CONDITIONS—SECTION I

C. Duties After Loss

This provision reinforces an insured’s prime obligation to strictly comply with its requirements. It mentions that if an insured fails to perform the duties, and if that failure adversely affects the insurer, the insurer is no longer obligated to provide coverage. An insured's cooperation is critical to an insurance company's ability to perform under the insurance contract.

Related Court Case: Uncooperative Insured Can’t Seek Arbitration.

In case of a loss to covered property, the named insured, the insured seeking coverage or a representative of either party is responsible for:

1. Giving prompt notice to the insurance company or the insurance company’s agent.

Related Court Cases:

Notice To Broker Was Not Notice To Insurance Company

Notice To Independent Agent Or Broker Held Not To Be Notice To Insurer.

2. Notifying the proper authorities in case of loss by theft.

3. Notifying the credit card or electronic fund transfer card or access device company in case of loss under credit card, electronic fund transfer card or access device, forgery and counterfeit money coverage.

Please see this analysis’s discussion of this coverage in item E.6. Additional Coverages.

4. Protecting the property from further damage.

If repairs to the property are necessary, the insured is required to do both of the following:

• Make reasonable and necessary repairs to protect the property
• Keep an accurate record of repair expenses because most are covered under the policy..

If a homeowner kept materials or supplies on hand to help protect the covered property from loss, the policy should also protect such property if it were stolen or destroyed by a listed or eligible cause of loss.

5. Cooperate with the insurance company in the investigation of a claim.

This item acts as an important reminder that the insured must be an active and willing participant in the claims process.

6. Prepare an inventory of damaged personal property.

The inventory must show the quantity, description, actual cash value and amount of loss. The “insured” should also attach any bills, receipts and related documents that will justify the figures reported in the inventory. This condition is unchanged from earlier editions of the Special Form policy.

Related Article: Actual Cash Value Guide.

7. As often as is required by the insurance company, the insured must do all of the following:

a. Show the damaged property

b. Provide the insurance company with the records and documents that they request and allow them to make copies

c. Submit to and sign an examination while under oath and without being in the presence of any other "insured”

This condition may appear to be heavy-handed, but the insurer is in the vulnerable position of having to rely on the insured concerning the scope of the loss. The insurer is merely asserting its chances of getting accurate information for investigating a claim. Unfortunately, this condition often becomes a battleground between insurers and claimants. The interests of insureds may have been better served if this condition contained some wording that obligated an insurer to exercise courtesy and reasonableness when enforcing this provision.

8. The named insured must send to the insurance company, within 60 days after its request, a signed, sworn proof of loss which to the best of the named insured’s knowledge describes the following:

a. The time and cause of loss

b. The interest of all "insureds" and all others in the applicable property, including all available information on any property liens

c. Other insurance which may cover the loss

d. Information concerning any status changes affecting the property’s legal ownership (title) or occupancy that took place during the policy term.

e. Any details on the damaged buildings regarding repair estimates and specifications

f. The inventory of damaged personal property described in an earlier part of this section

g. Additional living expense receipts and other information that can document a loss involving fair rental value

h. Any evidence or affidavit necessary to document  a claim under the credit card, electronic fund transfer card, or access device, forgery and counterfeit money coverage, which verifies the amount and the cause of loss.

Related Court Case: Confusion Caused By Treatment of Proofs of Loss

CP 00 10–BUILDING AND PERSONAL PROPERTY COVERAGE FORM ANALYSIS

E. LOSS CONDITIONS

3. Duties in the Event of Loss or Damage

The insured is expected to act reasonably whenever a loss occurs. If not, the company’s obligation to pay the loss may end. The named insured must:

• Notify the police or other law enforcement authorities if a law may have been broken. Even though this requirement may sound obvious, the circumstances surrounding a loss may make this issue more complicated than it appears.

In cases like these, the insurance company has the right to refuse to pay the loss. It needs this requirement to protects its interests, which include being certain that the claim is legitimate as well as making sure there is a chance that the responsible parties are found and punished. When theft of property is involved, police involvement increases the chances that the property will be recovered.

