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CATASTROPHIC "CAT" EVENTS - INSURANCE CLAIMS AND SETTLEMENTS - HOW TO READ AN INSURANCE POLICY
by , 12-30-2012 at 01:09 PM (61 Views)
This blog is intended to provide free information to folks who have suffered a loss due to "Sandy". Help with reading their insurance policy and how to deal with an adjuster. Small inurance companies and insurance agents are also invited to post.
I am here to help with the entire range of Insurance policies from Homeowners through farm, crop insurance, business owners, inland marine, umbrella and so on. If I cannot provide an answer, I will give a shout to other experts reading this blog for help. OK? Now, let's do the basics of a Homeowners Insurance Policy.
1. An insurance policy is a CONTRACT of ADHESION. This means that your insurance company dictates the terms of the policy/contract. You have no choice but to TAKE or LEAVE the contract. What this means to you is that any ambiguities in the policy writing will be in YOUR FAVOR. WAIT! You have certain responsibilities too!
2. An insurance policy is also a contract of UTMOST GOOD FAITH. If you fib on your insurance application and a loss occurs, you are up the river without a paddle. In legal terms; You, the insured have a duty to disclose all material facts about your home (risk) to the insurance company. Any reasonable divergence will void the policy at the insurance companies discretion. In lay terms, the insurance company writes thousands of policies and must rely on the customer's good faith.
3. YOUR POLICY is divided into four parts generally; a) Declarations page "what we will and will not insure" b) the agreement (root of the contract) c) conditions for payment and d) exclusions to the prior coverages.
4. Your policy will pay for either ACV or RCV (actual cash value or Replacement Cost Value). ACV is the cost to replace your home or contents less depreciation. RCV is the coast to make you whole again or the cost to replace your home with like material (no depreciation factor). Enough for our first session.
FOR ATTORNEYS:
A. Non-disclosure (omission) of a material fact on the application is fraud resulting in an illegal contract - automatically void under tort law but at the descretion of the insurer under insurance law (remember contract of adhesion?).
B. PROXIMATE CAUSE - As with Tort law, there must be an unbroken chain of events between the loss and the original occurence which is very arguable in a court of law. However, Insurance law emminates DIRECT LOSS & INDIRECT LOSS when determining settlements. A direct loss is the actual damage or destruction of the roof/car/entire home. INDIRECT LOSS is economic loss arising as a consequence to the direct loss e.g. loss of rent, medical and so on. The point is don't be confused with the terms DIRECT and INDIRECT.
C. BUSINESS PROPERTY DAMAGES (LIABILITY) - If a "lessor's risk" policy (you represent the landlord), always check for an "ADDITIONAL INSURED" clause in the lease agreement. Here, the commercial tenant must carry a liability insurance policy in the amount of minimally $1,000,000 naming your client as an additional insured. If the policy was never issued, the commercial tenant breached.
OK, enough for now. Insurance Law is extremely complex but I will make every attempt to simplify it one step at a time.
Thanks,
Vincent Haller Smith, JD, ASSE
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