The Recovery Path from Irene – Tips from an Insurance Adjuster

Hurricane Irene - NASATHUNDER BAY – The aftermath of Hurricane Irene has continued to be felt across the United States and Canada. President Obama said, “One of our chief concerns before Irene made landfall was the possibility of significant flooding and widespread power outages. And we’ve been getting reports of just that from our state and local partners. Many Americans are still at serious risk of power outages and flooding, which could get worse in the coming days as rivers swell past their banks. So I want people to understand that this is not over. Response and recovery efforts will be an ongoing operation, and I urge Americans in affected areas to continue to listen for the guidance and direction of their state and local officials”.

In the United States, the response by the White House has been to get President Obama back from his holiday. Likely Presidential advisors, remembering how Hurricane Katrina changed the presidency of George W. Bush, the Obama White House has been very conscious to be seen as doing the right things.

While New York City has come through the storm with relatively little major damage, the same is not the case in Vermont, and in many communities in New Jersey.

So far, Irene is responsible for 35 deaths in the United States and at least one death in Canada. The property damage is going to total in the billions of dollars.

The real damage in Vermont has been from flooding. Roads, classic covered bridges and homes have all been destroyed.

Help is coming in a number of ways. For example many vehicles have been badly damaged. That has brought rental agencies to the forefront. “In times like these, it is imperative for us to quickly move vehicles around the country and into affected areas,” said Matt Darrah, executive vice president of North American operations for Enterprise Holdings, which owns the flagship Enterprise brand as well as National Car Rental and Alamo Rent A Car. “Then, once vehicles are in place, we can help put utility companies, government agencies, insurance adjusters and CAT (catastrophe) teams on the road so that they can get the recovery and restoration process under way.”

The coming days, weeks and months will be difficult for many of the people in the disaster areas. Power remains off right now for many people, and the recovery clean-up is continuing. Re-building will start with insurance adjusters examining properties, and getting payments off to people.

Here are some tips from Gregg Owens, a retired Insurance Adjuster:

The first thing you should do is to document your “loss”. Your loss is the full amount of damage less items not covered, less your deductible to determine your claim. This is also known as your “Whole Loss”.

The best way to document your loss is with photographs. If you can present both before and after photographs, all the better. Your “before” photographs may have been lost, but relatives may have taken photos in your home or business on special occasions. Get them if you can.

As you begin to clean up, try to salvage as much of your property as you can. I know many hit by the storm were flooded with contaminated water. But those of us who are old enough remember changing cloth diapers on our children know that any clothes you have that do not have to be dry cleaned can be laundered. I do understand that laundry services may not be available; just tell your adjuster you tried to save the washables but the stench got to be too great if that is the case.
Freezers and fridges that didn’t get flooded can be salvaged. “Gregg, what about the terrible smell,” you ask? Belive it or not, wash the appliance on the inside with disposable douche products. (I kid you not!!!) It may take 3 or 4 times, but it works.

The reason I tell you to salvage as much as you can is threefold: first, your policy requires you to preserve and protect the property; second, if you run into coverage issues on your loss, salvaging will help reduce your loss; third, and probably most important, you allow your adjuster to document your attempts at salvaging which shows you are not trying to “get ahead” and he/she will have much more ability to be “flexible” with other aspects of your claim.

As you dispose of your personal property, make a list of the items you are throwing out and if possible, take a photo of the junk pile to show how much you had to toss.

Your policy requires you to “exhibit” the damage. In other words, your adjuster must be able to inspect the property and get a reasonable idea of the damage. Your adjuster will know your neighborhood and the extent of damage there when he/she arrives. If you want to go ahead and start the tear-out process in your home or business, go ahead; you should be okay. If the adjuster gives you any grief about not exhibiting the damage, tell the idiot you were trying to prevent further damage, as required by the policy(!!!), by trying to contain the spread of mold. You will leave the adjuster totally confused!

As far as your dwelling or commercial property repairs, most companies are now using computer software to make their estimates. I really don’t believe these programs will address the increased costs that will hit your area because of the increased demand of the market. You really don’t need to worry about that right now; that can be addressed later with a supplemental claim.

