A. Loss Conditions 

1. Appraisal For Physical Damage Loss 

If the insurance company and the named insured fail to agree to the amount of a loss, either may demand an appraisal. When this occurs, each party selects a competent appraiser, both of whom then select a competent and impartial umpire. Each appraiser separately states the actual cash value and amount of loss. If the two appraisers do not agree, they submit their differences to the umpire. When any two of the three agree, that decision is binding on all parties. The insurer and the named insured each pay the cost of the appraisers and share the expense of the umpire and costs of the appraisal equally. 

Note: Even if the insurance company participates in the appraisal process, it still retains the right to deny the claim. 

2. Duties In The Event Of Accident, Claim, Suit Or Loss 

The insurance company has no duty to provide any coverage under this coverage form unless the named insured fully complied fully with the following duties: 

a. In case of an accident, claim, suit or loss, the named insured must provide either the insurance company or its authorized representative with prompt notice of how, when and where the accident or loss occurred, the insured’s name and address and the names and addressees of any injured persons or of any witnesses, if known. 

b. The named insured and the involved insured must not commit the insurance company to any payment, obligation or expense. However, the insured can make any commitments it wants at its own expense. The named insured and the insured involved must cooperate with the insurer during investigating or settling the claim or defending the suit. They must also provide copies of all documents the insurance company requests as well as provide it with all necessary authorizations so it can obtain medical records or other pertinent information and submit to examination by a physician the company chooses as long as it is reasonable and at the insurer’s expense. 

c. The named insured has additional duties in case of a physical damage loss to a covered auto or its equipment. The police must be notified promptly if the loss is due to theft. In other loss situations and within reason, the named insured must protect the covered auto from further damage and record the expenses incurred to do so because they can be considered when the claim is settled. The insurer must be able to inspect the damaged auto and obtain information about the loss before the auto is repaired or disposed of. If requested by the insurer, the named insured must agree to be examined under oath and sign any statement of answers. 

Failure to cooperate can have serious consequences. Although it does not involve commercial auto, this case illustrates what can happen to a party who does not comply with such provisions. 

Related Court Case:  Uncooperative Insured Can’t Seek Arbitration 

3. Legal Action Against Us 

No one may bring legal action against the insurance company until all coverage form terms have been complied with. In addition, there are two additional requirements prior to legal action with respect to liability coverage. First, the insurer must agree that it has an obligation to pay or the amount of the obligation has been determined in a judgment. Second, no party has a right to bring the insurer into an action to determine the insured's liability. 

Related Court Case:  Insurer’s Unfair Handling Results In Treble Damages 

4. Loss Payment–Physical Damage Coverages 

The insurance company determines the method to use to settle a physical damage loss. It can: 

a. Pay to repair or replace the damaged or stolen property 

b. Return the stolen property but bear the expense of returning it. It also pays any damages the auto incurred due to the theft. 

c. Pay the appraised or agreed value of the damaged or stolen property and then take any or all of it 

Note: Any payment made includes any required sales tax. 

5. Transfer Of Rights Of Recovery Against Others To Us 

If the insurance company made payments to a party under this coverage form, any rights that party may have to recover from another transfer to the insurer. The party that was paid must do everything necessary to secure the insurer's rights to recover and do nothing to impair those rights.