April 27, 2018

 We all know about the historic wildfires affecting the American west, particularly California, in 2017. Many insurance issues arose from those events. Insuring to value was one, where once losses were being settled many insureds discovered much to their dismay that they did not have enough coverage to replace their dwelling or contents. There are many reasons why an insured may be underinsured which we will not detail here; The Ever Present Insurance to Value Issue provides a discussion on underinsurance. The fact is that many affected insureds discovered after losing all their possessions that they did not have enough coverage to rebuild.

 The standard policy language requires, in event of a loss, an insured is to provide an “inventory of damaged personal property showing the quantity, description, actual cash value and amount of loss. Attach all bills, receipts and related documents that justify the figures in the inventory.” This is standard wording from the ISO HO 00 03, and most forms use similar or identical language. Further along in the policy is a requirement to send to the carrier within 60 days of its request a signed, sworn proof of loss that includes the inventory as described. This is fine for many losses, but when the house has been burned to the ground, creating such inventory, and providing documentation and receipts, is often impossible. Most insureds do not have inventories of their property that are kept offsite for safekeeping, if they have inventories at all.