North Glenn Homeowners Association sustained hail damage as a result of the July 15, 2009 storm. Their insurance carrier paid them approximately $125,000 for the damage. The Association decided to fix a portion of the hail damage and the remaining balance of the settlement was used to make other repairs and improvements. State Farm only discovered this when they arrived to settle another claim for wind and hail that occurred on March 22, 2011. State Farm decided that their portion of the new claim was under the deductible so did not make any payment.

North Glenn wanted to activate the Appraisal Clause but State Farm refused and argued that the clause didn't apply because damage for the covered loss did not exceed the policy deductible.

Click here to see how the appellate court ruled.

The appraisal condition or clause is part of most property-related coverages because it provides a process to resolve differences of opinions without involving a court. Each side selects its own competent and impartial expert and those experts then agree upon an umpire. The umpire has the final decision if the two experts cannot agree.

Click here to read the PF&M analysis of the ISO Homeowners Appraisal Condition and the ISO Commercial Property Appraisal Loss Condition.

All policies start with a very broad insuring agreement that is narrowed considerably over the next 5 to 40 or more pages. Unfortunately, the only parts of the policy that may be read are the coverage descriptions and the exclusions. This cursory reading leads to gaps and mistakes. When a loss occurs, the most important part for an insured may be the conditions, especially the loss conditions. These spell out the responsibilities, of both parties. If either fails to meet its obligations, a breach of contract can occur. The insurance company knows their responsibilities so it is the insured that is often unfamiliar with his or her responsibilities that may breach and lose the coverage without even realizing it.

Click here to read the PF&M Analysis that describes and explains the ISO Homeowners and the ISO Commercial Property Duties of the Insured following a loss conditions.

Have you ever scheduled an appointment with your customer to talk about what their policy actually says? It could be an important visit that might cement your relationship for years to come. Use your PF&M subscription to help prepare for the meeting and then consider using the following letter to set up an appointment.

Scheduling an Appointment