Theft vs. Mysterious Disappearance

Q

Our homeowners insured recently reported the loss of a diamond ring. She had stayed overnight in a motel and left it in the room when she departed the next day. She did not discover that it was missing until she got home. A call to the motel revealed that the ring had not been turned in to lost-and-found. Upon the advice of her agent, the insured notified the police “for insurance purposes” and submitted a claim to us for theft of the ring.

We agree that there has been a “mysterious disappearance” of the ring from the motel room. However, we don't believe that a theft has occurred. We would appreciate your thoughts on the matter.

New York Subscriber

A

Under earlier editions of the homeowners policy, your insured would have a difficult time pursuing a claim for the loss of her ring. Those editions of the homeowners policy excluded loss of contents by “mysterious disappearance.”

However, the current forms no longer read that way. Instead, they promise to cover theft including “loss of property from a known place when it is likely that the property has been stolen.” With that kind of agreement, the insured has an excellent chance of recovery: if not stolen or turned in to lost-and-found, then the ring should be where she left it. Since it is not in the motel room, there is the strong likelihood that it was stolen.

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