A Few Thoughts:

DO NOT HIRE AN OUT OF TOWN CONTRACTOR! This will limit you as to when you get the repairs made, but homeowners have Additional Living Expense coverage (find out the limit) and business owners should have Business Interruption coverage.

DO NOT ALLOW A CONTRACTOR’S NAME TO BE INCLUDED ON YOUR INSURANCE CLAIM CHECK!! This limits your ability to fire a snake in the grass. No contractor has ever paid a dime of your insurance premium and you need to control the repair process with your money.

DO NOT PAY ANY UP FRONT MONEY TO THE CONTRACTOR! If the contractor is not large enough to to carry the burden of overhead (and you will see overhead added at the bottom of any estimate), you don’t need him.

Be patient!!! When I used to work storms I would always try and get to the most desperate first. The most desperate deserve to be first.

About Flood Insurance:

Flood Insurance is a Federal Insurance program administered through the Department Of Housing and Urban Development (HUD). It is intended to fill in the gap that homeowner’s policies left when they decided to exclude all flood coverage many years ago. The policy is underwritten through HUD with its National Flood Insurance Program (NFIP) and is non-profit as it is administered through a government agency. Flood coverage is not a very good insurance, but it is the only thing that covers the flood damage.

About 15 years ago, HUD started to allow commercial insurance companies to write flood policies through the “Write Your Own Policy” program (WYOP). HUD paid insurance companies a portion of their premium to write policies for them. If you have a flood policy through your homeowner’s insurance, it is still a flood policy. However, in the same circumstance, your homeowner’s adjuster will most likely be your flood adjuster as well.

If you bought your flood insurance directly from NFIP, which many mortgage companies do, you will most likely have a separate adjuster representing NFIP. Here is where a big problem can arise.

Flood coverage is for rising water and homeowner’s coverage is for falling water. All flood coverage is the same, but your limits of insurance may vary. The most you can purchase, be it homeowner’s or business coverage, is $250,000 building coverage. Homeowner’s coverage is based upon the Replacement Value of your home and you are expected to carry at least 80% of the replacement value on you dwelling. And limits will vary; its doubtful your next door neighbor has the same limits of coverage as you.

When you have two adjusters representing two different insurances, the adjusters are rarely on the same page with each other. Take the guy I mentioned above who had his base cabinets covered, but not his suspended cabinets. Heck! the suspended cabinets matched the base cabinets and how does the flood adjuster ask the homeowner to find someone who can mill the cabinets to match? Most kitchen cabinets are not custom made. They are mass produced and many are not available now. The homeowner is stuck.

If you have two adjusters working your claim, the very best thing you can do is to have both adjusters make their initial inspection at the same time. For those without power right now to read this, Good Luck!

Flood adjusters do not work for HUD. They are independent claims adjusters who follow storms, “Storm Troopers”. You may find that your adjuster actually lives in Iowa! The same goes for homeowner’s companies. Most likely, both adjusters are paid on a scale depending on the amount of the loss.

I have worked for both NFIP and homeowner’s/commercial carrier’s insurance companies in hurricane losses and I hardly ever met with a policy holder unless the other adjuster was present. I made this a stern rule because if an insurance carrier, NFIP or other, was going to limit my pay, I would lose money the more hours I had to work the claim. If I had to make 10 calls to the other adjuster to iron out who was going cover what, its obvious how that affects my paycheck.

I found the best way to handle a dual covered claim was to let the other adjuster “take” as much as he wanted. If it was a flood adjuster, I’d ask, “Do you want the walls?” meaning the interior/exterior walls. No company will pay for painting halfway up the walls. So, I’d let him take as much money as he wanted to make and I would be able to handle more claims.

If you get into the situation where you have two policies covering your Katrina loss, try every way you can to get both adjusters together when they do their inspection even if it takes weeks for them to get together. Stay out of their way and let each adjuster “take” what they want to cover. And, if all possible, insist both adjusters get on their laptop computers and write your estimate right then and there. If they refuse, lock them into a time when all of you can get together, go over each estimate, compare the two and make both adjusters answer your questions.

