Claim Stories: Missing and Inaccurate Project Documentation

Tell us about this project.

So we have a remodeling project for four buildings. And the renovation amount was $1,250,000. The existing structure value was insured for $900,000. the address listed on the policy was incorrect. It showed “TBD” with the name of the subdivision.

What happened to result in a claim?

We received a $32,000 theft loss that was reported of materials at this job site. It gets assigned to an adjuster and the adjuster starts the process of the adjustment.

What did the adjuster discover?

So, what the adjuster found out is there's six buildings at this location, not four. However, only four of the buildings was being renovated. So, the application was stated, right. Because our policy only covers for the existing structures, for the actual buildings that are going to be renovated.

So that was accurate. The materials that were stolen at the job site were stored at this premises. And so it was stored in one of the buildings. that was not being renovated. Then we find out that, the insured could not provide them with a scope. They said they didn't have a scope of work.

But then they asked for the cost breakdown, and they said they didn’t have a cost breakdown. They just guessed at the numbers. That's a lot of renovations to guess.

The adjuster could not proceed with the adjustment loss without some form of documentation, and the insured couldn't provide it.

How did Zurich respond to the claim?

We could not trigger coverage without the documentation. So they were informing the insured and having to deny the loss. So then what happens? The insured comes back and turns a loss in under temporary storage location. Then we got another issue. Because temporary storage location means away from the premises.

Remember what I told you where the where those materials were being stored. It was stored at the premises location that's on the policy where all six of these buildings were located. It's not a temporary storage location, so therefore claims couldn't even trigger the coverage under that optional coverage.

What did the agent get right?

They wrote the right policy. They wrote a remodelers include an existing structure. Correct.

They informed us four of the buildings were being renovated. Correct.

And they obtained the signed application. So they printed our application online, obtained the signature and kept it in their file, and sent us a copy. Great job.

What should have been done differently?

One big thing is when you have existing structures, they've already been assigned an address. Put the addresses on the application. And in this case, remember what I said? There were six buildings. They would have put only the four addresses for those four buildings where they were actually performing renovations.

What should agents do if the cost breakdown isn't provided?

My recommendation is when you write these remodeler policies, always ask the insured for the scope first. What are you planning on doing for each building? These are multiple buildings. Lay it out.

If the scope shows they're identical, then they give you this budget of $1,250,000, you can help the insured come to an assumption and break it up and divide it by the number of buildings being renovated.

How can agents ensure clients understand coverage triggers?

I always recommend a checklist for agents when you sell a policy. First thing, go through the application. Let's go through all the questions we answered before you make them sign that printed application.

Now, let's go through the additional coverages, the optional coverages. Show them what their limits are. Describe them. Give them some basic concept of when this coverage would trigger. What is it? Go through their deductible and then make sure you go through key components of the policy conditions.

I love to tell agents as you go through sections of an application, your policy conditions and the coverage forms. Are there endorsement attachments? Have them initial it, keep it as part of your file. Because now not only do you have a signed app to protect you. You also have all these areas that you went through and reviewed. And boy, does that look good.

So, we want you to protect yourself.

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