HO 00 03 Coverage Form Analysis (Excerpt)

(Selected) CONDITIONS—SECTION I

A. Insurable Interest and Limit of Liability

Regardless of the number of people who have an insurable interest in the property covered, the insurance company providing the special form HO coverage is limited in its response. It won’t pay an "insured" more than the amount of that "insured's" interest applying at the time of loss. It also will pay no more than the limit of liability for the covered property.

Specifically, the Special Form policy is only obligated to pay the policy limit that applies to a covered person who has suffered a loss to covered property.

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.

D. Loss Settlement

Any mention of replacement or repair cost does NOT include any expense created by any ordinance or law. The only exception is the coverage described under Additional Coverage E.10. Ordinance or Law. In light of this clarification, covered property losses are settled in the following manner:

F. Appraisal

If the “insured” and the insurer disagree on the amount of loss, either party can demand that the loss be appraised. In this process:

• each party chooses a competent, impartial appraiser no later than 20 days after getting the other party’s request for an appraisal.
• the two appraisers will choose an umpire.
• each party has to share the cost of the judge and pay the entire expense for their own appraiser.

If the appraisers cannot agree upon an umpire within 15 days, either the insurer or the “insured” can ask that a judge be selected by a court of record in the state where the "residence premises" is located.

The appraisers have to submit separate opinions on the loss amount and an agreement (submitted to the insurer in writing) between any two persons (among the appraisers and the judge) becomes binding on both the insurer and the policyholder.