Homeowners and personal auto policies leave deliberate gaps: flood, earthquake, valuable jewelry and art, boats, recreational vehicles, mobile homes, and liability above the underlying limits. This Personal Lines topic covers the policies and endorsements that fill those gaps, plus the residual market plans for people the standard market will not insure.

Personal umbrella

• A personal umbrella adds excess liability limits above the insured's auto and homeowners policies and may also cover some losses those policies do not cover, subject to a retention. After a large jury award exhausts the auto liability limit, the umbrella responds next.
• It requires the insured to keep stated underlying limits on home and auto liability; if they lapse, the insured self-insures the gap.
• It provides non-business liability protection for individuals; business pursuits are typically excluded. Commercial umbrellas cover business exposures.
• A Comprehensive Personal Liability (CPL) policy provides personal liability (and often medical payments) when no homeowners liability applies. For a dwelling policy, ISO's Personal Liability Supplement (DL 24 01) does this job.

Flood (NFIP)

• Homeowners forms exclude flood. Coverage comes from the NFIP or a private flood insurer; private policies may exceed NFIP limits or cover items the SFIP does not.
• NFIP coverage is available only in participating communities that adopt and enforce floodplain management rules, whether or not the property is in a high-risk zone (42 U.S.C. 4012(c)). Policies are placed through Write Your Own insurers or NFIP Direct, with the federal government bearing the risk.
• Flood means a general and temporary inundation of two or more acres of normally dry land or two or more properties (one the insured's) from overflow of waters, unusual surface water, or mudflow.
• Limits for one- to four-family residences: $250,000 building, $100,000 contents (42 U.S.C. 4013(b)).
• 30-day waiting period for new policies, except coverage bought in connection with making, increasing, extending or renewing a loan (effective at closing).
• Dwelling Form settlement: a single-family principal residence insured to at least 80% of replacement cost or the program maximum gets replacement cost; contents are ACV. Separate deductibles apply to building and contents.
• Not covered: additional living expense or loss of use; most basement contents (basement coverage is limited to listed items such as furnaces, water heaters, washers and dryers).
• Increased Cost of Compliance: up to $30,000 to elevate, floodproof, relocate or demolish. Proof of loss within 60 days.
• A burst pipe inside the house is not a flood; it is a homeowners water loss.

Earthquake

Earthquake is excluded from homeowners forms and is added by endorsement (ISO HO 04 54) or a separate policy. Even without the endorsement, fire, explosion or theft that follows an earthquake is covered.

Scheduled personal property and floaters

• Valuables that move around (jewelry, furs, fine arts, cameras, musical instruments) are insured under inland marine floaters: a stand-alone personal articles floater or the homeowners Scheduled Personal Property endorsement (HO 04 61).
• Why schedule: the HO-3 limits theft of jewelry, watches and furs to $1,500 and covers personal property only for named perils. A valuable engagement ring should be scheduled.
• HO 04 61: covers direct physical loss except listed causes (wear and tear, gradual deterioration, inherent vice, insects, war, nuclear); worldwide; no deductible. Newly acquired jewelry, furs, cameras and musical instruments of a scheduled class: lesser of 25% of the class amount or $10,000, if reported within 30 days; newly acquired fine arts (when fine arts are scheduled): up to 25% of the fine arts amount at ACV if reported within 90 days. Fine arts are paid at the scheduled amount; breakage of fragile fine arts is covered only when caused by listed perils such as fire, windstorm, earthquake, flood, malicious damage or theft.

Watercraft

• Homeowners covers only small watercraft within tight limits: a $1,500 Coverage C limit on watercraft and their trailers and equipment (no theft coverage away from the residence premises), and Section II liability that excludes owned sailboats 26 feet or longer, owned boats with inboard engines, and owned outboards over 25 horsepower (with limited exceptions).
• A boatowners (personal watercraft) policy insures the boat, motor, trailer and equipment plus liability; a boat owners package policy combines physical damage, medical expense and liability in one contract. A life salvage provision reimburses costs others incur to save the lives of insureds in a boating accident.
• Large vessels use a yacht policy with hull and protection and indemnity (P&I) coverage.

Recreational and miscellaneous vehicles

• The 2018 PAP excludes owned vehicles with fewer than four wheels and vehicles designed mainly for off-road use; homeowners liability excludes most motor vehicles and covers owned recreational vehicles only on certain insured locations.
• Motorcycles, golf carts, motor homes and similar vehicles are added to the auto policy with the miscellaneous type vehicle endorsement or insured separately. An owned snowmobile ridden on trails needs a recreational vehicle policy or endorsement.

Mobile homes

• Mobile homeowners insurance is a homeowners-type package for owners occupying the described mobile home: the home, personal property and liability, adapted for its construction and tie-downs.
• Coverage while the home is being moved must be bought before the move, usually for added premium.

Residual markets

• The residual market is the set of mechanisms that cover applicants the voluntary market rejects: FAIR plans, wind pools (beach and windstorm plans) and auto insurance plans.
• A FAIR plan (Fair Access to Insurance Requirements), in states that have one, provides basic property insurance to owners who cannot obtain it in the standard market. FAIR plans grew out of the federal Urban Property Protection and Reinsurance Act of 1968, whose FAIR provisions ended in 1985; not every state has a FAIR plan.

Common traps

• Umbrellas need underlying limits and exclude business pursuits.
• NFIP: 30-day wait (no wait at a loan closing), $250,000 / $100,000, contents at ACV, no loss of use.
• Earthquake is excluded but ensuing fire, explosion and theft are covered.
• Scheduled personal property: worldwide, no deductible, 30 days to report new jewelry (90 for fine arts).
• Mobile home transportation coverage must be bought before the move.