You already know that your home insurance policy is designed to cover you for damages to your home and your personal property. And while much of the insurance policy describes the coverages provided, other parts of the policy define how the insurance company will reimburse you for a loss. But there is also a section of the policy, known as “conditions,” that describes certain obligations you and the insurance company may have in the event of a loss. This is an important section and should not be overlooked. Here’s a short list of some conditions that might be helpful to know prior to a loss in any city – Denver, Detroit, Austin, Atlanta, Arlington, etc:
Loss to a Pair or Set –
It’s not uncommon for a claim to cover items belonging to a set that may have sentimental value, and which is just not the same after losing a piece of that set. However, the home insurance policy reserves the right to either repair or replace the missing item(s) to restore the pair or set to its original value, or it reserves the right to simply reimburse the difference in value after the loss to a portion of the set. This unique condition is somewhat of a deviation from the traditional replacement cost coverage on the home insurance policy.
Most policies have an appraisal condition to help resolve differences when you cannot agree on an amount of loss. The process can be formalized, but is intended to be as impartial as possible. Each party selects an appraiser and the appraisers then select a third party umpire. The hope is that the appraisers can reach an agreement in a short period of time. If, however, they are not in agreement, they both submit their differences to the umpire, who essentially breaks the tie. While this may seem complicated, it provides you with a fair, unbiased resolution.
Our Option –
This condition on the policy allows the insurance company to replace or repair your damaged or stolen property with similar property. Instead of providing you with a monetary settlement to repair or replace, the insurance company uses this clause to offer you a physical replacement. In addition, if they replace your damaged property, you must surrender it, rendering the damaged property the possession of the insurance company, who may in turn sell it for salvage to recover some of the loss.
Insurable Interest –
Your insurer is only obligated to reimburse those who are insured by the policy. If you own property in conjunction with other individuals, the insurance company will not pay their share of damaged property if they are not insured on the policy. If you and your partner intend for one policy to insure the jointly owned property, you should both be named on the policy as insureds. Otherwise, the insurance company may not reimburse the full loss.
Other Insurance –
Similar to the Insurable Interest condition described above, if the property is insured on more than one policy, the insurer will only reimburse their proportional share of the loss. Insurance is intended to make the insured whole after a loss, but not more than whole. Therefore, even if property is insured on multiple policies, the policies together will not pay more than the value of the insured loss. All insurance policies will contain an “other insurance” clause to ensure that an insured individual cannot profit from an insured loss.