Property and Casualty Insurance · Property Insurance · 6 min read
Responsibilities After Property Damage
- Identify the immediate post-loss duties an insured must perform, including notifying the insurer, authorities, and financial institutions.
- Explain the requirements for protecting property, separating damaged items, preparing inventories, and cooperating with insurer investigations.
- Describe the components, deadlines, and legal significance of a sworn proof of loss and the conditions governing lawsuits and mortgagees.
Immediate Actions: Notice and Crime Reporting
Property policy conditions outline the specific duties an insured must fulfill after a loss occurs. After damage, give prompt notice to the insurer or its agent, and take reasonable steps to prevent further damage without waiting to report the loss. This prompt notice requirement applies to both primary property coverage and optional coverage endorsements. Providing notice promptly allows the insurer to investigate the cause of loss while evidence is fresh. In your notice, you generally identify the damaged property and explain how, when, and where the loss occurred, as soon as that information becomes available.
Certain types of losses trigger additional immediate notification requirements. Under standard ISO homeowners forms, notify the police if the loss is by theft; under standard ISO commercial property forms, notify the police if a law may have been broken. For example, if you discover forced entry and stolen electronics, notify the police as required for a theft loss under a standard ISO homeowners policy. Similarly, for a claim under homeowners credit card or fund transfer card coverage, you must notify the card company, card issuer, or financial institution promptly as the applicable coverage requires.
Failing to meet these post-loss duties may jeopardize a claim, subject to the policy terms and applicable state law. While standard forms set national baselines, insurers may use their own forms and endorsements, and state law sets specific interpretations of what constitutes reasonable promptness.
Common mistakes
- Throwing away destroyed personal items before the adjuster arrives, which can jeopardize the claim settlement because the insurer is entitled to inspect damaged property.
- Believing an insured must obtain insurer approval before buying tarps or plywood to prevent incoming water damage, when policies actually require reasonable protective steps and cover reasonable emergency costs.
- Assuming that a failure of the property owner to submit a proof of loss automatically cancels the rights of the listed mortgagee, when the standard mortgage clause permits the mortgagee time to file its own proof of loss.
- Confusing the ISO proof of loss trigger (within 60 days after the insurer requests it) with the NFIP flood trigger (generally within 60 days after the flood loss occurs unless extended or waived).
Key points
- Give prompt notice to the insurer or agent; also follow the applicable form's additional notice duties, such as notifying police of a theft loss under a standard ISO homeowners policy or notifying the card company of a covered credit card loss.
- The insured has an express duty to take reasonable measures to protect covered property from further damage, document expenses, and preserve damaged items for inspection.
- A detailed inventory of damaged personal property under standard ISO homeowners forms must list the quantity, description, actual cash value, and amount of loss.
- Under standard ISO commercial property conditions, insurers may inspect property, take samples, and examine and copy relevant books and records as reasonably required; standard ISO homeowners and commercial property conditions also permit examinations under oath, including separate examinations of insureds.
- A sworn proof of loss outlines origin, interests, liens, other insurance, and occupancy changes, generally due within 60 days after insurer request under ISO forms or within 60 days of loss under NFIP rules unless modified.
- Intentional concealment, material false statements, or fraud on a claim can void coverage under policy conditions and trigger criminal prosecution.
- Standard mortgage clauses protect the lender's right to recover even if the insured fails post-loss duties, giving the mortgagee an opportunity to submit a proof of loss.
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