6 Examples of a Breach of Policy

You may not realize it, but you or your insurance company may have breached your home insurance policy. It’s important that you don’t breach your policy because you want to stay insured, and it’s important that your insurance company doesn’t breach your policy because otherwise you could sue them.

Naturally, you wouldn’t want to do anything to breach the policy because it would void your insurance coverage. However, sometimes people are not aware they are breaching their policy as they act. Here are the top three mistakes homeowners make that nullify their insurance policy.

1. They begin to rent out their home without changing the type of insurance policy on their home.

At some point, you may decide you want to move to a new home and rent out the home you were living in. If so, you need to contact your insurance agent. Failure to notify your agent could result in a canceled policy, but it could also be harmful should an accident occur during the time you are no longer living in the home. For example, if something happened and your house caught fire during the time the home is being rented, the damages may not be covered as the insurance company was not put on notice that you are renting the property to someone else. Your original policy covered damages to property owned and inhabited by you — not a property being owned by you but inhabited by someone else.

2. They start an in-home business.

Although a homeowner’s policy protects your home and its contents, it doesn’t cover anything related to business. If you plan on operating a business out of your home, you will need a separate policy. Be aware, not all home insurers also offer coverage for in-home businesses. Also, the policies for in-home businesses can be quite selective about the types of businesses that are or are not covered.

3. They don’t make arrangements to care for their home when they are gone for a long time.

When you plan to take a long trip (longer than 30 days), you need to be responsible for your home. For example, if you were gone for an extended period of time and one of your pipes burst, your insurance company might decide that you breached your agreement to appropriately care for and maintain your property by not shutting off the water to the property and draining the system or appliance which contained water while you were gone; they might decide not to cover your loss.

How Insurance Companies Can Breach a Policy

Homeowners aren’t the only ones who can breach an insurance policy. Insurance companies could do it, too. Here are the top three ways insurance companies breach a policy.

1. They underpay the amount of coverage for your property.

Depending on the type of policy you have, you will either be entitled to the replacement cost value of the covered property or the actual cash value of the damaged property. In most cases, your insurance company is required to put your home in its pre-loss condition. Each construction job can be priced differently by any contractor in Florida. If you take 10 different contractors and ask them what they would charge to repair a bathroom, you will see that each contractor will price a job differently. If your insurance company accepts coverage over your claim, your insurance company will likely pay out an amount that very close to what the cheapest contractor will charge to repair your home – sometimes even less. Sometimes, your insurance carrier will price a repair job to not include certain repairs in order to save themselves money. For example, some homes have their pressure lines running underneath the foundation. If a plumber decides that your pressure line needs to be replaced in total, it may require breaking through the foundation and replacing all of the pressure lines. Your insurance carrier may say, “Don’t break through the foundation, just re-route the pressure lines outside of your property or through the attic of your home.” The foundation method requires the insurance company to pay a lot more on a claim whereas the reroute option requires the insurance company to pay much less: which method do you think the insurance carrier is going to choose? This example illustrates one of the many ways carriers try to underpay claims.

2. They deny coverage for a covered claim.

Depending upon the type of insurance coverage you have, you are entitled to coverage on much more than you think. Your insurance company will hire an adjuster to inspect your property, take photos, and take measurements after you file a claim. Sometimes these adjusters have no experience in construction but instead rely solely upon the guidelines set by the insurance company to only pay for certain materials and look for certain damages. For example, let’s say after a hurricane, tropical storm, or heavy rain and windstorm hits your home you begin to see your roof leak. The insurance company’s adjuster visits your home to examine the damage. The adjuster goes to your property and asks how old your roof is. Maybe your roof is over 10 years old – but it has never leaked before this storm. Insurance companies will likely state that your roof leak is not covered because you failed to maintain your roof or the roof leak occurred, not because of the high winds or rains, but because the roof was old and suffering from wear and tear or deterioration. A few weeks later, you receive a letter from your insurance company denying coverage for your roof and roof leak. Depending upon your policy, this may be a breach of contract by your insurance carrier.

3. They fail to provide notice about changes to your policy.

If your insurance company fails to notify you that it is making a substantial change to your policy prior to renewing it, that change cannot be included in the renewed policy. For example, many HO-3 policies (standard homeowners policies) are being renewed to disallow coverage for water damage or providing limitations on the amount of coverage they will provide for water damage to your property. Your declarations page may say you’re covered for $200,000 worth of damage to the home, but the new endorsement says that you’re only covered for $10,000 worth of damage to your home if the damage was caused by water. These endorsements are usually not shown on your declarations page and require you to look at your entire policy to find the inconspicuous language. It is important to always check any correspondence you receive from your insurance company as they may include notice of a change of your policy which may dramatically change the type of coverage they will provide to your home.

What Can You Do if There Has Been a Breach of Policy?

If you or your insurance company has breached your homeowner insurance policy, you need to talk to a property insurance lawyer. A qualified property lawyer can answer any of your questions and help you get the coverage your home needs. If you have questions about your property insurance, contact Barnard Law Offices. Our experts can help you understand your policy and whether or not there has been a breach. Give us a call today at (305) 665-0000 or contact us online.

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Barnard Law Offices

The Barnard Law Offices, L.P. has been protecting the rights of Floridians for four generations. Together our attorneys bring years of insurance claim advocacy and trial experience to the table. We don’t believe in half-hearted measures when it comes to proving your claim: after inspecting the damage to your property, our office will engage or connect you with high-quality third-party professionals to assist you with your claim and assess your property damage. Our talented team is dedicated to serving each client’s needs with a passion and commitment that makes us stand out among our peers.
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