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Last Post 08/08/2010 11:07 AM by  Leland
Storm loss Questions
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Ray Hall
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08/04/2010 6:49 PM
    This is a hypo question, but timely since we are in hurricane season, and this one question is this most mis-understood question for new people and some who never learned good coverage skills. The state is TX. The policy is the HO-3  (HO 00 03 10 00(1999 iso) The A limit is $120,000 The B is$12,000. The C is 72,000. The D is $24,000. the deductible is 1%.
     
    You are working in the call center fast track team to settle simple claims by one phone call on the same day that the storm hit,  before you get your field files.
     
    The insured is a single lady living alone . She has a rare illness that requires 20 min. per day PT by a licensed Nurse who wheels her out to the hot tub installed in the detached garage for this purpose. The treatment is at a cost of $100.00 per day at home and $300.00 per day at the clinic. This lady is 250 lbs heavy.
     The storm blew down a very large tree blocking access from the wheel chair ramp to the garage, but did not touch any real property, just the grass lawn.
     
    Your adjusters job is to explain the coverage to the agent who wants to send out a check ASAP  for the removal of the tree that will take 3 days as the crane is on another job, however the cost will be a flat $1175.00 when they can do the work.  Note try to do this as no outside adjusters will be needed on this storm and you want to stay on @ any day rate.I will not give the only correct to this question until 5 other people ATTEMPT to think this out and answer this rather simple coverage question that is in the HO-3
     
     
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    Joe
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    08/04/2010 10:02 PM
    I don't have that policy in front of me, but if I did have it to look at, the first thing I would do is look up the coverage for trees to see if a blown down tree is covered. (I think there is coverage for lightning damage to a tree, but I can't remember if storm damage alone is covered or not.)
     
    I would also look up the coverage for debris removal to see if there is any coverage for removing the tree debris in addition to the value of the tree itself.
     
    And then I would see if there is a special limit for trees, if there is coverage for the tree in the first place.
     
    Finally,assuming coverage, the deductible applies to the loss, not the covered loss, so I would determine the value of the tree and debris removal and apply the deductible to that total value, and then pay the insured accordingly.
     
    I am not sure about any coverage for physical therapy in a hot tub, either at home or away, but I would look that up in the policy too.
     
    That's my guess, such as it is.
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    Montana Goldust
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    08/04/2010 11:50 PM
    No coverage for the ladies PT>
    JERRY TAYLOR
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    Ray Hall
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    08/05/2010 12:28 AM
    well you should not shoot from the hip. Doenload the policy read it and learn or tell the agent who called this claim in you just answer the phones, you don,t know the answers.
     
    Read the post again I know physical therapy is not covered, but read the whole ALE section .
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    Ray Hall
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    08/05/2010 12:45 AM
    OK Joe Black you can go home, this is a simple question if you have the policy to read. No its not in xmate or on the back of you license. Any adjuster who has a license should be able to find the answer for them selves in  one hour and call the agent back. Please no more guessing or dart throwing, but some one who is on please step up and answer this question. My god how many adjusters read this post each day. I thought it would be in the hundreds.  Someone with the right answer please send me a PM
     
    Don,t try to do this test unless you have the form listed.
     
    PT is not covered? Read ALE again.
     
     
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    Kemahsabe
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    08/05/2010 9:53 AM
    Mr Agent,
     
    Normally there would not be coverage for a tree that was blown down and did not damage a covered structure.  However, since it's blocking the handicap ramp I can allow $500 for it's removal under Additional Coverages.  That's the maximum for a single tree. 
     
    The insured will have an increase in living expense because she will have to go to the clinic for her treatment until the tree is removed.  However, Coverage D (ALE) will not cover it because it requires a covered loss under Section I of the policy that makes all or part of the residence premises unliveable.  There was no such loss.
     
    The claim will be Closed Without Payment since the $500 for the tree is under the $1,200 deductible amount.
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    jdacree
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    08/05/2010 10:15 AM
    The removal of the tree is covered, when a tree falls across handicap acess, or coverers a driveway that prevents acess by a motor viechle. The cost to remove from the ramp is covered along with $500.00 for debries removal.
    Jim Acree Stupidity is the art of not trying to learn Ignorance is the lack of opportunity to learn I am ignorant
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    Ray Hall
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    08/05/2010 3:37 PM
    The correct to this question is the carrier owes the insured $1300.00 I was post a long page, but it times out on me. I will try to copy the whole argument for the insured into this post.. Is someone jamming me on these post, just say yes or no if its no I will bother CADDO any longer. If any person wants the reasons this loss is $1300.00 please dend me a email. I will print it out and PDF back.
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    Leland
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    08/05/2010 4:29 PM
    For new adjusters it is pretty easy to pull up a copy of an HO3. Just google "HO3 policy form". You might even be able to search for key words like "tree" or "removal", if you click on the HTML version link instead of the PDF link. If you remember certain key words you can look them up again when you want to find the section with that word. This also works for taking continuing ed tests. Try searching for the word "handicapped" in the HO3. If you hit "CTRL" key and the letter "F" you can find any word in a document.

