RISK MANAGEMENT steps to insure the exposure correctly .
If the hot tub is deemed to be Coverage C , then RC coverage must be endorsed in the ISO HO program . The same is true for Coverage B non-building structure . However , even if the property is attached to the dwelling ( buildings are , for the most part , covered on an RC basis under both Coverages A and B ), that doesn ' t automatically mean that it ' s covered on an RC basis . For example , awnings and wall-to-wall carpeting are still covered on an ACV basis even when permanently affixed to the dwelling because they depreciate much quicker than the dwelling structure itself . The same is true for many types of nonbuilding structures .
Historically , the ISO endorsement HO 04 90 - Personal Property Replacement Cost Endorsement could be used to extend RC coverage to property customarily covered on an ACV basis . From an E & O standpoint , this endorsement
( and open perils coverage ) should ALWAYS be recommended to customers . For " non-building structures ," ISO provided the HO 04 43 - Replace Cost Loss Settlement For Certain Non-Building Structures On The Residence Premises endorsement in 2000 . ISO expanded eligibility under the HO 04 43 for hot tubs . Now there are means ; once a decision has been agreed to whether the hot tub is Coverage A , B , or C to endorse RC coverage on the hot tub .
That leaves the issue of whether the loss arises from a covered peril . In the third claim quesion , one carrier ' s expert said the loss was due to a " malfunction ." Presumably , the denial was based on mechanical breakdown or wear and tear . If so , the burden of proof is on the carrier . The most common cause of loss for hot tub claims involves freezing the water line between the hot tub and dwelling .
Bill Wilson , CPCU , ARM , AIM , AAM is the founder and CEO of Insurance Commentary . com and the author of four books . He retired from the Big
" I " in December 2016 where he served for over 17 years .
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