Thursday, July 06, 2017

Bad news: A P&C case study

Our friend Jeff M sent along the link to this sad story:

"Owners and renters in North Carolina say they were left in the dark after a beach condominium community suddenly shut down. The condos were condemned Friday, after an engineering report found that the property has dangerous structural issues."

It's not clear whether the owners will be allowed to retrieve their personal property.

Okay Henry, that is a sad story, but what's the insurance angle?

Well, Jeff asked if the owners' condo policies would cover this situation. As usual in these cases, I turned to our good friend (and P&C guru) Bill M. Now keep in mind that his answers are specific to Ohio, but that it's likely that they'd also apply in other states.

Basically, the owners are out of luck.

Now, why is that?

Well, Bill taught me a new phrase, and suggested I use it whenever I'm looking at these kinds of (potential) claims: "cause of loss." That is, which circumstances are specifically covered, and which are specifically excluded.

So here's the relevant exclusion:
(4) (a) wear and tear, marring, scratching or deterioration; (emphasis added)
So the "cause of loss" is specifically excluded. Which is a double whammy: the owner now has no place to live, but the bank still wants their mortgage paid off, and there's not going to be a check from the insurance company to pay off the old place, or pay for a new one.

But what about their personal property (clothes, appliances, furniture, etc)? Well, they're likely outta luck there,  too:
(1) Enforcement of any ordinance or law regulating the construction, repair or demolition of a building or other structure, unless specifically provided under this policy
The "cause of loss" here would be the government forbidding the owners to retrieve their belongings. So again, no insurance to pay for replacing them.

blog comments powered by Disqus