Reimbursement for Expenses to Prevent Further Loss

Q

We insure a nursing home on a CP 00 10 04 02 with CP 10 30 04 02 attached. Recently, it was hit by a huge snow storm. Due to the weight of the ice and snow, the roof was sagging and leaking. The management of the nursing home cut holes in the ceilings to allow water and snow to drop in. The roof was already damaged and this was done to prevent further damage—or even a major collapse—to the roof.

The nursing home also hired a contractor to clear the ice and snow from the roof, based on the policy's requirement that the insured mitigate further loss or damage. However, the insurer has refused to reimburse our client for this expense. They cite the policy language that such expenses should be submitted for consideration in the payment of the claim.

For the part of the loss that they have agreed to pay, their figure is considerably less than any estimate the insured has received.

We think the insurer is wrong. What is your opinion?

Iowa Subscriber

A

The policy obligates the insured to mitigate further loss, and it agrees to pay the insured for any expenses incurred in that mitigation. The policy says that the insured should submit receipts for that work for consideration in the payment of the claim. That does not mean the insurer will consider whether or not to pay it. The money spent here is just one more item to be included in overall payment of the claim.

The roof could not be repaired without removal of the snow. Again, that also makes the snow removal payable under the policy. It is analogous to removal of a fallen tree from the roof. The roof cannot be repaired until the tree is removed. Likewise, your insured's roof could not be repaired until the snow was removed.

It also appears that the insurer and the insured disagree as to the amount of the loss. That matter should be submitted to arbitration, as outlined in the policy.

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