Most important: if you get angry with your adjuster, keep it to yourself. Your adjuster should always be as friendly as you are. You can get mad, but don’t let your MONEY get mad. Make the adjuster explain things and if the adjuster is excluding part of your loss, make him/her show it to you in the policy and stay calm!

A useful tool to keep in mind is the Guiding Principles of Insurance.

Guiding Principle of Insurance

DISCLAIMER: NetNewsledger.com are posting “Tips From an Adjuster” as a service to our readers and is not intended to be Legal Advise. Gregg Owens is not employed by netnewsledger.com. Both netnewsledger.com and Gregg Owens’ only intentions are to assist the readers with insurance claim HELP and suggest you hire a qualified Attorney if you need Legal Help or Advise.

(NOTE: When reading the Guiding Principles and you see references to “Fire” policies, this is where the evolution of Home Owner’s and Flood policies came from. Initially, dwellings and other property such as commercial property were first insured for fire. Coverages broadened over the years to insure many other types of losses that could occur to these types of properties. Fire policies are like the Grandfather of your Home Owner’s, Commercial and Flood policies.) Gregg Owens

GUIDING PRINCIPLES FOR OVERLAPPING INSURANCE COVERAGES
BACKGROUND

Potential overlaps and gaps in coverage can develop when more than one non-standard policy is issued on property. Realizing the need to set a guiding principle between policies and coverages, should this situation occur, a group of organizations consisting of the Association of Casualty and Surety Companies, the Inland Marine Underwriters Association, the National Automobile Underwriters Association, the National Board of Fire Underwriters, the National Bureau of Casualty Underwriters and the Surety Association of America joined together on a project. Their aim was to set such Guiding Principles for first party property losses and claims for casualty, fidelity, fire, and inland marine. This was completed and released effective November 1, 1963.

Many years have passed since that original historical document was drafted, and although a multitude of changes have occurred in the interim, the original Guiding Principles remain intact.

Since these Guiding Principles are still—theoretically—in use, information is provided in the following analysis on these principles. The following analysis also provides some historical perspective of the evolution of the modern American insurance industry.

Much of what follows is quoted directly from the Guiding Principles.

GUIDING PRINCIPLES

CASUALTY – FIDELITY – FIRE – INLAND MARINE

FIRST-PARTY PROPERTY LOSSES AND CLAIMS

PURPOSE


“WHEREAS from time to time disputes arise in the adjustment and apportionment of losses and claims because of overlapping coverages, which disputes require litigation or arbitration, and WHEREAS the occurrence of such disputes is against the interests of the insuring public and the companies, and WHEREAS it is desirable to lay down certain Principles for the elimination of these disputes, THEREFORE BE IT RESOLVED that the Association of Casualty and Surety Companies, the Inland Marine Underwriters Association, the National Automobile Underwriters Association, the National Board of Fire Underwriters, the National Bureau of Casualty Underwriters and the Surety Association of America recommend to their respective members and subscribers their concurrence in adopting the following Guiding Principles, effective as to losses and claims, other than losses and claims involving retrospective rated policies, occurring on and after November 1, 1963.” (THE PRINCIPLES, a product of an all-industry committee, appear in the following pages without alteration.)

FOREWORD


Under practices predating these Guiding Principles, when an overlap in coverage existed between or among policies in the casualty, fire or inland marine classifications of insurance, each such classification participated as a group in the adjustment (subject to extent of available insurance and limiting conditions) without regard to the number of policies involved under each classification.

With the advent of multiple-line policies (including fidelity bonds) which cross and re-cross jurisdictional lines, the associations recommending these Guiding Principles have concluded that, excepting overlap between boiler-machinery policies with any other classification of insurance, it is no longer practical to group policies by “segments” of the industry; rather that each policy should contribute as an individual policy unless it be concurrent with another policy or policies, in which instance such group of concurrent policies should contribute as if it were a single policy, subject to the specific principles and general conditions contained herein.

