Water Damage Coverage: Changes in the HO-3 Form

The “Water Damage Coverage: Changes in the HO-3 Form” course is designed to help adjusters enhance their knowledge, understanding, and professional competence of homeowners insurance coverage principles involving water damage losses. The module is presented by Jeffrey Kerensky, John Hurley, and Sonia Copeskey of the Property & Liability Resource Bureau (PLRB).

This course begins with an overview of the natural source rule and the role of surface water in coverage analysis. The course then navigates through the nuances of the surface water exclusion including exceptions to, and the meaning of, surface water. Next, the course dives into a detailed review of the backup or overflow exclusion. The course then reviews the mold exclusion as it relates to water damage, as well as the tear out coverage provided under the policy. The course later concludes with a discussion of the accidental discharge peril.

After completing the course, the attendee will be able to identify the surface water and water below the surface exclusions; describe the natural source rule; recognize ISO’s policy form changes in response to the natural source rule and the rationale; define waterborne material; apply exceptions to the water damage exclusion, taking into account considerations such as ensuing losses, the anti-natural source rule, and the anti-concurrent causation provision; define surface water; understand the backup or overflow exclusion; identify the differences between backups and overflows; analyze the role of drains to water damage coverage analysis, including the differences between sewers and drains and whether toilets, sinks, or downspouts are drains; recognize policy changes to the backup and overflow exclusions; illustrate the differences between sumps, sump pumps, and related equipment for proper coverage analysis; describe the history of the mold exclusion as it relates to water damage coverage under the 1991, 2000, and 2011 policies; grasp the fungi endorsement and the differences between hidden and unknown damage; identify tear out coverage; analyze the water damage requirement for tear out coverage; illustrate the four ways in which tear out coverage is generally granted; describe the accidental discharge peril, including contents coverage, what may be considered accidental, what may qualify as a plumbing system, and what is not covered; analyze accidental discharge coverage scenarios using various policy provisions.

The course is primarily designed for insurance professionals working in the area of property adjusting.