This is Part 2 of 4 in a series of posts addressing homeowner insurance policies. This post discusses policy terms and conditions that are frequently in dispute between homeowner insureds and insurers.
The most important, but commonly overlooked starting point for any coverage determination or dispute is that each word in an insurance policy is important and must be reviewed. In addition, insureds, in particular, must be careful to read the policy in its entirety, since for example there may be “endorsements” (amendments) that modify or limit coverage.
Some common disputes involve:
- The amount of coverage. Your policy may cover only the “Actual Cash Value” (ACV) for a loss, or the Replacement Cost Value (“RCV”). As part of their claim investigation, insurers will inventory and determine a valuation for a submitted claim. Such valuations are subjective, and they are susceptible to understatement by claims adjusters, even when acting in good faith. Such concerns can create complicated questions concerning coverage for structural damage, but personal property claims. Insurers have no incentive to pay more than they must. Homeowner policies do have a an “appraisal” mechanism for neutral appraisals that can resolve disputes over claim valuation which will be discussed in a separate post.
- Lack of coverage. Sometimes, an insurer will disclaim (deny) coverage because a loss is specifically excluded under the policy, for instance certain flooding and mold. There may also be a claim denial because a loss was caused by something other than a covered loss in the first instance. Many losses involve complex and disputed factual issues and can create disputes about whether a loss falls within the scope of coverage, or exclusions. An otherwise insured loss cannot be denied pursuant to an exclusion unless the exclusion unambiguously bars coverage.
- Delays by the insurer. This issue frequently arises where there has been a natural disaster that overwhelms insurers’ claims adjusters. Again, delays can happen even where an insurer is acting in good faith, but they can also reflect insurer bad faith, but homeowner insureds should be able to rely on prompt claim adjusting and payment – especially where delays mean the homeowner has been displaced by a major loss such as a house fire.
These are just some disputes that can arise in the context of a homeowners insurance claim. At each stage, insureds should be diligent and organized in submitting and documenting claim information. As insurance coverage lawyers, we have seen many situations in which legitimate claims are delayed are denied because an insured not provided adequate documentation.
This content is provided as background and does not constitute legal advice. The attorneys at our firm have many years of experience with insurance coverage issues in Connecticut, New York and elsewhere. For more information or to schedule a free consultation, contact us at info@lalorattorneys.com / 646.818.9870.
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