However, retention of the classification concept is necessary to determine under which of the principles certain overlaps are apportioned namely, casualty, fidelity (not surety bonds), fire, inland marine; casualty to casualty, fire to fire, inland to inland. For this purpose, and not to determine concurrent policies, the component coverages found in multiple-line policies should be identified on the basis of their traditional underwriting classifications; i.e., the burglary and theft coverages of homeowners policies are casualty; the all-risk personal property coverage found in certain homeowners policies is inland marine.

THE PLAN

These Principles provide for the equitable distribution of available insurance. As among insurance companies, the “other insurance” clause(s) which is (are) contained in a policy(ies) of insurance, and which may include an excess provision, shall be set aside and be inoperative to the extent that it is (they are) in conflict with the purpose of these principles. Otherwise, these principles will not change coverage or other conditions under any policy(ies) of insurance.

Further, the application of these principles shall in no event operate to reduce recovery to the insured below that which would have been obtained under any policy or policies covering the risk.

THE PROCEDURE

The procedure is designed for dealing with first-party property losses and claims, except those situations more specifically provided for in Part II (Specific Principles: Casualty to Casualty, Fire to Fire and Inland to Inland) and the General Conditions.

General Principles

1. Insurance covering same property and same interest:

A. Insurance covering a specifically described article or object, whether or not for an express amount, at a designated location(1) shall be primary to any other insurance. (See Notes 1 and 2)

B. Insurance covering a specifically described article or object, whether or not for an express amount, without designation of location shall be excess as to “l-A” but primary as to any other insurance. (See Notes l and 2)

C. Insurance covering a specifically described group or class of related articles or objects, whether or not for an express amount, at a designated location shall be excess as to “1-A” and “1-B” but primary as to any other insurance. (See Notes 1 and 2)

D. Insurance covering a specifically described group or class of related articles or objects, whether or not for an express amount, without designation of location shall be excess as to “1-A,” “1-B,” and “1-C” but primary as to any other insurance. (See Notes 1 and 2)

E. Insurance covering at a designated location and not specific as to an article or object or as to group or class of related articles or objects shall be excess as to “1-A,” “1-B,” “1-C” and “1-D” but primary as to any other insurance. (See Notes 1 and 2)

F. Insurance without designation of location and not specific as to an article or object or as to group or class of related articles or objects shall be excess to “1-A,” “1-B,” “1-C” “1-D” and “1-E.”

However, as between insurances without designation of location and not specific as to an article or object or as to group or class of related articles or objects, the policy for the more limited purpose (other than peril) to which the insurance applies shall be primary. (See Notes 1 and 2)

G. Two or more policies providing coverage as set forth in “1-A” through “1-F,” respectively, shall be contributing. Contribution shall be as follows:

(1) Whether or not deductibles are involved, contribution shall be on the basis of the Limit of Liability Rule(3) except that, in the event there is an area of common coverage under two or more policies and separate coverage under any one or more such policies, the policy or policies affording separate coverage shall respond first to that loss it alone covers and the remainder of its limit of liability shall contribute to the common loss on the basis of the Limit of Liability Rule.

(a)When one of the policies is subject to a deductible, the amount of loss in excess of the deductible will be considered as the common loss. The policy(ies) without a deductible shall first respond to the loss which it alone covers to the extent of its limit of liability. Thereafter the remainder of its limit of liability will contribute with the other insurance to the common loss on the basis of the Limit of Liability Rule.

(b) When two deductibles are involved, the amount of loss in excess of the higher deductible will be considered as the common loss. The differential between the higher and lower deductible shall be assessed to the limit of liability of the policy(ies) subject to the lower deductible. The remainder of its limit of liability will contribute with the insurance subject to the higher deductible to the common loss oil tie basis of the Limit of Liability Rule. Where there are more than two deductibles, the same procedure shall apply. (See Notes 1 and 2)

Note 1: In overlapping situations involving boiler-machinery policies, classifications “1-C,” “1-D,”1-E” and “1-F” shall not consider other insurance primary. Therefore, losses will be apportioned in accordance with General Principle 1-G

Insurance effected on a specifically described article or object as defined in General Principles 1-A and 1-B shall be primary to the boiler-machinery policy. However, a building is not construed in overlapping situations involving boiler-machinery policies as a specifically described “article” or “object.”

