It does appear the policy was issued incorrectly. The only way to get a policy issued with multi-million dollar limits would be the Residential Condo Program yet the insured is clearly a cooperative housing corp. Co-op buildings can only get $250k. Somehow it managed to get issued as a condo assoc. Either the carrier didn’t check the submission or the agent erred in the application. Either way, the underwriting in the NFIP occurs AFTER a claim is filed. Policies found mis-rated are subject to premium increases, cancellations and/or coverage reductions. Pretty sure the carrier was correct in processing a cancel/rewrite but should they have caught the error during the application process? If the agent misunderstood and thought these limits were available for co-ops, the agents E&O should come into play.
The article appears to imply that the flood policy can’t change after the loss is reported. If this is correct there are other gray areas. Such as in a case when a five or more family unit was originally issued as a “residential”, after the flood it is reissued as “other Residential”
Although the $250K limit does not change it does affect in how the claim is paid, Residential does not have any depreciation “But” however “other residential” does depreciate, this does reduce the payout by some 20%,Pleas advise
Unless the insured can prove that the false belief of higher coverage prejudiced their opportunity to purchase higher amounts of flood insurance, it would not appear the error caused them any financial harm. The carrier does not generally benefit from selling higher amounts of coverage as their margins on commission payment on flood insurance are generally slim to negative. It supports their argument that they did not intend to deceive (for a profit motive) but that they were just incompetent.
why would an insured be required too prove when he has an issued policy,the company needs to prove that the insured knew that he did not have the coverage stated in the policy!
It does appear the policy was issued incorrectly. The only way to get a policy issued with multi-million dollar limits would be the Residential Condo Program yet the insured is clearly a cooperative housing corp. Co-op buildings can only get $250k. Somehow it managed to get issued as a condo assoc. Either the carrier didn’t check the submission or the agent erred in the application. Either way, the underwriting in the NFIP occurs AFTER a claim is filed. Policies found mis-rated are subject to premium increases, cancellations and/or coverage reductions. Pretty sure the carrier was correct in processing a cancel/rewrite but should they have caught the error during the application process? If the agent misunderstood and thought these limits were available for co-ops, the agents E&O should come into play.
The article appears to imply that the flood policy can’t change after the loss is reported. If this is correct there are other gray areas. Such as in a case when a five or more family unit was originally issued as a “residential”, after the flood it is reissued as “other Residential”
Although the $250K limit does not change it does affect in how the claim is paid, Residential does not have any depreciation “But” however “other residential” does depreciate, this does reduce the payout by some 20%,Pleas advise
Unless the insured can prove that the false belief of higher coverage prejudiced their opportunity to purchase higher amounts of flood insurance, it would not appear the error caused them any financial harm. The carrier does not generally benefit from selling higher amounts of coverage as their margins on commission payment on flood insurance are generally slim to negative. It supports their argument that they did not intend to deceive (for a profit motive) but that they were just incompetent.
why would an insured be required too prove when he has an issued policy,the company needs to prove that the insured knew that he did not have the coverage stated in the policy!