We are working on a fire claim in which there was an agreed structure estimate that was settled through the appraisal process with a RCV figure of $142,000 and an ACV figure of $120,000. These figures were for a partial loss and did not meet or exceed the policy limits of $160,000.

During the repair process, another fire occurred and the house was a total loss. A second estimate was done to assess the damage caused by the second fire. That figure was $92,000 and DID NOT include the damages from the first fire, only the damages caused from the second fire.

The insurance company is taking the stance that they are only paying the difference between the original appraisal award ACV ($120,000) and the policy limits ($160,000) and no more.

It is our understanding of the policy language that after 24 hours the second fire is a second, separate loss with a new set of policy limits. We agree the insured can not be paid twice for the damages that were paid in the first fire, however the second claim did not include those amounts and therefore it is our position that the second claim should be paid based on the actual damages, not the balance of the limits from the first claim.

Can you please give me your interpretation of how the policy should be applied in this situation?

Indiana Subscriber

The policy language only discusses timing of losses in regards to volcanic eruption, and states that one or more eruptions within 72 hours are considered one eruption. If the writers had wanted the same premise to apply to any other cause of loss the policy could have been written that way. Since it wasn't, you have two losses unless the second fire was somehow caused by the first fire. For example smoldering material set the rest of the house on fire the next day. With two separate losses, the limits are applied twice. Just because both causes were fire doesn't make a difference. If part of the house burned on Monday and 2 weeks later a tornado took the rest of the roof off, that's 2 losses.

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