Note 2: In overlapping situations involving burglary policies the term “article” or “object,” wherever used in these Principles, is not construed to include buildings or structures.


Footnotes:

(1)See Definitions.

(3)See General Condition 2.

General Principles

2. Insurance covering same property and different interests:

A. Bailee’s customers insurance shall be primary to other insurance effected by the same named bailee-insured. (See General Condition 8)

B. Insurance secured by a custodian covering property belonging to others shall be primary to any other insurance. Where there is more than one custodian, the insurance of the custodian in possession of the property shall be primary. (See General Condition 8)

Note: Bankers and brokers blanket bonds, and fidelity, burglary, theft and jewelers block insurance providing coverage on property “held by the insured in any capacity whether or not the insured is liable for the loss thereof,” or with equivalent verbiage, are not construed as insurance covering “different interests” and are not bailee’s customers insurance or insurance secured by a custodian covering property belonging to others.


Exceptions:

General Principle (2-B) shall not apply:

(1) when the custodian’s insurance is afforded under a policy provision containing the words “property for which the insured is liable”………..”may be liable,”……… is legally liable,” or equivalent verbiage;

Note: For the purpose of these Guiding Principles the above verbiage is construed to provide liability coverage.

(2) when the owner and custodian of the property have stipulated otherwise by written agreement prior to the loss.

C. Contents policies insuring at the place of the loss and covering “employees’,” “partners’ ” or “executives’ ” personal property, except in 2-B (1) above, shall be primary to any off-premises coverage available under the employee’s insurance. However, insurance covering a specifically described article or object, whether or not for an express amount, shall be primary.

D. Coverage for property “used” or “worn” by the insured, for property of servants or guests, and insurance afforded by the “physical damage to property” coverage, shall be primary to any available insurance in the name of the owner of the involved property, except insurance covering a specifically described article or object, whether or not for an express amount, shall be primary.

E. Installment-Sales or Deferred-Payment Merchandise Insurance:

(1) Evidence of insurance issued by a vendor to a vendee under the provisions of a dual-interest policy specifically or generally describing the article or articles and their values individually or in total as invoiced under a conditional-sales contract shall be deemed to be insurance on specifically described property.

(a) Above-described insurance shall be primary when overlapping with other contents policy(ies).

(b) Above-described insurance shall contribute on the basis of the Limit of Liability Rule when overlapping with insurance expressly describing an article(s) or object(s), whether or not an express amount of insurance applies to each such article(s) or object(s).

(2) When no such evidence of insurance has been issued, the dual-interest policy shall be deemed to be blanket floating insurance.

(a) Above-described insurance shall be excess to other contents insurance in those cases where loss occurs at the location shown in the contents policy.

(b) Above-described insurance shall contribute on the basis of the Limit of Liability Rule when overlapping with a floater policy. It is to be noted that the ten percent (10%) optional extension of the fire policy is floater coverage.

General Conditions

A. As to General Principles 1 and 2, and any additional Principles or amendments as may hereafter be adopted, it is AGREED that:

1. To provide the greatest recovery to the insured, the insurance declared to be excess or noncontributing under the governing Principle shall not include, in applying any coinsurance, average, or distribution clause(s) contained in any policy(ies), the value or loss on property covered under the insurance declared to be primary. However, it shall include any excess value not covered by the primary insurance and the loss unrecoverable under the primary insurance.

When a coinsurance (not reduced rate contribution or average) clause is present in any or all policies, it shall be applied as if it were a reduced rate contribution or reduced rate average clause. However, if by this procedure the insured collects less than he would collect under the terms of the coinsurance clause, the coinsurance clause shall be applied as such.

2. “Contribution,” unless otherwise as specified in General Principle 1-G, shall be on the basis of the applicable limit of liability under each respective policy or group of concurrent policies as though no other insurance existed, and the limit separately determined under each policy or group of concurrent policies shall be the smallest of the following:

(a) the amount of insurance,

(b) the amount of loss, or

(c) the amount payable after applying any policy limitation(s).

