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Home insurance policies reflect the times

"The changes are basically in reaction to changes in the lifestyles of Americans."

Coverage for grave markers, golf carts, and assisted living care are just a few of the more than 50 changes coming to many standard homeowners insurance policies. The Insurance Services Office (ISO) is recommending the changes.

ISO is suggesting 20 new options, 15 changes in rules, and 13 new rules. The organization is also suggesting claim limit increases for everything from tree removal to loss of earnings.

"First and foremost, the changes are basically in reaction to changes in the lifestyles of Americans," says Ralph Maffei, manager for personal line homeowners insurance at ISO. The forms were also updated based on regulatory changes, new laws, and court decisions.

Here are some of the major changes:

Garage sales

Changes in coverage for garage sales are a case in point. Most homeowners insurance policies currently provide coverage if you have a garage sale where someone trips and falls. Insurance agents found they were facing claims from people who were having garage sales every weekend, effectively transforming the occasional housecleaning effort into a home-based business. Under the new home insurance form, if you are holding garage sales on a regular basis, it's considered a home-based business. In this case, the customer who trips and falls will not be covered under your standard homeowners insurance.

Home businesses

ISO has changed the definition for what constitutes a “home business” to include "a full or part-time trade, profession, or occupation and any other activity engaged in for money or other compensation." It also addresses circumstances where home insurance would cover a moneymaking activity such as an occasional garage sale or babysitting a relative. "We try to accommodate the occasional worker," Maffei says.

"We try to accommodate the occasional worker."

ISO has also changed the definition of  “business property” to target items used "primarily" for business purposes, instead of the previous definition of "at any time or in any manner." With that change, property used in a former trade, profession, or occupation or that is occasionally used for business would only be subject to personal property limits. That means those items would be covered for up to 50 percent of the amount of insurance you have on your house, rather than a limit of $2,500 for business equipment.

Wider coverage

The provision covering stolen money has been revised to apply to smart cards and stored value cards, including things such as store gift cards, prepaid phone cards, and subway fare cards. ISO changed the firearms provision to include related equipment, such as shells. Debris-removal coverage has been broadened to include fallen trees that don't damage property but do block driveways. Grave markers, either at or away from a residence, will be covered for up to $5,000.

Increased limits

ISO is recommending increased claim limits for several items. The firearms claim limit has been increased from $2,000 to $2,500. The limit for debris removal has been increased from $500 to $1,000. Limits on the theft of jewelry and furs have been increased from $1,000 to $1,500, and several other areas have seen limit increases as well.

Golf carts

The single biggest change, according to Maffei, will be the additional coverage for motorized golf carts. "That was probably the item that we received the most requests for," Maffei says. "People use them to go all kinds of places. With this change, when you use your own golf cart in a private residential community, and if something happens, you'll be covered."

Costs should stay level

"Insurance companies can implement the changes without changing premiums."

In spite of all the changes, Maffei believes most homeowners won't see any difference in insurance rates. "We always like to have our major revisions come out to be revenue neutral," says Maffei. "That way insurance companies can implement the changes without changing premiums."

Don’t expect to see all these changes on your insurance policy. According to ISO, roughly 75 percent of insurance companies make adjustments to ISO’s recommendations.

Also, you probably won’t see any changes to your insurance policy until it’s up for renewal.

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