    Thanks Ray, for posting this scenario. I read the policy and learned something new.

    I am leaning towards agreeing with Mr. Dreisbach but I haven't decided yet as I type this.

    Here's the wording from the policy:

    Coverage D- Loss of use

    If a loss under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any neccesary increase in living expense incurred by you so that your household can maintain its normal standard of living.

    Payment will be for the shortest time required to repair or replace the damage...

    Now for the sake of argument, if we assume that ALE is covered, how much could the ALE be?

    Her increased expense will be $200 per day x 3 days, or $600.00

    Now I don't hardly ever do HO3's anymore, and we don't have percentage deductibles in California, so I'm not 100% sure about the 1% deductible. But I will try to do a Statement of Loss:

    STATEMENT OF LOSS

    Item: Debris Removal (Covg E)

    removal of tree blocking handicapped access per Acme Tree Service $1175.00

    at policy limit per tree 500.00


    Item: Additional Living Expense (Covg D)

    increase in physical therapy of $200.00 at 3 days 600.00

    total of debris removal and Additional Living Expense 1775.00

    total of debris removal at policy limit and Additional Living Expense 1100.00

    Total deductible at 1% of $120,000 Covg A limit 1200.00

    portion of deductible absorbed under debris removal 675.00

    remainder of deductible not absorbed under debris removal 525.00

    net claim (1100.00 less 525.00) 575.00


    Now I did this statement of loss without being 100% sure that ALE is even due. I need to study the policy carefully re ALE. I think Mr. Dreisbach might be right.
    However, in the real world it would not surprise me to see a carrier pay the ALE even if a careful reading of the policy revealed it wasn't due.

    I will study the ALE section and post on that later.

    Thanks again Ray





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    Leland
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    08/05/2010 5:27 PM
    show us your SOL, Ray.
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    Leland
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    08/05/2010 5:32 PM
    and just to explain, the reason I have this line:

    total of debris removal and Additional Living Expense 1775.00

    is because that's the number a CAT adjuster would get paid a percentage on.

    A daily claim adjuster can leave that line out of the SOL; it's not really needed.
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    Leland
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    08/05/2010 7:48 PM
    Here's the ALE section again:

    Coverage D- Loss of use

    If a loss under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any neccesary increase in living expense incurred by you so that your household can maintain its normal standard of living.

    Payment will be for the shortest time required to repair or replace the damage...

    -------------------------------------

    So I need to refer to ""Section I"....

    On page three there is a heading entitled:

    SECTION I - PROPERTY COVERAGES

    but on page 8 there is also a heading entitled:

    SECTION I - PERILS INSURED AGAINST

    and on page 11:

    SECTION I - EXCLUSIONS

    and finally on page 13:

    SECTION I - CONDITIONS

    So my best guess is that "Section I" must refer to any part (or all parts) of the policy that say "Section I".

    The debris removal does fall under SECTION -I PROPERTY COVERAGES.

    But it doesn't qualify under the SECTION I - PERILS INSURED AGAINST because there was no "direct physical loss to property described in Coverages A & B".

    I've never run into this problem before- what exactly does it mean when it says "a loss under Section I"????

    There's only a few possible answers in my opinion:

    a) SECTION I means the property listed

    b) SECTION I means the perils listed

    c) SECTION I means all the parts named SECTION I, and for a loss to be "under Section I" it must fit all the sections.

    To me this seems like an ambiguity in the policy- it seems like maybe its a typo - maybe they meant to say SECTION I PROPERTY COVERAGES.

    So I'm just going to keep going.

    Next question:

    Is the "residence Premises" where the insured resides, unfit to live in?

    1) residence premises includes the house, garage, and grounds.

    2) The word reside isn't defined in the policy. But it's fair to say that an insured "resides" at a residence, and residence is defined broadly, so I'm going to go ahead and say that the insured resides at the residence which includes the dwelling, grounds, and garage. I'm going to give the insured the benefit of the doubt- I'm not going to say that the insured "resides" only in the house - she resides at the whole place.

    3) So using my broad definition of "reside" is the residence premises "unfit to live in"?

    Maybe not for me or you, but for the insured it is unfit to live in. This is a contract between her and the insurance company, not some average healthy person and the insurance company. So if its not fit for her, its not fit period. As lawyers say, "the insurance company has to take the insured as they find them".

    So in conclusion I think this lady qualifies for ALE except for the question of what exactly is "Section I". And since this whole "Section I" thing is ambiguous, and ambiguous terms need to be decided in favor of the insured, I am going to ignore it.

    Also it wouldn't make good sense to deny a small ALE claim to a handicapped lady, especially when it's not clear what the policy is referring to.