The limits so determined of all policies or groups of concurrent policies herein declared contributing shall be added and, if the total amount exceeds the whole loss, each policy or group of concurrent policies shall pay such proportion of the loss as its limit bears to the sum of all the limits, but if the sum of the limits of liability is less than the whole loss, then each policy or group of concurrent policies shall pay its limit of liability. The determined liability of a group of concurrent policies shall be apportioned pro rata among the policies of the group.

3. Insurance covering property both scheduled and blanket, or both specific as to location and floating, shall be deemed to insure each item or portion separately, and the loss shall be apportioned in accordance with the Principle applying to each item or portion declared to be separately insured.

In applying such Condition:

B. Extensions of coverage in the name of the same insured, whether optional, those creating additional insurance, or based upon a percentage of the principal building or contents policy(ies), whether “permitted” or not and without reference to inception date, shall be considered as excess to any specific coverage applying to the involved property. However, in the absence of specific insurance, the extensions shall be considered as:

(1) Blanket insurance for on-premises losses.


Examples:

Private structures. Rental value. Additional living expenses. Improvements and betterments. Replacement cost coverage. Debris removal.

(2) Floater insurance for off-premises losses.


Examples:

Contents while “elsewhere.” Property removed for preservation from damage caused by the perils insured against. Livestock, farm and dairy produce while “elsewhere.”

General Conditions

4. When the owner of a building is also the owner of the contents of the building and any overlapping coverage exists involving items of building equipment and fixtures essentially in the nature of real property, the building policy(ies) shall be primary.

Examples: Covered under building policy(ies). Antennae and Towers-TV, detached-not affixed(1) to the building or to an outbuilding. Porandas-demountable screened enclosures. Readily removable equipment and fixtures that are included in the realty mortgage. Wall-to-wall carpeting only when included in the realty mortgage.

Note: The building policy(ies) shall include, whether in position or stored on the premises, storm doors, storm sash, shades, blinds, wire screens, screen doors and awnings.

5. When the owner of a Building is also the owner of the contents of the building and any overlapping coverage exists involving items of building equipment and fixtures essentially in the nature of personal property, the contents policy(ies) shall be primary, except when such items are included in the realty mortgage, in which event the policy(ies) covering building shall be primary.

Examples: Covered under contents policy(ies). Antennae and Towers-TV, affixed to the building or to an outbuilding. Fuel. Laundering machines whether or not attached to the realty. Portable air-conditioning and ventilating units. Refrigerators. Stoves. Wall-to-wall carpeting when not included in the realty mortgage.

6. Tenant’s improvements and betterments insurance shall be primary to building insurance when the insured is owner and occupant of a cooperative apartment. However, the tenant’s insurance shall first be made available to the loss on his own property and to property not otherwise insured.

7. The Principle specifically providing the basis of apportionment shall prevail over any Principle more general in scope.

8. Where a bailee’s policy(ies) covers his own property, as well as property of others, the bailee’s policy(ies) shall first be made available to the loss on the bailee’s own property and to property not otherwise insured. Such claim or claims will be adjusted subject to all policy conditions affecting the adjustment, except that value and loss of otherwise insured property shall be deleted from the adjustment.

A second statement of loss should then be prepared by the adjuster including all values and loss covered by the terms of the bailee’s policy(ies) as written to determine the maximum liability under the policy.

Distribution should then be made

(a) to the loss on the bailee’s own property and to the loss on otherwise uninsured interests,

(b) to the otherwise insured interests for the difference, if any, up to the maximum liability under the bailee’s insurance.

While right of action under subrogation is retained by the bailors’ insurers, the inclusion of the bailee insurer’s name in any action against the bailee is contrary to the intent of these Principles.

Claims filed by other insurers with the bailee insurers after payment or advance to owners shall be recognized to the same extent as if directly presented by the owner through the bailee in order to fulfill the purpose of these Principles, except where the bailee insurer may have certain facts in connection with a specific claim that justify reimbursement in a sum less than the amount paid by the bailor insurer.

9. Differences of opinion respecting the application or effect of these Principles shall be submitted for arbitration in the manner determined by the participating Associations. Payments of loss, or advances under loan agreements, or otherwise, shall be without prejudice to the rights of the insurers under these Principles.

