Wordings For The Insured And Insurer For When A Loss Is Incurred

PaperworkIn the Technical Policy Requirements for Handling Claims, even in the modern world of "plain English" policy wording, most property policies contain few, if any, provisions explaining exactly how the claims process is to work. That process is usually buried in the so‐called "Statutory Conditions". The claims process that emerges from a close reading of the "Statutory Conditions" and some of the other sections in the "General Provisions" (Part 2) of the Insurance Act is as follows:
  1. The insured must forthwith give notice of any covered loss or damage.
  2. The insured (not the insurer) must take all reasonable steps to prevent further damage to the property including, if necessary, its removal or protection.
  3. The insurer then has an "immediate right of access and entry by accredited agents (adjusters) to inspect and appraise the loss or damage."
  4. The insured must secure the property and maintain control/possession of the property and is not allowed to "abandon" the property to the insurer without the latter's consent.
  5. The insurer must furnish the insured with "printed forms on which proof of the loss or claim may be made."
  6. The insured must deliver to the insurer as soon as practicable that Proof of Loss, verified by a Statutory Declaration "listing the destroyed/damaged property and detailing quantity, cost of same, actual cash value of same, and particulars of the amount claimed."
  7. The insurer can request, and if it is practicable, the insured must produce, any paperwork it may have relating to the damaged property including invoices, etc.
  8. The loss is payable by the insurer to the insured (or to such other person as the insured directs) within sixty days after submission of the Proof of Loss documents.
  9. Note some property policies bestow upon the insurer the ability to require the insured to submit to examination under oath regarding the loss, and produce documents all at a reasonable place and time designated by them.
  10. Any fraud or willfully false statement in the Proof of Loss vitiates the entire claim i.e. in such circumstances, the insurer pays nothing even if the fraud relates only to just one component of the loss.
  11. Instead of making payment of the claim, the insurer has the option of itself repairing/replacing the damage property by giving written notice to that effect within thirty days after receiving the Proof of Loss and proceeding with such repairs/replacements with all due diligence.
  12. In the event there is a dispute between the insurer and the insured about the value of the property or the amount of the loss, then such dispute must be determined by way of the "appraisal" procedure provided under the Insurance Act and the insurer is not obliged to make payment under the policy until that appraisal has been determined.
What is apparent from all of the above is that technically speaking, the insurer is obliged to do very little following a loss. Basically, the only positive requirements imposed by the statute are to:
  • Provide forms on which proof of the loss can be made
  • Make payment (of whatever amount is appropriately due) within sixty days following receipt of such Proof of Loss; exactly how much the insurer must pay in respect of any loss is of course governed by the "basis of claim payment" provisions set out in the policy. Generally speaking, with respect to a property loss, the amount payable will be one of the following:
    1. The cost of repair/replacement (whichever is less) with materials of equivalent kind and quality and without deduction for depreciation (replacement cost)
    2. Actual cash value (ACV) of the damage, usually determined on the basis of the cost of replacement less an appropriate discount for depreciation having regard to the property's condition, resale value, and normal life expectancy
Make sure you're protected. Call Heritage Insurance at (800) 667-7640 for more information on Moose Jaw insurance.
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