    So I'm going to stick with a net claim of $575.00.

    If I was worried about what my supervisor thought I would just have them decide in the first place.

    And frankly I analyzed this in way more detail than anybody would on a storm site.

    Also as a practical matter the adjuster can follow up with the tree removal people to make sure the tree gets removed on time and reduce any further ALE exposure.







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    Leland
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    08/05/2010 7:52 PM
    If anybody has a different SOL (including Ray!) please post it.

    It wouldn't be the first time I made an error in public!

    But if you're not absorbing part of the deductible I would like to hear why not.

    Does anybody come up with Ray's number?
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    Joe
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    08/05/2010 7:55 PM
    I am writing this from home because Ray fired me and sent me home, LOL, but I do like Mr. Driesbach's answer.

    Awaiting Ray's SOL, and still shooting from the hip,

    Joe
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    Joe
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    08/05/2010 8:00 PM
    Oh...I like Leland's answer too, especially because the insured received a check under Leland's method.

    Can't wait to see the correct answer.

    signed,

    Wishy Washy

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    Ray Hall
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    08/05/2010 9:45 PM
    You pay the $500.00 for one tree removal and 200 a day for 4 days= $1300. All of section I is property that is insured. All of section II is the liability section of the policy. The removal is necessary as it blocks the hot tub, this gives it addition coverage. No deductible is applicable to the E coverage as it has no limit shown on the dec sheet and only A B C & D have a limit shown. Now what is Loss of use under D if a lady can not get a necessay medical treatment in her own house. Kinda thing this like a body function that most people do ever day.
     
    Then think about the four corners of the policy that gave you the additional coverage, and it has to give you the Loss of use coverage also without a deductible.
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    Leland
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    08/06/2010 12:17 AM
    OK, no deductible on ALE. It's been years since I did ALE.

    But shouldn't we apply the deductible to the debris removal?

    That wipes out the $500.00 tree removal and leaves the ALE.

    And you said 3 days, not 4.

    If she had her therapy in the morning, the tree fell in the PM, and the tree removers are coming in three days, that means 3 days of therapy outside the home.

    So the total net claim is 3 x 200 or $600.00

    If you say 4 days its $800.00

    I would agree we should pay the ALE but it really isn't that clear cut that the policy requires it. I gave my reasoning above, and I think its the right thing to do, but there are reasonable arguments to not paying it, if you want to be legalistic.

    We all know that lack of water, electricty, security, safety, heat, AC etc can make a house unfit to live in.

    But if a medical treatment is made more inconvenient is that really making the dwelling unfit?

    Imagine if her twin sister has the identical tree fall and the identical medical problem with just one difference: the twin has her cable TV in the garage, and always goes to the clinic for her treatment.

    Would you argue that the first lady has a house unfit to live in and the second one does not?

    If you can still use the kitchen, use the bathroom, enjoy the AC, sleep in the house etc. but you have to leave once a day for some treatment like many other people with a similar condition is your house really unfit to live in?

    Again, I would argue for paying the ALE but you can make pretty good arguments either way.

    I would pay it because if you can argue it both ways than probably you should give the insured the benefit of the doubt.

    Also it would be somewhat heartless and could even create a small scandal if you didn't cover it. Not to mention that even if you thought you were right, not paying it could end up in an even bigger payout down the road.

    Due to the humanitarian considerations I would run it by a supervisor- it wouldn't surprise me for a staff person to decide to pay for something that might not be owed under the circumstances.

    So if you pay ALE and the tree is below the deductible the net claim is $600 or $800, not $1300.00
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    Ray Hall
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    08/06/2010 12:28 AM
    I dont argue, take it or leave it.  Lets take a vote.
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    swink_d
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    08/06/2010 1:23 AM

    b.            We will also pay your reasonable expense, up to $1,000, for the removal from the "residence premises" of:

    (1)          Your tree(s) felled by the peril of Windstorm or Hail or Weight of Ice, Snow or Sleet;
    (4)         Does not damage a covered structure, but:
    (b)         Block(s) a ramp or other fixture designed to assist a handicapped person to enter or lave the dwelling building. 
      The $1,000 limit is the most we will pay in any one loss regardless of the number of fallen trees. No more than $500 of this limit will be paid for the removal of any one tree.
     
     
    so we have 500.00 for a tree. 
     

    1.             Additional Living Expense

    If a loss covered under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living.

     
    and diddly squat on the ALE
     
    CWOP
     
     
    PS Why we got to be in Texas? We gonna use the HOA?
     
     
     
     
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    swink_d
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    08/06/2010 2:02 AM
    've never run into this problem before- what exactly does it mean when it says "a loss under Section I"????


    Its real simple , You have to have a covered loss, in order to have ALE.

    Say a house get overrun with roaches and makes the house uninhabitable, NOT A COVERED LOSS IN SECTION 1, so NO ALE
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