Broker Check

Pitfalls in Property Claims, and How to Avoid Them

August 17, 2021
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Attorneys Ashley Jordan and Christopher Kuleba of Reed Smith LLP have identified six areas of concern when filing a property claim, with tips to avoid problems. Their post is on https://www.reuters.com/legal/legalindustry/this-season-fires-hurricanes-avoiding-insurance-coverage-pitfalls-2021-07-30/.

1. Notice: Insurers must be notified promptly as required by policy terms and state law.  A first notice must be sent as soon as possible to avoid rejection due to late notice 

  • The notice should contain as much information as needed to establish a loss, reserving the right to submit more information as it becomes available.

2. Proof of loss will be required within a time period specified in the policy.

  • The period may be extended by state law.
  • If needed, insureds should request additional time.
  • Ask the insurer for a proof of loss form; if it does not fit the loss circumstances get permission to customize or supplement it.
  • If the loss is still being investigated at the submission deadline, submit the proof as preliminary subject to change.
  • If the insurer makes a partial payment, do not sign a release that will foreclose future payments. Confirm that accepting a payment does not foreclose your right to additional payments. 

3. Document requests: The insurer is allowed to inspect an insured's  books, records and other documents.

  • The request must be reasonable. Some states require the insurer to explain the request.
  • Insureds can ask the insurer to review documents onsite and copy what is needed.
  • Require a confidentiality agreement when needed.

4. Supplemental claims may have to be made based on updated information. 

  • Be sure to observe any time limits in the policy or state law.

5.Deadlines to repair or replace: Repair or replacement must be made within a specified time to be covered for replacement cost. 

  • Check state law for deadline extensions.
  • Submit a request for an extension if repair or replacement is  unavoidably delayed.

6. Suit limitations: Suits are barred if not filed within a limited period.

  • The period may be extended by sate law.
  • If the insurer is still considering the claim, the period may be extended.
  • The best strategy may be to file suit before a deadline.