Second Claim Occurs Before First Claim Repairs Completed

July 10, 2012

 

This is in reference to a non-owner occupied (rental) property. The insured sustained a fire loss at the loss location. The repairs have not commenced. The insured sustained another claim at the loss location (break-in: vandalism & theft). Using 1 room as an example- if the living room needed to be gutted of the drywall and painted due to smoke from the first loss, should the 2nd claim also include drywall repair and painting because the vandals broke into it to steal the copper pipes, even though drywall repair was covered by the first claim?

The ACV has been paid on the 1st loss and now the insured may not do the repairs. Does this impact the 2nd claim?

Michigan Subscriber

 

The claims are separate and should be handled that way. However, since the property had not been repaired from the first loss, then only the increase in loss from the second claim should be covered. For example, the first loss will cover replacement of drywall while the second claim will pay for subsequent damage, the loss of the pipes. Since the first loss hadn't been repaired, the second claim will not pay for duplicate repairs.

 

It also depends on the separation between the losses; if it's been several months, the insured could have a problem since the DP 03 requires the insured to protect the property from further damage by making reasonable and necessary repairs to protect the property; coverage may be denied if this has not occurred.

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