If You Have A Fire Don’t Get Burned By: Peter L. Obremskey and Michael L. Schultz

I. Introduction.

Short of a death or serious personal injury, the most devastating thing that can befall a family is to have their home or business destroyed by fire. It is hard to imagine the emotional upheaval to stand by and watch the fire department attempt to save your hopes and dreams as they go up in smoke. It is at this juncture you would expect your homeowners or commercial insurance policies to step in and provide the protection for which you have paid insurance premiums for those many years. Unfortunately, there are many pitfalls which you must be aware of if you are going to protect your interests and receive just compensation from the insurance company for the loss that you have suffered. It is important to understand that the damage to your home or business is not only caused by the fire, it is also caused by the smoke, the water and the destruction created by the fire department in an attempt to put out the flames. As the fire department leaves the scene, your thoughts must go from the smoldering ashes to what’s next.

II. Application.

An application for homeowners insurance is an important document. By the time a fire has occurred, the application process has long been resolved and the insurance issued. At the time of the fire, however, the insurance adjustors will review the policy to determine if there were any material misrepresentations made in the application process that would give the company an opportunity to deny coverage. Virtually all applications are now done online with the insurance agent asking the applicant the questions and then filling in the blanks on the computer. Many applications are taken over the phone with the agent making assumptions as to what the answers to the respective questions would be, only to find out later his assumptions are incorrect and are jeopardizing the insured’s policy coverage. The insured must sign the application and swear that the information contained therein is truthful. Hopefully they have carefully read the application to make sure all the answers to the questions are correct.

It is common practice by most insurance companies to require the agents to visit the property, take photographs and attach them either online or with a hard copy of the application so that the underwriters can make a determination as to whether coverage would be afforded. Remember, the agent is on a commission basis and is anxious to sell the insurance. The insurance agent is well-aware of what the underwriting requirements are in order to place coverage. As a result, they participate in the exaggeration and misinformation that the application may contain.

(Part 1 of 7. Part 2 will be posted on 5/27/10.)

The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.