RTFP – Read the Full Policy!
This is sage advice. We were reminded of the importance of reading the full policy on a claim we handled a couple of years ago. Leading insurance consultant Bill Wilson spoke at the 2019 NAPIA mid-year convention, and it was instructive. Bill’s take was a tad more colorful – “Read the F#@*%ing Policy” was more the message – but it still resonates nonetheless.
This advice was applicable soon thereafter when we handled a claim involving a historic house in a Boston suburb that was totally burnt out. It was a total loss – that is, it couldn’t be repaired to its pre-loss condition. The homeowner wisely hired us at the outset, which is very important.
We received the policy before meeting with the insurance company adjuster. Interestingly, it included verbiage that we hadn’t seen before in other policies. It included a clause stating that, if the property suffers damage and is deemed a total loss, the insurance company will pay the policy limit. The only other time we have seen language like that is in “value policy states” – which Massachusetts is not.
When we met the insurance company adjuster, we advised him about this clause. He smiled in a bemused way and said, “Ah, so you saw that clause?” Then he said he would pay the limit of the homeowner’s insurance policy.
Typically, we write up a full estimate, send it to the insurance company, and commence negotiations. What’s more, this particular loss was worth LESS than the policy limit. And yet, the insurance company cut the check for the entire limit.
The homeowner, needless to say, was most pleased.
The point? Some of these insurance companies write very unusual policies. And the insurance company might not go out if its way to call your attention to a clause that benefits you. That’s why you have to read every policy cover to cover.