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6.10 Section II Additional Coverages

Section II also includes four Additional Coverages. These coverages provide extra protection for certain liability-related expenses. Amounts paid under these Section II Additional Coverages are paid in addition to the applicable limit of liability.

Claim Expenses (Supplementary Payments)​

Supplementary Payments cover certain expenses related to the defense of a covered claim. These payments include the insurer's own claim defense expenses, as well as reasonable expenses the insured incurs at the insurer's request. Covered supplementary payments may include:

  • Premiums on bonds required in connection with the claim;
  • The insured's actual loss of earnings when assisting the insurer in the investigation or defense, up to $250 per day; and
  • Postjudgment interest that accrues after a judgment is entered.

First Aid Expenses​

This Additional Coverage pays expenses the insured incurs to provide first aid to others for bodily injury covered under the policy. The coverage does not apply to first aid provided to an insured.

Damage to Property of Others​

Under this Additional Coverage, the insurer pays the replacement cost of property damage caused by an insured to property owned by others, regardless of whether the insured was negligent. Coverage is limited to $1,000 per occurrence. For example, this coverage may apply if an insured accidentally damages a lawn mower borrowed from a neighbor.

This Additional Coverage does not apply to:

  • Property losses that are payable under Section I;
  • Damage caused intentionally by an insured who is 13 years of age or older;
  • Damage to property owned by an insured;
  • Damage to property owned by or rented to a tenant;
  • Damage arising out of business pursuits engaged in by an insured; or
  • Damage resulting from the ownership, maintenance, use, loading, or unloading of an aircraft, hovercraft, watercraft, or motor vehicle.

However, coverage may apply to damage caused by a recreational vehicle if the recreational vehicle is not owned by an insured and is not required to be registered.

Loss Assessment​

This Additional Coverage provides up to $1,000 for the insured's share of a loss assessment charged by a corporation or association of property owners during the policy period. The assessment must result from:

  • Bodily injury or property damage that is not otherwise excluded by the policy; or
  • Liability arising from the act of an elected director, officer, or trustee of the corporation or association, as long as that person serves on the board without compensation.

The $1,000 limit applies separately to each occurrence or to each covered act of an elected director, officer, or trustee. This coverage does not apply to assessments charged against the association or corporation by a governmental body.

An Insurance Story

The Nelsons belong to a homeowners association (HOA) that provides a clubhouse for its members. Because the clubhouse is a common element, HOA members may be responsible for sharing in certain losses involving the clubhouse.

Whether the Nelsons' share of the assessment is covered under Section I or Section II depends on the type of loss.

A fire damages the clubhouse. The HOA's master policy pays for the loss, but the amount that exceeds the master policy's limit is assessed against the HOA members. Because the fire caused a property loss, the Nelsons' share may be covered under the Loss Assessment Additional Coverage in Section I.

Later, a guest is injured in the clubhouse. The HOA is held liable, and its policy responds to the claim, but the amount that exceeds the master policy's limit is assessed against the HOA members. Because the injury involves a liability loss, the Nelsons' share may be covered under the Loss Assessment Additional Coverage in Section II.