• Give prompt notice to the insurance company of loss or damage and describe the property involved. This notice is not a complete and thorough report. It provides only enough information for the insurance company to begin to process the claim and decide how to respond. Some court cases have challenged the meaning of "prompt." As a result, the best advice is for the insured to send as much loss information to the insurance company as soon as it knows that a loss has occurred.

Related Court Case: Two-Year Limitations Period To File Claim Began To Run On Date Of Fire

• Give a description of how, when, and where a loss occurred as soon as possible after it occurs. This requirement is slightly different than the prompt notification obligation. That obligation is to inform the insurance company on a timely basis that a loss has occurred. This obligation assists the company to determine if the loss is actually covered.
• HOW is what actually caused the loss. The answer determines if the loss is covered.
• WHEN is the exact time the loss occurred. Because coverage applies only if the loss occurs during the policy period, this information is very important. There is coverage if the loss occurs at 12:02 a.m. on the inception date. There is no coverage if it started at 11:59 p.m. the day before the inception date. In addition, accurate information on when the loss or damage occurred may help resolve whether the loss occurred suddenly or over a period of time. This is important. There is a distinction because sudden losses tend to be fortuitous and covered while losses that take place over a period time may be maintenance issues that are not covered.
• WHERE is important because most coverages require that the property be at a location or premises listed on the declarations. If the loss occurs elsewhere, the coverage form must be examined carefully to determine if any coverage applies at such locations.

·         Take appropriate steps to protect the covered property from any further damage. The time to take that annual Florida vacation is never immediately after a loss occurs. The requirement to protect property involves taking reasonable measures, not extraordinary or unreasonable ones. Covering property with tarps to protect against moisture damage, boarding up windows, and hiring security guards are examples of reasonable measures to take after a loss. Any expenses the named insured incurs are taken into consideration in the loss adjustment and settlement but paying these expenses does not increase the limit of insurance. Finally, the named insured should separate the damaged property from undamaged property and set the damaged property aside for examination whenever possible.

• Provide inventories of damaged and undamaged property when the insurance company requests them. This includes quantities, costs, values, and the amount of loss claimed. This detailed information is important to properly adjust the loss and offer a fair settlement. The named insured controls the inventory and is responsible for supplying the information needed.
• The insurance company has the right to verify that the information the named insured provides is accurate and correct. For this reason, it may inspect the property in order to prove the loss or damage. It may also examine the insured's books and records that relate to the loss or damage. The insurance company can also take samples of the damaged and undamaged property and make copies of the insured's books and records.

This condition states that the insurance company must be reasonable in its requests. Because reasonable is not a defined term, the two parties might disagree about the intent of this condition. For example, the company may state that repeat visits are necessary in order to be thorough. The insured may view the same actions as being a delaying tactic that slows down the settlement. While the essence of this condition is to prevent the insurance company from harassing the insured, it also benefits the company. Because of the way it is written, an uncooperative insured cannot claim that a single visit is sufficient for the carrier to adjust and settle a loss.

Related Court Case: Uncooperative Insured Can't Seek Arbitration (Classic)

• Show good faith in the truth and accuracy of a claim for loss by providing the insurance company with a signed and sworn proof of loss. This must be done no later than 60 days after the company requests it, along with any other information needed. The insurance company provides the necessary forms and instructions on exactly the information it needs.

Note: If the company's requests are not clear and the insured is confused, any delay in providing the information cannot be used as an excuse to deny coverage.

• Cooperate with the insurance company as it investigates and settles the claim.

In addition to the points outlined above, the insurance company has the right to examine any insured under oath. The examination can take place without another insured being present. The examinations can be done as often as necessary with respect to anything related to either the insurance coverage or the claim itself. They can include examinations of the insured's books and records. In all examinations, the written document used to record the insured's answers must be signed.

Related Court Case: Insured Fails to Produce Required Documents Following Fire Loss

Note: Loss investigation is a serious part of the insurance claims process. The insurance company must have complete access to information as necessary to investigate and settle the claim. This may include information the insured would rather not disclose. Claims adjusters want to believe their insurance customers are honest but the sheer number of incidents of fraud makes them cautious. While the insurance company cannot use intimidation or harassment, it must still be diligent in order to protect its assets and to prevent or limit fraud.