1. Forms
2. HO
3. HO-04-60

What the form is

The HO 04 60, titled Scheduled Personal Property Endorsement (With Agreed Value Loss Settlement), is an endorsement to a standard homeowners or renters insurance policy. Its primary purpose is to provide broader and more specific coverage for valuable personal property items that might otherwise have limited coverage under the base policy due to internal limits (e.g., for jewelry theft) or peril limitations. This endorsement allows policyholders to list (schedule) individual items and insure them for an 'agreed value'. This means that in the event of a covered total loss, the insurer will pay the amount shown in the schedule for that item, without deduction for depreciation. Furthermore, coverage for items scheduled on this endorsement is typically on a 'special form' or 'open perils' basis, offering protection against a wider range of risks than the 'named perils' coverage found in many base policies for personal property, and is usually not subject to the policy deductible.

Classes of business it applies to

This endorsement is used in personal lines insurance for individuals who own valuable personal articles. It is not designed for commercial or business exposures. It applies to homeowners, condominium unit owners, and renters who wish to adequately insure specific valuable items. Real-world examples of property classes that are commonly scheduled using this endorsement include:

• Jewelry: Engagement rings, necklaces, watches.
• Furs: Fur coats and garments.
• Cameras: Photographic equipment and accessories.
• Musical Instruments: Violins, pianos, guitars (coverage for professional use may be excluded or limited).
• Silverware/Goldware: Sterling silver flatware, gold-plated items, pewterware.
• Golf Equipment: Golf clubs, bags, and related accessories.
• Fine Arts: Paintings, sculptures, valuable antiques, and collectibles. (It's important to note that while HO 04 61 also schedules property, HO 04 60 offers agreed value for a broader range of categories beyond just fine arts).
• Stamps and Coins: Philatelic (stamp) and numismatic (coin) collections.

Special considerations

• Agreed Value Loss Settlement: This is a key feature. The value of each item is agreed upon when the endorsement is added, typically based on a current appraisal. This eliminates potential disputes about the item's value after a loss.
• Appraisals: Insurers usually require recent, detailed appraisals for high-value items, especially jewelry and fine arts, to establish the agreed value. Outdated appraisals can lead to underinsurance.
• No Deductible: Losses to items scheduled on this endorsement are generally not subject to the homeowners policy deductible.
• Open Perils/Special Form Coverage: Scheduled items are covered for all direct physical losses, except for those specifically excluded in the policy. This is broader than named perils coverage.
• Worldwide Coverage: The endorsement often provides worldwide coverage for the scheduled items, which is beneficial for items taken while traveling.
• Newly Acquired Property: Some versions of the form may provide limited, temporary coverage for newly acquired items in a class of property already scheduled (e.g., a new piece of jewelry if jewelry is already scheduled). This coverage is typically for a short period (e.g., 30 days) and up to a certain percentage of the existing coverage for that class or a specific dollar limit, requiring the insured to report the new item to the insurer within that timeframe to maintain coverage.
• Pairs and Sets: The endorsement may contain specific provisions for how losses to pairs or sets are handled (e.g., if one earring of a pair is lost).

Key information for agents and underwriters

• Risk Assessment: Underwriters need to carefully evaluate the items being scheduled. This includes reviewing detailed descriptions, verifying current appraisals (typically within 1-3 years, depending on the item and insurer guidelines), and assessing the overall risk profile of the insured.
• Pricing: Premiums are specifically rated for each scheduled item or class of property based on its nature, value, and the insurer's rates for that category. Jewelry and fine arts often have higher rates due to their value and susceptibility to loss.
• Addressing Coverage Gaps: Agents should use this endorsement to address the special sublimits in the base homeowners policy (e.g., the typical $1,500 limit for theft of jewelry). It ensures clients with valuable items are adequately protected.
• Client Education: It's crucial for agents to explain the benefits of agreed value, the importance of maintaining current appraisals, and how this coverage is broader than the standard personal property coverage.
• Underwriting Guidelines: Insurers will have specific underwriting guidelines regarding the types of property eligible, maximum values per item or in total, appraisal requirements, and any necessary security precautions (e.g., safes for high-value jewelry, professional storage for furs).
• Moral Hazard: For high-value, portable items, underwriters remain mindful of potential moral hazard. A stable insurance history and financial standing of the insured are positive factors.
• Interaction with Other Forms: Note that if Personal Property Replacement Cost settlement (e.g., HO 04 90) is part of the policy, items covered under HO 04 60 (with agreed value) are settled according to HO 04 60's terms, not HO 04 90.