5 Biggest Property Insurance Claims of All Time
Property insurance is intended to protect you from substantial financial loss due to destruction or damage to property. Unfortunately, occasional claims for property damage compensation are simply too outrageous to be true, or too unusual to ignore. If nothing else, these claims are a testament to human creativity and a source of entertainment. Whether or not any of these claims were compensated is anyone’s guess.
- Building and Contents: Ardent collectors of everything Egyptian housed two complete mummified bodies in their sarcophagi in their home. Much to the chagrin of the homeowners, a guest at one of their parties indulged in too much alcohol and fell into the glass case that protected the mummies. The mummies themselves were not damaged, probably to the relief of the insurance agent, since their value is beyond any amount that could be compensated reasonably. Instead, the property owners requested compensation for repair of the wood surface of the sarcophagi that had been damaged by the sharp edges of the broken glass case.
- Building and Contents: Art is in the eye of the beholder, but when a house fire caused damage to a toilet seat that had been hand-painted by popular 20th century artist Jackson Pollock, questions and curiosity surrounded the implication that a toilet seat could command as much as $1 million dollars. That was the going price for works done by the famous artist who was a friend of the homeowner who also proudly displayed the unique work of art. Because the painting had not been assessed by a professional, figures for the actual value of the seat were as low as an abysmal $20. This incident certainly exemplifies the importance for assessment of works of art that you have in your home, regardless of who was the original creator. In the end and despite the fact that the insurer could have easily been responsible for $1 million or more, the homeowner was compensated with the sum of $820. Certainly, the seat could not be replaced, but neither could it be accurately assessed.
- Replacement Cost Coverage: Insurance claims are frequently disproportionately large because individuals may accurately or wrongly become opportunists in the wake of unfortunate events. Silverstein Properties was perhaps the largest opportunist of 9/11 as the holder of the lease on the World Trade Center and also the holder of 22 separate contracts with a variety of insurers. Claims made by the company exceeded $300 million in property damage, though Silverstein claimed the actual losses were estimated at more than $8.2 billion. Appeals by the insurers and Silverstein volleyed back and forth in the courts for several years, particularly because it became difficult to identify the events of 9/11 as a single terrorist attack or two separate attacks, each on a single building. In the end, Silverstein walked away with the legal property limit of compensation, $3.5 billion.
- Replacement Cost Coverage: A 1993 house fire in an upper class New Hampshire neighborhood left a physician’s five bedroom home and its contents destroyed. Claiming that the works of art contained within the building were worth as much as $20 million, the doctor attempted to justify the high claim by explaining the pieces were irreplaceable. Oddly enough, the replacement cost part of the same homeowners policy had been deleted by the insurer just after the fire, leading the courts to wonder whether or not the company was covering future potential losses. An 11-year court battle ensued between the homeowner and insurer and ended in a settlement for an undisclosed amount. Given that the amount offered for compensation was $1.7 million, the settlement likely exceeded this amount and hopefully was enough to leave both parties relatively happy.
- Replacement Cost and Loss of Property: The 2003 blackout that hit Canada and several northeast states remains the largest insurance property claim amount at $5 billion. As many as 50 million people were affected by the loss of power that also made its way to New York City, parts of Connecticut, Ohio, and Michigan. Ohio didn’t simply lose power, they also lost water because there was no power available to force it through municipal lines to homes and businesses. Food cost losses were in the millions, thanks to the timing — the power outage occurred in the middle of the summer heat. Anything that relied on electricity to keep cool was lost, including the potential loss of the stability of nearby nuclear power plants. The claims continue to be reviewed and compensated, so a final tally of the total cost of the claims is at this point unknown.