(1)See Definitions.

PART II

SPECIFIC PRINCIPLES: CASUALTY – CASUALTY

Overlap of first-party property coverage situations occurring between or among casualty coverages, only, are to be resolved in accordance with General Principles 1-A through 1-G; 2-A through 2-E; General Conditions and Definitions.



SPECIFIC PRINCIPLES: FIRE – FIRE


Overlap of first-party coverage situations occurring between or among fire coverages, only, are to be resolved in accordance with General Principles 1-A through 1-G; 2-A through 2-E; General Conditions; Specific Principles and Definitions.

Explanatory Notes and Examples

Under overlapping situations between fire-fire coverages:

1. A building is construed to be an object.

2. The following are construed to be a group of related articles or objects and come within the provisions of General Principle 1-C or 1-D:

(a) stock (merchandise),

(b) machinery,

(c) furniture and fixtures,

(d) improvements and betterments.

3. Coverage on any combination of the above in 1 or 2 and coverage on CONTENTS or on personal property are not construed to be coverage on a group of related articles or objects, but come within the provisions of General Principle 1-E or 1-F.

SPECIFIC PRINCIPLES: INLAND – INLAND

Overlap of first-party coverage situations occurring between or among inland coverages only are to be resolved in accordance with General Principles 1-A through 1-G; 2-A through 2-E; General Conditions; Specific Principles and Definitions, subject to the following specific exceptions:

1. Policies issued to common or contract carriers covering their legal liability for cargo shall be deemed to insure independently of any policy issued to a shipper, consignee, owner or agent to the same extent as if no other insurance existed, subject, nevertheless, to pro rata contributions from and with other similar policies issued to the carrier.

2. Overlapping insurance shall be deemed to exist in the case of termination, by expiration or cancellation, of a motor truck cargo liability policy with Interstate Commerce Commission and State Endorsement(s) expiring subsequent thereto, and a succeeding motor truck cargo liability policy whose ICC and State Endorsement(s) attach upon the termination dates of the endorsement(s) attached to the succeeded policy. In the case of such overlapping insurance between a succeeded insurer’s unexpired ICC and State Endorsement(s) and a succeeding insurer’s ICC and State Endorsement(s) whether issued or not: It is agreed that the succeeding insurer shall assume any liability under ICC or State Endorsement(s) from the date of attachment of the succeeding policy but not in excess of the limits stated in the ICC or State Endorsement(s).

3. Overlapping insurance shall be deemed to exist whenever insured loss or damage may have occurred during continuous coverage under successive policies of two or more companies, and the date of loss cannot be determined but may be presumed to have been during the existence of such policies, the loss shall be prorated between the companies on the basis of time each company was at risk prior to discovery of loss, the total of such time in no case to exceed thirty-six months, nor to extend in the case of missing property beyond the time the property was last seen, nor in the case of damage beyond the time the property was last known to be in sound condition.

4. When a furriers customers policy has been extended to cover excess legal liability and the amount charged the bailor for storage or services and insurance was predicated on the declared valuation stated in the receipt issued by the furrier for the article lost or damaged, the bailor’s insurer shall accept in final settlement the amount of the loss or damage not exceeding such declared valuation, unless such loss or damage was due to unauthorized use or disposition of the article by the bailee.

When one bailee sends property to another bailee, insurance covering the bailee in possession of the property at the time of the loss is to be considered primary in relation to the first bailee’s insurance. The measure of liability under the insurance declared to be primary shall be determined as follows: notwithstanding any limitation of subsequently determined excess liability stated in the original bailee’s contract of bailment with the owner or agent:

A. If a receipt shall have been issued by the bailee in custody, with a declared valuation, or stated limitation of liability, the measure of liability shall be such declared valuation, or stated limitation, but in no event exceeding the actual cash value of the property.

B. If a receipt shall have been issued by the bailee in custody with no declared valuation, or no stated limitation of liability, or if no receipt shall have been issued, the measure of liability shall be the actual cash value of the property, unless there is in effect a signed contract or other agreement in writing between the parties specifically providing for a lesser liability between the parties.

