide information.
• Officials to provide forms to apply for building permits and provide guidance for that process for both residential and commercial buildings.
The Community Resource Center will be staffed Monday through Saturday from 9 am to 4 pm and Sunday from 1 pm to 4 pm EST