Policy Changes & Erosion of Coverage

When I receive a call from a policyholder who needs help with their property damage insurance claim, it frustrates me when I have to tell them they have limited coverage, that they have no coverage, or they have a high deductible.
 
To hear their surprise is astonishing to me.  Policyholders really don’t know the coverage in their policies, or should I say the lack of coverage. Haven’t their agents discussed the policy with them? How can they be so unaware?
 
As a follow-up to my past blogs about the Erosion of Coverage, I am frustrated that the Office of Insurance Regulation continues to allow insurance companies to make policy changes that are not beneficial to property owners, and more detrimental when they have to file an insurance claim.
 
This Can Happen To You
A recent call led me to write about this again.  An elderly couple’s daughter asked me for help with her parent’s hurricane claim in Delray Beach, Florida.  They had roof damage as well as a few rooms of interior damage resulting from the roof leaking.
 
She could not understand how the insurance company’s first estimate included the full roof replacement, then in subsequent emails, the estimates changed, and they paid very little on her parent’s claim.
 
In addition to an almost $20,000 deductible, the policy contained an endorsement for Matching of Undamaged Property, and it was limited to 1% of the Coverage A policy limit.
 
The roof is damaged on a few slopes.  At first the adjuster wrote to pay the entire roof replacement.  In the subsequent “Estimate Change Forms” and “revised estimates” from the insurance company, they put the “undamaged” roof items, dumpster fees, and gutters under the “1% Matching of Undamaged Property” endorsement. 
 
The insurance company paid two separate checks.  One check was for repairs to the damaged portions of the roof.  A second check for about $3,700.00 was for the $67,000 worth of “undamaged” line items they listed in a separate section of the estimate under the 1% matching endorsement.
 
Know Your Policy Coverage
Most property owners do not have $67,000 sitting around to pay for property damage, especially when they pay insurance on their property and expect to be covered in the event they have a claim, especially a catastrophic claim.
 
You need to know your policy and the coverage it provides before you have a property damage claim.
 
Coverage Limits
Between $10,000 water damage limits, roof depreciation schedules, 1% matching of undamaged property, and high deductibles, policyholders can be left with high out of pocket costs for repairs.  Meanwhile insurance premiums have not decreased but continue to increase.
 
Shop Coverage Not Price
Due to the high cost of insurance, many people are trying to cut their costs and have more affordable insurance. Unfortunately, you may have less coverage if you do that.  Depending on the age of the home or some of its components, you may have no choice and have limits placed on the policy.
 
There still are insurance companies writing coverage, so I suggest you review your policy and see if you have any policy limitations. If you do, contact your agent and see if they can place you in a policy without limits, or if you can increase the limit.
 
If you have any questions, a new or underpaid claim you need help with, we are here to help. Contact us today for a free consultation.  We treat every client’s claim as if it were our own.