EXAMPLES—Specific Principle 4 (Inland-Inland)

Example 1. A coat worth $3,000 is stored by “A” with the furrier who issues a fur storage receipt with a declared value of $500. “B” asks the furrier to manufacture a coat like “A’s”. The furrier agrees, and without “A’s” knowledge or consent removes her coat from the storage vault to his workroom where it is used as a model, and while there it is stolen. This is an unauthorized use of the coat, and the furrier should be liable for the full value.

Example 2. The same coat is stored under a $500 receipt, and without “A’s” knowledge or consent, the furrier removes the coat from the storage vault for display or exhibition and, while on a form in the store or window, it is stolen. This is an unauthorized use of the coat and the furrier should be liable for full value.

Example 3. The same coat is stored under a $500 receipt, and repairs are ordered and agreed upon. The receipt bears a statement: “All work done on our premises.” The coat, without the knowledge of “A,” is sent to another and independent contractor where the work is to be done. It is damaged by fire on these premises and is a total loss. This is an unauthorized use of the coat and the furrier should be liable for the full value for such a breach of contract.

Example 4. Assuming the same bailment, the furrier, being in financial difficulties, takes the coat to a pawnbroker, where it is pledged for a loan. “A” should recover damages (i.e., cost of replevin, et cetera) up to the full value from the furrier for such unauthorized use or disposition of the property.

Note: Where the personal property insurer does not control the right of recovery against the furrier, due to insufficient insurance, and a recovery is made by the owner in excess of the receipt valuation, the property insurer should refund to the excess liability insurer such amount as it has received in excess of the receipt valuation.

DEFINITIONS of Insurance Terms for the Purpose of these Guiding Principles

AFFIXED—A television aerial or antenna is affixed to the building or outbuilding when substantially attached with the weight of the antenna borne principally by the building.

BLANKET (Casualty)—When a policy covers at a stated location and any number of other unstated or non-scheduled locations as well, it is said to be “blanket.”

(Fire and Inland Marine)—When a single amount of insurance covers several unrelated items, the policy is said to be written “blanket.” Example: One amount of insurance covering two or more buildings or a building and its contents.

CONCURRENT POLICIES—Concurrent policies are those insuring the same interest and the identical property involved in the loss or claim, which divide the risk of a specific major hazard between or among policies or companies, even though policy dates and amounts vary and certain policies contain reduced rate contribution, average, coinsurance, or deductible clauses, while others do not.

Examples:

  • Two or more standard fire policies.

  • Two or more contractors installment floaters.

  • Two or more furriers customers policies.

  • Two or more mercantile theft policies.

A policy(ies) providing coverage under more than one underwriting classification; i.e., casualty—fidelity—fire—inland marine or multiple-line, shall not be considered concurrent to policy(ies) limited to one classification.

Examples:

  • A standard fire policy and a homeowners or MIC.

  • A boiler-machinery and a fire policy.

  • A special multi-peril motel policy and a mercantile theft policy.

EXCESS PROVISION—A provision in a policy which stipulates that the policy is liable only after other insurance, covering the risk, has been exhausted—not to be confused with “pure excess” insurance. However, depositors forgery insurance which by its terms is primary to employee dishonesty coverage shall remain so.

FLOATER POLICY (FLOATING)—A policy under the terms of which protection follows movable property, covering it wherever it may be.

Example: A policy on tourist’s baggage.

LIMIT OF LIABILITY RULE—As described in General Condition 2.

LIMITED PURPOSE—A policy(ies) is said to be for a more limited purpose when it is designed to provide coverage for a specific exposure as contrary to one which includes that exposure and other exposures as well.

Example: A trip transit policy is a more limited purpose policy than a household furniture policy with off-premises coverage.

LOCATION—A site specifically defined in the policy.

OVERLAPPING—When two or more types of insurance cover the same risk the insurance is said to be “overlapping.”

RETROSPECTIVE RATING—A plan under which the final premium for a risk is adjusted on basis of its own loss experience during the policy period.

This information was originally published following Hurricane Katrina and covers the best information at the time. (c)2005 James Murray//Infozonenews//NetNewsledger.com