HO 04 14 - Special Computer Coverage

HO 04 14–SPECIAL COMPUTER COVERAGE

(July 2020)

This endorsement may be attached to any HO form with the following, important exceptions:

It expands protection for property that qualifies under this form's definition of computer equipment (see below). Instead of being covered by the Coverage C perils, this endorsement extends coverage on, roughly, the same basis as the protection which applies to Coverage A, Dwelling and Coverage B, Other Structures.

Related Article: ISO HO 00 03–Special Homeowners Coverage Form Analysis.

What Additional Coverage Is Provided

Use of the HO 04 14 means that computer equipment is protected against a wider spectrum of perils. The form has its own Perils Insured Against provision which replaces the Coverage C section of the form to which it is attached. It is identical to the Coverage A and B perils insured against section with a few differences in the loss excluded:

The following A and B exclusions are not part of this endorsement:

The following exclusions apply only to this endorsement:

·         Damp atmosphere or extremes in temperature

·         Most forms of collision involving land vehicles or watercraft (including trailers and equipment)

·         Computer equipment’s sinking, swamping, or stranding on any type of watercraft

·         Equipment undergoing renovation refinishing or repair

 

Example: For Christmas, Hank just got a state-of-the-art desktop computer system. He excitedly sets it up in his living room, just to see how it performs. He planned on moving it to the room they use as an office. Hank hears the doorbell and he let his guests in. It is his sister, his brother-in-law and surprise, their Christmas gift: a full-grown Doberman. The dog bursts into the house and scatters the computer system, thoroughly smashing several components. The loss would be covered under the HO 04 14.

 

Example: Sharla is surprised when she comes downstairs and feels her foot sink deep into a soaked hallway carpet. She screams as she discovers that the water line to her toilet cracked apart during the night and, among other things, ruined the new laptop and printer that she had just opened and laid out on her, now drenched, living room floor. Fortunately, this loss would be covered under the HO 04 14.

 

The form contains another exception. It protects computer equipment that is damaged by any source of ensuing loss that is not specifically excluded.

Definition - Computer Equipment

Computer equipment includes computer hardware, software operating systems or networks. Peripheral equipment such as scanners, monitors, printers, and modems are also protected since the coverage applies to electronic parts, equipment or systems solely designed for use with or connected to the computer equipment.

Of some concern may be the latter wording in the definition of computer equipment. Note that, under Definition 2, the endorsement states:

“Other electronic parts, equipment or systems solely designed for use with or connected to equipment in 1. above.” (italics and underline added for emphasis)

This wording may cause concern to insurers for a technical reason.

 

Example Clareece Cyberville’s homeowner policy is endorsed with a HO 04 14–Special Computer Coverage form. She has advanced computers, peripherals, etc. Clareece is also a media junkie, so her computer equipment is connected in an awesome configuration with her large screen T.V., stereo systems, wall mounted wireless speakers,  game systems and Digital Recorders. Clareece tells her agent that, since all of her electronic equipment is connected to her computer equipment, she assumes that the broader protection of the endorsement applies and not Coverage C.

 

Without clarifying wording, the connection of other equipment to computer equipment could broaden the coverage for the non-computer equipment attached to the computer equipment. Further ambiguity exists. If non-computer property that is connected to a computer becomes eligible for broader coverage, what about accessories to such connected, non-computer equipment?

An argument might be made that coverage DOES extend to such property.

These ambiguity concerns are further complicated by the fact that this form also includes introductory wording that the form does not result in a higher Coverage C insurance limit and that it does not alter the policy's response to ineligible personal property.

However, if there is ambiguity caused by the computer equipment definition’s meaning of property “connected to” a computer, then there may be ambiguity over the application of both the Coverage C overall and special limits of liability. Confusion could exist regarding protection for property that may have new coverage status because it is either connected to computer equipment (such as custom, luxury speakers) or accessories to such equipment (such as special lighting).

Special Conditions - The form’s special conditions section informs an insured that the endorsement’s selection does not increase the policy’s personal property limit, expand its Special Limits of Liability (the sublimits that apply to certain property classes such as jewelry), nor does it affect property that the policy wording classifies as ineligible property.

Note: The policy has added wording that appears merely to accommodate  this form’s attachment to a base policy that has been modified by a Broadened Home-sharing Host Activities Coverage Endorsement. (02 17 Change)