Would a carrier deny a property claim if.....

[Rob]

Would a carrier deny a property claim if on the application the insured indicates that the age of the roof (or electrical or whatever) is under 20 years and then at the time of a loss it is discovered that it was over 20 years, and the insured did not willfully misrepresent, but the information provided did cause the the carrier to issue Special Form rather than Basic Form.

This is not an actual case. I just have alot of commercial customers that (and I can't be 100% sure of this) don't know 100% and are putting their best estimate down. In fact I have one right now that we are doing an application for with the building built in 1985 and they just don't know the age of the roof.

Thanks

Rob

[ebrenneman]

If your not sure you can usually go to the county assesors office often there is a section in the property portion that will indicate inprovements and/or permits. you can also check with the building division for permits pulled or work completed. a phone call is cheaper than running around hoping you have coverage plus think about the added touch of proffessionalism. If you have an idea that work was completed and there is no permit you can always call a specialist and have them give you an idea of the age. Field underwriting at its finest!

[kevinraz]

My answer as a former underwiter: maybe. If it's a smaller claim and it's not a big miss on the age (a few years) then it'll probably sail through. A huge claim and they said the roof is under ten years old but shows obvious wear signs (broken/missing shingles, wear, sunfade, etc) then you've got a problem.

For electrical and plumbing you should pretty much assume that they are original unless you have hard copy proof of upgrades. Most anything built after 1970 has copper plumbing and circuit breakers. That sounds good until you realize that the stuff is now 40 years old and needs complete replacement, something few people do.

Municipalities will most likely have records of plumbing and electrical work, less so on roofing but still might get some help there.

[scott]

Access to reference materials is essential in this business. A library of insurance texts and online services is invaluable if you want to differentiate yourself. Of course, you have to use the material.

From FC&S (National Underwriter Company):

Misrepresentations in Application
and Post Loss Can Void Coverage - July 2004

Summary: An insured's misrepresentation in obtaining coverage or fraud involving the policy can void coverage. Property and liability policies almost universally contain provisions stating that truthful and correct statements are the basis upon which the insurers decision to issue the contract is made and that fraud or misrepresentation voids the policy. Due to the phrasing of many misrepresentation and fraud clauses, the acts of any insured, and not just the named insured, can have the effect of voiding insurance coverage.

The courts generally uphold these provisions in insurance policies. Further, statutes in many states allow the insurer to deny recovery under a policy where the misrepresentation is fraudulent, material to the acceptance of the risk or to the hazard assumed by the insurer or where the insurer in good faith would not have issued the policy if the true facts regarding the risk had been made known to the insurer.

There are two reasons. The first is that the insurance contract is based on the premise of "utmost good faith and fair dealing" on the part of both parties to the contract. The insurer relies on the honesty of the insured making the representations, and the insured places his faith in the insurers promise to deal fairly in claims settlement. The second reason is that underwriting decisions are made using guidelines in which insurability and premium is determined by multifarious factors, such as: type of property; use made of the premises or automobiles; moral and physical risk exposures; age of insureds; territory; insureds' past loss and claims history; and driving and other public records. This makes representations made by potential insureds in procuring insurance vital information for an insurer who must decide whether to accept or decline a risk and how much to charge.

[LadyBroker]

while I would agree that a misrepresentation 'should' void coverage, in experience have seen that if the ages are close, and the claim is smaller, it will typically be paid, and then the policy set to non renew.

SOrry I can't be of more help.

[mccluney]

The "key" is to indicate on the application that the client or the building owner has estimated that the age is ....This should be used if the agent cannot determine the accuracy of the answers. Then of course the client signs the application. If the underwriter accepts the application, the company would be hard pressed to come after the client or more importantly the agent, assumming the answers have been indicated in good faith.

[earlybird]

Keep in mind that the misrepresentation must be "material." In other words, would that misrepresentation cause an underwriter to agree to cover a risk, that he would not cover if he had known the age of the roof, in the example given. As a 30 year claims man, turned underwriter, it is likely that the claim would be paid. Suppose the roof was actually 25 or 30 years old, what difference would it make if the roof has hail damage or a tree poking through it?
Now for an extreme example, suppose the property is insured as a retail store, on the basis of the application, but the owner is manufacturing fireworks in the basement! If a fire loss occurs, you have a problem!

[d's insurance store]

I think the key here is to look at the size of the potential account. If your agency holds all the personal lines in a household and the insured wants to insure an office in a BOP format for contents, GL, Loss of Use and landlord as an additional insured and the premium is minimum at $500-750, and the office building looks sound but was built in the early or mid 70's, then really, just how much time is the agent going to spend on researching permits and the like.

I know that insurance companies are all looking for brand new HVAC, electrical, roofs and plumbing in any risk, but in reality, conduit or romex wiring doesn't really wear out and copper plumbing that has good solder joints doesn't leak, so I don't know what the big deal is on those issues.

On large risks with big premium, I have and will do the legwork, but when I'm accommodating a current client or just writing a quick low premium BOP, then I'll give it my best guess estimate and let the chips fall where they may. I have yet in 26 years to have a denied claim because the plumbing was declared to be from the 70's, but was actually from the 60's.

[ebrenneman]

[quote="d's insurance store"]I know that insurance companies are all looking for brand new HVAC, electrical, roofs and plumbing in any risk, but in reality, conduit or romex wiring doesn't really wear out and copper plumbing that has good solder joints doesn't leak, so I don't know what the big deal is on those issues.[quote]

in the original question regarding special or broad form these items play a significant part in the claim, since it must be repaired or replaced to current building code outdated materials, whatever they are, can add a significant amount of cost to remove and replace. regardless of wether they wear out or not in a partial loss it will need to be brought current with code each city, county, state has different codes.
a 500.00 account can have as big loss as a 5,000.00 dollar account the question is do you have enough coverage.

[Bill]

Two questions will usually determine whether the carrier would be successful in their attempt to deny coverage.

1. Would the insurer write the coverage had they known the correct information? ( Lets look at their underwriting guidelines.)

2. Does the insurer have any simular risks with the characteristics that they are trying to deny coverage currently on the books?

If the answers to these questions are in the affirmative, then the carrier is on the hook for the claim. If not your errors and omissions is on the hook, because you didnt research the construction date online with the county to determine the correct year of construction. Either way the insured will always get amnesia after a claim and forget that they told you a certain year of construction.